Representatives of the life insurance industry and state regulators voiced support during a Senate hearing for inclusion of group life insurance in any extension of the Terrorism Risk Insurance Act.
At the same time, while Senate Democrats expressed strong support for renewal of the legislation at a hearing, concerns voiced about extension of the current TRIA program by Republicans left it unclear whether there is enough support in Congress for the inclusion of group life in any extension.
All comments were made at a hearing convened by Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, regarding the need to reauthorize the TRIA extension legislation, which expires at the end of the year. “I firmly believe that doing nothing is not an option,” Dodd said. He also implied he will pressure the committee to act promptly, but gave no timetable.
Michael J. Peninger, president and CEO of Assurant Employee Benefits Inc., said at the hearing, “While we certainly agree that there needs to be adequate terrorism insurance coverage for buildings, we also believe that the people who work or reside inside those buildings should be adequately covered for such events as well.”
He was also speaking on behalf of the American Council of Life Insurers.
“Group life insurance is a critical employee benefit,” Peninger said. “For millions of Americans, especially lower-income workers, it is the only life insurance that their families have and can rely on if they were to unexpectedly die.”
Almost $20 billion in death benefits were paid to group life beneficiaries in 2005, which represented about 37% of all death payments, according to Peninger.
He also said the threat of large-scale terrorist attacks presents new challenges to group life insurers.
“Unlike deaths from accidents, diseases, murders and natural disasters, which have been tabulated and analyzed over dozens of years and incorporated into mortality and morbidity tables, there is insufficient historical data in this country relating to deaths from terrorism that can be factored into such tables. Terrorism is, by its nature, unpredictable, so it cannot be accurately forecasted or priced,” Peninger said.
Moreover, following the 9/11 attacks, group life insurers were unable to obtain catastrophic reinsurance for terrorism risks, Peninger said.