Two new sets of Treasury Department rules for implementation of the Terrorism Risk Insurance Act (TRIA) reportedly clarify important statutory requirements of the new law for insurers and address important state insurance residual market issues. The National Association of Independent Insurers reports it is pleased with the content of the new guidelines.
According to the NAII, the interim rule clarifies the statutory requirements that insurers make clear and conspicuous disclosures to policyholders within specified time periods as a condition for federal payment. The new interim final rules provide that the totality of the facts and circumstances of the disclosure will be used to determine whether the notice is clear and conspicuous. The Treasury stopped short of proscribing a specific form or content for the disclosure, but continued to provide a safe harbor for insurers utilizing the National Association of Insurance Commissioners’ (NAIC) model disclosures.
“NAII is pleased that the Treasury is allowing insurers the maximum flexibility in meeting the notice and certification requirements,” said Julie Gackenbach, NAII assistant vice president federal affairs. “We are also pleased that the proposed rules on state residual markets mirror proposals suggested by the NAII and the industry. The Treasury has recognized that state residual markets play an important role in TRIA and have supported industry efforts to develop an effective framework for that role.”
The proposed regulations consider all residual market entities that arrange for or provide commercial property/casualty coverage to be included in the definition of covered insurer under the TRIA. The proposed regulations revise and update the list of covered entities previously released as part of interim guidance.
Gackenbach said that under the proposed rule, a state residual market that does not share its profit and losses will be treated as a stand-alone insurer and will follow the rules and regulations applicable to other insurers.
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