FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department today announced its decision on group life insurance coverage under the Terrorism Risk Insurance Program.   As passed by Congress, the Terrorism Risk Insurance Act of 2002 did not provide coverage for group life insurance policies.  Instead, the Treasury Department was tasked with evaluating market conditions and making a determination on coverage.  Treasury could include coverage for group life insurance if both insurance and reinsurance were not available, or not likely to be available in the future. 

During its evaluation, the Treasury found no appreciable reduction in the availability of group life insurance coverage for consumers, although Treasury did find a current general lack of catastrophic reinsurance for insurance companies that offer group life coverage.  Given that evaluation, Treasury has determined that it could not extend taxpayer coverage for group life insurance under the Terrorism Risk Insurance Program.

“This decision is the result of a careful consideration of market conditions, with significant input from users and providers of group life insurance,” said Assistant Treasury Secretary for Financial Institutions Wayne A. Abernathy. “We were pleased to find that group life insurance companies have stayed with their customers and continued to make group life insurance available on much the same terms as before the terrorist tragedies of September 11th. However, Treasury will continue to monitor conditions and developments in the market for group life insurance.”

The Terrorism Risk Insurance Act of 2002 was enacted to provide a temporary federal reinsurance backstop for providers of commercial property and casualty insurance against risks from international terrorism while the private sector develops its own resources and programs.  Such resources and programs would include traditional reinsurance, as well as other market mechanisms for risk sharing.  The coverage under the legislation expires on December 31, 2005.