NAIC Confident in Congressional
Response to Terrorism Insurance Issue
KANSAS
CITY, Mo. (Jan. 15, 2003) — In response to a Dec.
27, 2002, letter from the Consumer Federation of America
(CFA), members of the National Association of Insurance Commissioners
(NAIC) today expressed their continued support of the Terrorism
Risk Insurance Act of 2002 and the interim guidance from the Treasury
Department.
The CFA has urged state and federal officials to take
more aggressive steps to protect and inform insurance consumers
under the recently enacted act and has objected to the Treasury
Department’s interim guidance that allows insurers to limit coverage
for events related to nuclear, biological or chemical events if
authorized to do so under state law.
“Insurers have limited coverage for nuclear, biological and chemical
events in commercial lines insurance products for quite some time,”
said NAIC President and Arkansas Insurance Commissioner Mike Pickens.
“What is excluded from coverage in these coverage limitations is
the damage from nuclear, chemical or biological contamination of
property, not the ensuing fire damage that would result from a nuclear
or chemical blast. Radiation from failed nuclear reactors is also
excluded, because coverage is available from another source. Thus
the Treasury Department guidance does not allow for blanket exclusions
as the CFA has implied.”
The CFA has also encouraged state insurance regulators to take an
active and aggressive role in monitoring and preventing price gouging.
“State insurance regulators, through the NAIC, are taking steps
to actively monitor insurance markets and stand ready to implement
needed statutory remedies when abuses are discovered,” Pickens said.
“State regulators have appointed a Market Conditions Working Group
to monitor market conditions related to distressed insurance markets
and terrorism, and they have been actively collecting information
on a quarterly basis since 9/11.”
State regulators are also monitoring premium growth figures reported
by insurers. This monitoring process will continue so that state
regulators can be prepared to assist the Department of the Treasury
in conducting its study of the effectiveness of the Terrorism Risk
Insurance Act of 2002.
“Not all state rate-filing laws are the same. States differ in the type
of statutory provisions that they have available to them to constrain
insurer rate changes,” Pickens continued. “Virtually all states
have laws that require that rates not be excessive, inadequate or
unfairly discriminatory. If a policyholder believes that the rates
charged by insurers are excessive, they should contact their state
insurance regulatory official.”
The NAIC has appointed a Terrorism Insurance Implementation Working
Group to assist the Department of the Treasury with implementation
issues and clarification of the responsibilities that insurers have
to their policyholders. This group has been very active in recent
weeks helping the Treasury understand insurance and insurance regulatory
issues and concerns.
All states have consumer assistance personnel to help aggrieved
policyholders with their insurance problems. Visit www.naic.org
to find out how to get in touch with your regulator.
About the NAIC
Headquartered in Kansas City, Mo., the National Association
of Insurance Commissioners (NAIC) is a voluntary organization of
the chief insurance regulatory officials of the 50 states, the District
of Columbia and four U.S. territories. The association’s overriding
objective is to protect consumers and help maintain the financial
stability of the insurance industry by offering financial, actuarial,
legal, computer, research, market conduct and economic expertise.
Formed in 1871, it is the oldest association of state officials.
For more information, visit NAIC on the Web at www.naic.org/pressroom.
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