Eliot Who’ TRIA Whoa’ Republicans Outline Insurance Priorities

Industry Gets Victory on Class Action But Reason to Worry Over TRIA

Eliot who?
The name Eliot Spitzer was never spoken during a recent gathering of insurance brokers and federal lawmakers in Washington, D.C. At the annual legislative summit organized by The Council of Insurance Agents and Brokers, U.S. senators and congressmen talked about terrorism risk insurance, tort reform, federal regulation, social security and several other issues but not one mentioned brokerage compensation, Marsh or New York Attorney General Spitzer and his investigations.

Why no mention of the man and the issues that have sparked debate throughout the industry? Attendees shared several theories. Maybe because all the speakers were Republicans and therefore reluctant to give Democrat Spitzer any publicity. Maybe because there is no mechanism in Washington for dealing with the issues raised by Spitzer. Maybe because the issue is perceived as a New York and not a national problem.

There actually was one reference to the compensation controversy. It was a joke introduction by a CIAB member who disclosed he was not receiving any compensation for his introduction of his state’s elected representative.

Joking aside, the federal Republican lawmakers and insurance brokers had other matters to discuss, among them renewal of the Terrorism Risk Insurance Act–and the news was no laughing matter for the insurance industry that has placed this near the top of its priority list.

Trouble for TRIA
TRIA renewal will not even be considered until a Treasury department report on the subject is available sometime in June and, even after that, renewal could face an uphill battle, according to the lawmakers. While Rep. Deborah Price (R-Ohio), chair of the Republican Conference, and others confirmed that TRIA will not be revisited on Capitol Hill until after the June report, Rep. Richard Baker (R-La.) warned that Republican leaders in Washington have their doubts about the wisdom of TRIA.

Baker said that he and others in Washington question whether the government should “advance capital to an industry that may not need it.” He said they are reluctant to give taxpayer dollars to insurance companies that later show billions in profits unless there is some way for government to recoup its funds later on.

Baker added that lawmakers want to “protect government shareholders’ monies from going to insurance company shareholders” without at least having some way of getting back the funds once insurers are again on solid financial footing.

On a brighter note for the industry, Rep. Pete Sessions (R-Texas), who serves on the Rules Committee, said he was very aware of the industry’s concerns over TRIA and of the timetable for renewal and that he, for one, remains “fully committed” to getting a TRIA bill this year.

Class action reform passes
The good news for the industry came on class action reform. Shortly after the CIAB attendees were told it was a Republican priority and would pass, the Senate gave its approval, 72-26. The vote almost assures enactment since the Senate measure, The Class Action Fairness Act, is similar to bills previously passed by the House on several occasions.

President Bush has also backed similar reforms. House Majority Leader Tom DeLay (R-Texas) said he plans to send the bill to the House floor right away.

The bill’s key provision redirects many class action lawsuits from state courts into the federal court system. It is intended to curtail “venue shopping” whereby lawyers bring national class action suits in more favorable state courts. The bill establishes federal authority over interstate cases in which plaintiffs’ claims are over $5 million in the aggregate, while maintaining state authority over strictly intrastate cases.

The bill passed with help from every Republican except two who did not vote along with 18 Democrats and the Senate’s independent, James M. Jeffords of Vermont.

“Today’s passage of the Class Action Fairness Act is a victory for the American people,” said Senate Majority Leader Bill Frist (R-Tenn.). “The bill protects plaintiffs’ rights while reining in rampant abuse of America’s courts.”

Democrats who opposed the class action bill decried the vote. “It slams the courthouse doors on a wide range of injured plaintiffs,” said Senate Minority Leader Harry Reid of Nevada. “It turns federalism upside down by preventing state courts from hearing state law claims. And it limits corporate accountability at a time of rampant corporate scandals.”

At the CIAB conference, Baker said the class action bill would be a “landmark” in its value to the industry and to bringing the “litigation-mad” system under some control.

The Republicans said they hope that the success on class action reform will translate into momentum for Congress to address asbestos liability and medical malpractice.

Topics Lawsuits Legislation Agencies Washington Politics