The New York State Insurance Department announced that it has concluded a cooperation agreement with the Excess Lines Association of New York (ELANY), a member of an industry coalition, which will set standards by which Terrorism Risk Insurance Act (TRIA) coverage is earned on excess line policies.
ELANY will publish a “Best Practices” guidance document which calls for limitations on the earned premium charged to TRIA policies. “The guidelines provide a standard that a charge of no more than 25% of the minimum earned premium for terrorism coverage will be employed upon cancellation by the insured,” said the announcement.
“Under the guidelines, excess lines carriers should not charge more than 25% of the terrorism premium if an insured opts to cancel their TRIA coverage,” indicated NYSID Superintendent Gregory V. Serio. “These guidelines were adopted to ensure New York’s businesses are given options in their insurance coverage.”
He also noted that the state’s “businesses are already facing a hardening insurance market and should be afforded the ability to shop around for the insurance coverage best-suited to their needs without the unnecessary worry of forfeiting 100% of the premium penalties upon an early cancellation.”
“The Best Practices guidance document is based on the understanding that ensuring both affordability and availability of terrorism coverage is one of the goals of TRIA,” said the bulletin.
“A discussion with the industry was necessitated because it had come to my attention that some insurers participating in the Terrorism Insurance Program were issuing policies containing cancellation provisions that dictated that premiums were 100% fully earned upon policy issuance,” Serio added. “These guidelines establish a standard to protect the insured’s ability to shop around for terrorism coverage. The Department remains committed to ensuring the Best Practice guidelines are implemented completely and fairly.”
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