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Union lambastes Larson plan to insure state workers, retirees

by Ed Jacovino
Journal Inquirer
Aug. 5, 2013

State Rep. Timothy Larson, D-East Hartford, is under fire from public employee unions over his proposal for the state to take out life insurance on workers and retirees.

The American Federation of State, County, and Municipal Employees Council 4, the largest state employee union, asked its members Friday to write Larson opposing his plan.

That was after Larson, along with Rep. Jeffrey Berger, D-Waterbury, penned an editorial column for the Journal Inquirer and the Waterbury Republican-American touting their plan as a way for Connecticut to avoid Detroit’s financial woes — particularly when it comes to pension and retiree health care debts.

“As we take a look at the grim economic situation in the city of Detroit that has caused it to file for public bankruptcy, we believe a significant contributor was the underfunding of Detroit’s pension program over the years,” the lawmakers wrote. “Connecticut, in many ways, could face a similar situation as Detroit’s.”

Larson and Berger proposed legislation this spring to let the state take out life insurance on its employees and retirees. Once they die, some of the benefit would go to the state, and the rest to the person’s beneficiary. The program would be run by an outside investment group, and the workers would have to sign on.

Larson equated it to “key man” insurance companies take out on top executives. Opponents give it another name: “dead peasant,” saying it devalues the lives of workers.

Neither Larson nor Berger could be reached for comment. Larson, however, said earlier this year that the plan would shore up the state’s pension fund. It would also benefit workers because they’d have life insurance, and help the state’s insurance companies.

The proposal got no support in the General Assembly. It never received a vote in the legislature’s Insurance and Real Estate Committee. Employee unions and insurance companies opposed it, too.

A group called the American Council of Life Insurers said it would be too costly for the state, adding that the state would have a difficult time proving it had an incentive to keep current and former employees alive. Laws prevent people from taking out life insurance on strangers.

The Insurance Association of Connecticut also opposed the bill, saying carriers have never been pitched such a plan that works.

Brian Anderson, a lobbyist for AFSCME Council 4, said the proposal was a bad idea and a misuse of insurance.

“When you insure someone, you are not hoping to get a financial payoff when they die. You are preventing damage in the incidental death of the person,” Anderson said. “So it goes completely against the concept of insurance.”

Anderson also warned there could be legal issues with the plan — state employees could be voiding their own life insurance policies when they sign onto it. And he said paying the premiums on the insurance policies could cost the state more, taking money from the pension fund.

“They will try to raid the pension fund or the future payments due into the pension fund to pay the dead peasant policies,” Anderson said. “A dead peasant policy isn’t self-funding.”

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