The National Association of Mutual Insurance Companies (NAMIC) commented on a draft definition of terrorism released recently by an Ad Hoc Committee on Legal Issues of the National Association of Insurance Commissioners (NAIC).
The NAIC intends to employ this definition in approving exclusions for terrorism.
“The single most frequently expressed concern is that there should be one definition of terrorism,” wrote Peter Bisbecos, NAMIC’s legislative and regulatory counsel. “The acts of September 11th have caused a great deal of uncertainty in the insurance industry. Three months later we still don’t know all the ramifications.”
According to NAMIC, a definition of terrorism should have four components:
One definition of terrorism;
Not require association with a terrorist organization;
Affiliation of the terrorist is irrelevant; and
Distinguish between terrorism and acts of war.
NAMIC is also concerned about any language that requires association with a terrorist organization.
Bisbecos wrote, “We have two concerns about requiring association.
“First, what happens if an individual commits an act that meets all requirements of this definition except association?
“Second, requiring association may pose an insurmountable proof problem. Terrorist organizations are, by their very nature, secretive, going to great lengths to mislead and deceive authorities.”
When initially considering an appropriate definition, NAMIC wrestled with creating a distinction between domestic and foreign acts of terrorism.
“However, we concluded that the identity [domestic or foreign affiliation] of the terrorist is irrelevant,” wrote Bisbecos. “Whether al Qaeda or a white supremacist group, terrorism’s impact on an insurer’s solvency is the same. Therefore, we do not believe that this distinction is appropriate.”
NAMIC endorses the NAIC’s distinction between an act of terrorism and an act of war, which is generally already excluded.
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