SERFF Tracking #: WSRB State Tracking #: Company Tracking #: DP-2015-OTEFO

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1 Publication Date: Thursday, February 26, 2015 DWELLING PROGRAM TRIA FORMS AND RULES CHANGES Circular DP The purpose of these filings is to introduce changes necessary to bring WSRB's forms and rules into compliance in response to the provisions of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (H.R.26). This act extends the federal Terrorism Risk Insurance Program for a six year period through December 31, DP-2015-OTEFO DP-2015-OTEMU COMPANY ACTION If you have authorized us to file on your behalf and decide: To use our revision and effective date, you are NOT required to file anything with the Insurance Department. These changes are applicable to all policies effective on or after To use our revision with a different effective date, to use our revision with March 1, 2015 modification, or to NOT use our revision, you must make an appropriate submission with the Insurance Department. In all correspondence with the Insurance Department regarding this revision, include the WSRB Filing Designation Number Compliance Department th Avenue Suite 300 Seattle, WA wsrbcompliance@wsrb.com not this Circular number. MANUAL DISTRIBUTION Insurance Service Office, Inc. will print and distribute revised manual pages prior to the effective date. A complete copy of the filing is available at the We offer nationwide Actuarial & Compliance services, individualized based upon your specific company needs for all lines of business. Please contact us at info@bmiconsultants.com WSRB web site using the Compliance Filings Library. Circular notification is available by only. Register to receive electronic notification at the Compliance Filings Library page inside the Members section at wsrb.com

2 SERFF Tracking #: WSRB State Tracking #: Company Tracking #: DP-2015-OTEFO State: Washington Filing Company: Washington Surveying and Rating Bureau TOI/Sub-TOI: 01.0 Property/ Personal Property (Fire and Allied Lines) Product Name: DWELLING PROGRAM TRIA Project Name/Number: DP-2015-OTEFO/DP-2015-OTEFO Filing at a Glance Company: Product Name: State: TOI: Sub-TOI: Filing Type: Washington Surveying and Rating Bureau DWELLING PROGRAM TRIA Washington 01.0 Property Personal Property (Fire and Allied Lines) Form Date Submitted: 02/20/2015 SERFF Tr Num: SERFF Status: State Tr Num: State Status: Co Tr Num: Co Status: Effective Date Requested (New): Effective Date Requested (Renewal): Author(s): Reviewer(s): WSRB Closed-Approved Approved DP-2015-OTEFO Approved 03/01/ /01/2015 Disposition Date: 02/23/2015 Disposition Status: Erica Brownell, Jim Antush Dennis Godwin (primary) Approved Effective Date (New): 03/01/2015 Effective Date (Renewal): 03/01/2015 PDF Pipeline for SERFF Tracking Number WSRB Generated 02/24/ :40 PM

3 SERFF Tracking #: WSRB State Tracking #: Company Tracking #: DP-2015-OTEFO State: Washington Filing Company: Washington Surveying and Rating Bureau TOI/Sub-TOI: 01.0 Property/ Personal Property (Fire and Allied Lines) Product Name: DWELLING PROGRAM TRIA Project Name/Number: DP-2015-OTEFO/DP-2015-OTEFO General Information Project Name: DP-2015-OTEFO Project Number: DP-2015-OTEFO Reference Organization: Reference Title: Status of Filing in Domicile: Domicile Status Comments: Reference Number: Advisory Org. Circular: Filing Status Changed: 02/23/2015 Company Status Changed: 02/24/2015 State Status Changed: 02/23/2015 Created By: Erica Brownell Corresponding Filing Tracking Number: DP-2015-OTEMU Filing Description: Deemer Date: Submitted By: Erica Brownell This filing revises DP 05 37, Cap On Losses From Certified Acts Of Terrorism and DP 05 38, Cap On Losses From Certified Acts Of Terrorism; Disclosure Pursuant To Terrorism Risk Insurance Act, in response to the Terrorism Risk Insurance Program Reauthorization Act Of Company and Contact Filing Contact Information Erica Brownell, Compliance Director th Avenue Suite 300 Seattle, WA Filing Company Information Washington Surveying and Rating Bureau th Avenue, Suite 300 Seattle, WA (206) ext. [Phone] [Phone] [FAX] CoCode: Group Code: Group Name: FEIN Number: State of Domicile: Washington Company Type: Rating Organization - Property State ID Number: 1425 Filing Fees Fee Required? Retaliatory? Fee Explanation: State Specific No No Is the Co Tracking # field populated on the General Information Tab? (yes/no): yes Form Tab Only - Are the Form # and Form Description fields populated corresponding to the attached form? (yes/no): yes PDF Pipeline for SERFF Tracking Number WSRB Generated 02/24/ :40 PM

4 DWELLING PROPERTY DP THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CAP ON LOSSES FROM CERTIFIED ACTS OF TERRORISM If: 1. Aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Yearcalendar year (January 1 through December 31); and 2. We have met our insurer deductible under the Terrorism Risk Insurance Act; we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata allocation in accordance with procedures established by the Secretary of the Treasury. "Certified act of terrorism" means an act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United States in accordance with the provisions of the federal Terrorism Risk Insurance Act, to be an act of terrorism pursuant to the federal Terrorism Risk Insurancesuch Act. The federal Terrorism Risk Insurance Act includes the following criteria in a "certified act of terrorism": 1. The act resulted in insured losses in excess of $5 million in the aggregate, attributable to all types of insurance subject to the Terrorism Risk Insurance Act; and 2. The act: a. Is violent or dangerous to: (1) Human life; (2) Property; or (3) Infrastructure; and b. Is committed by an individual or individuals; and c. Is part of an effort: (1) To coerce the civilian population of the United States; or (2) To influence the policy or affect the conduct of the United States Government by coercion. R E V I S E D DP Insurance Services Office, Inc., 2015 Page 1 of 1

5 POLICY NUMBER: DWELLING PROPERTY DP THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CAP ON LOSSES FROM CERTIFIED ACTS OF TERRORISM; DISCLOSURE PURSUANT TO TERRORISM RISK INSURANCE ACT SCHEDULE SCHEDULE - PART I Terrorism Premium (Certified Acts): Additional information, if any, concerning the terrorism premium: SCHEDULE - PART II Federal share of terrorism losses % Year: 20 (Refer to Paragraph C. in this endorsement) Federal share of terrorism losses % Year: 20 (Refer to Paragraph C. in this endorsement) Information required to complete this Schedule, if not shown above, will be shown in the Declarations. A. Cap On Losses From Certified Acts Of Terrorism If: 1. Aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a Program Year (January 1 through December 31) calendar year; and 2. We have met our insurer deductible under the Terrorism Risk Insurance Act; we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata allocation in accordance with procedures established by the Secretary of the Treasury. "Certified act of terrorism" means an act that is certified by the Secretary of the Treasury, in concurrence with the Secretary of State and the Attorney General of the United Statesin accordance with the provisions of the federal Terrorism Risk Insurance Act, to be an act of terrorism pursuant to the federal Terrorism Risk Insurance such Act. The federal Terrorism Risk Insurance Act includes the following criteria in a "certified act of terrorism": DP Insurance Services Office, Inc., 2015 Page 1 of 2

6 1. The act resulted in insured losses in excess of $5 million in the aggregate, attributable to all types of insurance subject to the Terrorism Risk Insurance Act; and 2. The act: a. Is violent or dangerous to: (1) Human life; (2) Property; or (3) Infrastructure; and b. Is committed by an individual or individuals; and c. Is part of an effort: (1) To coerce the civilian population of the United States; or (2) To influence the policy or affect the conduct of the United States Government by coercion. B. Disclosure Of Premium In accordance with the federal Terrorism Risk Insurance Act, we are required to provide you with a notice disclosing the portion of your premium, if any, which can be attributed to coverage for terrorist acts certified under that Act. The portion of your premium which can be attributed to such coverage is shown in the Schedule of this endorsement or the Declarations. C. Disclosure Of Federal Participation In Payment Of Terrorism Losses The United States Government, Department of the Treasury, will pay a share of terrorism losses insured under the federal program. The federal share equals 85% of that portion of the amount of such insured losses that exceeds the applicable insurer retention. The federal share equals a percentage (as shown in Part II of the Schedule of this endorsement or in the policy Declarations) of that portion of the amount of such insured losses that exceeds the applicable insurer retention. However, if aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a calendar year, the Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion. D. Cap On Insurer Participation In Payment of Terrorism Losses If aggregate insured losses attributable to terrorist acts certified under the Terrorism Risk Insurance Act exceed $100 billion in a calendar year and we have met our insurer deductible under the Terrorism Risk Insurance Act, we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata allocation in accordance with procedures established by the Secretary of the Treasury. Page 2 of 2 Insurance Services Office, Inc., 2015 DP

7 DWELLING POLICY PROGRAM FORMS FILING DP-2015-OTEFO Forms Revised In Response To The Terrorism Risk Insurance Program Reauthorization Act Of 2015 About This Filing This filing revises DP 05 37, Cap On Losses From Certified Acts Of Terrorism and DP 05 38, Cap On Losses From Certified Acts Of Terrorism; Disclosure Pursuant To Terrorism Risk Insurance Act, in response to the Terrorism Risk Insurance Program Reauthorization Act Of Revised Forms We are revising the following forms: DP , Cap On Losses From Certified Acts Of Terrorism DP , Cap On Losses From Certified Acts Of Terrorism; Disclosure Pursuant To Terrorism Risk Insurance Act We have used a format of striking-through deletions, underlining additions and inserting a revision bar in the left margin to indicate changes from the abovereferenced editions to the editions. Concurrent with implementation, the editions will supersede the prior editions. Related Filing(s) The following companion filings are being filed with a concurrent effective date: DP-2015-OTEMU (Rules) Background The Terrorism Risk Insurance Act (TRIA) of 2002 established a program (Terrorism Risk Insurance Program) within the Department of the Treasury, under which the federal government shares, with the insurance industry, the risk of loss from some future terrorist attacks. Pursuant to Section 103(c) of the Act, insurers providing insurance for lines of business to which the Act applies are required to participate in the program by making available coverage for insured losses resulting from an act of terrorism as defined by the Act (so-called certified acts coverage). Insurance Services Office, Inc., 2015

8 DWELLING POLICY PROGRAM FORMS FILING DP-2015-OTEFO Page 2 The Terrorism Risk Insurance Program, originally set to expire at the end of 2005, was extended for two years by the Terrorism Risk Insurance Extension Act of 2005, and subsequently extended for seven more years (through December 31, 2014) by the Terrorism Risk Insurance Program Reauthorization Act of We responded in the past to each of these enactments, with filings of disclosure forms and various endorsements addressing the terrorism risk. Currently, there are no exclusions expressly addressing terrorism in effect in the ISO Dwelling Policy Program. In addition, there are no such exclusions introduced in this filing. Current Environment The federal Terrorism Risk Insurance Program has been revised and extended until December 31, 2020 by the Terrorism Risk Insurance Program Reauthorization Act of In summary, such Act: Extends the Terrorism Risk Insurance Program for six years; Removes the Secretary of State from the certification decision process and provides that the Secretary of the Treasury will consult with the Secretary of Homeland Security (in addition to the United States Attorney General); Reduces the federal share in terrorism losses by increasing insurers' co-pay from 15% to 20% over the course of five years, in one-percent increments beginning on January 1, 2016; Increases the threshold for federal participation in losses from $100 million to $200 million in $20 million annual increments over five years beginning in calendar year 2016; Increases the mandatory recoupment amount from $27.5 billion to $37.5 billion in $2 billion increments annually, beginning in calendar year 2015 and reaching $37.5 billion in calendar year 2019; Beginning in calendar year 2020, revises the mandatory recoupment amount to be the amount equal to the annual average of the sum of insurer deductibles for all insurers participating in the program for the prior three calendar years, with such amount to be determined annually by the Secretary of the Treasury; Replaces references to Program Year with the term calendar year; Requires insurers to issue disclosure notices to policyholders only at the times of offer and renewal of the policy, instead of at the times of offer, purchase and renewal; Insurance Services Office, Inc., 2015

9 DWELLING POLICY PROGRAM FORMS FILING DP-2015-OTEFO Page 3 Requires various studies to be undertaken, such as: study of potential improvements to the certification process; study of the viability of collecting upfront premiums from insurers that participate in the program, the effect of such on the private market terrorism risk reinsurance coverage or requiring insurers to participate in a capital reserve fund for terrorism-related risks; beginning June 30, 2017, conduct a biennial study of market competitiveness of small insurers participating in the program; Requires the Secretary of the Treasury to establish an advisory committee to provide recommendations on encouraging the growth of private market reinsurance capacity for terrorism losses; and Directs the Secretary of the Treasury to require insurers participating in the program to submit data concerning coverage for terrorism losses beginning on January 1, Explanation of Changes In response to the Terrorism Risk Insurance Program Reauthorization Act of 2015, endorsements DP , Cap On Losses From Certified Acts Of Terrorism and DP , Cap On Losses From Certified Acts Of Terrorism; Disclosure Pursuant To Terrorism Risk Insurance Act, are being revised, as appropriate, to address the following: To accommodate the change in federal share of terrorism losses, including adding a new Part II to the schedule, to reflect calendar year terminology in place of references to Program Year and to include cap language pertaining to limitations on federal payment and insurer payment. To accommodate removal of the Secretary of State as a decision-maker in the certification process. As revised, the forms also omit reference to the Attorney General, taking the approach of conveying that an act is to be certified by the Secretary of the Treasury in accordance with the provisions of the federal Terrorism Risk Insurance Act; the terms of the Act prescribe the decision makers and consultative process. In addition, the revised forms reflect calendar year terminology in place of references to Program Year. Copyright Explanation The material distributed by Insurance Services Office, Inc. is copyrighted. All rights reserved. Possession of these pages does not confer the right to print, reprint, publish, copy, sell, file or use same in any manner without the written permission of the copyright owner. Insurance Services Office, Inc., 2015

10 DWELLING POLICY PROGRAM FORMS FILING DP-2015-OTEFO Page 4 Important Note Insurance Services Office, Inc. (ISO) makes available advisory services to property/casualty insurers. ISO has no adherence requirements. ISO policy forms and explanatory materials are intended solely for the information and use of ISO's participating insurers and their representatives, and insurance regulators. Neither ISO's general explanations of policy intent nor opinions expressed by ISO's staff necessarily reflect every insurer's view or control any insurer's determination of coverage for a specific claim. ISO does not intercede in coverage disputes arising from insurance policies. If there is any conflict between a form and any other part of the attached material, the provisions of the form apply. Insurance Services Office, Inc., 2015