The U.S. Department of the Treasury has recommended
against continuation of the federal Terrorism Risk Insurance Act (TRIA)
past its scheduled "sunset" on Dec. 31, 2005. The final decision
whether to extend the program or not lies with Congress and President
George W. Bush.
In a letter
accompanying a 142-page report
on the subject, Treasury Secretary John Snow states that "TRIA has
achieved its goals of supporting the [insurance] industry during a
transitional period" and that "continuation of the program is
likely to hinder further development of the insurance market."
(Distribution of this Advisory was delayed one day to await release
of the report.)
Over the past twelve months, AAIS has undertaken
countrywide filing action to anticipate the possibility that TRIA would
not be extended. To date, optional endorsements that can be used to
exclude coverage for loss caused by terrorism, subject to specific
thresholds and exceptions, have been approved in all states except
Florida, Georgia, and New York.
Three possible outcomes regarding the disposition of
TRIA and likely responses are outlined below:
a.
TRIA sunsets as of Dec. 31, 2005 - If TRIA is no longer in
effect, and no other restrictions are enacted, insurers may elect to
exclude loss caused by terrorism, subject to specific thresholds and
exceptions, in all states other than Florida, Georgia, or New York.
b.
TRIA is renewed without significant change - If Congress
acts to renew TRIA without significant change, despite Treasury's
recommendations, insurers must continue to offer coverage for loss caused
by acts of terrorism "certified" as such by designated federal
cabinet officers. In most states, carriers would still be able to exclude
coverage for loss caused by "non-certified" acts of terrorism.
c.
TRIA is renewed with significant changes or replaced by new
act - AAIS will take the steps necessary to provide affiliated companies
with the materials needed to comply with any new or revised terrorism
insurance requirements.
AAIS continues to monitor federal action regarding
terrorism and related issues. Affiliated companies will receive more
information by bulletin in the near future.
AAIS has released its new Texas Homeowners
manual, completing the process of introducing its Homeowners
Program in that state.
For years, admitted companies writing homeowners
coverage in Texas were required to use a state-mandated policy form. That
requirement was eliminated, but the relaxation in form regulation
was accompanied by increased scrutiny of ratemaking. Only within the past
two years were advisory organizations
permitted to file manual rules and rating information.
For information on affiliating with AAIS for use of
its Homeowners Program, contact Rick Maka, marketing director, at rickm@AAISonline.com
or by calling 800/564-AAIS.
AAIS has added several new features to AAISdirect,
the Web-based service for accessing policy forms, manuals, bulletins,
and other information. The new features include:
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Advisory information, such as sample declarations
and other nonfiled forms;
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Status reports on countrywide filing activity; and
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General information on AAIS products, services,
and membership.
The new features are added to the estimated 7,200
forms, 2,000 manuals, 6,000 bulletins, 2,500 pages of the Inland
Marine Guide, and other information available on AAISdirect.
AAIS affiliates seeking to access AAISdirect
materials for their lines and states should contact Rick Maka, director of marketing, at rickm@AAISonline.com,
or by calling 800-564-AAIS.
Insurers writing personal lines coverage in North
Dakota face restrictions on the use of loss histories (prior claims) in
underwriting under a law
that takes effect Aug. 1, 2005. In essence, the law prohibits insurers
from considering inquires and damage reports from applicants unless those
communications resulted in paid claims.
Beyond that, insurers are prohibited from considering
paid claims for wind and hail damage that are more than five years old,
and any other paid claims more than 10 years old, unless the insurer can
provide evidence the applicant or insured failed to maintain the property.
Similarly, insurers cannot deny coverage for a property solely on the
basis of a previous owner's loss history, unless they can demonstrate that
the previous owner did not repair the damage.
Under the law, carriers that use loss histories in
underwriting must disclose that fact to applicants, and inform insureds
if they report claims to an "insurance support
organization," such as the "CLUE" or "A-PLUS"
loss history databases.
A bulletin
from the North Dakota Department of Insurance provides answers to frequent
questions raised companies regarding the new law.
Companies affiliated with AAIS were mailed a detailed
customer survey form two weeks ago and invited to fill it out on paper or
online, using a link provided in the survey.
Nearly a third of AAIS affiliates have already mailed
the survey or responded online, a very high response rate. All affiliates
are urged to respond by June 30 to ensure that their comments and concerns
are reflected in the final tabulation.
If you no longer have your survey form and want to
access the online version, contact Joseph Harrington, communications
director, at joeh@AAISonline.com
or by calling 800/564-AAIS.
