One of the most pressing issues for ABIA members is the question of retroactivity. There was no mention of retroactivity in the guidance, which could be interpreted as Treasury not considering the Program as having a gap. ABIA, along with AIA and CIAB, have interpreted the guidance in this way and assume there is no gap in coverage or that the law applies retroactively to 1/1/15.
Treasury does not appear inclined to concern itself with other issues surrounding the delayed reauthorization. Issues of stand-alone and gap coverage written during January 1-12, for example, do not impact TRIA’s requirements, and likely are considered a private business-to-business matter as far as Treasury is concerned.
Below are additional ABIA and CIAT's interpretations of the guidance:
- The NAIC Model Disclosures, now updated, have Treasury’s blessing.
- Insurers have until 13 April 2015 (roughly 90 days from enactment) to make a new offer if needed.
- No new offer is needed if an insurer forbore on exercising a conditional exclusion; however, insurers must give written notice of forbearance and state that the forbearance is effective from January 1, 2015. This creates an incentive for insurers to forbear on exercising conditional exclusions by relieving them from having to make a new terrorism offer if they forbear and confirm continuous coverage.
- Earlier offers declined by the policyholder do not require new offers so long as the offer "did not materially differ in price from that which the insurer would have offered" following the new enactment. This appears intended to target the insurers who, in connection with policies currently in effect but without inclusion of terrorism, offered terrorism cover at very high prices due to the uncertainty over TRIA’s future. Left ambiguous here is whether the prior offer must have been a TRIA compliant offer (presumably so, but does not so state), as well as what is meant by "materially differ in price."