Legislation introduced in the House last week that extends the Terrorism Risk Insurance Act for 10 years specifically includes coverage for group life insurance for the first time.
Life insurance industry officials voiced strong support for the decision to include group life in the bill, the “Terrorism Risk Insurance Revision and Extension Act of 2007,” H.R. 2671.
The Bush administration, however, threw cold water on the legislation.
In testimony on June 21, a Treasury official specifically said it could not support adding group life insurance to the program.
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David Nason, assistant secretary of the Treasury for financial institutions, testified before the Capital Markets Subcommittee of the House Financial Services Committee, saying, “It is important that the program remain temporary and short-term.”
“The following 3 elements are critical if TRIA is to be reauthorized for a second time: The program remains temporary and short-term, private sector retentions are increased, and there is no expansion of the program,” Nason said. “Unfortunately, H.R. 2761 does not meet these critical elements.
“Without these critical elements, we would not be supportive of extending TRIA, as, in our view, the program would be moving in the wrong direction,” Nason said.
“The program should not be expanded to introduce new lines or types of coverage willingly provided by the private market. For example, we do not see any evidence of problems in the market for group life insurance or in coverage for domestic terrorism,” he continued.
“These markets continue to function despite not having access to the TRIA program,” Nason concluded.
Expanding the TRIA program to include additional coverage for well-functioning markets–as H.R. 2761 proposes–”is inconsistent with the appropriate role of the federal government in the terrorism risk insurance market,” Nason said. “Treasury would oppose any such efforts that move the program in the wrong direction.”
In general, he said, H.R. 2761 “does not meet our objectives,” he noted.
“In Treasury’s view, from both a market and economic perspective, it would be better to have no TRIA than a bad TRIA,” he said.
“We are willing to continue to work with Congress toward finding an appropriately balanced solution and to establish the appropriate increases in private sector participation,” Nason said.
However, Nason did not say the president would veto the legislation if the House bill, which calls for a 10-year extension and adds coverage of nuclear, chemical, biological and radiological threats, makes it to his desk. The legislation also contains special provisions relating to areas that have already sustained attacks, specifically New York, not contained in previous versions.
The American Council of Life Insurers, which has led the lobbying effort for inclusion of group life, lauded the decision to include the program.
“The need for this legislation is clear,” said Frank Keating, ACLI president and CEO, calling group life a “critical employee benefit.”
“For millions of Americans, especially lower-income workers, it is the only life insurance that their families can rely on if they were to unexpectedly die,” Keating said.