The American Association of Insurance Services (AAIS) has completed a countrywide filing of revised commercial lines endorsements for excluding insurance coverage for losses resulting terrorism.
In a related matter, AAIS staff will be participating in an upcoming teleconference meeting under the auspices of the National Association of Insurance Commissioners (NAIC) to determine what action is appropriate regarding personal lines coverage or exclusions for terrorism losses. AAIS originally filed terrorism exclusions in November 2001, in response to requests from its member companies who reported that their reinsurers planned to exclude coverage for terrorism in contracts up for renewal on Jan. 1, 2002.
AAIS revised those filings in response to a late December policy recommendation by the NAIC. To reflect that recommendation, the revised AAIS filings –
a. Adopt a definition of “terrorism” that is unique to the insurance industry, in place of the definition derived from federal statute used in the original AAIS filings;
b. Incorporate an exception to the exclusion for terrorist events that cause $25 million or less in total insured damages or 50 or fewer casualties (deaths and serious injuries); and
c. Incorporate, in states that require it, an exception to the exclusion for direct physical damage that results from fire caused by a terrorist act. (Exceptions to exclusions maintain coverage under the specified conditions.)
Copies of the endorsements and the AAIS bulletin explaining them can be seen at the AAIS Web site, www.AAISonline.com. Notice of state approvals will be posted on the Web site.
To date, no new filings have been made in New York and California, two states where insurance departments have not approved terrorism exclusions based on the NAIC recommendation.