TO:Insurers Offering Property and Casualty Policies in Massachusetts
FROM:Julianne M. Bowler, Commissioner of Insurance
DATE:January 14, 2005
RE:Massachusetts Form and Rate Filing Requirements and Procedures to Supplement Bulletin 2004-10 Regarding Uncertainty Related to Expiration of the Terrorism Risk Insurance Act of 2002 ("TRIA")

On November 19, 2004, the Division of Insurance ("Division") released Bulletin 2004-10 regarding "Uncertainty Related to Expiration of the Terrorism Risk Insurance Act of 2002 ("TRIA") Exclusions Related to Acts of Terrorism." The Division is issuing this bulletin to address three issues that have arisen in the course of discussing the processes necessary to implement Bulletin 2004-10.

First, when the Division issued Bulletin 2002-18 regarding "Massachusetts Form and Rate Filing Requirements and Procedures under the Terrorism Risk Insurance Act of 2002," the Division had written that for "the purposes of terrorism exclusions and/or limitations, the Division is waiving the usual filing requirements of 1) the lockbox form; 2) the filing fee; and 3) the checklist(s)." Please note that this provision only applies to forms submitted under Bulletin 2002-18 and does not apply to forms submitted under Bulletin 2005-01.

Second, in Bulletin 2004-10, the Division noted that it will not accept terrorism exclusions for workers' compensation, automobile or fire coverage which are not permitted under Massachusetts law. Following further review, it appears that while such exclusions are not permitted for use with private passenger automobile insurance policies, they are permitted for use with commercial automobile insurance policies. This bulletin is being sent partly to confirm that the Division will permit the filing of such endorsements for use with commercial automobile insurance policies.

Third, among the provisions of Bulletin 2004-10, the Division indicated that it would permit insurers to use conditional terrorism endorsements that may exclude or limit coverage, provided that the insurer obtains, on the endorsement or associated document, the insured's signature in which the insured indicates that he or she understands that without an extension of TRIA, the policy's coverage for terrorism-related claims will change as described in the endorsement. Following additional consideration of this issue, the Division is also sending this bulletin to notify insurers that the Division, as an acceptable alternative to the signature requirements of Bulletin 2004-10, will permit carriers to submit conditional endorsements for review and approval by the Division, provided that they submit a certification with the Division that it is in compliance with the appropriate requirements of Bulletins 2004-10 and 2005-01 and has instituted the following procedures to:

  1. Make coverage for certified acts of terrorism available in accordance with Section 103 (c) of the Terrorism Risk Insurance Act 2002 ("TRIA");

  2. Provide clear and conspicuous disclosure of the premium for such coverage in accordance with Section 103 (b) of TRIA; and

  3. Independent from (or in addition to) any conditional endorsement, provide a clear and conspicuous notice at the time that a new policy is offered or issued or a policy is renewed of any change in coverage for losses resulting from an act of terrorism if TRIA terminates or is extended under different terms. The change in coverage will apply regardless of whether the insured elected to purchase coverage for certified acts of terrorism at the inception of the policy.

An insurer may comply with this certification by using the form attached as Exhibit  pdf format of Bulletin 2005-01_ExA.pdf
to this Bulletin or any other form or certification that includes the elements in the paragraph above. This requirement also applies to any insurer that is relying on a filing submitted on its behalf by a licensed rating organization.

Although insurers are not required to submit the notice required under item 3 for review, the Division would like insurers to be aware that it considers the notice attached as Exhibit  pdf format of Bulletin 2005-01_ExB.pdf
as an example of an appropriately clear and conspicuous notice to be used as an alternative to the signature requirements of Bulletin 2004-10.