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How Terror Cover Calculated Affects Agencies

Independent insurance agencies are incurring costs making sure that clients receive notices from carriers regarding coverage offered under the Terrorism Risk Insurance Act (TRIA). How...
February 25, 2003

Independent insurance agencies are incurring costs making sure that clients receive notices from carriers regarding coverage offered under the Terrorism Risk Insurance Act (TRIA). How carriers count coverage increases under TRIA matters, according to PIA National Federal Affairs Committee Chairman Robert Page of Houma, Louisiana. "There is some issue about compensation back to the agent because of the added cost to the agency for following through on the federal mandate," Page told the National Underwriter.  He said this raises the issue of compensation for the work agents have done for carriers. If companies count the TRIA increases as "surcharges," Page notes, agents do not receive compensation for the time and effort their offices have spent making sure the notices have been sent and either accepted or rejected.

What It Means to Agents:  PIA National has gone to bat for agents on this issue. PIA National believes that any and all charges for terrorism insurance coverage under the Terrorism Risk Insurance Act (TRIA) are a part of premium, subject to the payment of commissions, not a so-called "surcharge." Accordingly, comments have been filed with the U.S. Treasury Department requesting a clarification affirming this. We will update you on this as developments occur.

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