House bill contains group life, Senate’s does not
Overwhelming votes for extension of the Terrorism Risk Insurance Act in both the House and Senate financial services panels last week sent a clear message that despite White House opposition, the legislation in principle will be extended beyond its current expiration date of Dec. 31.
However, because the bills are markedly different, it is likely that Congress will not send a bill to President Bush to sign before mid-December.
A key sticking point is language in the House bill adding group life insurance to the program, although group life insurers would be forced to accept a high retention level under the “silo” approach the House uses.
There is great concern among congressional staffers and lobbyists that during talks to reconcile the House and Senate bills, group life insurance will be the first tradeoff.
The leadership of the Senate Banking Committee was working to have the full Senate take up the bill after press time last Thursday afternoon.
The House, with a fuller plate of must-do legislation to digest before it departs for a two-week Thanksgiving recess, is seen as unlikely to pass its version before Saturday.
Reacting to the activity in Congress, American Council of Life Insurers President Frank Keating said, “ACLI believes the same principles that apply to insured buildings must also apply to the 160 million Americans protected by group life insurance. By including group life insurance in the Terrorism Risk Insurance Revision Act, the House Financial Services Committee took a critical step to help ensure that lives, as well as property, will be protected in the event of a major terrorist attack. We look forward to the bill’s adoption by the full House.”
It is clear, however, that the White House will push for the Senate version of the bill. In a statement after the Senate vote, Treasury Secretary John Snow said, “I’m pleased to see that actions today in the Senate to extend the Terrorism Risk Insurance Act recognize the temporary nature of the program and place terrorism insurance on the right path to full private market participation.”
In general, both bills call for a two-year extension of the two-year program and raise the current $5 million “trigger” for federal involvement to $50 million in the first year and $100 million in the second year.
But there the similarities end. The Senate mandates that the program end after the two-year extension; the House bill provides language for the bill to continue, albeit with higher threshold levels. The House bill also adds group life insurance to the listed coverages; the Senate bill does not.
The Senate Banking Committee reported out a more modest version of the current legislation by a unanimous voice vote on Nov. 16. The House Financial Services Committee approved a more expansive version later that day by a vote of 64-3.
Although there was little debate on the measure itself by the House panel, and passage by the committee was never in doubt, several members said that they would have preferred a bill more in line with White House recommendations for reducing the federal government’s exposure and increasing the burden on private insurers.
Rep. Jeb Hensarling, R-Texas, saw the Senate bill as preferable, adding that he was “very hesitant, very reluctant to see the federal government, again, permanently get into the insurance business,” through a long-term terrorism risk backstop. Hensarling also said that group life, which is included in the House version of the bill but not the Senate’s, “seems to be widely available” and that “the government’s exposure will only be greater with the silo approach.”
Despite these criticisms, the legislation is not a Democratic project, or a giveaway for the insurance industry, according to Rep. Barney Frank, D-Mass., ranking member of the committee. “This is not the bill the Democrats would have written if we were in the majority,” he said.