NU Online News Service, Oct. 15, 3:52 p.m. EDT
WASHINGTON–Rules for payments by the government following a terrorist attack must not impair the ability of property and casualty insurers to recoup federal dollars for covered losses, the American Insurance Association (AIA) said in a letter to the Treasury Department.
"Such a scenario would disrupt business and ultimately be a disservice to commercial insureds," AIA officials state in the letter.
The AIA comments are in response to a Treasury request for comments published in early August on its "final netting rules."
The final rule would deal with how Treasury would reimburse insurers for a loss from a terrorism attack, and, conversely, collect funds it is due under the Terrorism Risk Insurance Act.
The comment period closed Oct. 4. Treasury received 11 comments on the proposal.
The AIA letter was signed by J. Stephen Zielezienski, senior vice president and general counsel.
The AIA opposed the timeframe Treasury proposed to cut off payments for a particular event, called the "final netting date."
Mr. Zielezienski said Treasury must consider the lines of business where losses occur to avoid putting companies with a large proportion of long-tail claims at a disadvantage.
The Treasury suggested a cutoff date for payment claims "very likely…in the range of five to seven years."
The AIA said the cutoff should be no earlier than 10 years.
The AIA also took issue with a proposed Treasury rule on workers' compensation, which states that an "insurer may provide updated information based on the number of workers' compensation claimants previously reported," but that an insurer may not report any "increased workers' compensation loss amounts based on an increase in workers' compensation claimants."
The AIA said, "This prohibition is particularly troublesome as injuries to workers' compensation claimants are often latent in nature and do not manifest themselves until later in life."
Mr. Zielezienski suggested that Treasury provide an additional public comment period.
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