A regional insurance carrier is undergoing a comprehensive review of its underwriting manuals and claims procedures to ensure alignment with the Terrorism Risk Insurance Act (TRIA). The review board is analyzing the carrier's obligations regarding policy offers, line-of-business applicability, and federal reimbursement mechanics. Based on federal TRIA requirements, which of the following statements are correct? (Select all that apply.)
- The insurer is required to offer terrorism coverage for commercial property and casualty risks, but the insured retains the right to voluntarily reject this coverage.Answer
- BThe state Insurance Commissioner possesses the legal authority to officially certify an event as an act of terrorism to trigger the program.
- CFollowing a certified act of terrorism, the federal government assumes direct liability and processes claims as the primary insurer.
- The statutory provisions and federal backstop explicitly exclude personal lines of insurance, such as homeowners and personal auto policies.Answer
Answer
The correct statements are that insurers must mandate an offer of terrorism coverage for commercial risks (which the insured can decline), and that personal lines of insurance are excluded from TRIA.
The correct statements accurately reflect two foundational rules of TRIA: first, the 'make available' provision requires insurers to offer the coverage on commercial property and casualty policies while allowing the insured to decline it; second, the legislation is strictly aimed at commercial economic stability and explicitly excludes personal lines such as homeowners and personal auto insurance.
Step-by-Step Solution
Key Concept
TRIA mandates that commercial P&C insurers offer terrorism coverage (which can be rejected) and provides a federal financial backstop, but it does not apply to personal lines, nor does it replace the primary insurer's duty to process claims.