Treasury Department Announces Interim Guidance On Terrorism Insurance for Insurance Industry
December 3, 2002
Treasury and State Insurance Commissioners Work Closely Together
The Treasury Department released interim guidance [pdf] for the insurance industry in meeting certain requirements under the Terrorism Risk Insurance Act of 2002, which was signed into law by President Bush on November 26, 2002.
Treasury Under Secretary for Domestic Finance Peter R. Fisher outlined the interim guidance at a Treasury news conference. He was joined by National Association of Insurance Commissioners (NAIC) President Therese M. Vaughan, who also serves as Commissioner of Insurance for the state of Iowa.
"The Terrorism Risk Insurance Program became effective upon enactment by the President," said Fisher. "Commercial property and casualty insurance companies now are required to make terrorism insurance coverage available to their policyholders and, in many cases, such coverage is in place today as a result of the legislation. That is good news for our economy.
"Through the working of the competitive marketplace, the economic benefits expected as a result of the Program should begin to be realized in the near term."
Fisher emphasized that the Program relies upon the state insurance oversight mechanism to monitor insurance companies' implementation of, and compliance with, many of the program's requirements. "Our partnership with the state insurance regulators has worked very well, and in the upcoming months Treasury will continue to work closely with the state insurance regulators on the implementation process," he said.
"State regulators will continue consulting with the Treasury Department on an array of implementation issues," said Vaughan.
"We are committed to a smooth implementation and want to help companies and regulators comply with the new law's requirements as quickly and uniformly as possible."
The interim guidance covers several mandates of the new law, including policyholder disclosure requirements and the requirement that insurance companies make coverage for terrorism risk, as defined by the Act, available to their policyholders. The interim guidance released today follows the NAIC's release of model disclosure forms last week. Treasury interim guidance states that use of the NAIC's model disclosures [pdf] constitutes compliance with the Act's disclosure requirements while noting that the model disclosures are not the exclusive means by which insurers may comply with the Act.
Treasury's interim guidance also provides useful information to commercial entities that wish to obtain terrorism risk insurance. Insurance companies generally have 90 days to notify their policyholders of the Program and of any changes that may be available in their insurance coverage and insurance premium as a result. In some cases, policyholders must respond affirmatively within 30 days of the notice in order to be covered under the Program.
Interim Guidance [pdf]
NAIC's Model Disclosures [pdf]
Source: Treasury Department