TRIA Clarification

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Draws Agents Praise

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Washington

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The Council of Insurance Agents and Brokers is praising thelatest Treasury Department interim regulations on the terrorisminsurance program for clarifying the characterization of“premiums.”

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“Specifically, the Treasury has responded positively to theCouncils request for clarification that premiums collected forterrorism coverage under the federal backstop program are indeedpremiums and not surcharges (subject to broker intermediation),”said Ken A. Crerar, president of the Washington-based Council.

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He said that within weeks of the enactment of the terrorisminsurance legislation, the Council received anecdotal reports thatsome insurers were characterizing the premiums inappropriately andasked Treasury for guidance on the issue.

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Mr. Crerar said that the problem appears to have largelydisappeared in the past two months, and the new Treasury guidancenow assures that brokers will not be disadvantaged by theprogram.

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According to a legal analysis produced by the Council, theinterim regulations addressed three other issues of interest tobrokers.

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First, the regulations clarify that coverage can include limitsthat are permissible under state law. Thus, exclusions for nuclear,biological or chemical events that are permitted by state law arealso permitted for the terrorism component.

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Second, the regulations clarify that required disclosures mustbe made at the time of offer, purchase and renewal of a policy.

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Third, the regulations note that Treasury is still consideringwhether the mandatory offer requirements should be extended to Dec.31, 2005.


Reproduced from National Underwriter Edition, April 28, 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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