National Association of Professional Insurance Agents
400 North Washington Street, Alexandria, Virginia 22314
General Phone: 1-703-836-9340 and FAX: 1-703-836-1279
General E-mail: & website:
December 31, 2003
Office of Financial Institutions Policy
Attention: Terrorism Risk Insurance Program
Public Comment Record
Room 2100
Department of the Treasury
1425 New York Avenue
Washington, DC 20220
Re: Proposed Rule on Claim Procedures – Comments
31 CFR Part 50/RIN 1505-AB07
Dear Sirs:
This letter is being written on behalf of the National Association of Professional Insurance Agents (PIA National). PIA National represents owners of independent insurance agencies and insurance brokerage firms across the U.S. PIA member agencies serve the insurance needs of small-to-mid-size businesses, placing insurance with a wide variety of insurers and insuring mechanisms in the admitted, non-admitted and residual marketplace. PIA National also actively participates in the insurance sector coalition that collectively reviews and discusses TRIA draft regulations and their possible impacts and outcomes for all professional segments of our business sector.
Insurance Residual Market Mechanisms:
In that capacity, we urge your attention to and acceptance of the several changes being requested for insurance residual markets and their insurer and servicing entities. These comments are being filed separately from PIA National’s submission in a joint letter submitted by the Alliance of American Insurers (AAI), the American Insurance Association (AIA), the National Association of Independent Insurers (NAII), and the National Association of Mutual Insurance Companies (NAMIC) in consultation with the residual markets through the National Council on Compensation Insurance (NCCI), the Auto Insurance Plans Service Office (AIPSO), and the Property Insurance Plans Service Office (PIPSO).
Residual market mechanisms are unique insuring arrangements that require distinct treatment and/or clarification under TRIA rules, as compared to TIRA rules application to direct individual insurers (or a collective insurer-affiliated group). These state-law established arrangements are an insurance market of last resort for commercial clients’ insurance coverage needs when PIA members cannot otherwise place in the admitted, direct-insurance marketplace.
Current insurance (and PIA member) data demonstrate that client-placements into residual markets are increasing, particularly in Workers’ Compensation Insurance. Therefore, it is particularly important that TRIA final rules reflect the necessary modifications and clarifications being requested by AAI, AIA, NAII and NAMIC for residual market entities.
PIA Specific Comments:
- This set of rules, in particular, requires modification to include recognition for insurers’ best efforts to file forms and documentation correctly, completely and appropriately. TRIA by its law structure is designed to function in an extremely flexible manner as to how TRIA may implement after “an event.” Further, the actual details of future claims event are as yet unknown, and TRIA meanings in that context, untested. Clearly, insurers will and should be acting to the best of their ability to reasonably know and/or ascertain. However, any language suggesting or requiring a higher level of certainty on their part is inadvisable.
- Additionally, we find that further clarification is needed on Schedule B, TERRORISM RISK INSURANCE PROGRAM, and CERTIFICATION OF COMPLIANCE WITH SECTION 103(b) OF TERRORISM RISK INSURANCE ACT OF 2002.
Several of the items under this form require better clarity of other issues elsewhere in the proposed rules. For example, the insurance sector needs to fully understand where and how these rules apply to related litigation costs and/or claims that through arbitration may experience segmented claims settlements as issues are resolved in order to answer statement number one.
Numbers three and four seem to imply different notice processes regarding TRIA coverage offer and TRIA premium costs verses notice trigger in the claims process, but this is not clear.
In number five, do you mean – to the extent that an insurer is filing for a claim under TRIA that this claim ONLY comports to the parameters of TRIA coverage established in the law/rules? Or do you mean that no insurer can offer any terrorism related coverage that includes TRIA (separately accounted for in notice, charge and notation), and then separately includes an additional endorsement for other possible terrorism-related losses not ultimately covered by TRIA for which the insurer may or may not have charged?
- TRIA rules also need to better reflect an understanding that insurance policies have differing limits of liability and deductibles among various coverages even when those coverages are organized under a commercial insurance package offer and/or within the same policy form.
- TRIA rules need to change the current draft’s focus from the insurer to the insured in terms of “double-dipping” securitization efforts.
First, there are insurance policies that pay an insured for a loss despite what that insured may have already collected from another source on the same event. These instances have been upheld in court. The purpose of the various insurance policies is not per se for the insured to achieve multi-payments for a single event for the same loss circumstances. Rather, they generally pay different types of losses that most times can and do occur in separate events. The fact that a multi-benefits collection response happens in a single loss event will not negate the insured right to collect under both insurance contract expressed obligation and further support by common decisions in some circumstances.
Second, despite best efforts, neither the insurer with the TRIA claim nor the insurance producer that placed that particular policy may know whether the insured/policyholder in question has other coverage in force that may apply to the claim and/or whether the application is duplicative, primary, secondary, excess or in addition to.
Closing:
As other insurance carrier trades and individual insurers file their separate comments, you will note a series of additional and common requests among these for changes to be made to the current proposal. PIA National supports these as well. However, we’ve confined our comments in this submission to the areas that have the greatest potential for the most direct impact on our members’ practices. Better clarity and adopting the suggested modifications will permit PIA National to more successfully work with our members’ carriers in establishing appropriate practices and directions for insurers, producers and insureds in TRIA related matters.
We appreciate this opportunity and for being included on your industry contact listing.
Sincerely,
Patricia A. Borowski
Senior Vice President
DP = 703-518-1360