MDI addresses insurers? filing terrorist exclusions

According to a recent announcement from Scott Lakin, director of the Missouri Department of Insurance, MDI has rejected insurance company proposals to exclude terrorist-related damages from home, auto and other personal property policies unless the insurer can indicate actual liability dangers to its own financial solvency in providing these coverages.

At the present time, life and health insurers cannot apply terrorist exclusions unless MDI approves them or does not take action on company filings.

Of the 47 homeowners' and related policies for which the MDI has received insurance company exclusion filings, 35 have been withdrawn. The MDI has notified the remainder of their need to withdraw.

Of the 12 insurers who filed exclusions on their private auto policies, all have been withdrawn, according to the department.

Lakin said it was necessary to add "common sense to the equation" in weighing the needs of Missouri's businesses and residents. He said it was difficult to say if insurers "face such an unpredictable and potentially expensive loss from terrorism that they can drop such coverage from policies and leave Missourians totally unprotected."

The MDI, in concert with the National Association of Insurance Commission-ers, is establishing what insurers must cover following Sept. 11. After working with the Insurance Services Office, the two organizations now accept that damage done from most terrorist events will be covered for business insurance policyholders unless the damage exceeds $25 million.

Lakin said MDI has a limited legal ability in regulating commercial insurers, but it will begin administrative proceedings against companies that attempt to either exclude terrorist coverage or restrict benefits from the ISO standard.

In regard to workers' compensation policies, Missouri state law does not permit insurers to sell coverage that excludes terrorism-related injury and/or death claims to employees, Lakin said.

In a bulletin to all property and casualty insurers, Lakin outlined the MDI's position, and stated that although MDI has not yet formally addressed life and health insurance and terrorism coverage, he does not expect that the department's final position on those policies will differ from standards for auto and homeowners' plans.