Producer Groups Explain Terrorism Act

Since the signing of the Terrorism Risk Insurance Act of 2002,independent agent associations have been busy putting outinformation to explain what it means to producers and theirclients.

Among the first was the Alexandria, Va.-based IndependentInsurance Agents & Brokers of America(www.independentagent.com). The association has madeavailable an in-depth summary of the law and a collection ofinformation resources through its Big “I” Virtual University.

The National Association of Professional Insurance Agents, alsolocated in Alexandria (www.pianet.com), has been busy aswell, creating a Web site link to articles and statements about thelaw. The association also included a bulletin in itsNovember-December online publication, Connections, aboutthe issue.

State agent associations have similarly been on the case. TheIndependent Insurance Agents Association of New York, based inSyracuse (www.iiaany.org), put together a “fact-filledelectronic kit” for members to help them understand how the new lawaffects their agencies and clients. The kit also contains links toIIABAs resources on the subject.

The Professional Insurance Agents Association of Connecticut,New Hampshire, New Jersey and New York, based in Glenmont, N.Y.(www.piaonline.org),placed summaries of the law and related bulletins on its Web site,along with links to the U.S. Treasury Department, which willoversee the federal reinsurance program's implementation.

Also on the local PIA site is an article, “Federal TerrorismBackstop Is LawNow What?” authored by Ellen D. Kiehl, assistantexecutive director of government and industry affairs.

Although the law places “no special responsibilities or dutieson agents,” it is important that agents be able to explain to theirclients what is happening and what to expect, said IIAANY ChairmanJohn R. Costello, in a statement.

“There are still a lot of unanswered questions,” noted Ms.Kiehl. “We are posting something new every day to our members.” Sheadded that discussions of questions about implementation wouldprobably go on well into the new year.

Agent associations outside of the New York area say they arerelying on the national associations to explain what is happeningwith the terrorism insurance law.

Bill Roof, director of communications for the IndependentInsurance Agents of Texas in Austin, said the associations Web siteis directing members to IIABAs resources, as well as relatedstatements from the National Association of Insurance Commissionersand other industry sites with information.

Alan Smith, president of the PIA Group of California, Nevada,Arizona and New Mexico, based in Sacramento, Calif., said there hasnot been much of a call for information from members, who are moreconcerned with the hard market at the moment. However, he added,the national associations are “doing a good job at getting theinformation” out to members.

Laura Richter, vice president of communications for theProfessional Independent Insurance Agents of Illinois, based inSpringfield, said the association has not received many inquiries,but it is keeping agents advised on what is happening and alertingmembers about the availability of information on industry Websites, including IIABA's. The association also plans to print asummary of the law in its publication, InsuranceInsight.

The Insurance Brokers and Agents of the West, based in Oakland,Calif., took a more active route. The association began holdingseminars on terrorism coverage in December through its insuranceeducation division–the Insurance Skills Center–said NicolasSeperas, head of continuing education for the group. Anothersession is scheduled for late January in Palm Springs, Calif.

The major thing agents need to do, said Patricia A. Borowski,senior vice president of the National PIA, is to understand how thecarriers they represent are interpreting the law and applying ittheir policyholders. “There are a lot of questions still up in theair,” she noted.

One situation that has arisen in New York, noted Ms. Kiehl, isthat a few policyholders have received notices from their carrier(she would not name the company or companies) requesting additionalpremium for the terrorism coverage the client already has. She saidthe states insurance department is reviewing this practice.

Ms. Borowski said that agents should pass on information aboutcarrier practices to their associations to better inform thenational associations and the Treasury Department about what ishappening in the marketplace and enable them to respond.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, January 6, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.