The Independent Insurance Agents & Brokers of America (IIABA) is providing its members an in-depth summary of the Terrorism Risk Insurance Act (Public Law 107-297) that offers an overview of the law’s major features and introduces agents and brokers to issues related to its implementation.
Additionally, IIABA, through its Big “I” Virtual University, has compiled an extensive online collection of informational resources that agents and brokers can use to familiarize themselves with how the new law will be implemented by their insurance company partners as well as federal and state regulators and industry advisory groups.
“Implementation of the Terrorism Risk Insurance Act is a work in progress. There are many questions that yet have to be answered by both federal and state authorities,” IIABA CEO Robert Rusbuldt said. “As the terrorism backstop becomes a part of the industry’s lexicon, we believe this IIABA summary and the online informational resources will help educate our 300,000 members on the impact of the new law on their business clients.”
The IIABA-produced summary explains that while the Terrorism Risk Insurance Act does not impose any duties or responsibilities on agents and brokers, they nonetheless may have a role in working with insurers on their compliance because agents and brokers often are the first or primary point of contact for commercial lines policyholders.
Specifically, agents and brokers may be asked by some of their companies to help with the law’s policyholder disclosure requirements. To do this, agents can use forms and information supplied by their companies to provide disclosure notices, notes the IIABA summary.
In addition, the summary offers a step-by-step analysis of the law’s definition of an act of terrorism, what insurers are covered, what lines of coverage are affected, the effective dates for the terrorism insurance backstop program, how the program’s loss-sharing rules work, how insurer deductibles will be calculated, the law’s mandatory reimbursement formulas, and numerous other provisions.
As to agent and broker errors and omissions coverage for claims stemming from acts of terrorism, the IIABA summary advises agents and brokers to seek guidance from their E&O providers about how they will handle coverage, premium charges and potential exclusions from E&O policies relating to acts of terrorism. For IIABA members covered by the Big “I” Professional Liability Program through ERC/Westport, a terrorist event does not impact the coverage provided to them under their errors and omissions policies; the trigger for a loss is a negligent act, error or omission during the rendering of professional services, not the act of terrorism.
The IIABA summary and online resources are available at www.independentagent.com by selecting “Terrorism Insurance Info.” The resources include relevant Treasury Department information; National Association of Insurance Commissioners bulletins and model forms; Insurance Services Office (ISO) rules, endorsements and forms analyses; and links to information from other industry and government resources.
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