Life insurers say the terrorist bombings in London point to the need for both a government reinsurance program for group life insurance and effective risk management by group life insurers.[@@]
At press time, officials were estimating that the London bombings have killed at least 37 people and wounded more than 700.
The American Council of Life Insurers, Washington, has responded to the bombings by expressing condolences to those affected and reissuing a statement that ACLI President Frank Keating made earlier this year about the need for Congress to extend the Terrorism Risk Insurance Act and include protection for group life insurers. TRIA is scheduled to expire on Dec. 31.
Treasury Secretary John Snow has written a letter accompanying the report that says continuing the federal terrorism reinsurance program could crowd out innovation and capacity in the private market. He urged that Congress consider narrowing the scope of TRIA, rather than expanding the scope, if it does decide to try to extend TRIA.
The main Senate TRIA extension bill that includes group life is S.B. 467, and the main House TRIA extension bill that includes group life is H.R. 1153.
Keating argues that the Sept. 11, 2001, terrorist attacks have had a severe effect on the group life market.
“ACLI companies offering group life insurance policies have faced the harsh realization that catastrophe reinsurance coverage for this product has essentially evaporated from the private marketplace,” Keating says in the ACLI statement. “Unlike the property and casualty industry, in the absence of TRIA, group life insurers are required by state law to offer terrorism coverage if they offer the product. As a result, group life insurers have been making changes to mitigate factors within their control. They are adjusting underwriting factors and working to control risk concentrations.”