The Bush administration’s vehement opposition to efforts to add group life insurance to legislation extending the Terrorism Risk Insurance Act will likely weigh heavily in talks to reconcile differing versions of the legislation when Congress resumes work the week of Dec. 5.
Legislation extending the program for two years passed the Senate by unanimous consent on Nov. 19. That bill excluded group life insurance and was significantly narrower than legislation that overwhelmingly passed the House Financial Services Committee on Nov. 16.
But despite the White House’s position, the group life industry plans to soldier on. “The American Council of Life Insurers strongly supports adding group life to TRIA,” said spokesman Jack Dolan. “It does not make sense to exclude lives and only cover bricks and mortar in TRIA’s reauthorizing legislation.”
The Hartford, whose chairman and CEO, Ramani Ayer, has been a steadfast industry advocate on the extension of TRIA, also said it continued to support inclusion of group life in the program.
Joshua King, a Hartford spokesman, said, “We are gratified that group life is part of the bill put forward by the House Financial Services Committee and hope that it remains part of the legislation. When it comes to insuring against terrorism, covering lives, in addition to covering property, is very important.”
The House bill is expected to be pushed through on the suspension calendar soon after Congress returns to work, setting up a conference with the Senate to reconcile differing legislation.
Under the calendar released by the Office of the Majority Leader of the House on Nov. 21, Congress hopes to finish its work by Dec. 15. “No votes are currently scheduled past Thursday, Dec. 15, though they are still a possibility,” the memo said.
The House bill embraced coverage for group life through a breakthrough “silo” system that will force insurers to accept a greater burden for coverages the House viewed as less essential. For example, group life insurers will have to retain 21.5% of the cost of claims resulting from a terrorism attack in the first year of the program and 22.5% in the second year.
In a statement of position issued Nov. 17, the Bush administration voiced strong support for legislation passed by the Senate.
“The Administration strongly supports the bill’s exclusion of additional lines of coverage and will strongly oppose any efforts to add lines of coverage, including group life insurance, or further expand the program,” the administration said.
Both the House and Senate bills raise the “trigger” for federal involvement in paying claims for an act of terrorism from $5 million currently to $50 million in the first year and $100 million in the second year.
The Senate bill narrows overall support for the government backstop for handling terrorism insurance claims, and reduces the lines of coverage to which it will contribute.
The Senate bill, which terminates the program effective Dec. 31, 2007, also raises the basic retention level on claims from the current 15% to 17.5% in the first year and 20% in the second, as well as reducing the number of business lines covered by the federal backstop.
The House bill, by contrast, leaves open the possibility that the bill could be extended and adds group life to the lines covered.
In announcing the vote, Sen. Richard Shelby, R-Ala., said, “I commend the Senate’s passage of S. 467, the Terrorism Risk Insurance Extension Act of 2005.”
Noting that the bill was the result of bipartisan efforts, and passed out of the Senate Banking Committee without objection, Shelby added, “If enacted, this legislation will satisfy the short-term needs of the insurance industry while promoting the development of private market solutions. I remain committed to working with the House and the administration to pass an extension that reflects the balanced principles outlined in this bill.”
The bill was sponsored by Sen. Chris Dodd, D-Conn., and had 33 co-sponsors.
“The Administration…will strongly oppose any efforts to add lines of coverage, including group life insurance, or further expand the program.”
The House Bill
GROUP LIFE RETENTION LEVELS
1st Year 2nd Year
The House bill extending TRIA says group life insurers will have to retain 21.5% of the cost of claims resulting from a terrorism attack in the first year of the program and 22.5% in the second year. The Senate bill excludes group life.