November 22, 2002 by Canadian Underwriter
Following the recent Senate approval of the “Terrorism Reinsurance Act”, which will be signed into effect by U.S. president George Bush early next week, insurance companies represented by the National Association of Independent Insurers (NAII) have come out in full support of the legislation. Among its provisions, the bill will make availability of terrorism cover mandatory on insurers. The National Association of Insurance Commissioners (NAIC) is currently compiling a model bulletin outlining insurer obligations under the new federal legislation, NAII observes.
Specifically, NAII is encouraged by the inclusion of many industry recommendations in the long-awaited bill. “We are pleased that the short-term federal program will include NAII supported provisions addressing workers’ compensation, business interruption, personal company retention levels and cross-subsidization,” says Carl Parks, senior vice president of government relations at NAII. Key provisions include:
* Full inclusion of workers’ compensation coverage, including cover for “war risks”. Workers’ compensation lines were severely impacted by the events of 9/11, NAII notes.
* The legislation provides full coverage for business interruption losses.
* The “per company retention level” provision protects the solvency of small to mid-sized insurers. The vast majority of insurers write less than US$100 million in coverage, NAII points out.