P000111
January 23, 2002
VIA FACSIMILE: 301-519-5956
Mr. Kenneth Feinberg
Special Master, Sept 11th Federal Victim's compensation Fund
Office of Management Programs
Civil Division
U.S. Department of Justice
Main Building, Room 3140
950 Pennsylvania Avenue
Washington, DC 20530
Dear Mr. Feinberg:
As a professional actuary and a relative of someone widowed by the atrocities of September 11th,
I would like to make a few comments on the interim Regulations which you have proposed for the
September 11th Federal Victim's Compensation Fund. I have not been able to find the complete
actuarial assumptions that were used to create the proposed presumptive settlement amounts so
I am limited to a few issues that were spelled out in the proposed regulation.
The one of most significant assumptions in the calculation of the economic loss is the earnings
level of the victim. The tables are based upon the average earnings for the years 1998-2000.
This will often be representative of the victim's earnings for the middle year of that range, 1999.
Since the economic loss is measured by the lost income from essentially 2002 and later, this
"base" salary starting point is 2 or 3 years out of date, depending upon when you start applying
the salary increase percentages. This would mean that your economic loss amounts would on
average be 10-15% too low. In particular cases, the average earnings for 1998-2000 could be
most unrepresentative of the victim's earnings capacity. In most situations, the best estimates
of a person's current earnings capacity is their actual current earnings! I suggest that the
starting point be based upon the annualized 2001 earnings. This might save you and the victim's
families much time and effort in presenting and resolving disputes.
A second adjustment that I would like to suggest is based upon the timing of the payment. The
law provides for claims to be made up to December 22, 2003 and payments to be made within
120 days. Thus it is possible that some payments could be made almost 2 1/2 years from the date
of the loss. It would be appropriate to add interest (at the rate used to discount future earnings)
from approximately September 11, 2001 to the date of payment. In fact it would be improper to
discount future earnings back to 2001 if the payment is to be made in 2002 or 2003 or even 2004.
If further details of the calculations were made public, I might make other suggestions. If desired,
I'm sure that you could call upon volunteers from the Society of Actuaries to assist in the process
or review the procedures.
I would like to close with a general comment. When Congress passed the law establishing the
September 11th Federal Victims' Compensation Fund they also limited the ability of the victims to
recover damages by alternative means. Victims must relinquish the right to bring lawsuits upon
application to the Fund. These facts argue for a liberal interpretation of the law and giving the
benefit of the doubt to the victims when deciding upon the assumptions for the calculations of
economic and non-economic losses. I don't think Congress meant to penalize the September
11th victims versus others in other situations who have the right to pursue claims in court. At least
I don't think any of them would admit to that.
Cordially,
Individual Comment
Brooklyn, NY