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ISO policy contract language for terrorism cover triggered

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ISO policy contract language for terrorism cover triggered

The sunset of the federal government's terrorism insurance backstop will trigger the activation of Insurance Services Office Inc.'s conditional commercial policy contract language for terrorism cover, ISO said Thursday.

Terms of the policy endorsements become effective Jan.1, 2015, with policies to which they are attached, ISO said in a statement.

Up to a sublimit, the endorsements offer insurers exclusions for losses from acts of terrorism and for losses from acts involving nuclear, biological or chemical terrorism, as well as providing a means to cover terrorism losses not otherwise excluded.

The conditional endorsements were introduced in 2004, before the first extension of the program, which was created by the Terrorism Risk Insurance Act of 2002.

“ISO recognized the uncertainty created by Trio's hard ending back in 2004, when the first terrorism insurance act was in place,” Beth Fitzgerald, president of ISO Insurance Programs and Analytic Services, said in the statement.

“The potential expiration of TRIA now, as then, creates potential problems in addressing the risk of terrorism for both insurers and policyholders. ISO's terrorism portfolio has always recognized that the potential disappearance of a federal backstop could alter risk midterm and cause a reevaluation of the ability to cover the terrorism exposure.”

The terrorism insurance program will expire on Dec. 31. The House of Representatives had approved legislation amending and extending the program through 2020, but the Senate failed to follow suit before adjourning earlier this week.

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