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SUBJECT: VOLUNTARY EXPEDITED FILING PROCEDURES FOR EXCLUSIONS RELATED TO ACTS OF TERRORISM
DATE: December 27, 2001
The purpose of this bulletin is to inform you of the decision in this state to approve certain limited exclusions for acts of terrorism and to provide a voluntary procedure for insurers to use to expedite the filing and timely review of these limited exclusions. The Nebraska Department of Insurance was involved in recent discussions at the National Association of Insurance Commissioners (NAIC) related to this issue. In a recent conference call the members of the NAIC adopted a motion that "if the Congress adjourns without enacting federal terrorism legislation, the states should grant conditional approval to commercial lines endorsements that exclude coverage for acts of terrorism consistent with the exclusion framework developed by ISO. To the extent permitted by state law, such approvals would sunset or be withdrawn 15 business days after the President signs into law a federal backstop to address insurance losses attributed to acts of terrorism, or be subject to other conditions on the approval consistent with state law." By this bulletin, we are informing you of our decision to act in a manner consistent with the recommendation from the NAIC membership. We believe this to be the best course of action as it balances the need of insurers to have some certainty related to solvency concerns with the business consumer's concerns that their businesses not be subject to uninsured events.
To date many unacceptable exclusions have been filed by insurers to be attached to commercial lines insurance products. These endorsements will be disapproved for use in this state as inconsistent with the interests of public policy and inconsistent with Neb.Rev.Stat. § 44-7513.
Instead of approving the very broad total exclusions of coverage for acts of terrorism, the Nebraska Department of Insurance intends to grant approval to exclusions that provide the same or better coverage than the series of optional endorsements developed by the Insurance Services Office, Inc. (ISO) and which have been approved by this Department. The endorsements developed by ISO and approved by the Department are as follows:
COMMERCIAL PROPERTY INTERLINE ENDORSEMENT: IL 09 40 01 02
COMMERCIAL PROPERTY INTERLINE ENDORSEMENT: IL 09 42 01 02
COMMERCIAL GENERAL LIABILITY ENDORSEMENT: CG 21 69 0102
COMMERCIAL GENERAL LIABILITY ENDORSEMENT: CG 31 42 01 02
COMMERCIAL GENERAL LIABILITY ENDORSEMENT: CG 31 43 01 02
COMMERCIAL LIABILITY UMBRELLA ENDORSEMENT: CU 21 29 01 02
BUSINESSOWNERS ENDORSEMENT: BP 05 12 02
BUSINESSOWNERS ENDORSEMENT: BP 05 13 01 02
FARM LIABILITY ENDORSEMENT: FL 10 30 01 02
Note that the following endorsements have NOT been approved, owing to their nonconformance with the Standard Fire Policy:
COMMERCIAL PROPERTY INTERLINE ENDORSEMENT: IL 09 41 01 02
BUSINESSOWNERS ENDORSEMENT: BP 05 11 01 02
In an unprecedented move in recognition of the seriousness of the situation, ISO has indicated that it will permit the use of its copyrighted language by any insurer, including one that is not a current licensee of ISO for policy forms. Insurers that are current licensees of ISO for policy forms can use the new language pursuant to their current ISO agreements and approval by this state of its forms. If you are properly affiliated with ISO, and have given them authorization to file on your behalf, no further action is needed on your part.
Any insurer that desires to use the language contained in the ISO forms, but that does not have a license agreement in effect with ISO for policy forms, is required to execute a short, limited license agreement that authorizes the use of the new language. ISO has indicated that there will be no fee for this limited license. You may contact ISO's Customer Service department directly for more information at 1-800-888-4ISO(4476) using option 2. You may also contact ISO at "info@ISO.com."
The only filings that must be made with the Department of Insurance are when an insurer wishes to use exclusionary wording for terrorism that is different than that contained in the approved ISO endorsements.
Terrorism means activities against persons, organizations or property of any nature:
Again, please note that filings need not and should not be made for endorsements using the ISO language, regardless of whether the insurer is customarily affiliated with ISO for the filing of such endorsements or if it has merely availed itself of the limited licensing which ISO is offering for these endorsements. Also note again that copies of endorsements with the ISO wording do not need to be filed even if the insurer reformats the text, uses a different form number, or adds the company name or logo. The only filings that need to be made are for endorsements that use different exclusionary language than the ISO endorsement.
As is being done generally by insurance departments as a result of the NAIC action, the Nebraska Department of Insurance will provide expedited processing and approval of an exclusionary endorsement that is more liberal to policyholders than the parallel ISO endorsement. For an insurer to receive expedited approval of an exclusion for commercial lines insurance coverages, the exclusionary endorsement must comply at a minimum with the terms and conditions set forth in this bulletin and be submitted in accordance with the instructions specified below. You must explain the manner in which your endorsement provides coverage that is at least as broad as the approved ISO endorsements.