The Alliance of American Insurers (AAI) says it is pleased with the initial steps taken by the U.S. Department of the Treasury in the implementation of the terrorism insurance legislation signed by the President recently.
“We were very impressed by the quick action of Treasury Undersecretary Peter Fisher in issuing interim guidelines for the industry,” Alliance President Rodger Lawson said. “We are equally grateful for the leadership shown by Terri Vaughan of the National Association of Insurance Commissioners in trying to develop a smooth implementation plan.”
“This is no easy task for the industry,” Lawson said. “Notifying millions of policyholders will take a monumental effort, but the quick action by the NAIC in providing model disclosure forms provides a good start.”
Companies have 90 days to notify their policyholders of the program and of any changes that may be available in their insurance coverage and insurance premium. Individual companies will have to develop their own pricing models based on their assumed risk. Companies are required to make available coverage for acts of terrorism as defined by the new law that does not differ from coverage offered to customers for events other than terrorism.
“There will be some initial confusion in the marketplace, but our expectation is that the companies working with the Treasury Department and the NAIC will manage that in as efficient a manner as possible,” Lawson said. “The Alliance will cooperate with the Treasury and the NAIC in order to make the transition as smooth as possible.”
Lawson expressed hope that individual states will make every attempt to cooperate with the NAIC to have a unified approach to dealing with issues that arise under the new legislation. “The extent to which states attempt to work together – during what is essentially a national emergency – will largely determine how successful the implementation of the terrorism insurance legislation will be, and will further the long-term interests of state-based regulation,” he said.
Lawson said the Alliance did not see any compelling interest for significant divergence in implementing the new program. “We believe every attempt should be made to approach this issue in a unified manner,” he said.
The Alliance is pledging its support to work with the NAIC to ensure that the terrorism insurance legislation moves forward. “The first week was a great example of state-federal government cooperation, and we hope it continues.” Lawson added.
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