Federal Employees Group Life Insurance Program

Pursuant to a congressional request, GAO discussed the Federal Employees Group Life Insurance (FEGLI) Program, which the Office of Personnel Management (OPM) administers. GAO noted that the federal government: (1) annually pays about $850,000 in risk charges to about 200 insurance companies who participate as FEGLI reinsurers; (2) separately pays the prime insurer to process FEGLI claims; and (3) acts as a self-insurer of FEGLI, since it assumes all risks, establishes and collects premiums, establishes reserves, and manages most of the funds. GAO also noted that, to make FEGLI more equitable, OPM needs to: (1) require the government to pay its share of basic insurance costs for employees retiring after December 1989; (2) eliminate the program's unfunded liability as a factor in setting employee premiums; and (3) reconsider the appropriateness of the economic assumptions it uses to determine premiums.