WEBSITE-GROUP LIFE ON THE MOVE-07-12-05

Harper also pointed out a resolution recently passed by the National Association of Insurance Commissioners urging inclusion of group life in an extended TRIA (see NU, June 20). Harper said that while many insurance commissioners had voiced support for inclusion of group life in a government-sponsored terrorism insurance program, the resolution marked the first time all commissioners had dealt with the issue, and they passed the resolution unanimously. Harper also noted that because of what it felt was the urgency of the issue, the NAIC short-circuited its usual deliberative process on such resolutions and dealt with it promptly.

The report on group life being circulated to members of Congress and other decision-makers was prepared by Milliman, Inc. of Portland, Maine, on behalf of the Group Life Coalition. It draws heavily on a recent survey of group life underwriters that was designed by Milliman and conducted by LIMRA International, Hartford, Conn.

The report says that group life insurance policies cover 160 million Americans, and for many, it is their only insurance. At a briefing, Harper, Anderson and other group life industry officials pointed out that many of those who are covered are first-responders to terrorism events, such as police, firefighters, transit employees and those who work in high profile buildings.

The report says that the group life catastrophic reinsurance market has “not come back post-9/11.” It adds that, “Conversely, the reinsurance market has begun to return for TRIA-supported workers’ compensation.

“Thus, there is evidence that TRIA did not retard the market’s development but rather enhanced it,” the report concludes.

The report also noted the similarities between workers’ compensation insurance and group life, chief among them that both lines are characterized by concentrations of risk. “Workers’ compensation is mandated by state law for virtually all employees and group life insurance is offered to almost all employees,” the report says. Both lines of insurance are very competitive. State departments of insurance do not allow exclusions for terrorism. Both lines are an integral part of the product package sold by private companies.”

As Anderson pointed out, “Group life is caught in a vice grip of high concentration of risk and no reinsurance.” Anderson explained that if group life is not included, given the growing concern about terrorism, it is likely to lead to more expensive coverage, the decision by many individuals to not take it and companies to not offer it, and, tragically if there is attack, insurance insolvencies that are likely to result in minimum payments to victims and their families. Anderson also said that under TRIA there is a threshold for government involvement and a payback scheme even if the government pays some losses.

If such a program doesn’t exist for group life and there is a tragic event, then there is also the possibility, as in 9/11, a pressured government will create a compensation system for victims–a program with no government involvement.

Anderson also pointed out that Bush administration economists are well aware that a terrorist attack is the primary threat to a healthy economy, the administration’s priority.

“We’re prepared to work with Congress to find the right balance,” Anderson said. “In the past, we haven’t told our story aggressively. But this time, we’re determined to be sure in this TRIA process that Congress acts to protect the financial security of working Americans–160 million of them–who have group life insurance as their sole source of protection.”

‘Senators are aware of the issue. The volume is up.’