Environmental Policy/Terrorism

Question 1

Site Specific Environmental Liability

Answer 1

• 3rd party claims from gradual or sudden release of pollutants from a specific location

Question 2

Site Specific Environmental Liability: Exclusions

Answer 2

• Known pre-existing conditions
• Nuclear
• Property lease to others
• Deliberate non-compliance

Question 3

Remediation Stop Loss - Policy

Answer 3

• Facilities real estate sales: when property is known to have environmental issues and is being sold
• Estimation is made on clean up costs: policy will cover any costs that go over the estimate
• Can protect your interests

Question 4

Why Was TRIA Created?

Answer 4

• Terrorism Risk Insurance Act
• Created to serve as a back drop for insurers to offer coverage
• Allows the economy to recover and business to feel secure that coverage can be acquired

Question 5

Purpose of TRIA

Answer 5

• Terrorism attacks are too unpredictable for insurers to priorly price the exposure (Dynamic Risk)
• Govt. theory was for private insurers to eventually handle (Did not occur)
• Necessitated ongoing extensions

Question 6

TRIA Role In Insurance Process

Answer 6

• Government backs up or reinsures the terrorism risk for insurance carriers; similar to flood
• Won’t allow insurers to get wiped out from one catastrophic loss

Question 7

Terrorism Definition

Answer 7

• Must be certified act of terrorism by govt.
• Violent act that is dangerous to human life, property or infrastructure,
• Results in damage within the USA
• Must be committed by individuals in an effort to coerce the civilian population, influence US Policy, or affect US Govt. conduct by coercion

Question 8

Federal Participating Trigger

Answer 8

• Fed does not get involved until industry verified costs exceed 100 million in a calendar year (Industry Absorbs the Costs)
• Deductible of 20% of previous year earned dollars
• Then insurer pays 15% of all losses exceed deductible; Fed pays 85%
• Cap of 100 Billion
• Above 100 Billion, Treasury Secretary determines a pro rata share formula for how losses will be paid

Question 9

FLOOD and TRIA difference

Answer 9

• Insurer does not pay in flood; Govt. retains all

- In TRIA Insurance shares losses

Question 10

Terrorism Formula

Answer 10

Insurer Deductible = (.02)(Previous Year $)
Insurer Loss Payout = (.15)(Losses over deductible)
Govt. = (.85)(Losses Over Deductible)