House May Back-Burner Insurance Reform

House May Back-Burner Insurance Reform

By Arthur D. Postal, Washington Bureau Chief

NU Online News Service, Sept. 16, 11:55 a.m. EDT, Washington?Citing a lack of time and the press of bigger priorities, the House Financial Services Committee is slowing its pace on the so-called insurance regulatory reform "road map" legislation that came under fire recently.[@@]

Among the other items mentioned by the panel as needing attention is a plan to push through legislation extending the Terrorism Risk Insurance Act this year.

Staff officials and trade group representatives close to the Financial Services panel denied that strong criticism of the plan last week from state regulators and legislators and consumer groups have had any impact on their game plan for action on the so-called SMART legislation?the State Modernization and Regulatory Transparency Act.

Comments by the leadership of the National Conference of Insurance Legislators that the role of the federal government in insurance regulation should be limited to such national issues as terrorism and catastrophe insurance is not slowing down action on the bill, they said.

Under the current plan, the SMART bill will be introduced late this month, and an informational hearing will be held on it by the Capital Markets Subcommittee before Congress recesses by mid-October to campaign. Instead, the panel will deal with TRIA and legislation imposing greater controls on sales of life insurance at military bases.

Charles Symington, senior vice president of federal government affairs at the Independent Insurance Agents & Brokers of America in Alexandria, Va., said his group continues to work closely on the SMART legislation with Rep. Michael Oxley, R-Ohio, who chairs the House Financial Services Committee, and Rep. Richard Baker, R-La., who chairs the Capital Markets Subcommittee.

Mr. Symington said his organization "will do everything possible to assist them in their desire to move the bill forward."

"What we are seeing is that some are criticizing the legislation because it goes too far, and others because it does not go far enough," said Mr. Symington, adding that "the Big I thinks the chairmen have struck the right balance. We, like most organizations, have expressed our support for the legislation. We feel that this support proves that the legislation is a pragmatic middle-ground proposal."

Joel Wood, chief lobbyist for the Council of Insurance Agents and Brokers in Washington, said the industry is not disappointed that no markup of the SMART bill will be held this year.

"I think Reps. Oxley and Baker are on track to move a bill through the Congress, or at least the House, next year," Mr. Wood said. "No one labored under the impression that a bill could be enacted this year."

He added, "I am extremely comfortable that both Mr. Oxley and Mr. Baker have produced a bill that provides an excellent start at modernizing the industry, and that this is the only politically viable opportunity for meaningful reform in the next few years."

The TRIA extension will be dealt with by the committee through a bill introduced recently by Rep. Baker and Rep. Pete Sessions, R-Texas. Reps. Baker and Oxley are the current sponsors of the SMART bill.

The Baker/Sessions bill, introduced with several other co-sponsors, would:

? Extend TRIA for two years, through 2007.

? Require terrorism insurance coverage to be made available for all years through the 2007 phase-out.

? Keep the insurer deductible steady at 15 percent in year four.

? Phase out the program with a 20 percent deductible in year five.

? Require the Treasury Department to report on long-term solutions for expanding the availability and affordability of terrorism insurance without a federal backstop.

Legislation extending TRIA has been introduced in the Senate by Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn.

An aide to Rep. Sessions said the representative is amenable to adding group life coverage to the TRIA bill. The current legislation authorizes the Treasury Department to add group life to the federal terrorism reinsurance program if the secretary feels there is a need for such coverage, but the agency has rejected the appeal of group life writers to add that product to the areas the bill covers.