News

 

Subject: Surety Association of America ? Florida Statute Change

Florida legislature has passed a new statute, and all payment bonds
written for projects located in the state of Florida
must contain the following wording:

This bond is given to comply with section 255.05 Florida Statutes, and
any action instituted by a claimant under this bond for payment must be
in accordance with the notice and time limitation provisions in Section
255.05(2), Florida Statutes.

Attached is a copy of the letter which the Surety Association of America
(on SAA letterhead and signed) sent to 50 government officials in the
State of Florida. Surety Association asks that if you are aware of any
public entities in Florida which are not adhering to the new statute, to
let them know about it.

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The Surety Association of America
1101 CONNECTICUT AVENUE, NW, SUITE 800, WASHINGTON, DC 20036 TEL: (202) 463-0600 - FAX: (202) 463-0606
WEBSITE:HTTP://WWW.SURETY.ORG
E-MAIL:INFORMATION@SURETY.ORG

TO: Government Affairs Advisory Committee

FROM: Lenore S. Marema
Vice President-Government Affairs

DATE: December 19, 2005

RE: Congress Passes a TRIA Extension

The U.S. House and Senate both passed a two-year extension of the Terrorism Risk and Insurance Act (TRIA) this weekend. S. 467 goes to the President, who is expected to sign it. Surety is one of the lines excluded from coverage under the revised Act. A copy of the bill is attached, and a summary of its provisions is provided below. We will advise the GAAC on the timing of the signing of this legislation.

The House and Senate conferees reached agreement on Friday, December 16, on a compromise TRIA bill that is similar to the Senate bill that was passed in November. The major compromises made to the Senate bill were increases to the industry's retentions and the trigger of coverage under the Act. The American Insurance Association led the industry in obtaining an amendment, which preserves many of the definitions in the current law, such that insurers and advisory organizations will not have to make massive and costly new filings to reflect the changes in TRIA. Although the House strongly supported an increase in the industry' payback of any federal payout under TRIA, the final bill increases the industry payback to $25 billion in the first year and $27.5 billion in the second year, which are far removed from the $100 billion favored by the House.

Highlights of the legislation include:
· TRIA will be extended for two more years until December 31, 2007;
· Coverage will be somewhat scaled back. Surety, commercial auto, burglary/theft, farmer's multi-peril and professional liability will no longer be covered. Although there was a push for it, group life was not added to the lines covered under TRIA;
· Property and liability policies are included under TRIA, but they do not have to provided coverage for nuclear, biological, radiological and chemical attacks (NBCR coverage);
· The industry's percentage deductible amount will increase as follows:
2005 - 15 percent;
2006 - 17.5 percent;
2007 - 20 percent;
· The aggregate amount of industry losses that will trigger coverage under TRIA will increase as follows:
2005 - $ 5 million in insured losses;
2006 - $ 50 million in insured losses (effective after March 31, 2006);
2007 - $100 million in insured losses;
· The legislation provides for a "President's Working Group" to be appointed to review the effectiveness of the program and make recommendations for improvement. The House and Senate intend to create a permanent public/private partnership on terrorism coverage during the two-year extension to be put into place when the TRIA extension expires on Dec. 31, 2007.
The President is expected to sign the bill as the Administration favored the Senate version of TRIA, and the SAA will advise its members when the date of the signing is known.