The Property Casualty Insurers Association of America (PCI) recently submitted comments to the United States Department of Treasury seeking improvements to the proposed “Final Netting” rule that would close the time period when insurers could request reimbursement for covered terrorism claims.
Final netting would be the process by which Treasury would make final payments to, and recoveries from, insurers following one or more terrorism incidents that trigger the Terrorism Risk Insurance Act (TRIA) program. “Should the unthinkable happen and another large terrorist attack occurs, smooth operation of TRIA’s reinsurance mechanism would be critical to maintaining a healthy U.S. insurance industry to protect businesses and communities,” said David Golden, senior director of commercial lines at PCI.
“Treasury is in some ways attempting to create a ‘one size fits all’ procedure that may not be appropriate for all insurers in every circumstance,” said Golden. “We suggest various improvements that would help preserve insurers’ ability to recover long-tail losses.”
PCI’s large and diverse membership puts it in a unique position to address the impact that this proposed rule could have on different types of insurance companies and on the operation of the TRIA program. PCI recommends that Treasury allow a comment period when it is ready to complete the final netting process. In addition, PCI recommends several criteria to add to the published list of what Treasury would consider in determining if the time was right to close out a program year.
“In crafting the final netting rule, great care must be taken to ensure that the TRIA program responds equally well for small, mid-size and large insurers with varying risk exposures,” said Golden. “TRIA must also work as well for general liability and workers compensation as it does for property coverage.”