Insurance Handbook - Alaska Department of Community and ...

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Updates at www.iii.org/issues_updates Insurance Topics Terrorism Risk Auto and Insurance risk—that it is uninsurable—but unlike the insurance industry, the President’s Working Group said that the existence of TRIA has negatively affected the development of a more robust market for terrorism insurance, a point on which the industry disagrees. TRIA is the reason that coverage is available, insurers say. The structure of the program has encouraged the development of reinsurance for the layers of risk that insurers must bear themselves—deductible amounts and coinsurance—which in turn allows primary insurers to provide coverage. TRIA and its extensions authorized the creation of a federal reinsurance plan, which is triggered when insured terrorism losses exceed a predetermined amount. The program, a sharing of losses between the insurance industry and the federal government according to a preset formula—a type of reinsurance— has enabled the commercial insurance market to function, even though the threat of terrorism remains. The law defines an act of terrorism under the 2007 amendment. To be covered by the federal program, an act of terrorism must be committed by individuals acting as part of an effort to influence the policy or conduct of the United States. The law also requires that the act be certified by the Secretary of the Treasury in concurrence with the Secretary of State and the Attorney General. Insurers do not pay the federal government for this reinsurance coverage. Only commercial insurers and causes of losses specified in the underlying policies are covered. In addition to commercial lines insurers, insurers eligible for coverage include residual market entities such as workers compensation pools, state-licensed captive insurers and risk retention groups, see report on captives. Personal lines insurance companies—those that sell auto and home insurance—and reinsurers are not covered. Neither are group life insurance losses. Most types of commercial insurance losses were covered under the original legislation, except some specialty coverages such as medical malpractice and crop insurance. Some commercial insurance coverages were deleted under the 2005 extension including commercial auto insurance, professional liability except for directors and officers liability, surety, burglary and theft and farmowners multiperil, a coverage similar to homeowners. In return for the federal backstop, commercial insurers must make terrorism coverage available and conspicuously state the premium charges; policyholders can reject the offer and choose to mitigate this class of risk in other ways. In offering terrorism coverage to their policyholders, commercial insurers must make it available on the same terms and conditions as they offer in their non- TRIA coverage. After September 11, to minimize the likelihood of a wave of liability claims, I.I.I. Insurance Handbook www.iii.org/insurancehandbook 71
Insurance Topics Updates at www.iii.org/issues_updates Terrorism Auto Insurance Risk and Insurance Congress established the Federal Victims Compensation Act, which provided nearly $7 billion in payments to families of September 11 victims. In return, victims’ families were required to give up the right to sue those they perceived as responsible parties. This provision is not part of TRIA or its extension. Mandated Coverages/Exclusions: In some states a doctrine know as “fire following” applies. This means that in the event of a terrorist-caused explosion followed by fire, insurers could be liable to pay out losses attributable to the fire (but not the explosion) even if a commercial property owner had not purchased terrorism coverage. A number of states have amended their standard fire policy laws to exclude such coverage for acts of terrorism. Injuries in the workplace resulting from terrorist attacks are covered under state workers compensation laws. Workers compensation insurance is a mandatory coverage in all states but Texas. 72 I.I.I. Insurance Handbook www.iii.org/insurancehandbook
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Insurance Handbook A guide to insur
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Insurance Basics Overview Accountin
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Directories ISO 545 Washington Blvd
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Directories PCI - WASHINGTON, DC 44
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Directories INSURANCE COMMITTEE FOR
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Directories INSURANCE REGULATORY EX
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Directories INSURANCE INSTITUTE FOR
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Directories Title Insurance AMERICA
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Directories INSURANCE ADVISORY BOAR
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Alphabetical Index State specific a
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Alphabetical Index Intermediaries a
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State Organizations State Organizat
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State Organizations Pacific Associa
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State Organizations Florida State A
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State Organizations Illinois State
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State Organizations Other Organizat
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State Organizations Texas Coalition
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State Organizations Agent Associati
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Alphabetical Index YEAR EVENT 1601
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Brief Alphabetical History Index YE
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I.I.l. Resources COMMERCIAL INSURAN
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I.I.I. Member Companies Lockton Com
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The I.I.I. Insurance Handbook • C
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