The Department of the Treasury this week finalized the first regulation implementing the Terrorism Risk Insurance Act of 2002 (TRIA).
The final rule clarifies that fidelity insurance is not included under the Act and does not issue new requirements for federally approved insurers. The regulation substantially mirrors the regulation issued in interim final form on Feb. 28 setting forth the purpose and scope of the program, as well as key definitions.
“The National Association of Independent Insurers (NAII) applauds Treasury officials for their dedication to working with the insurers to understand how TRIA impacts insurance company operations and policies. Working together has helped Treasury, the industry and commercial insureds successfully implement this Act,” said Carl Parks, senior vice president, government relations.
Comments submitted to Treasury by NAII reportedly resulted in the confirmation that fidelity was not a covered line of insurance under the program. NAII also requested clarification of the treatment of policies covering one-to-four family rental dwellings.
In issuing the final rule, Treasury noted that such coverage would be considered commercial property and casualty coverage included in
the program; however, to the extent that the policies contain a personal lines component the allocation methods may be used to calculate the appropriate premium.
Treasury specifically sought comment regarding the advisability of the establishment of financial standards for federally approved insurers. NAII questioned the authority of Treasury under the Act to establish such standards and argued that such action would represent an unwarranted intrusion into the regulation of insurance. The final rule, while not specifically acknowledging the lack of authority, does not propose any additional criteria for federally approved insurers.
“NAII will continue to work closely with Treasury officials on the
implementation process, including notice certification, claims procedures, reporting requirements and the ‘other lines’ study,” added Parks.
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