The House Financial Services Committee sent to the House floor on August 1 legislation extending government-subsidized terrorism risk insurance, including coverage for group life.
The vote on the bill was 49-20. Several amendments were added to the version passed by the panel’s Capital Markets Subcommittee on July 24. But, the only amendment of significance to life insurance companies was one sponsored by Rep. Peter King, R-N.Y., that extended the program for 15 years, instead of the 10 years in the original bill.
The next step for the legislation is House floor action, possibly in mid-October. The Senate Banking Committee still has not acted on extension legislation. The current program expires Dec. 31.
In comments issued after the House panel voted, Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said, “I commend Reps. Barney Frank and Mike Capuano, both D-Mass., [sponsors of the original legislation] and the House Financial Services Committee for their efforts.”
He added, “I intend to continue to work with members of the Senate Banking Committee including Senator [Richard] Shelby, R-Ala., [ranking minority member] to seek a timely, expeditious and more permanent solution to ensure that TRIA’s proven economic protections are maintained, strengthened and extended.”
The legislation, H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007, also includes a provision limiting use of travel destination information in underwriting life insurance policies.
The life components of the legislation were not discussed during the multi-hour debate on the bill.
The only major change in the legislation as passed by the subcommittee was an extension of the current program by 15 years. The subcommittee extension had been for 10 years. Extension of the legislation for that period is expected to draw heavy fire from the Bush administration, which opposes continuation of the current program, but would likely accept a relatively short extension. The more conservative Senate is also likely to propose a far shorter extension when its members consider the bill.
The American Council of Life Insurers, which has worked unsuccessfully to win inclusion of group life in the program since 2002, praised the committee’s action.
“Adding group life insurance to the TRIA program will help ensure that group life insurers will have the capacity to meet their commitments in the event of a catastrophic terrorist attack,” said ACLI President and CEO Frank Keating.
“Group life insurance is a critical employee benefit,” Keating said. “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.”
“The action by the House Financial Services Committee is an endorsement of the belief that the federal backstop in TRIA should provide adequate coverage for people and not just the buildings where they work or live,” Keating concluded.
In addition to including group life in the TRIA program, H.R. 2761 adds coverage against domestic terrorism as well as against nuclear, chemical, biological and radiological attacks.
The bill would limit the federal share of compensation paid under the program to any one individual under a group life program to $1 million in any year. Under the program, the initial deductibles would be reduced to 3.5%.
The travel underwriting provision would limit use of travel destination as a criterion for underwriting in order to travel to be conducted during the first year in which the policy would be in effect.
The provision also prohibits practices such as charging extra for insureds who intend to travel to certain destinations, except when the federal government has ruled such travel dangerous because of an invasion, health risks or other significant risks.