Disclose Twice For Terror Compliance:Treasury

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Washington

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Last week the Treasury Department released additional guidancefor compliance with the Terrorism Risk Insurance Act covering suchissues as the timing and means of the required disclosures.

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Under the legislation, insurance companies are required toprovide policyholders with “clear and conspicuous” disclosure ofthe premiums charged for terrorism loss covered by the federalprogram and the federal governments share of compensation.

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Insurance companies must comply with the disclosure requirementsin order for claims filed with the federal government to becertified.

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The guidance issued last week says that Treasury will deem aninsurer to be in compliance if it makes the required disclosuretwice.

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The first time is no later than the time the insurer firstformally offers to provide the coverage or renew a policy for acurrent policyholder.

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The second time is at the time the transaction is completed, ifthe insurance company makes a clear and conspicuous reference backto the disclosure.

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The required disclosure can be made by using channels, methodsand forms of communication normally used to communicate similarinformation.

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Treasury notes that this method represents a safe harbor, but isnot the exclusive means of compliance.

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The legislation also requires insurers to make the requireddisclosures on a separate line item in the policy.

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Treasury says that insurers will be deemed in compliance withthis requirement if the disclosure appears on the declarationspage, elsewhere in the policy itself, or in any rider orendorsement.

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In addition, the legislation requires insurers to certify thatthey are in compliance with the disclosure requirement. Treasurysays it will issue regulations establishing claims procedures, andthat it expects that the regulations will require insurers tocertify compliance at the time a claim is submitted.

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Wayne Abernathy, assistant Treasury secretary for financialinstitutions, said that the guidance is designed to assist insurersin determining how they must comply with certain provisions of thelegislation that are immediately applicable.

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At the same time, he said, Treasury is working overtime todevelop formal regulations.

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A complete copy of todays guidance is available from TreasurysWeb site at www.treas.gov/trip.


Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, January 27, 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.


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