The group life insurance industry “strongly urged” Congress to include group life in any successor to the Terrorism Risk Insurance Act.
Group life coverage was not included in the original bill, passed in late 2002, and the Treasury Department declined an opportunity offered by a provision in the bill to add group life coverage, saying there was adequate availability of this coverage. But the life insurance industry is mounting an aggressive campaign to be included this time.
In comments at a hearing on the future of TRIA held by the Capital Markets Subcommittee of the House Financial Services Committee, Ed Harper, senior vice president of Assurant Inc., and chairman of the Group Life Coalition, said group life insurance represents approximately 42% of the U.S. life insurance market and provides financial security to 160 million Americans.
Meanwhile in the Senate, Sen. Chris Dodd, D-Conn., and Sen. Hillary Clinton, D-N.Y., held a press conference during which they called for a simple extension of the TRIA program through legislation that Dodd co-sponsored with Sen. Robert Bennett, R-Utah. That legislation also calls for inclusion of group life.
During the House hearing, Harper’s views were embraced by Ernst Csiszar, president and CEO of the Property Casualty Insurers Association of America, in his testimony. But J. Robert Hunter, director of insurance for the Consumer Federation of America, took the opposite approach, suggesting Congress should reject calls for adding group life to any successor program.
In his testimony, Harper said, “We strongly urge Congress expressly to include group life in any market-based successor to the TRIA program.”
At the conclusion of the first of two panels testifying on the issue, Rep. Mike Capuano, D-Mass., asked all witnesses if they had any opposition to the inclusion of group life in the TRIA program. None of them responded, which Capuano took to mean that they supported inclusion.
Capuano joined with fellow Democrats Rep. Barney Frank, Mass., and Rep. Steve Israel, N.Y., in introducing legislation extending the current TRIA program several months ago that incorporated a provision including group life.
“Quite simply, Congress needs to insure the people inside the buildings, too,” Harper said.
He explained that “in many cases, [group life] is the only life insurance most policyholders have to provide protection to their families. As such, the fate of group life insurance and TRIA is no trivial concern.”
Harper added that, going forward, the Group Life Coalition, which includes the American Council of Life Insurers, would support extending TRIA with group life for two years with upwardly adjusted triggers, retention levels and co-shares to provide catastrophic protection for the policyholders and the economy and to protect the taxpayer. “As the new program is ready to be engaged and begin functioning, the ‘old’ TRIA model should sunset,” Harper said.
In a theme brought up by several of those testifying at the hearing, Harper suggested that a long-term solution should include as a major component a government-mandated pooling of risk. “The government does not bear the risk or the costs” under this proposal, Harper said.