CFA Blasts AIA's Terrorism Loan Report
By Steven Brostoff
NU Online News Service, Aug. 8, 11:10 a.m. EST, Washington?The Consumer Federation of America is blasting a report commissioned by the American Insurance Association which says that the terrorism insurance loan program approved by the House of Representatives would actually cost the government more than the quota share program passed by the Senate.
"The American Insurance Association should be immediately inducted into the Flat Earth Society for claiming that a bill that requires taxpayer funds to be paid back is more costly than one that largely does not," said J. Robert Hunter, director of insurance for the Washington-based CFA.
"AIA relied on baseless assumptions that the federal government would be extremely slow in requiring payback in order to produce its absurd conclusion," he said.
The study, commissioned by the Washington-based AIA, based its cost finding on Congressional Budget Office estimates of recoveries over a five-year period.
The study said that due to the timing difference between disbursements and recoveries the budget impact of the House bill, H.R. 3210, is higher over five years than the Senate bill, S. 2600, even though H.R. 3210 requires insurers to repay any federal assistance.
But Mr. Hunter charged that the AIA study misrepresents the CBO recovery estimates. In fact, he said, the CBO report did not call for slow payback.
The AIA stands by its conclusions. CFA's analysis, Mr. Hunter said, found no basis to assume that the House bill would not result in repayment of taxpayer funds much faster than the AIA report contends.
Gary Karr, an AIA representative, blasted the CFA's analysis as "a political press release, not a study."
AIA, Mr. Karr said, commissioned serious research, and the difference is obvious.
CFA's Mr. Hunter said that after five years the House bill would have a net budgetary impact of $380 million, which would be repaid in the next year.
By contrast, he said, using AIA's figures, the Senate bill would have a $2.8 billion taxpayer impact, which would never be recovered.
"AIA has failed in its shameless attempt to prove the impossible, that requiring AIA members to pay back any largesse they receive from taxpayers actually costs more than letting them pocket the taxpayer help," Mr. Hunter said.
AIA's Mr. Karr said that, "We are happy to put our credibility up against CFA's on Capitol Hill. We have no doubt that AIA would win the battle handily."
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