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Annuities providers continue their campaign for new tax breaks and angle to play a role in any privatization of Social Security. Post-September 11, they're doing it sotto voce.

By Eric Laursen
December 2001
Institutional Investor Magazine

Philmore Anderson has never worked as a teacher, but in the wake of September's terrorist attacks, the senior lobbyist for the American Council of Life Insurers has spent much of his time giving tutorials. His students: members of Congress and White House officials who need a quick course in Life Insurance 101.

On September 12, for example, Anderson took a call from House Ways and Means Committee chairman Bill Thomas, a Republican from California, who he had run into at a private social function two nights before. Thomas wanted to know how the industry would handle claims: Would life insurers make it easier for victims' families to file death benefits claims? Would they invoke policy exclusions that release them from paying benefits in the event of war or terrorist attacks?

"We're keeping our promises," Anderson assured him. "There will be no exclusions, and we're aggressively seeking at the state level to assure that claims will go out as fast as possible."

Anderson repeated that refrain again and again - to House Financial Services Committee chairman Michael Oxley, a Republican from Ohio, and to White House officials, among others - in a weeklong whirl of phone calls and meetings. The assurances were echoed by the 12 CEOs who met with the president on September 21 (among them: Hartford Financial Service Group's Ramani Ayer, American International Group's Maurice (Hank) Greenberg, Chubb Corp.'s Dean O'Hare and Robert O'Connell of Massmutual Financial Group). Insurers would waive war and terrorism restrictions. And in New York, life insurers worked with state regulators to create a simple affidavit that family members of people killed at the World Trade Center could submit instead of death certificates, which were difficult to obtain in the first few weeks after the attacks.

Yet despite the catastrophe, life insurers should emerge in relatively strong shape. They will be liable for some $4 billion in payouts to victims' survivors - a significant sum, but peanuts compared with the $40 billion to $45 billion in losses faced by insurers of property loss and business interruption. Further, the hit to life insurers' capital base should be marginal, in the neighborhood of 0.6 percent to 1.1 percent. Property/casualty insurers, by contrast, face a hit to their capital base at least ten times that magnitude, says Colin Devine, a life insurance analyst with Salomon Smith Barney.