Agents:
02 Feb, 2003

To our Agents:
On November 26, 2002, President Bush signed the Terrorism Risk Insurance Act of 2002. The Act provides a federal government insurance backstop in the event of acts of international terrorism.

With this Act come important responsibilities for the insurers and surety companies with respect to providing commercial policyholders (including surety bonds) with written notice regarding the availability of terrorism coverage. Each insurer must follow these procedures in order to qualify for federal reimbursement under the new law. As our agent you have a role in these procedures and it is essential that you adhere to them.

The Notice
We are required to make terrorism coverage available on surety bonds and each policyholder must be notified. As part of the notification process you, as our agent, will also have certain responsibilities. We are required to provide a written notice of the availability of terrorism coverage to the policyholder each time that a policy is offered, purchased and renewed. We must also provide the notice to all in-force policy holders. The notice must disclose the premium that is charged, if any, to the policyholder for terrorism losses covered by the backstop program and the federal share of compensation for terrorism losses covered by the program. At this time, we will not be billing a premium for terrorism coverage relating to surety bonds. As a result, the premium charge reflected on the notice for terrorism coverage will be $0.00.

You will note at the end of this letter icons for the policyholder notice that is to be used by our agents. We have provided this notice as both Word and PDF documents.

In-Force Bonds
We are required to provide the notice within 90 days to your client with bonds that are in force as of November 26, 2002, which is the effective date of the new law. We expect to start mailing the notices on February 14, 2002.

New Bonds
Beginning February 24, 2003, you are required to attach the notice to each and every contract and commercial bond (including bid) that you issue. It is important that you follow this requirement and send us a copy of the notice when you report the bond to us. Attaching the notice is necessary to ensure that the NAS Surety Group will be able to take advantage of the federal reimbursement as outlined by the Act.

Renewal Bonds
We will attach the notice to every renewal notification form that we send to your office. You are expected to forward the notice to your customer when renewing their bond(s).

We understand that you might have additional questions and ask that you contact your regional office. Our offices have been advised of this procedure and are available to answer any questions that you might have.

Please keep in mind that we will be reviewing bonds as they are reported to us to verify that our agents are adhering to this policy.

IMPORTANT: Please be aware that if the NAS Surety Group were adversely affected by an agent’s non- compliance there is possible E&O exposure to your agency.

For additional information, please visit the Treasury’s department website at:
http://www.ustreas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/