ISO Files Conditional Terrorism Insurance Policy Endorsements

JERSEY CITY, N.J., May 3, 2004 — Insurance Services Office, Inc. (ISO) has asked state regulators to approve conditional commercial policy contract language to address terrorism coverage should Congress not extend the federal terrorism insurance backstop beyond its Dec. 31, 2005, "hard ending." Congressional action to extend, modify or renew the federal backstop is uncertain.

The Terrorism Risk Insurance Act of 2002 (TRIA) was passed in the aftermath of the Sept. 11, 2001, attack on the World Trade Center and the Pentagon. It provides federal financial backing for insurance losses resulting from events certified by the Secretary of the Treasury as "acts of terrorism."

As early as September 2004, insurers will begin taking action on policies with effective dates of Jan. 1, 2005, and later. These policies, some of which include terrorism coverage, have terms that extend beyond Dec. 31, 2005 — when the federal backstop may no longer exist. The disappearance of a federal terrorism insurance backstop will cause insurers to reevaluate their ability to cover terrorism.

The optional endorsements filed today will help insurers and policyholders manage potential coverage problems posed by the Dec. 31, 2005, hard ending of the federal backstop by providing critical tools needed now to make underwriting decisions on terrorism coverage in an uncertain post-TRIA environment. ISO filed the conditional endorsements under its commercial lines programs for regulatory approval in all jurisdictions. The endorsements provide participating ISO insurers several options, including:

  • a total exclusion of losses from acts of terrorism;
  • an exclusion for losses resulting from acts involving nuclear, biological or chemical terrorism; and
  • a means to cover terrorism losses not otherwise excluded up to a sublimit (a lesser amount than the full policy limit).

These optional, conditional endorsements will be available for use on policies with terms that extend beyond Dec. 31, 2005. If the federal backstop expires, the terms of the endorsements become applicable on Jan. 1, 2006, and would apply to any losses that occur on or after that date. The endorsements will also take effect if the backstop is extended but increases insurers' share of losses or risk of loss from terrorism events.

These conditional endorsements are being filed now to give insurers sufficient time to make any necessary changes in their operational systems.

About ISO
ISO is a leading source of information, products and services related to property and liability risk. For a broad spectrum of commercial and personal lines of insurance, ISO provides data, analytical and decision-support products; consulting; data processing; and technical, statistical and actuarial services. ISO field services include on-site rating and underwriting services and the evaluation of community loss-mitigation efforts. ISO's products help customers with sales and prospecting, underwriting, rating and quoting, customer management, policy administration, product development, claims administration and fraud detection. ISO's AIR Worldwide subsidiary provides technologies to assess and manage natural and man-made extreme-event risk. Through its ISO Claims Services, Inc. (iiX unit) and IntelliCorp subsidiaries, ISO provides motor vehicle reports and criminal-records information and through its AscendantOne unit delivers rating, quoting and policy-administration solutions. Solutions from ISO's Quality Planning Corporation (QPC) subsidiary enable insurers to identify auto premium leakage and recover lost premium. In the United States and around the world, ISO serves insurers, reinsurers, agents, brokers, self-insureds, risk managers, insurance regulators and other government agencies.

Release: Immediate

Giuseppe Barone / Erica Helton
MWW Group (for ISO)
201-507-9500 /

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