November 2001 - VOLUME 22 - NUMBER 11
An Interview with Robert Hunter
Robert Hunter is the Consumer Federation of Americaís Director of Insurance, former Federal Insurance Administrator, and a former Texas Insurance Commissioner.
The industry put forward a proposal modeled after the UK pool reinsurance plan, which would establish some kind of non-regulated pool of insurers which wouldnít have any antitrust law and wouldnít be regulated ó basically, it would permit the industry to do anything it wanted. |
Multinational Monitor: Why does the U.S. insurance industry need
any government assistance right now? MM: These are risks related to terrorism? Individual insurance companies cant insure them alone. They have
to form reinsurance pools. The reinsurers have retrenched. Swiss Re took
a huge hit from the World Trade Center somewhere between
$3.5 billion and $7 billion, depending on how the court rules. Individual
companies cant stand that sort of risk without some kind of backup.
MM: So the insurers are stepping back and the government needs
to step in? MM: What kind of proposals is the industry putting forward? It was such a case of overreach that whoever wrote it probably has a
dislocated shoulder. They tried to throw their entire wish list, including
tort reform, into the bill. Fortunately, it seems like Congress is paying
no attention. The administration bill is pretty bad, but at least its
not as bad as the industry bill. MM: What are the things that are under consideration? Fortunately, the House committees have marked up a bill which is much
more sensible. It would give significant backup to the industry, but would
require a payback of the monies which would accrue as loans against the
insurers for the first level and above that against the entire industry.
In other words, it would automatically spread the costs through some kind
of loans that would be paid back by the entire industry. Ultimately, the
industry would bill their consumers, but it would be limited to commercial
consumers, so it would be corporate entities that would pay it back instead
of individual taxpayers. The administration plan, by contrast, would have the individual taxpayer
pay back. MM: Would those involve 100 percent payback of the government outlay? MM: Are there other central principles that consumers and taxpayers
should look for in a sound assistance bill? |
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The Bush administration, working with the Banking Committee, has come up with what I would call a hand-out. It goes beyond a bailout, and would give taxpayer dollars to back up the industry very extensively. | ||