Hearing of the House Financial Services Committee - The Holocaust Insurance Accountability Act of 2007
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REP. ILEANA ROS-LEHTINEN (R-FL): Thank you so much, Mr. Chairman. First of all, thank you for your kindness in allowing me to participate in the committee's hearing today.
Certainly, the Holocaust stands as one of the darkest chapters in human history. Over half a century has passed since the world witnessed the atrocities committed by Hitler's regime, yet many Holocaust-related issues remain unresolved. One of these is the continued failure of insurance companies to pay Holocaust survivors or families of Holocaust victims for policies they purchased before or during World War II.
These insurance companies have for over 60 years refused to provide compensation under the insurance policies to Holocaust survivors or families of Holocaust victims. These companies argued that Holocaust survivors and their families do not have the documentation, such as a death certificate and insurance records. Concentration camps in which many of these Holocaust victims perished did not issue death certificates, and all assets and documents were confiscated from the Jews during that time by the Nazis.
For years I have worked on the issues related to Holocaust-era compensation, and to address the issue of insurance policies specifically my colleague, Robert Wexler, and I introduced H.R. 1746 in March of last year. Among other provisions, the bill requires insurance companies that do business in the United States to disclose the names of Holocaust-era insurance policyholders. Furthermore, the measure will allow Holocaust survivors or their heirs to sue the insurance companies in U.S. courts.
People often ask Mr. Wexler and I why we introduced this bill and why we feel so strongly about this issue. Well, let me answer by reading one of the many letters that I receive from Holocaust survivors, and this one is from Elizabeth Lefkowicz (ph), of Florida.
"Dr. Congresswoman Ros-Lehtinen:
"My name is Elizabeth Unger Lefkowicz (ph), and I am a U.S. citizen and a Florida resident. I was sent to the Auschwitz concentration camp in 1944, when I was 20 years ago. During the Holocaust I lost both of my parents, my grandparents, my two sisters and a 2-year-old nephew. After the war, I found a document that was hidden by my father, Ignatz Unger (ph). This document contained his life insurance policy for 25,000 gold dollars. In 1945, when I presented the insurance claim to the insurance company, they requested a death certificate as a prerequisite to pay the claim. Without the death certificate, they said the policy was invalid.
"A few years ago, the International Commission on Holocaust-Era Insurance Claims revived our hope for justice with the insurance companies and I filed a claim, Claim No. 77452, reference Ignatz Unger (ph) life insurance. Unfortunately, this effort produced no results. I am very glad that the Holocaust Claims Insurance Accountability Act, H.R. 1746 legislation, has been introduced in Congress, and if passed the insurance companies doing business in the U.S. that profited from the Holocaust will be held accountable for their actions."
So, Mr. Chairman, it is because of Ms. Lefkowicz (ph) and countless others who share her history, her tragedy, her circumstances, that Mr. Wexler and I introduced our bill.
Unfortunately, today obviously we cannot bring back those who perished in the Holocaust, nor can we erase the pain and suffering from the memories of those who suffered these atrocities. However, we can work to bring about long-awaited justice to Holocaust survivors and their families. Because the number of Holocaust survivors who are alive decreases drastically every year, it is critical that Congress move expeditiously to pass H.R. 1746 and offer a level of closure to those who suffered immensely under Hitler's regime and then were shamelessly mistreated for decades by the insurance companies that sought unjust enrichment at the expense of Holocaust victims.
Thank you again, Mr. Chairman, for the opportunity to participate in the hearing.
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REP. ROS-LEHTINEN: Thank you, Mr. Ambassador. I wanted to ask you a few questions about the ICHEIC process and proper compensation for the victims and their descendants. ICHEIC has been criticized for failing to review hundreds of thousands of relevant files. For example, ICHEIC's Final Report of External Research indicates that when looking at the Central Property Office files of Slovakia, more than -- quote, "more than 700 boxes of records dealing with the Aryanization of Jewish firms in Slovakia were found" -- over 700 boxes of records. And these files contain information about the assets of the firms or their Jewish owners.
However, the researchers searched only what they call, quote, "a small amount," end quote, of those 700 boxes, which provided information about 18 policies -- 18 policies. Would it be accurate to say to either of our witnesses, actually, that there were many files that ICHEIC did not examine containing information about Holocaust-era insurance policies? And shouldn't the beneficiaries of these policies not have a right to be compensated for their insurance policies?
MR. KENNEDY: Thank you very much, Congresswoman.
I think that the point I'd like to focus on in replying is that if insurance policy documents come to light, and there will be a few, the members of the -- the ICHEIC participating companies have all agreed to continue to use the relaxed standards of proof that characterized the ICHEIC process to process those claims. So while ICHEIC has closed its doors, the committees -- I'm sorry, the companies have said that they will continue to use those standards as they process the claims. And that's what I think is important from our point of view, that the people who have claims can still file them.
REP. ROS-LEHTINEN: Thank you. That in no way answers the question, but on that issue that there will be a few, insurance companies that have participated in the ICHEIC process have agreed, as you say, to continue the -- to consider claims and use the ICHEIC's lower standard of proof. However, there are no oversight mechanisms. There's no way to appeal the decisions of the insurance company. And it seems as though the insurance companies will again be in full control of deciding who will or will not be compensated, as well as determining the amount of that compensation.
And considering that ICHEIC was established because the insurance companies failed -- failed to act on their own, how would this voluntary process that you talked about offered by the insurance company, which lacks an appeals mechanism, which lacks oversight, will be at all effective in fairly resolving what you consider a few of these unpaid claims?
MR. KENNEDY: Well, in my conversations with people from the insurance associations, they have welcomed the idea of some oversight. I imagine that people here in the United States who have an issue if their claim is not resolved would still be able to go to the state insurance commissioners and to other entities that have real expertise in these matters.
REP. ROS-LEHTINEN: Thank you.
And just to -- Madam Chair, one -- one more question. Thank you for your generosity.
Your responses -- well, it's often been argued that the court's proof requirements would be a lot more stringent than those used by ICHEIC, and that it's unlikely that many claims will turn out to be successful. And if that's the case, then I ask myself, "Why are the insurance companies so worried about litigation if there is not enough proof and the case will be quickly dismissed because of lack of evidence?" So why not let the survivors have their day in court, have a judge or a jury decide, rather than have an insurance company -- again, with no oversight, although they say that they would welcome it, that's a real stretch of the imagination. They have not done so yet. But what would be wrong with having the survivors have their day in court rather than have this insurance company or that insurance company, whose interests lie in not paying, in having to pay as few policies as possible? That's how they make their money.
MR. KENNEDY: Thank you, Congresswoman. The bilateral executive agreement that we have, for example, with Germany, in no way infringes on the ability of someone to go into court and seek redress right now.
REP. ROS-LEHTINEN: Well, yes, the U.S. federal government cannot forbid U.S. citizens from pursuing legal action against the insurance companies. However, it did commit to filing statements of interest encouraging dismissals of any legal action against European companies in the U.S., and these statements have prevented lawsuits against European insurance companies brought by Holocaust survivors.
And after seeing that only a fraction of the policies have actually been paid out by the insurance companies and that the ICHEIC process ended without adequately addressing the issue of Holocaust-era insurance policies, shouldn't the U.S. government's statement of policy change in order to allow those who have been denied a fair opportunity to recover their insurance policy to be able to bring their claims to court? I think that's -- that would be the fair thing to do.
Thank you so much for your time and generosity, Madam Chair.
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REP. ROS-LEHTINEN: Thank you. Thank you, Mr. Chairman, again, for letting me participate.
One multilevel question for Mr. Dubbin, if he could answer within the allotted time.
Some opponents of H.R. 1746 have stated that it is premised on inaccurate estimates of the unpaid value of Holocaust victims' policies; secondly, that it violates deals to provide legal peace for German and other insurance companies that participated in ICHEIC, and thirdly, that H.R. 1746 isn't likely to produce enough successful claims by survivors to justify the political cost of the ill-will that it would engender among foreign governments whose insurance companies profited from the Holocaust. If you could refute those, or not refute them.
MR. DUBBIN: On the value, Mr. Zabludoff, who participated in the ICHEIC group analysis which was consensus -- there was a consensus that at the time, in '38, the value of -- there was a consensus about what the value of Jewish policies was.
He calculated the amount that had been paid after the war in various programs and then taking the remainder, which was slightly under $600 million, he multiplied that by the yield of the 30-year U.S. bond from 1938 till the present. And with that he got, in 2004, $15 billion. Now it's $17 billion.
A 30-year bond yield is extremely conservative because most insurance companies invested in stocks, real estate and other much more high-yielding investments. So there is no dispute about the underlying numbers, and ICHEIC never undertook to go to the next step, which is to take the value in '38 and bring it up to current levels.
So the $17 billion figure is very solid, but if you -- as Mr. Wexler said, if you accept the $3 billion level, what ICHEIC paid out would still only be 15 percent. But under Mr. Zabludoff's conservative numbers, which are not challenged in any -- I have not seen a theoretical objection or a factual objection to what he said.
The second question was legal peace. The U.S. government does not have the power to waive a citizen's right to go to court.
Germany demanded that; they were told you can't have that. What the United States agreed to do was very limited, and it said that we will file statements of interest in court which would say that it's in the foreign policy interest of the United States government for the case to be dismissed on some -- if there is a valid legal ground for doing that.
And the Germans accepted that, understanding that they were not getting everything they asked for. So today to say that we agreed that survivors would not have the right to go to court is disingenuous. In fact, it's giving the Germans more today than they bargained for then. And the reason it's necessary is because the courts have interpreted that commitment more broadly than the language the Germans were actually able to negotiate for, because the courts have said it doesn't matter what the language in the agreement says, which is limited; we think there is in addition to the language, in addition to the contractual language, there is a federal policy of the executive branch that Holocaust victims insurance policies should be resolved in a non-adversarial setting.
So the question for you is -- now, because the legal landscape is clear, do you agree with that policy? Does Congress agree that someone today who has a piece of paper from Generali or Allianz, which was denied through ICHEIC, do you agree that person should not have the right to go to court and have a judge force the company to disgorge all of the relevant information? Because I can tell you from my ICHEIC experiences, and I can give you many examples, those companies were able to deny claims without providing the information to the claimant.
So you have a star chamber system where the claims were denied. The rules might have said one thing but the practical application was thousands of people were denied claims without getting any documentation, including --
REP. ROS-LEHTINEN: If I could interrupt you because our time is limited, sir.
MR. DUBBIN: So the last question is the cost-benefit analysis. I don't believe that human rights are subject to a cost-benefit analysis. The right to go to court, to pursue your documented insurance claim or to pursue a company you believe sold you a policy, if you can convince a lawyer to bring that case, in the United States of America is a fundamental human right; it's enshrined in the Constitution and the constitutions of every state. And to say that we're going to let for some people not to be able to avail themselves of that right because other groups -- and by the way, I don't care what groups sat in a room. Izzy Arbeiter, David Mermelstein, Jack Rubin, Alex Moskovic and hundreds of survivors who I personally have come into contact with did not authorize any organization, did not authorize the State Department, did not authorize the secretary of State, did not authorize the president to --
REP. ROS-LEHTINEN: To speak for them.
MR. DUBBIN: -- negotiate for their insurance rights.
REP. ROS-LEHTINEN: Thank you.
Thank you, Mr. Chairman. And although I'm not a member of this committee, and you've been very kind to me, I will --
MR. EIZENSTAT: May I respond to this?
REP. FRANK: Yes.
REP. ROS-LEHTINEN: I will ask --
MR. EIZENSTAT: Congresswoman, may I respond?
REP. ROS-LEHTINEN: Excuse me.
Mr. Chairman, I will ask a member of the committee if they could introduce for the record some of the letters that I have gotten from constituents who --
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