81 FR 95310 - Data Collection and Comments in Aid of Analyses of the Terrorism Risk Insurance Program

DEPARTMENT OF THE TREASURY

Federal Register Volume 81, Issue 248 (December 27, 2016)

The Terrorism Risk Insurance Act of 2002 (TRIA) created the Terrorism Risk Insurance Program (Program) to address disruptions in the market for terrorism risk insurance, to help ensure the continued availability and affordability of commercial property and casualty insurance for terrorism risk, and to allow for the private markets to stabilize and build insurance capacity to absorb any future losses for terrorism events. The Program has been reauthorized on a number of occasions, most recently in the Terrorism Risk Insurance Program Reauthorization Act of 2015. TRIA requires the Secretary of the Treasury (Secretary) to perform periodic analyses of certain matters concerning the Program. In order to assist the Secretary with this process, TRIA requires insurers to submit on an annual basis certain insurance data and information regarding participation in the Program. Treasury requests stakeholder feedback on the data collection forms proposed for use in the 2017 data collection process, pursuant to 31 CFR 50.51(c). Copies of these forms and associated explanatory materials are available for electronic review at https:// www.treasury.gov/resource-center/fin-mkts/Pages/program.aspx. Treasury also seeks comments from interested parties on issues that Treasury will be analyzing in connection with its next report concerning the Program, which will address the participation of small insurers in the Program, including any competitive challenges such insurers face in the terrorism risk insurance marketplace.

[Federal Register Volume 81, Number 248 (Tuesday, December 27, 2016)]
[Notices]
[Pages 95310-95312]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-31238]


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DEPARTMENT OF THE TREASURY


Data Collection and Comments in Aid of Analyses of the Terrorism 
Risk Insurance Program

AGENCY: Departmental Offices, U.S. Department of the Treasury.

ACTION: Request for comments.

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SUMMARY: The Terrorism Risk Insurance Act of 2002 (TRIA) created the 
Terrorism Risk Insurance Program (Program) to address disruptions in 
the market for terrorism risk insurance, to help ensure the continued 
availability and affordability of commercial property and casualty 
insurance for terrorism risk, and to allow for the private markets to 
stabilize and build insurance capacity to absorb any future losses for 
terrorism events. The Program has been reauthorized on a number of 
occasions, most recently in the Terrorism Risk Insurance Program 
Reauthorization Act of 2015. TRIA requires the Secretary of the 
Treasury (Secretary) to perform periodic analyses of certain matters 
concerning the Program. In order to assist the Secretary with this 
process, TRIA requires insurers to submit on an annual basis certain 
insurance data and information regarding participation in the Program. 
Treasury requests stakeholder feedback on the data collection forms 
proposed for use in the 2017 data collection process, pursuant to 31 
CFR 50.51(c). Copies of these forms and associated explanatory 
materials are available for electronic review at https://www.treasury.gov/resource-center/fin-mkts/Pages/program.aspx. Treasury 
also seeks comments from interested parties on issues that Treasury 
will be analyzing in connection with its next report concerning the 
Program, which will address the participation of small insurers in the 
Program, including any competitive challenges such insurers face in the 
terrorism risk insurance marketplace.

DATES: Submit comments on or before February 27, 2017.

ADDRESSES: Submit comments electronically through the Federal 
eRulemaking Portal: http://www.regulations.gov, or by mail to the 
Federal Insurance Office, Attn: Richard Ifft, Room 1140 MT, Department 
of the Treasury, 1500 Pennsylvania Avenue NW., Washington, DC 20220. 
Because postal mail may be subject to processing delays, it is 
recommended that comments be submitted electronically. If submitting 
comments by mail, please submit an original version with two copies. 
Comments concerning the proposed data collection forms should be 
captioned with ``2017 TRIA Data Collection Form Comments.'' Comments 
addressing the participation of small insurers in the Program should be 
captioned with ``2017 TRIA Small Insurer Study Comments.'' Please 
include your name, group affiliation, address, email address, and 
telephone number(s) in your comment. Where appropriate, a comment 
should include a short Executive Summary (no more than five single-
spaced pages).

FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance 
Regulatory Policy Analyst, Federal Insurance Office, Room 1410 MT, 
Department of the Treasury, 1500 Pennsylvania Avenue NW., Washington, 
DC 20220, at (202) 622-2922 (not a toll-free number), Kevin Meehan, 
Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 
at (202) 622-7009 (not a toll-free number), or Lindsey Baldwin, Senior 
Policy Analyst, Federal Insurance Office, at (202) 622-3220 (not a toll 
free number). Persons who have difficulty hearing or speaking may 
access these numbers via TTY by calling the toll-free Federal Relay 
Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    TRIA \1\ directs the Secretary, beginning in calendar year 2016, to 
``require insurers participating in the Program to submit to the 
Secretary such information regarding insurance coverage for terrorism 
losses of such insurers as the Secretary considers appropriate to 
analyze the effectiveness of the Program[.]'' \2\ This information and 
data includes information regarding: (1) Lines of insurance with 
exposure to such losses; (2) premiums earned on such coverage; (3) 
geographical location of exposures; (4) pricing of such coverage; (5) 
the take-up rate for such coverage; (6) the amount of private 
reinsurance for acts of terrorism purchased; and (7) such other matters 
as the Secretary considers appropriate.
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    \1\ Public Law 107-297, 116 Stat. 2322, codified at 15 U.S.C. 
6701, note. As the provisions of TRIA (as amended) appear in a note, 
instead of particular sections, of the United States Code, the 
provisions of TRIA are identified by the sections of the law.
    \2\ TRIA sec. 104(h).
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    31 CFR 50.51 outlines the data collection process and requires 
insurers to submit the specified data and information relating to 
Program participation no later than May 15 of each calendar year. 
Treasury, through an insurance statistical aggregator, intends to 
establish a web portal, through which insurers will be able to submit 
the requested data. All information submitted via the web portal will 
be subject to the confidentiality and data protection provisions of 
applicable Federal law.
    The first year of data collection under Section 104(h) was 2016. In 
March 2016, Treasury requested that participating insurers voluntarily 
submit 2015 insurance data.\3\ This was done to ensure that Treasury 
data collection was both limited and meaningful. This voluntary 
collection identified the types of data and information sought by 
Treasury, and provided insurers with time to make adjustments to ease 
the burden of compliance with subsequent mandatory data collections. 
The collection templates proposed for use in calendar year 2017 follow 
from the form created for use in calendar year 2016, although certain 
changes have been made due to experience developed through the 2016 
voluntary data call.
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    \3\ 81 FR 11649 (Mar. 4, 2016).
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    In addition, Section 108(h) of TRIA requires the Secretary to 
conduct, by June 30, 2017, a study of small insurers (to be defined by 
regulation by the Secretary, as has been done under 31 CFR 50.4(z)) 
participating in the Program to identify any competitive challenges 
that small insurers face in the terrorism risk insurance marketplace. 
Treasury's rules provide for the collection of data in connection with 
these small insurers (31 CFR 50.52), and Treasury has also identified 
several questions regarding the role of small insurers in the Program, 
to which comments are sought for use in the study that Treasury must 
conduct

[[Page 95311]]

concerning the participation of such insurers in the Program.

II. Data Collection Templates: Request for Comments

    Pursuant to Section 104(h)(4) of TRIA, Treasury has determined that 
the needed information will not be available in a timely or meaningful 
manner from other sources. Accordingly, Treasury is requesting certain 
data and information directly from insurers, and will continue to work 
with publicly-available sources to gather additional information.
    Based on feedback received following the voluntary 2016 data 
collection, and pursuant to 31 CFR 50.51(c), Treasury proposes to use 
four different data collection templates for future data collection. 
Insurers will fill out the template identified ``Insurer (Non-Small) 
Groups or Companies,'' unless the insurer meets the definition of a 
small insurer, captive insurer, or alien surplus lines insurer as set 
forth in 31 CFR 50.4. These insurers will be required to complete 
different and separate forms that have been more specifically tailored 
to their operations. Each form is accompanied by a separate ``data 
dictionary'' applicable to the form, in which specific instructions 
concerning each data element are provided.
    Small insurers are defined in 31 CFR 50.4(z) as insurers (or an 
affiliated group of insurers) whose policyholder surplus for the 
immediately preceding year is less than five times the Program Trigger 
amount \4\ for the current year, and whose TRIP-eligible lines direct 
earned premium for the previous year is also five times less than the 
Program Trigger amount. For the 2017 data collection, which is 
otherwise requesting information from calendar year 2016, this will 
require an insurer to have 2015 policyholder surplus and 2015 direct 
earned premium of less than $600,000,000 (or five times the 2016 
Program Trigger of $120,000,000). In addition, and at least for 
purposes of data collection in calendar year 2017, to the extent a 
small insurer had less than $10,000,000 in TRIP-eligible lines direct 
earned premium in calendar year 2016, such insurer is not required to 
provide data. This $10,000,000 threshold is designed to further reduce 
the burden on small insurers that write only small amounts of TRIP-
eligible lines insurance.\5\
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    \4\ The Program Trigger amount is the amount of aggregate 
industry insured losses that must be exceeded before any Federal 
payments are made, even if a particular participating insurer has 
exceeded its deductible. See 31 CFR 50.4(p) and (v).
    \5\ To the extent an insurer with this level of TRIP-eligible 
lines direct earned premium is part of a larger group that is 
required to report, the experience of this insurer, even if it is 
under the $10,000,000 direct earned premium threshold, must be 
reported in connection with the appropriate form for the group as a 
whole.
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    Captive insurers are defined in 31 CFR 50.4(g) as insurers licensed 
under the captive insurance laws or regulations of any state. All 
captive insurers as defined, regardless of size, are required to 
complete the captive insurer template if the captive insurer writes 
some amount of terrorism risk insurance subject to the Program. To the 
extent a captive insurer writes policies in TRIP-eligible lines of 
insurance, but does not actually provide its insureds with any 
terrorism risk insurance subject to the Program, the captive insurer is 
not required to provide data.
    Alien surplus lines insurers are defined in 31 CFR 50.4(o)(1)(i)(B) 
as insurers not licensed or admitted to engage in the business of 
providing primary or excess insurance in any state, but that are 
eligible surplus line insurers listed on the NAIC Quarterly Listing of 
Alien Insurers. To the extent an alien surplus lines insurer is part of 
a larger group that is subject to reporting under either the ``Insurer 
(Non-Small) Groups or Companies'' or ``Small Insurers'' template, the 
information for that alien surplus lines insurer should be reported as 
part of the larger group, using the proper template. The ``Alien 
Surplus Lines'' template is to be used by any other alien surplus lines 
insurer, regardless of size, that is not part of a larger group. Such 
alien surplus lines insurers must report, at least for calendar year 
2017, even if they fall within the $10,000,000 premium threshold 
otherwise required for small insurers to report.
    Insurers will be required to complete these forms online through a 
web portal that will be established for the calendar year 2017 
collection, the link for which will be provided at a later date. 
Reporting for all Program participants for calendar year 2017 is 
mandatory, unless an insurer falls within the exceptions for certain 
small insurers and captive insurers as identified above. As was the 
case with the voluntary data call in calendar year 2016, Treasury 
intends to provide training and make available additional resources for 
insurers with questions during the data process about proper completion 
of the forms. To ensure efficient and accurate completion of the forms 
by affected insurers, Treasury is requesting the public's feedback on 
the content of these forms, which are now available through the Web 
site listed above.

III. Solicitation for Comments on Small Insurer Participation in the 
Program

    Section 108(h) of TRIA requires the Secretary to conduct a study to 
identify any competitive challenges that small insurers, as now defined 
in 31 CFR 50.4(z), participating in the Program face in the terrorism 
risk insurance marketplace. As discussed above, Treasury will be 
collecting certain data from small insurers in calendar year 2017 which 
will be used in connection with the study. In addition, Treasury also 
requests comments concerning the participation of small insurers in the 
Program. Treasury welcomes comments concerning small insurer 
participation in the Program generally, and invites responses to the 
following particular issues:
    (1) Changes to the market share, premium volume, and policyholder 
surplus of small insurers relative to large insurers.
    (2) How the property and casualty insurance market for terrorism 
risk differs between small and large insurers, and whether such a 
difference exists within other perils.
    (3) The impact of the Program's mandatory availability requirement 
under Section 103(c) of TRIA on small insurers.
    (4) The effect of increasing the trigger amount for the Program 
under Section 103(e)(1)(B) of TRIA for small insurers.
    (5) The availability and cost of private reinsurance for small 
insurers.
    (6) The impact that State workers compensation laws have on small 
insurers and workers compensation carriers in the terrorism risk 
insurance marketplace.

IV. Procedural Requirements

    Paperwork Reduction Act. The collection of information contained in 
this notice has been submitted to the Office of Management and Budget 
(OMB) for review under the requirements of the Paperwork Reduction Act, 
44 U.S.C. 3507(d). Organizations and individuals desiring to submit 
comments concerning the collection of information in the notice should 
direct them to: Office of Management and Budget, Attn: Desk Officer for 
the Department of the Treasury, Office of Information and Regulatory 
Affairs, Washington, DC 20503. A copy of the comments should also be 
sent to Treasury at the addresses previously specified. Comments on the 
collection of information should be received by February 27, 2017.

[[Page 95312]]

    Treasury specifically invites comments on: (a) Whether the proposed 
collection is responsive to the statutory requirement; (b) the accuracy 
of the estimate of the burden of the collections of information (see 
below); (c) ways to enhance the quality, utility, and clarity of the 
information collection; (d) ways to use automated collection techniques 
or other forms of information technology; and (e) estimates of capital 
or start-up costs and costs of operation, maintenance, and purchase of 
services to maintain the information.
    Comments are being sought with respect to the collection of 
information in connection with data collection.
    Treasury previously analyzed the potential burdens associated with 
the data collection process. See 81 FR 18950 (April 1, 2016). As 
explained previously, the data collection rules propose a mandatory 
annual data collection process (beginning in 2017) which will continue 
from year to year as the Program remains in effect. The information 
sought by Treasury will comprise data elements that insurers currently 
collect or generate, although not necessarily grouped together the way 
in which insurers currently collect and evaluate the data. Treasury 
currently anticipates that approximately 100 Program participants will 
be required to submit the ``Insurer (Non-Small) Groups or Companies'' 
data collection form, 300 Program participants will submit the ``Small 
Insurer'' form, 400 Program participants will submit the ``Captive 
Insurer'' form, and 75 Program participants will submit the ``Alien 
Surplus Lines Insurers'' form.
    Each set of data collection forms is expected to incur a different 
level of burden. Treasury anticipates approximately 75 hours will be 
required to collect, process, and report the data for each Insurer 
(Non-Small) Group or Company, approximately 25 hours to collect, 
process, and report data for each Small Insurer, and approximately 50 
hours to collect, process, and report data for each Captive Insurer and 
Alien Surplus Lines Insurer.
    Assuming this breakdown, the estimated annual burden would be 
38,750 hours (100 insurers x 75 hours + 300 insurers x 25 hours + 400 
insurers x 50 hours + 75 insurers x 50 hours). At a blended, fully 
loaded hourly rate of $85, the cost would be $3,293,750 across the 
industry as a whole, or $6,375 per Insurer (Non-Small) Group or 
Company, $2,125 per Small Insurer, and $4,250 per Captive Insurer or 
Alien Surplus Lines Insurer.

    Dated: December 20, 2016.
Michael T. McRaith,
Director, Federal Insurance Office.
[FR Doc. 2016-31238 Filed 12-23-16; 8:45 am]
 BILLING CODE 4810-25-P