A top insurance industry executive is asking Congress to help set up a mandatory risk-pooling system to protect group life insurers against catastrophic acts of terrorism.[@@]
Under the risk-pooling proposal, “the government does not bear the risk or the costs,” Edwin Harper, senior vice president of Assurant Inc., New York, said today at a hearing organized by the U.S. House Financial Services Committee capital markets subcommittee. “Rather, it creates a new structure that materially increases the capacity of”
With the right structure, a mandatory risk-pooling system could help private group life insurers handle events that produce as many as 100,000 deaths without use of government funds, Harper said.
Harper, chairman of the Group Life Coalition, appeared at the capital markets hearing with other insurance industry executives and regulators to talk about the idea of including protection for group life in a new federal terrorism reinsurance program.
The Terrorism Risk Insurance Act of 2002, the law that created the program, expires Dec. 31, and it has never included protection for group life insurers. The U.S. Treasury Department declined to use a TRIA provision that could have let it expand the program to protect group life insurers as well as property-casualty insurers.
Group life insurers have formed the Group Life Coalition to mount an aggressive campaign to get group life into any extension of TRIA.
“Quite simply, Congress needs to insure the people inside the buildings, too,” Harper said.
Ernst Csiszar, president of the Property Casualty Insurers Association of America, Des Plaines, Ill., said his group also supports inclusion of group life insurers in TRIA.
“As we protect our nation’s assets we must not neglect protection of the economic security of its workers,” Csiszar said. “PCI, therefore, strongly supports the addition of group life coverage to the program.”
In the Senate, Sens. Chris Dodd, D-Conn., and Hillary Clinton, D-N.Y., called today at a press conference for Congress simply to extend the current TRIA program and add group life protection. Dodd has cosponsored a TRIA renewal bill that would include group life with Sen. Robert Bennett, R-Utah.
Harper said the Group Life Coalition, which includes the American Council of Life Insurers, Washington, would support the idea of extending TRIA with group life for 2 years with provisions that would dramatically increase the amounts insurers would have to pay out before they could benefit from federal protection.
But Republican committee members warned that a 2-year extension would be unacceptable to the Bush administration.
One witness, Robert Hunter, director of insurance for the Consumer Federation of America, Washington, firmly objected to the idea of including group life insurers in TRIA.
“There is no meaningful evidence that justifies expanding TRIA to cover group life insurance,” Hunter said. “These insurers have not attempted all meaningful measures to spread their risk privately.”
Up till now, the Consumer Federation has not received a single complaint about the price or availability of group life coverage, Hunter said.