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Terrorism

Life Insurers Lobby for Expanded Terrorism Insurance Coverage

Strategic Insights

— 2 min read

The American Council of Life Insurers (ACLI) is lobbying to extend and expand the federal terrorism insurance backstop program, known as the Terrorism Risk Insurance Act (TRIA), to cover group life insurance. This is despite a recent US Treasury Department report recommending against reauthorizing the program in its current form unless it is scaled down significantly. The ACLI argues that group life insurers are in a precarious position without a reinsurance backstop, as they are required by state law to offer terrorism coverage if they offer the product.

The TRIA program, set to expire at year-end, provides coverage for certified acts of terrorism that cause at least $5 million in damage and are committed by foreign interests. The federal government provides reinsurance for 90% of losses, up to a cap of $100 billion, on events that cause total damage in excess of 15% of the industry's prior-year commercial property and casualty direct earned premium. However, the program excludes life insurance, health insurance, and personal lines property and casualty insurance.

The ACLI, led by President and CEO Frank Keating, argues that lives, not just brick and mortar, should be included in TRIA. With over 160 million Americans having group life insurance coverage, the ACLI believes it is critical that the US government assist the group life insurance industry to ensure that this critical life insurance coverage continues to be available.

Key Takeaways:

  • The American Council of Life Insurers (ACLI) is lobbying to extend and expand the federal terrorism insurance backstop program, TRIA, to cover group life insurance.
  • The ACLI argues that group life insurers are in a precarious position without a reinsurance backstop, as they are required by state law to offer terrorism coverage if they offer the product.
  • The TRIA program provides coverage for certified acts of terrorism that cause at least $5 million in damage and are committed by foreign interests.
  • The program excludes life insurance, health insurance, and personal lines property and casualty insurance.
  • The ACLI believes that lives, not just brick and mortar, should be included in TRIA.
  • Over 160 million Americans have group life insurance coverage.
  • The life insurance industry suffered losses of $1 billion in the September 11 attacks.

Statistics:

  • Over 160 million Americans have group life insurance coverage.
  • The life insurance industry suffered losses of $1 billion in the September 11 attacks.
  • Swiss Re estimated that group life insurance accounted for less than half of the total losses in the September 11 attacks.
  • The TRIA program provides reinsurance for 90% of losses, up to a cap of $100 billion.
  • The industry's prior-year commercial property and casualty direct earned premium is estimated to be between $15 billion and $20 billion for 2004.

Sources:

  • A.M. Best via COMTEX
  • American Council of Life Insurers (ACLI)
  • RAND Institute for Civil Justice
  • Swiss Re
  • National Association of Insurance Commissioners (NAIC)
  • Senate Banking Committee
  • House Financial Services Committee

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