The Alliance of American Insurers (AAI) is applauding the U.S. Department of the Treasury for its reported diligence in issuing the first set of regulations under the Terrorism Risk Insurance Act (TRIA) of 2002.
“While the proposed rule covers only a small portion of what ultimately will be forthcoming, what Treasury has published will provide insurers with more certainty than they have had,” Roger Kenney, Alliance associate vice president of research, commented.
“We are pleased that in the definition of direct earned premium, Treasury has made it much clearer what constitutes commercial premium. The earlier definition seemed to imply that some personal lines premium would be considered commercial under TRIA, but that is no longer the case,” Kenney said. “No personal lines premiums will be considered commercial. Likewise any incidental commercial coverage written on a personal lines policy will not be included in the program.”
Treasury is also soliciting comments in several areas, including comments on how the program should treat multiple controlling owners of an insurer, and how Treasury might prevent evasion of insurer deductible and other program requirements by certain newly-formed insurance companies.
The proposed rule is reportedly consistent with the three interim guidance documents that were previously published. For insurers that have been following the guidance, they can reportedly take comfort that they have done what is necessary to be in compliance with TRIA.
The Alliance expects subsequent regulations will soon follow – perhaps in the coming weeks – on other issues that were addressed in interim guidance, such as the disclosure requirements and the “make available” requirement, and on the treatment of state residual market entities and state workers compensation funds.
Insurers and other interested parties will have the opportunity to submit formal comments on the regulation, and the comment period will last for 30 days from the date of the regulation’s publication in the Federal Register.
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