The Department of the Treasury recently issued proposed rules to address Claims Procedures and Audit, and Investigative and Civil Money Penalty Procedures implementing the Terrorism Risk Insurance Act of 2003 (TRIA). Written comments are due to Treasury by Dec. 25, 2003. A final rule is expected to be issued shortly thereafter.
“The National Association of Independent Insurers (NAII), has remained actively involved in the implementation process and is pleased that proposed claims rules have finally been released,” said Carl Parks, senior vice president, government relations.
Rules issued earlier in the year detailed the terrorism risk insurance program’s scope and disclosure requirements. The new provisions address procedures for first notice to Treasury, certification of compliance, and ongoing claims procedures for federal reimbursement. It also sets out basic documentation and recordkeeping requirements for insurers seeking federal compensation for losses related to terrorist acts.
Major points of the proposed rules include:
· Modification of definition (e), “insured loss”.
· Claims Procedures. General procedures for seeking reimbursement from Treasury for “insured losses”. These procedures are patterned after the “best practices” used, according to Treasury, in the reinsurance industry. Generally, the proposed rules follow the rules set up to address federal reimbursement under the Cerro Grande fire of 2000, as recommended by NAII.
· Audit, Investigative and Civil Money Penalty Procedures. The proposed rule states that insurer records should be retained for a minimum of three years following the conclusion of the policy year for premium information and for a minimum of five years following the final adjustment of each individual claim.
“NAII is encouraged that throughout the process of implementing TRIA that Treasury has attempted to follow normal company practices and we look forward to continuing to work with the department to implement the remaining provisions effectively and efficiently,” added Parks.
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