Kerry Victory Would Put Industry On The Defensive

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

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

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

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

"Only Nixon could go to China," Mr. Wood said, "and only a Democrat like [President] Clinton could sign a sweeping welfare reform bill into law. Doctors are getting madder and louder about medical malpractice premiums, and the asbestos litigation crisis is reaching the point of absurdity. Maybe these are the conditions under which a Kerry Administration would be uniquely poised to broker an historic compromise."

Mr. Wood also cited TRIA extension as a key issue. Congress has indicated a desire to take up a renewal of the TRIA reinsurance program when members return on Sept. 7. Hearings and perhaps a markup could be scheduled in the House Financial Services Committee, and there is bipartisan support for such a bill in the Senate legislation was introduced as the Senate departed for its August recess in late July.

However, Mr. Wood wants to be realistic. With only 20 legislative days remaining before Congress adjourns to campaign, some industry lobbyists are telling him a more likely scenario is for something on TRIA to be added to an omnibus bill taken up in a session after the election.

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

The problem for the insurance industry is that if there is no action this year, when insurers start renewing commercial policies in January, the longer Congress takes to deal with the issue, the greater the risk will be that carriers will write policies that expire after TRIA sunsets at the end of 2005. That leaves them with the dilemma, Mr. Wood explained, of going bare on terrorism reinsurance or adding clauses that deny coverage for terrorism if TRIA is not renewed. State regulators will also play into that mix.

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

Gary Karr, a staff official at the American Insurance Association in Washington, said his group doesn't get into endorsements or favoring one candidate over the other in the presidential race. "Our issues are going to be the same on Jan. 20 regardless of who wins 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," he said, noting that no one is predicting a clear majority to come out of the elections.

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

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