The Office of General Counsel issued the following opinion on April 1, 2003, representing the position of the New York State Insurance Department.
Re: Livestock Insurance and Terrorism Risk Insurance Act of 2002.
Would animal mortality insurance be considered to be "livestock insurance" within the meaning of the Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297) (the Act)?
Yes, the Department would consider animal mortality insurance to be livestock insurance within the meaning of the Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297) (the Act), as interpreted by the Department of Treasury.
The Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297) (the Act), among other things, establishes a temporary Federal program (the Program) that provides a federal backstop covering certain acts of terrorism in regard to "property and casualty insurance", as that term is defined in Section 102(12) of the Act.
"Livestock insurance" is not included within the Section 102(12) definition of "property and casualty insurance". Specifically, § 102(12)(B) of the Act excludes "[f]ederal crop insurance issued or reinsured under the Federal Crop Insurance Act, or any other type of crop or livestock insurance that is privately issued or reinsured." The Act, however, does not define the meaning of "livestock insurance." Nor does it use the term "animal mortality insurance."
The inquirers company writes animal mortality insurance in New York on horses. The inquirer questions whether such insurance would be "livestock insurance" and therefore would not be included within the scope of the Act.
In interpreting the Federal Act, the Department of the Treasury (Treasury) has issued two Interim Guidances on December 3, 2002 and December 18, 2002. In Section II(C) of the December 3 Guidance, Treasury, pending the issuance of regulations, deemed certain lines of insurance1 from the National Association of Insurance Commissioners (NAIC) Exhibit of Premiums and Losses (commonly known as Statutory page 14) to be included in the Program. The Guidance goes on to state:
As interim guidance to facilitate implementation, Treasury deems the phrase "any other type of crop or livestock insurance that is privately issued or reinsured" to mean Multiple Peril Crop insurance reported on Line 2.2 of the NAICs Exhibit of Premiums and Losses (commonly know [sic] as Statutory Page 14.
In the December 18 Guidance, in Section D, Treasury responds to two questions: 1. Whether the property and casualty lines of coverage described in the December 3 Guidance are the only lines covered under the Program; and 2. Whether all types of insurance coverage reported under the lines of coverage listed in the Guidance are covered under the Program. Treasurys response to both questions is the same:
Until Treasury proposes and issues regulations concerning the definition of property and casualty insurance for purposes of the Program, insurers should refer to the definition contained within the Act and the guidance provided in Treasurys previous interim guidance. As part of the rulemaking process, interested parties will have a chance to provide comments on Treasurys proposed regulation on this definition.
On February 28, 2003, Treasurys Interim Final Regulation (31 CFR 50) was published in the Federal Register. Section 50.5(l) defines "property and casualty insurance" for the purposes of the program. Line 2.2 is not included among the lines of insurance that Treasury deems to be included in the program. Another line that is not included is line 33, which is Aggregate for other lines. Insurers detail their other business not specifically listed on this line.
Neither the term "livestock insurance" nor "animal mortality insurance" is used in the New York Insurance Law. However, we understand the latter term to refer to insurance that is effectively term life insurance on animals. Animal mortality insurance may cover loss by death from natural causes, such as illness or disease, or from accident, fire or lightning. Such insurance comes within the meaning of "animal insurance", which is a kind of insurance under New York law and which is defined in N.Y. Ins. Law § 1113(a)(11) (McKinney Supp. 2003) as follows:
(11) "Animal insurance" means insurance against loss of or damage to any domesticated or wild animal resulting from any cause."
Animal insurance is usually reported under line 33 (Aggregate for other lines). Since animal mortality insurance is not reported on one of the lines specified in the Treasury Guidance, pending either further guidance from the Treasury or the final regulations, it is our view that such insurance would not be covered under the Program.
For further information you may contact Principal Attorney Paul Zuckerman at the New York City Office.
1 While in New York insurers are licensed to write different kinds of insurance, as enumerated in N.Y. Ins. Law § 1113(a) (McKinney Supp. 2003), insurers do not report business on the annual statement by the kinds of insurance. The term "lines of insurance" relates to the lines of business specified in the annual statement.