Kerry Victory Would Put Industry On The Defensive

Insurers, agents worry about fate of tortreform, TRIA and taxes if Bush is voted out

However, Joel Wood, senior vice president for government affairsat the Council of Insurance Agents and Brokers in Washington,offered a different perspective, holding out hope for tort reformeven under a Kerry Administration.

He said that probably half of the issues the Council follows inCongress involve medical malpractice, class action reform,asbestos, and other litigation issues. "Considering how tight theKerry-Edwards ticket is with trial lawyers, my instinct is thatwe'd have to throw in the towel on all of these initiatives."

However, "on the other hand," he noted, "for all of PresidentBush's success as Texas governor on tort reform, nothing ofsignificance on legal reform has been signed into federal law onhis watch. The last major piece of civil justice overhaul was thesecurities litigation reform bill the result of an override ofPresident Clinton's veto."

"Only Nixon could go to China," Mr. Wood said, "and only a Democratlike [President] Clinton could sign a sweeping welfare reform billinto law. Doctors are getting madder and louder about medicalmalpractice premiums, and the asbestos litigation crisis isreaching the point of absurdity. Maybe these are the conditionsunder which a Kerry Administration would be uniquely poised tobroker an historic compromise."

Mr. Wood also cited TRIA extension as a key issue. Congress hasindicated a desire to take up a renewal of the TRIA reinsuranceprogram when members return on Sept. 7. Hearings and perhaps amarkup could be scheduled in the House Financial ServicesCommittee, and there is bipartisan support for such a bill in theSenate legislation was introduced as the Senate departed for itsAugust recess in late July.

However, Mr. Wood wants to be realistic. With only 20 legislativedays remaining before Congress adjourns to campaign, some industrylobbyists are telling him a more likely scenario is for somethingon TRIA to be added to an omnibus bill taken up in a session afterthe election.

However, if that occurs, it might push the extension effort tomid-2005, with some people telling him Congress will only take upthe bill after the U.S. Treasury Department completes its report onthe effectiveness of TRIA. The issue will be dealt with differentlygiven who is elected, and the ability of a newly-elected PresidentKerry to come up to speed quickly is unclear, Mr. Wood said.

The problem for the insurance industry is that if there is noaction this year, when insurers start renewing commercial policiesin January, the longer Congress takes to deal with the issue, thegreater the risk will be that carriers will write policies thatexpire after TRIA sunsets at the end of 2005. That leaves them withthe dilemma, Mr. Wood explained, of going bare on terrorismreinsurance or adding clauses that deny coverage for terrorism ifTRIA is not renewed. State regulators will also play into thatmix.

A securities analyst, who asked not to be quoted by name and hasconsulted with Mr. Wood and others on this issue, suggests thatgiven the softening insurance market, carriers will "roll the dice"and provide terrorism coverage, "even if [federal] coverage doesn'tlook as if it will materialize."

Gary Karr, a staff official at the American Insurance Associationin Washington, said his group doesn't get into endorsements orfavoring one candidate over the other in the presidential race."Our issues are going to be the same on Jan. 20 regardless of whowins the election," he said. "Our agenda is going to be the same,"he added, citing tort reform, TRIA and asbestos litigation.

"We're going to have an agenda that requires bipartisanship," hesaid, noting that no one is predicting a clear majority to come outof the elections.

The AIA, he said, while holding fundraisers and making donations tosome members of Congress, generally stays out of the presidentialrace. "Our approach may be different depending on who lives at 1600Pennsylvania Ave., but we're willing to work with anybody," hesaid.

Reproduced from National Underwriter Edition, August 12, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.