A resolution to include group life insurance contracts in any renewal of the Terrorism Risk Insurance Act is starting down a path toward full endorsement by state insurance regulators.
The resolution was adopted by the Property and Casualty Insurance (C) Committee of the National Association of Insurance Commissioners, Kansas City, Mo., during its summer meeting here.
The resolution states that “group life insurance faces the same concentration of risk as workers’ compensation insurance and provides protection for the lives of American workers.”
“It is time for the NAIC to go on record,” said Ed Harper, a representative of Assurant based in Washington. Harper has lobbied for the inclusion of group life in TRIA.
“Group life provides an important service,” according to Harper, who said it is “particularly vulnerable” to terrorism.
Carriers who decide the risk is too great and leave group life are effectively leaving the employee benefits market, too, Harper said. Group life is part of a benefits package that may include dental, DI and other types of coverages, he said. “It is an extremely competitive business. Basically, it means closing up shop, probably forever.”
Reinsurance is expensive and hard to come by, Harper told regulators. Assurant formerly was able to get $900 million in reinsurance for a very reasonable premium, he said, but now, the company only can get $40 million at 10 times the cost.
Dick Baker, a representative with Savings Bank Life Insurance of Massachusetts, Boston, said a similar situation exists for individual life. “Rating agencies are asking about coverage for individual life in force. If they don’t have it, they get marked down.” SBLI, he said, has sufficient coverage.
Trade groups including the American Council of Life Insurers, the American Insurance Association, and the Reinsurance Association of America, all of Washington; and the Property Casualty Insurers Association of America, Des Plaines, Ill., all support the resolution.
A resolution states that ‘group life insurance faces the same concentration of risk as workers’ compensation insurance and provides protection for the lives of American workers’