CONN. ADOPTS TERROR EXEMPTION:

The Connecticut Department of Insurance has implemented a limited commercial lines exemption from terrorism liability under the state’s standard fire insurance policy. Public Act 04-140’s limited exclusion applies only when a commercial policyholder has rejected federal Terrorism Risk Insurance Act (TRIA) coverage and will end when TRIA expires on Dec. 31, 2005. If the federal TRIA is not reauthorized or extended, the exclusion will not apply for any subsequent events and revised filings will be required. Commercial lines insurers using the limited exclusion must also provide a credit or premium reduction to reflect any savings projected from the exclusion. Additionally, insurers must provide the policyholder either with a notice of non-renewal or a conditional renewal notice with a prominent disclosure of the new exclusion. This notice must comply with the same 60-day advance notice requirements of any policy non-renewal notification, according to the rules announced by Commissioner Susan Cogswell. Of the 28 states with standard fire policies, eight including Connecticut have adopted commercial lines exclusion for terrorism risks.