Uncertainty Related to Expiration of the Terrorism Risk Insurance Act of 2002 Exclusions Related to Acts of Terrorism

2 should be aware that, although policy form language provisions will provide that the insurer is to make a determination regarding when any of the thresholds described in this bulletin have been reached for purposes of settling a claim, insurers should be ready to substantiate any decision made to deny benefits to a claimant. Explanation and Instructions for Expedited Review The coverage limitations that will be approved by this state have some significant limitations; however, they continue to provide coverage for acts of terrorism under certain circumstances. For policies providing property insurance coverage the following limitations apply: • Exclusion for acts of terrorism only apply if the acts of terrorism result in industry-wide insured losses that exceed $25,000,000 for related incidents that occur within a 72 hour period; • Exclusions for acts of terrorism are not subject to limitations above if: o The act involves the use, release or escape of nuclear materials, or that directly or indirectly results in nuclear reaction or radiation or radioactive contamination; o The act is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials; or o Pathogenic or poisonous biological or chemical materials are released, and it appears that one purpose of the terrorism was to release such materials. For policies providing liability insurance coverage the following limitations apply: • Exclusion for acts of terrorism only apply if the acts of terrorism result in industry-wide insured losses that exceed $25,000,000 for related incidents that occur within a 72 hour period; or • Fifty or more persons sustain death or serious physical injury. For purposes of this provision serious physical injury means: o Physical injury that involves a substantial risk of death; o Protracted and obvious physical disfigurement; or o Protracted loss of or impairment of the function of a bodily member or organ. • Exclusions for acts of terrorism are not subject to limitations above if: o The act involves the use, release or escape of nuclear materials, or that directly or indirectly results in nuclear reaction or radiation or radioactive contamination; o The act is carried out by means of the dispersal or application of pathogenic or poisonous biological or chemical materials; or o Pathogenic or poisonous biological or chemical materials are released, and it appears that one purpose of the terrorism was to release such materials. This state will accept the following definition of acts of terrorism or definitions that are more liberal to policyholders: Terrorism means activities against persons, organizations or property of any nature: 1.That involve the following or preparation for the following: a. Use or threat of force or violence; or b. Commission or threat of a dangerous act; or 3 c. Commission or threat of an act that interferes with or disrupts an electronic, communication, information, or mechanical system; and 2.When one or both of the following applies: a. The effect is to intimidate or coerce a government or the civilian population or any segment thereof, or to disrupt any segment of the economy; or b. It appears that the intent is to intimidate or coerce a government, or to further political, ideological, religious, social or economic objectives or to express (or to express opposition to) a philosophy or ideology. Terrorism exclusions are not permitted for: • Workers’ Compensation Insurance or Excess Workers’ Compensation Insurance • Commercial Automobile Financial Responsibility Limits • Personal Risk Insurance • Direct loss caused by fire or other covered perils following an act of terrorism. Because Connecticut Public Act 04-140, which permits the exclusion of damage caused by fire or other covered perils following an act of terrorism, is linked to the existence of TRIA, conditional terrorism exclusions shall not apply to direct loss caused by fire or other covered perils following an act of terrorism. Companies are required to reinstate coverage for these losses if they have been excluded. In the event TRIA is not reauthorized or otherwise extended, the permitted limited exclusion will not apply for any events that occur subsequent to TRIA’s expiration. Revised filings will be required at that time. Companies should refer to Bulletin PC-55 on the Insurance Department website http://www.ct.gov/cid/lib/cid/bullpc55.pdf Should TRIA expire December 31, 2005, the Department will permit the use of terrorism exclusions for the following types of insurance: • Professional liability • Directors & Officers liability • Errors & Omissions • Medical Malpractice • Crop insurance • Mortgage Guaranty insurance • Title insurance • Financial Guaranty insurance For an insurer or advisory organization to receive expedited approval of its exclusions for commercial lines insurance coverages, the exclusionary endorsements must comply with the terms and conditions set forth in this bulletin and be submitted in accordance with the instructions specified below. Further, the company must certify that it is filing endorsements that provide coverage at least as broad as described in this bulletin. Forms with Instructions Attached to this bulletin is a uniform filing transmittal form that has been agreed upon by this state and other states. A filer wishing to receive expedited treatment of its filing for review shall complete the EXPEDITED FILING—TERRORISM EXCLUSIONS APPLICATION Form Filing Transmittal as 5 EXPEDITED FILING— COMMERCIAL LINES TERRORISM EXCLUSIONS APPLICATION Ed. 6/1/04 This page applies to the following state(s) ___________ Department Use only Company Name(s) Domicile NAIC # FEIN # Contact Info for Filer Name and address of Filer(s) Telephone # FAX # e-mail Filing information Line of Insurance (see attachment) Company Program Title (Marketing title) (if applicable) Filing Type This application is used with: Effective Date Requested Filing date Company Tracking Number Date filing approved in domiciliary state Component/Form Name /Description/Synopsis Form # Include edition date Replacement Or withdrawn? If replacement, give form # it replaces Previous State Filing Number, if required by state 01 [ ] Replacement [ ] Withdrawn [ ] Neither 02 [] Replacement [ ] Withdrawn [ ] Neither To be complete, a form filing must include the following: • A completed Form Filing Transmittal Document for each insurer. • One copy of each endorsement. • The appropriate filing fees, if required. • A postage-paid, self-addressed envelope large enough to accommodate the return. The insurer(s) submitting this filing certifies that it is:  Using an endorsement that provides coverage that is at least as broad as described in the bulletin. ___________________________ ___________________________ ___________________________ Signature Print Name: Title: 6 COMPLETED SAMPLE FORM EXPEDITED FILING—COMMERCIAL LINES TERRORISM EXCLUSIONS APPLICATION Ed. 6/1/04 This page applies to the following state(s) ___________ Department Use only Company Name(s) Domicile NAIC # FEIN # ABC Insurance Company NY 0000-99999 99-1234567 Contact Information for Filer Name and address of Filer(s) Telephone # FAX # e-mail John Doe (Form Filing) Regulatory Compliance ABC Insurance Co. 12345 Fifth Ave New York, NY 10234 501-555-5555 501-555-5551 John.doe@abcins.com Filing information Line of Insurance (see attachment) Commercial General Liability Company Program Title (Marketing title) (if applicable) General Liability Program Filing Type Form (Endorsement) This application is used with: (Insert policy form number to which the application attaches) Effective Date Requested 08-01-04 (Enter your desired effective date) Filing date (Date Company sends filing) Company Tracking Number ABC-EP-2004-01 (Enter your filing tracking number, if applicable) Date filing approved in domiciliary state Not approved yet. Filed on same date as this filing. Component/Form Name /Description/Synopsis Form # Include edition date Replacement Or withdrawn? If replacement, give form # it replaces Previous State Filing Number, if required by state 01 Conditional Terrorism Coverage Limitation Endorsement CG 21 69 01 02 [ ] Replacement [ ] Withdrawn [x] Neither 02 [ ] Replacement [ ] Withdrawn [ ] Neither To be complete, a form filing must include the following: • A completed Form Filing Transmittal Header for each insurer. • One copy of each endorsement. • The appropriate filing fees, if required • A postage-paid, self-addressed envelope large enough to accommodate the return. The insurer(s) submitting this filing certifies that it is:  Using endorsements that provide coverage that is at least as broad as described in the bulletin. ___________________________ ___________________________ ___________________________ Signature Print Name: Title: