NAIC Property and Casualty Insurance (C) Committee Reports on Terrorism Risk Insurance Act (TRIA)
February 2, 2006
On December 28, 2005, NAIC’s Terrorism Insurance Implementation Working Group adopted
a model bulletin intended to help state insurance regulators advise insurers about regulatory requirements related to the recent extension of the Terrorism Risk Insurance Act (TRIA). The Working Group reviewed changes made to TRIA under the recently signed Terrorism Risk Insurance Extension Act of 2005 (the Act). President Bush affixed his signature to the bill on Dec. 22, 2005. Thus, Senate Bill Number 467 became Public Law 109-144.
The model bulletin provides guidance to insurers related to rate filings and policy language that state regulators would find acceptable to protect U.S. businesses from acts of terrorism. The model bulletin describes important changes that are contained in the Act and informs insurers regarding whether rate and policy form filings might be needed
Since the Act has a Jan. 1, 2006 implementation date, timely guidance is essential to assure a smooth transition from the current requirements. On January 26, 2006, the Terrorism Insurance Implementation Working Group adopted the Model Disclosure Forms [Form 1] [Form 2] . Insurers may modify the forms to meet individual circumstances or use forms that are substantially similar. The U.S. Department of the Treasury has notified the NAIC that the disclosures do satisfy the disclosure requirements in the Act.
Access to insurance is essential to business confidence and continued economic growth. Some terrorism risks may be largely uninsurable without a backstop. The members of the NAIC are extremely concerned that significant market disruptions will develop before the Act’s expiration. Regulators are currently discussing various solutions for future catastrophes and their potential impact on the American economy.