The House conceded the obvious on Dec. 19 and passed the Senate version of legislation extending the federal backstop on terrorism reinsurance without any provision for group life insurance.
Also left out of the bill was a provision that would have limited insurers in using travel destination as a factor in the underwriting of life insurance policies.
The overwhelmingly bipartisan vote was 360-53, with 50 Republicans and 3 Democrats voting against the bill.
But House Democrats did not accept the inevitable before taking some shots at the Senate, especially Sen. Richard Shelby, R-Ala., ranking minority member of the Senate Banking Committee, who was insistent that the Senate version would have to carry the day.
Both Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Rep. Gary Ackerman, D-N.Y., railed against the lack of communication the Senate had with the House.
And Ackerman said during the final debate that he was introducing a bill that would add a provision to the Senate bill that increases terrorism risk insurance capacity for properties in urban areas seen as prime terrorism targets where there is currently a shortage of such capacity available, even with the current TRIA program in place, the so-called “reset” provision.
But, he said in acknowledging the obvious, “Santa Claus is not going to give America terrorism risk insurance for Christmas and we don’t live with the Easter bunny in the Senate’s candy-land, where catastrophic risk can be comfortably ignored.”
Ackerman added, “Saying ‘the market will provide’ doesn’t make it true.”
Frank said, “I do regret the breakdown in the U.S. Senate of the legislative process. We were told the senior Republican on the committee, the gentleman from Alabama, simply refused to meet with us,” Frank said. “If the Senate had voted against the reset mechanism, I would have been disappointed, but I would have said, ‘well that’s the way it works.’ “
Frank asked members of the Senate “not to put themselves in a position where there is a one-person veto.”
Rising in support of the legislation, Rep. Spencer Bachus, R-Ala., ranking minority member of the House Financial Service Committee, called it a good compromise.
“While it is not a perfect bill, the Senate’s TRIA extension is a reasonable, bipartisan compromise that will ensure the continued vitality of our commercial insurance markets operating under the threat of global terrorism,” he said.
He called the 7-year extension “fiscally responsible,” but said he supported it because it “otherwise limits and improves taxpayer protections and prevents further intrusion by the government into this market-based program.”
As passed by the House, H.R. 2761, the Terrorism Risk Insurance Program Reauthorization Act of 2007, effectively extends the current program through 2014 and adds coverage of domestic terrorist events to the program.
It was passed under expedited rules requiring support by two-thirds of House members voting.
At press time, the next step is the likely signing of the bill by President Bush.
Bowing to the inevitable, a staff official of the American Council of Life Insurers, which had led the battle on behalf of life insurers to have group life included in the program, conceded defeat.
“Even though the public policy arguments for including group life in TRIA are compelling, we understood that this would be an uphill battle in the face of the veto threat from the administration,” said Steve Brostoff, an ACLI spokesman.
“We appreciate the efforts of members on both sides of the aisle and in both the House and the Senate who worked so hard to include group life in TRIA and protect people as well as buildings,” Brostoff added.
The bill as passed by the House under expedited procedures also leaves out two other provisions which it had sought. One provision would have cut the current trigger for federal involvement in paying claims from a terrorist attack from $100 million to $50 million.
Another House priority left out of the final bill would have increased terrorism risk insurance capacity for properties in urban areas seen as prime terrorism targets where there is currently a shortage of such capacity available, even with the current TRIA program in place.
The current program is set to expire by Dec. 31, and Congress was working furiously to finish action on must-do legislation and leave town as soon as possible.
The House threw in the towel despite a tense, last-minute effort by House Democrats, led by Frank, to persuade the Senate to accept the additional provisions.
But, as expected, getting no response from the Senate or the Bush administration, Frank gave up.
In an effort to stir the Senate to accept parts of his far broader bill, Frank said during floor debate last week, “We put group life back in. Members will remember that after the 2001 mass murders of so many innocent Americans by vicious thugs, we adopted a very expensive program to compensate people.
“A better way to do that would be to have this group life insurance as part of the terrorism risk insurance,” he added.
Regarding the travel underwriting provision, Frank said, “I should say that including the travel insurance provision is something that was called to our attention on a bipartisan basis from members from Florida which says that you should not have your life insurance cancelled if you go to Israel.”
Frank added, “That is basically what we are talking about, or maybe some other areas where the insurance companies think there is a problem when there isn’t one. And we checked, and the number of payoffs they have had to make of people who died going to Israel or other countries on their list is negligible, zero, from what we could tell.”
So, he added, “we included a provision in our bill that was overwhelmingly supported by both sides, to say that there were rules; not that you couldn’t deny someone life insurance if they were going to a hazardous area, but that you had to have a rational process by which you defined that.”