Terrorism Risk Insurance Act Liability Cap, Recoupment Regulations Finalized
Dec 30, 2009
The National Association of Insurance Commissioners Property and Casualty Insurance Committee and Terrorism Insurance Implementation Working Group have advised that two final adopted Rules developed by the Terrorism Risk Insurance Program (“TRIP”) were published in the Federal Register on December 14.
The United States Department of the Treasury issued these final Rules as part of its implementation of Title I of the Terrorism Risk Insurance Act of 2002 (“TRIA”), as amended by the Terrorism Risk Insurance Extension Act of 2005 and the Terrorism Risk Insurance Program Reauthorization Act of 2007. TRIA also established TRIP, under which the Federal Government would share the risk of insured losses from certified acts of terrorism with commercial property and casualty insurers.
To view each Rule as printed in the Federal Register, click on the title hyperlinks below.
The TRIP Cap on Annual Liability Rule outlines recoupment provisions contained in the 2005 TRIA Extension Act. The Rule describes how the U.S. Treasury will calculate the amounts to be recouped from insurers and establishes procedures for insurers to use in collecting and remitting Federal Terrorism Policy Surcharges.
The Recoupment Provisions Rule addresses various issues related to the $100 billion cap on annual liability contained in the TRIA Reauthorization Act of 2007. The Rule describes how the Treasury intends to determine the pro rata share of insurance losses under TRIP when the losses otherwise would exceed the prescribed annual monetary cap. It also describes how the Treasury would impose a claims settlement method that would be equitable and minimally disruptive under the circumstances.
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