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ASSOCIATION OF CASUALTY AND SURETY COMPANIES,
Nero York, N. Y., November 18, 1955. Hon. HERBERT H. LEHMAN, Senate Banking and Currency Committee,
Senate Office Building, Washington, D. C. DEAR SENATOR LEHMAN: I am writing to you on behalf of our 132 stock casualty and surety companies (a list of our membership is attached hereto) concerning a single phase of the problem of damage resulting from disasters. We have noted proposed bills dealing with natural disasters, particularly the one which, as we are informed, you plan to introduce at the convening of the Congress on January 3, 1956, which covers also damages resulting from manmade disasters. For the purposes of this letter the interest of our association is limited to the matter of potential liability for war damages under the State and Federal workmen's compensation and occupational disease laws and employers' liability acts (hereinafter referred to as workmen's compensation laws).
We believe there is general agreement that the furnishing of indemnity for personal injuries or death suffered from war damage or perils of war is a function of the Nation as a whole rather than that of the States or private enterprise; that, therefore, there should be no State laws requiring States or private enterprise to provide such indemnity. However, as we have brought to the attention of the Congress on previous occasions when war-damage legislation was under consideration, the question is not free from doubt as to whether the various State workmen's compensation acts or similar laws impose liability on employers (and their insurance carriers) when the injuries or deaths of employees result from war damage or the perils of war. We believe it is essential that such doubt should be removed and that it should be settled once and for all that there is no liability on employers and workmen's compensation insurers for war damages or perils of war. Clearly, amendment to the various State acts would be a most cumbersome and difficult process—perhaps an impossible task because the States would not be in a position to substitute in lieu thereof a system of indemnification. We believe, therefore, that the Congress in the exercise of its paramount war povers can and should remove this doubt by Federal legislation.
We think the bill you have drafted particularly emphasizes the necessity of congressional action relieving employers and insurers of any potential liability under the workmen's compensation laws. Unlike earlier war-damage bills which dealt only with personal injury or death of workers injured or killed in the course of their employment and with injury or death of civil-defense workers, your bill would provide a means for each and every citizen to purchase a form of insurance protection against war injuries or perils of war. As your bill affords this opportunity to all citizens, the bill, together with our suggested congressional action, would substitute a definite system of indemnification for the doubtful rights which only injured workers might have under the various State compensation laws.
In our opinion, the development of nuclear and other weapons, whose destructive potential extends immeasurably to an undeterminable distance beyond the point of immediate impact, has very substantally strengthened the contention that our citizens must necessarily be treated impartially, whether injured in the course of their employment or otherwise. It is no longer arguable that pinpoint bombing of war plants presents a distinct problem which merits and permits special consideration. We now know that the area of destruction and contamination of such weapons is so far reaching as to encompass population concentrations far removed from a damaged war plant. The new weapons, constantly increasing in their destructive potential, must have the inevitable effect of creating a common denominator and eliminating classifications or categories based on occupations or geographical locations. This, it seems to us, strongly accentuates the desirability and the necessity of treating all citizens alike.
It can hardly be emphasized too strongly that any possible liability for war injuries could have utterly disastrous effects on the assets and reserves of legally qualified self-insured employers, and of insurance carriers, both private and public. It could have an equally grave impact on all employers because m st workmen's compensation laws impose on thein a direct liability which continues whether they insure by carrier or are self-insured. We realize that section 201 (b) (2) of your bill recognizes the workmen's compensation problem by affording reinsurance against any such liability as may exist. This would be helpful but, in our considered judgment, it is not the ultimate needed answer. Reinsurance can lessen to the extent provided the catastrophic losses which employers and insurers may suffer, but of itself it will not prevent exhaustion of the resources of insurers and employers, to the detriment of the Nation as a whole, and in particular to the detriment of those to whom compensation awards had been granted and were, in due course, being paid. We are also fearful that the availability of such reinsurance through congressional action and its subsequent purchase by insurers and self-insurers would inevitably lend support to the theory that injuries and deaths due to war damage and the perils of war are compensable under workmen's compensation laws.
Very likely your bill intends to treat the workmen's compensation problem only by way of reinsurance. However, as certain provisions are presently drafted, it would seemingly permit the Federal Government to write on a direct basis insurance covering possible liability for war injuries or perils of war. This, we believe, would serve no useful purpose. It would not necessarily relieve employers and insurers of their potential liability. Furthermore, the State workmen's compensation laws generally do not permit an employer to insure his liability on a single location in more than one insurance carrier. In other words, they are required by law to carry insurance against all workmen's compensation liability on a given location in a single insurer. If there should be liability for war injuries or perils of war, it might be most difficult to argue that the Congress, through its war powers, had intended to alter the effect of the State workmen's compensation laws by permitting the Federal Government to insure against any potential war damage with the remainder of the compensation exposure remaining in conventional insurers. Accordingly, we be. lieve it essential in any event to restrict the approach set forth in your bill to reinsurance and the attached suggested amendinents are designed to achieve that purpose.
In closing may I emphasize two points. First, there is, we believe, general agreement among self-insurers, State funds and private insurers that reinsurance alone is not a solution to their problem, and that the only adequate remedy is congressional action relieving employers and insurers from any potential liability for war injuries. Their position is unique. The obligation to provide workmen's compensation insurance is a statutory obligation. Unlike other forms of insurance, there is no way a self-insurer or an employer and his insurer can exclude by agreement any part of the workmen's compensation coverage. The courts may hold that the statutory obligation extends to injuries and deaths resulting from war damage and the perils of war. The incalculable damage of nuclear and other means of warfare should not be saddled upon and cannot be borne by employers and insurance carriers. But since the question of liability is not free from doubt, the doubt should be removed and can be removed, as we believe only by Federal legislation. We are not herein stating any position whatsoever with respect to any other insurance matter covered by the bills under consideration by the Senate Banking and Currency Committee. Most respectfully,
RAY MURPHY, General Counsel.
AMENDMENTS TO TITLE II OF SENATOR LEHMAN'S BILL PROVIDING INSURANCE
AGAINST NATURAL AND MANMADE DISASTERS
(1) Amend section 201 (b) to read as follows:
“(b) The Administrator may provide such indemnity [by means of insurance, reinsurance, or otherwise affording]
* (1) by means of insurance, reinsurance, or otherwise affording reasonable protection against loss of or damage to real or personal property :
"(2) by means of reinsurance (including the insurance of self-insured employers) affording reasonable protection against such liability as may exist under any workmen's compensation or occupational disease act enacted hy any State, District, Territory, or possession of the United States or by the Federal Government [or occupational disease act], or by way of employers' liability under any (such] act or the common law for injury, disease or death suffered by an employee and arising out of or in the course of employment;
(3) by means of insurance, reinsurance, or otherwise affording reasonable compensation for personal injury or death suffered by any civil defense worker in the performance of civil defense activities under appropriate orders;
“(4) by means of insurance, reinsurance, or otherwise affording reasonable compensation for personal injury or death and loss of or damage to real or personal property incurred in the course of performing duties of a civil defense nature pursuant to the direction of the Administrator or State, District, Territorial, or local civil defense authorities, or anyone operating under his or their direction; and
“(5) by means of insurance, reinsurance, or otherwise affording reasonable compensation for personal injury, disease or death caused by the perils of
war." (2) Amend section 202 (b) to read as follows:
“(b) In fixing premiums or charges for indemnity made available under this title, the Administrator shall from time to time establish uniform rates (1) for each type of property with respect to which indemnity is made available pursuant to the provisions of this title, (2) for such [protection as is offered against liability] workmen's compensation reinsurance as set forth in paragraph (2) of subsection (b) of section 201 in this title, and (3) classified according to the legal residence of the person involved, for compensation offered pursuant to the provisions of paragraph (5) of subsection (b) of section 201 in this title."
(3) Amend section 206 (a) to read as follows:
"Sec. 206 (a) To carry out the functions authorized by this title, the Administrator shall establish (1) a Property Indemnity Fund, (2) a Workmen's Compensation Reinsurance Reserve Fund, (3) a Civil Defense Indemnity Fund, and (4) a Personal Risk Fund. In the event reinsurance is made available for any of the purposes set forth in paragraphs (1) [,(2)) or (5) of subsection (b) of section 201 in this title, the Administrator shall also establish (1) a Property Indemnity Reinsurance Fund, [(2) a Workmen's Compensation Reinsurance Reserve Fund,] and [(3)] (2) a Personal Risk Reinsurance Fund, as the case may be."
Membership list- Association of Casualty & Surety Cos.
Aetna Casualty & Surety Co., 151 Farmington Ave., Hartford 15, Conn. Aetna Life.
Bldg., Baltimore 3, Md.
Chicago 3, n.
American of Newark,
American Re Insurance. American Surety Company of New York, 100 Broadway, New York 5, American Surety.
Century. Columbia Casualty Co., i Park Ave., New York 16, N. Y
Commercial Union. Columbia Insurance Company of New York, 55 5th Ave., New York 3, N. Y Phoenix of London. Cornmercial Insurance Company of Newark, 10 Park Fl., Newark 1, N.J. Ioyalty. Connecticut Fire Insurance Co., 61 Woodland St., Hartford, Conn..
Phoenix of Hartford. Connecticut Indemnity Co., 175 Whitney Ave., New Haven, Conn. Security of New Haven.. Detroit Fire & Marine Insurance Co., 625 Shelby St., Detroit 26, Mich. Great Aukerican, Eagle Fire Company of New York, 75 Maiden Lane, New York 38, N. Y. Norwich l'nion. Empire State Insurance Co., Watertown, N. Y.
Agricultural. Employers' Fire insurance Co., 110 Milk St., Boston 7, Mass
Birmingham 3, Ala.
Chubb & Son.
Membership list–A88ociation of Casualty & Surety C08.—Continued
Fidelity & Deposit Company of Maryland, Charles and Lexington Sts., Fidelity & Deposit.
Baltimore 3, Md.
Hartford 15, Conn.
delphia 5, Pa.
Do. Globe Indemnity Co., 150'William St., New York 38, N. Y.
Royal-Liverpool. Great American Indemnity Co., 1 Liberty St., New York 5, N. Y.
Great American. Great American Insurance Co., 1 Liberty St., New York 5, N. Y.
Do. Hanvover Fire Insurance Co., 111 John Št., New York 38, N. Y
Hanover. Hartford Accident & Indemnity Co., 690 Asylum Ave., Hartford 15, Conn.. Hartford Fire. Hartford Steam Boiler Inspection & Insurance Co., 56 Prospect St., Hart- None.
ford 2, Conn. Home Indemnity Co., 59 Maiden Lane, New York 38, N. Y.
Home. Home Insurance Co., 59 Maiden Lane, New York 38, N. Y.
London Assurance. London Guarantee & Accident Co., Ltd., 55 5th Ave., New York 3, N. Y.. Phoenix of London. London & Lancashire Indemnity Co., 20 Trinity St., Hartford 2, Conn. London & Lancashire. Manhattan Fire & Marine Insurance Co., 99 John St., New York 38, N. Y.. London Assurance. Manufacturers Casualty Insurance Co., Pennsylvania Blvd. at 16th St., Transamerica.
Philadelphia 3, Pa.
York 7, N. Y.
Newark 1, N. J.
Box 1021), Springfield 1, Mass.
Milwaukee 2, Wis.
Los Angeles 14, Calif.
Ohio St., Pittsburgh 12, Pa.
ford 15, Conn.
Fireman's Fund Insurance. National Union Fire Insurance Co., 139 University Pl., Pittsburgh 13, Pa National Union. National Union Indemnity Co., 139 University Pl., Pittsburgh 13, Pa.
Do. New Amsterdam Casualty Co., 227 St. Paul St., Baltimore 3, Md.
New Amsterdam. Newark Insurance Co., 150 William St., New York 38, N. Y.
Springfield 1, Mass.
New York 17, N. Y.
Crum & Forster.
York 38, N. Y.
Boston. Pacific Insurance Co., Ltd., 1677 Ala Moana Blvd, Honolulu 15, Hawaii.. None. Pacific Coast Fire Insurance Co., 111 John St., New York 38, N. Y
Century. Pacific National Fire Insurance Co., 454 Montgomery St., San Francisco Transamerica.
20, Calif. Pan American Fire & Casualty Co., 2905 Louisiana St., Houston 1, Tex.. Pan American. Pearl Assurance Co., Ltd., 19 Rector St., New York 6, N. Y,
Pearl-American. Phoenix Assurance Co., Ltd., 55 5th Ave., New York 3, N. Y.
Phoenix of London. Phoenix Indemnity Co., 55 5th Ave., New York 3, N. Y
Do. Phoenix Insurance Co., 61 Woodland St., Hartford, Conn.
Phoenix of Hartford. Providence Washington Indemnity Co., 20 Washington Pl., Providence, Providence Washington.
Membership list-Association of Casualty & Surety C08.—Continued
Provident Fire Insurance Co., 111 John St., New York 38, N. Y..
Royal-Liverpool. St. Paul-Mercury Indemnity Co., 111 West 5th St., St. Paul 2, Minn. St. Paul F. & M. Group. Seaboard Surety Co., 100 William St., New York 38, N. Y.
Prudential-Skandia-Hudson, Southeastern Fire Insurance Co., 207 Liberty Life Bldg. (Post Office Box None.
2665), Charlotte 1, N. C.
Box 1021), Springfield 1, Mass.
Senator LEHMAN. That concludes the hearing for this afternoon. We will recess until tomorrow morning at 10 o'clock at Goshen, N. Y.
(Whereupon, at 4:15 p. m., the hearing was recessed to reconvene at 10 a. m., Friday, November 4, 1955, in Goshen, N. Y.)