Earlier this week, the U.S. Department of Treasury Federal Insurance Office released Interim Guidance on implementation of the Terrorism Risk Insurance Program Reauthorization Act of 2015, which was signed into law last month after the prior program had expired on January 1. Some of the key features of the Interim Guidance include:
- Approval by Treasury of the NAIC Model Disclosure Forms, which are available here and here;
- Insurers have until April 13, 2015 to provide disclosures and offers that comply with the program regulations, if needed;
- No new offer is needed if an insurer elected to not exercise a conditional exclusion; however, insurers must give written notice of forbearance and state that the forbearance is effective from January 1, 2015; and
- Earlier offers declined by the policyholders do not require new offers as long as the offer “did not materially differ in price from that which the insurer would have offered” following the new enactment.
Notably, the Interim Guidance does not address retroactivity, which could be interpreted as Treasury not considering the program as having a gap. Pending further guidance from Treasury, insurers should assume there is no gap in coverage or that the law applies retroactively to January 1, 2015.
Treasury is also seeking public comment on the process to certify that an event is an “act of terrorism” which would trigger use of the program. Comments must be submitted by March 6, 2015. Finally, Treasury noted that it will provide additional updates to this regulation at a future time.
For more information on the Program, please visit www.treasury.gov/resource-center/fin-mkts/Pages/program.aspx.
For more information on FIO, please visit www.treasury.gov/initiatives/fio.