Uniform Information Services Notes Terrorism Exclusion Appearing In Latest Policies
(RIVERWOODS, ILL., February 28, 2002) – State insurance
departments are allowing providers of commercial property and casualty
insurance to exclude large losses due to terrorism from their coverage
because there seems to be no other viable solution, according to
Uniform Information Services, a leading provider of insurance
information, forms and compliance software.
Joseph Bieniek, Regulatory Compliance Manager for Uniform’s
compliance division, says that thus far, the insurance commissioners
of 48 states have approved the language of a terrorism exclusion for
large losses, and 26 state insurance departments have already given
formal notice that they will allow the exclusion to be written into
new commercial policies and added to existing policies as they come up
"Reinsurance companies, who stand behind the bulk of the
policies written by insurers, won’t touch terrorism coverage,"
Bieniek said. "A proposed government reinsurance program for
terrorism failed in the last Congress. Without a backup, insurers feel
they could be exposed to catastrophic, bankrupting losses."
"Unheard of" Cooperation
"The insurance industry and state authorities have moved
quickly and with unheard of cooperation to craft the terrorism
exclusion and approve its use," Bieniek said.
For example, the wording of the exclusion was worked out by ISO
(Insurance Services Office, Inc.), one of several private companies
that normally charge for the use of their copyrighted forms and policy
"ISO consulted extensively with the National Association of
Insurance Commissioners (NAIC) to develop the language of the
exclusion, and promised the Association that they would not charge
anyone for the use of the language, whether they were ISO members or
not," Bieniek noted.
While the involvement of the NAIC in developing the exclusion’s
language is an indication that it will be accepted by the individual
state departments of insurance, it may not be entirely smooth sailing
for companies adopting the exclusion, Bieniek warned.
"The states are now beginning to issue formal notices on the
exclusion, and at least some are requiring companies adopting it to
explain why they shouldn’t lower their rates," he noted.
Furthermore, three of the largest states, California, Florida and
New York, have yet to endorse the exclusion either formally or
"The political climate in New York has led them to decide not
to allow the exclusion at this time," Bieniek observed.
Exclusion Not Total
Policies with the exclusion will still cover losses due to
terrorism as long the incident does not involve the release of
nuclear, biological or chemical material, and as long as damage to all
types of property doesn’t exceed $25 million.
"That 25 million dollar level can be exceeded very
quickly," Bieniek said. In addition, policies with the exclusion
will still be obliged to cover any property damage losses directly
attributable to fire, even if the fire was caused by an incident of
"In addition, it’s important to remember that the exclusion
only applies to commercial types of insurance," Bieniek added.
Personal lines aren’t covered, and the NAIC has indicated that they
won’t approve an exclusion for them.
About Uniform Information Services
Uniform is the nation’s number-one provider of compliance related
services for the property and casualty insurance industry. The company
was founded in Chicago in 1917 as a non-profit to provide standardized
uniform-language insurance forms. Today, the company is part of CCH
INCORPORATED Business and Finance Group, and is a leader in the
advancement of property and casualty compliance and insurance forms
automation. To learn more about Uniform, visit the company’s web
site at www.UniformInformationServices.com
or call 800-503-1896.
About CCH INCORPORATED
CCH INCORPORATED, founded in 1913, has served four generations of
business professionals and their clients. The company produces
approximately 700 print and electronic products for securities, tax,
legal, banking, securities, human resources, health care and small
business markets. CCH is a wholly owned subsidiary of Wolters Kluwer
North America. The CCH web site can be accessed at cch.com.
The CCH business and finance group web site can be accessed at business.cch.com.
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