AAIS Filing "Noncertified" Terror Exclusions
NU Online News Service, Jan. 17, 3:18 p.m. EST?The American Association of Insurance Services in Wheaton, Ill. said it is starting to file policy language for its members with individual state regulators that excludes losses from "noncertified" acts of terrorism.
Non-certified terrorist acts, AAIS said, are classified as those carried out by groups based in the United States, plus all terrorist acts, from whatever source, that cause less than $5 million in total insured losses.
AAIS said its policy forms and rating information is used by more than 600 property-casualty companies nationwide.
The organization said it will be filing four types of optional endorsements, most of them with an effective date of April 1, 2003.
Information on the status of AAIS state terrorism filings, the association said, will be available at the Web site, www.AAISonline.com, by clicking on the icon for "Terrorism: The New Rules," and following the links.
Technical details aside, AAIS said, there are basically four types of endorsements addressing non-certified terrorism losses:
? An exclusion for all types of losses from a non-certified terrorist event.
? A similar exclusion with an exception preserving coverage for direct fire losses.
? An endorsement excluding losses from non-certified events involving a biological or chemical attacks. (Liability arising from nuclear events is excluded as well, while property exclusions for nuclear perils are already embedded in standard forms).
? A similar exclusion addressing biological, chemical, and (for liability) nuclear attacks with an exception preserving coverage for direct fire losses.
Under each of the endorsements, coverage for losses arising from nuclear, biological, or chemical attacks are excluded entirely, except for the "fire following" coverage required in some states.
The new endorsements, AAIS said, update terrorist exclusions developed before enactment of the new federal terrorism reinsurance program, but incorporate the term "non-certified."
In most states, AAIS said, companies will be able to use existing terrorism exclusions to address non-certified losses until the new endorsements become effective.
Under the Terrorism Risk Insurance Act the U.S secretary of the treasury, in concurrence with the secretary of state and attorney general, is charged with certifying that an event is an act of terrorism eligible for coverage under the new federal Terrorism Insurance Program.
To be certified, an event must cause more than $5 million in commercial losses and be directed or carried out by foreigners.
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