Industry Praises Final TRIA Regs

By Steven Brostoff

Washington

Industry groups are generally praising the Treasury Departments final regulation on key definitions under the Terrorism Risk Insurance Program.

“On the whole, were pleased Treasury was responsive to industry concerns, as they have clarified the definition of insurers to be included in the program, and how personal and commercial premiums are to be handled when they both appear in one of the covered lines of business,” said Roger Kenney, associate vice president with the Downers Grove, Ill.-based Alliance of American Insurers.

David Anderson, vice president of the Alliance, added, however, that part of the final rule, which addresses affiliates of an insurer, is construed too broadly.

Treasury, Mr. Anderson said, would collectively treat affiliates–companies owning 25 percent or more of the voting stock of another insurer–as one insurer. This provides insurers no ability to appeal the treatment for purposes of consolidating direct earned premiums and calculating deductibles under the program.

“The Alliance believes that an insurer should be allowed to argue in all cases that an insurers affiliate relationship with another insurer should not be treated as a single entity for purpose of the TRIA deductible calculation,” Mr. Anderson said. “To do otherwise could lead to unfair results and is potentially contrary to the decisions of state insurance regulators,” he said.

Carl Parks, senior vice president of government relations with the Des Plaines, Ill.-based National Association of Independent Insurers, added that comments submitted to Treasury by NAII resulted in the confirmation that fidelity is not a covered line of insurance under the program.

In addition, he said, in its comments NAII questioned the authority of Treasury to establish financial standards for federally approved insurers. The final rule, Mr. Parks said, while not specifically acknowledging a lack of authority, does not propose any additional criteria for federally approved insurers.

Reproduced from National Underwriter Edition, July 14, 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.

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Industry Praises Final TRIA Regs

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