The National Association of Mutual Insurance Companies (NAMIC) has announced its federal affairs agenda for 2005, and topping the list of items include further legal reform, improving state-based insurance regulation, an extension of TRIA, and to increase the small property/casualty company investment income election. NAMIC will also be an active participant in legislation addressing natural disasters and strengthened state building codes.
“The top items to be considered in the 109th Congress promote the core values and strengths of NAMIC members,” said David A. Winston, NAMIC’s senior vice president of the federal affairs department.
Of the key items slated for attention, additional legal reform takes top priority. In February, NAMIC and the property/casualty insurance industry won a significant victory when President Bush signed into law the Class Action Fairness Act.
“Enactment of class action reform legislation is an important first step in the need for broader legal changes,” Winston stated. “Congress must speak to the current asbestos liability crisis. There are people who have been physically injured or have died from exposure to asbestos, and the legal system should fairly and adequately compensate these innocent victims.”
Winston also said that today’s system instead targets and punishes those companies which had only peripheral or no involvement with asbestos-containing materials, and it allows some individuals to sue and obtain compensation when they are not injured.
Another very important facet of legal reform is the issue of medical malpractice liability. The cost of medical malpractice insurance has skyrocketed in the past few years. These rate increases have resulted from a number of factors, including: the growing number of medical malpractice claims, rising defense costs, and a reduced supply of available coverage. “Due to the rising costs in their medical liability coverage, more and more doctors are being forced to relocate or quit their practices thereby denying patients access to quality healthcare,” said Winston. “Congress must pass legislation to reform the current medical malpractice liability system.”
On the issue of insurance regulation, Winston stated, “NAMIC’s federal and state affairs departments are working together to modernize the state system of insurance regulation to enable consumers to enjoy the benefits of competition that they enjoy in almost all other sectors of the U.S. economy.”
Another important issue for NAMIC will be the extension of the Terrorism Risk Insurance Act (TRIA). TRIA created a mechanism under which the federal government would provide direct assistance to commercial insurers in the event of a terrorist attack and is scheduled to sunset on Dec. 31, 2005. In a study titled “The Economic Effects of Federal Participation in Terrorism Risk,” the study concluded that, “failing to extend TRIA will result in decreased economic performance in the absence of another major attack” and that the “economic reality is that terrorism losses are simply too unpredictable and potentially catastrophic to be fully covered by the private sector alone.”
Winston said NAMIC supported the concept of a federal backstop for terrorism insurance as a response to an extraordinary national crisis and continues to strongly support legislation to extend TRIA for two years beyond the Dec. 2005 sunset.
The small property/casualty investment income election has long been a top priority for NAMIC.
NAMIC strongly supports the expansion of Section 831(b)(2) of the Internal Revenue Code to more adequately reflect the inflationary impact that has occurred since it was last increased in 1986.
“The modification of this section is very important to the communities that depend on small property/casualty insurance companies to provide them with affordable property insurance,” said Winston. “Many small companies are approaching the current $1.2 million limit and both they and their customers will be adversely impacted if it is not raised. With the increased election level, tied to an annual adjustment in the cost-of-living, these insurance companies can continue to keep premiums low in rural areas where larger insurers either do not write coverage or charge higher premiums than consumers can afford.”
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