Disclose Twice For Terror Compliance: Treasury

Washington

Last week the Treasury Department released additional guidance for compliance with the Terrorism Risk Insurance Act covering such issues as the timing and means of the required disclosures.

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

Insurance companies must comply with the disclosure requirements in order for claims filed with the federal government to be certified.

The guidance issued last week says that Treasury will deem an insurer to be in compliance if it makes the required disclosure twice.

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

The second time is at the time the transaction is completed, if the insurance company makes a clear and conspicuous reference back to the disclosure.

The required disclosure can be made by using channels, methods and forms of communication normally used to communicate similar information.

Treasury notes that this method represents a safe harbor, but is not the exclusive means of compliance.

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

Treasury says that insurers will be deemed in compliance with this requirement if the disclosure appears on the declarations page, elsewhere in the policy itself, or in any rider or endorsement.

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

Wayne Abernathy, assistant Treasury secretary for financial institutions, said that the guidance is designed to assist insurers in determining how they must comply with certain provisions of the legislation that are immediately applicable.

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

A complete copy of todays guidance is available from Treasurys Web 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 serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Special Reports /

Disclose Twice For Terror Compliance: Treasury

Related Stories

Recommended For You