One of the purposes of TRIA was to establish requirements for insurers to follow to obtain payment of the federal share of insured losses from a terrorist event. But not just any terrorist event; the event must be certified by the Secretary of Treasury, in concurrence with the Secretary of State and the Attorney General, to be an act that is dangerous to human life, property, or infrastructure and to have resulted in damage within the U.S. (or outside the U.S. in the case of a U.S-flagged vessel, or on the premises of a U.S. mission). That's claim settlement, and that's what this magazine is all about. So what else does it say?

 Who Is Insured?

 TRIA requires anyone that meets its definition of insurer to participate in the program. "Insurer" is any entity, including an affiliate, that is:

 ·Licensed or admitted to engage in the business of providing primary or excess insurance in any state;

·Not licensed or admitted if it is an eligible surplus lines carrier listed on the quarterly listing of alien insurers of the NAIC, or any successor thereto;

·Approved for the purpose of offering property and casualty insurance by a federal agency in connection with maritime, energy, or aviation activity;

·A state residual market insurance entity or state workers' compensation fund; or

·Any other entity described in section 103(f) of the Terrorism Risk Insurance Program Reauthorization Act of 2007.

 The last definition also includes any entity that receives direct earned premiums for any type of commercial property and casualty insurance coverage and that meets any other criteria that the Secretary may reasonably prescribe. The Secretary of Treasury may extend TRIA to other classes or types of insurers, such as self-insurers and group life insurance.

 Familiar Provisions

 Insurers are required to absorb a specified level of insured losses — an insurer deductible — before receiving reimbursements for insured losses. The insurer must certify the amount of its direct earned premium, along with the calculation of its deductible. This places the amount of the insurer's deductible on file with the Treasury Department to expedite the processing of the insurer's initial certification of loss.

 Non-duplication provisions reduce the federal share for insured losses by the amounts provided by the federal government through any other program for those same losses. Insurers are required to determine whether or not the claimant received a duplicate recovery from any other federal source and to report that amount with their claims.

 Multiple incidents of terrorism that occur within a 72-hour period and appear to be carried out in concert or have a related purpose or common leadership will be deemed to be one incident, for the purpose of determining whether the threshold is exceeded. This is similar to language we see in property policies dealing with earthquakes and floods.

 Punitive damage amounts may not be included as insured losses. However, such amounts must be reported with the claim.

 TRIA recognizes that insurers may have other sources of recoveries for their insured losses, particularly through commercial reinsurance agreements. Should the amount of an insurer's payment from the program and the amount of recoveries from other sources exceed the aggregate amount of its insured losses, excess recovery must be returned to Treasury Department. This provision excludes recoveries from a reinsurer pursuant to an agreement whereby an insurer's obligation to repay its reinsurer takes priority over its obligation to repay the Treasury.

 Claim Settlement

 Essentially, the process of settling claims under TRIA requires insurers to gather information about insured losses and provide proof or certification that the insurer has met the conditions for payment. The amount an insurance company can recover after an insured loss follows the familiar formula of determining the deductible amount and the excess loss amount. An insurer's deductible increases each year of the program, reducing the government's share each year until the program expires. An insurer's deductible is based on the value of its direct earned premiums. Once an insurer has met its individual deductible, the federal payments cover 90 percent of the insured losses above the deductible, subject to the industry aggregate limit of $100 billion. In 2007, the insurer deductible was 20 percent of prior year's direct earned premiums.

 Special Conditions

 Insurers must provide a clear and conspicuous disclosure to the policyholder of the existence of the $100 billion cap at the time of offer, purchase, and renewal of a policy. Failure to provide this notification means that the insurer will not be eligible for reimbursement of payment of losses.

 TRIA also requires that insurers provide clear and conspicuous disclosure to the policyholder of the premium charged for the program and the federal share of compensation for insured losses under the program. These disclosures must be made on a separate line item in the policy, at the time of offer, purchase, and renewal. The disclosure of the premium must reflect the premium charged for insured losses (as determined by the revised definition of an act of terrorism).

 Of course there is much, much more to this program, including recordkeeping requirements, but that is more related to bookkeeping than claim issues.