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TRIA Premiums Are Not Surcharges Says PIA

PIA is working with carrier trades in preparing our final comments to the U.S. Treasury Department on a final rule on how the portion of...
March 17, 2003

PIA is working with carrier trades in preparing our final comments to the U.S. Treasury Department on a final rule on how the portion of premium collected for terrorism insurance under the Terrorism Risk Insurance Act (TRIA) is classified. Final comments are due by March 31, 2003. Some insurers have referred to the TRIA notice/offer of coverage as a "surcharge," but PIA has found this is the exception, not an industry-wide practice.

In working with other carrier trades, PIA knows that most are supporting our position, shared by other producer trades, that the front-end TRIA notice/coverage is premium and thus subject to whatever regular commission or earnings agreements carriers have in place with their producers.

However, should there be a covered event and the Treasury Department determines a recoupment charge for monies paid out of the Treasury is appropriate, the Treasury Department will require all carriers to pass-through such a charge to all of their policyholders, not just C/Ls. In such a case, that will be considered a surcharge and treated accordingly, not subject to any earnings, commission or otherwise.

What It Means to Agents:  PIA is confident that Treasury will embrace this understanding in their final rule. If it does, this will help protect agents' commissions.

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