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Department Adopts Changes to Existing Regulations to Allow for Changes in Terrorism Coverage Without Penalty

Superintendent Gregory V. Serio today announced the adoption of amendments that will prohibit insurers from issuing terrorism insurance policies that contain provisions that penalize businesses by charging for full policy term premium upon cancellation prior to policy expiration.

"It has come to my attention that some insurers participating it the Terrorism Insurance Program are issuing policies containing cancellation provisions that provide that premiums are fully earned upon policy issuance and this practice will not be tolerated," said Serio. "The new amendments will allow New York’s businesses to continue to shop around for terrorism insurance coverage best suited to their needs without the unnecessary worry of penalties upon cancellation."

The practice of collecting unearned premiums unjustly enriches such insurers and is contrary to Terrorism Risk Insurance Act’s (TRIA) goal of making coverage more affordable. Treating premiums as fully earned upon policy issuance violates fundamental insurance premium recognition rules, which generally provide that a policy premium is earned evenly over the entire policy period. In addition, this approach is inconsistent with rating rules filed and approved by the Department for the types of insurance business covered by these amendments.

The insurance community is greatly aided by the federal backstop for terrorism losses through TRIA. The benefit of affordable and available insurance coverage for acts of terrorism should be provided to the insurance consumers for whom TRIA was designed. These amendments prohibit the continuation of the inequitable practice of treating premiums as fully earned upon policy issuance, which results in an excessive rate in violation of the rating principles embodied in Article 23 of the Insurance Law.

These amendments are applicable to authorized insurers and policies placed by an excess line broker in the excess line markets. The 6th amendment to Regulation 57 and the 8th Amendment to Regulation 41 are available on the Department’s Web site at


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