The following are some important items you may have missed in the midst of celebrating the holidays.
On Dec. 22, President Bush signed without comment a two-year extension of the Terrorism Risk Insurance Act.
The bill was virtually identical to an austere version of a TRIA extension passed by the Senate the week before Thanksgiving. Senate and House negotiators drafted a final bill of the TRIA extension on Dec. 16, which was passed by the Senate that night and by the House the following day.
The legislation will scale back the scope of TRIA’s coverage.
Group life was not included in the bill, whose aim is to protect insurers from catastrophic losses in the event of a severe terrorist attack. Under the final version, commercial auto, burglary-theft, surety, professional liability and farm owners multiple peril will no longer be covered.
Under the revised TRIA, the property-casualty industry’s retention level will rise from the current 15% to 17.5% next year and 20% in 2007. The bill will also raise the program trigger from an event of $5 million in insured losses to $50 million in April and to $100 million in 2007.
–By Arthur D. Postal
Both houses of Congress have passed a long term care partnership provision strongly supported by the life insurance industry.
The provision was included in a budget bill the House passed by a 212-206 vote and which the Senate passed 51-50.
Due to slight differences between the two versions of the budget bill, it must now go to a reconciliation committee representing both houses. Once the two sides agree, the revised bill then can be resubmitted to both houses for a new vote.
The LTC provision of the act would eliminate barriers that prevent states from sponsoring LTC policies. Although four states currently offer such partnerships, federal law as it now stands makes it impossible to launch new ones.
Under the budget act’s partnership provision, an individual could purchase an LTC insurance policy approved by a state government. In return, the state would guarantee that should the policy benefits be exhausted, the government would cover the costs of continuing care through Medicaid. The senior would not be required to spend down all his or her assets first, as under current Medicaid rules.
For example, if a consumer buys an LTC partnership policy with $100,000 in benefits that are eventually exhausted, he or she then can protect an equal amount of assets, or $100,000, before using Medicaid.