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)

Page Range		95310-95312
FR Document		2016-31238

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 Issue 248 (Tuesday, December 27, 2016)

[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

95312 Federal Register / Vol. 81, No. 248 / Tuesday, December 27, 2016 / Notices

Treasury specifically invites Dated: December 20, 2016. affordability of commercial property
comments on: (a) Whether the proposed Michael T. McRaith, and casualty insurance for terrorism
collection is responsive to the statutory Director, Federal Insurance Office. risk, and to allow for the private markets
requirement; (b) the accuracy of the [FR Doc. 2016–31238 Filed 12–23–16; 8:45 am] to stabilize and build insurance capacity
estimate of the burden of the collections BILLING CODE 4810–25–P to absorb any future losses for terrorism
of information (see below); (c) ways to events. TRIA requires insurers to ‘‘make
enhance the quality, utility, and clarity available’’ terrorism risk insurance for
of the information collection; (d) ways DEPARTMENT OF THE TREASURY commercial property and casualty losses
to use automated collection techniques resulting from certified acts of terrorism
or other forms of information Guidance Concerning Stand-Alone (insured losses), and provides for shared
technology; and (e) estimates of capital Cyber Liability Insurance Policies public and private compensation for
or start-up costs and costs of operation, Under the Terrorism Risk Insurance such insured losses. The Secretary of
maintenance, and purchase of services Program the Treasury (Secretary) administers the
to maintain the information. Program; pursuant to the Dodd-Frank
AGENCY: Department of the Treasury,
Comments are being sought with Wall Street Reform and Consumer
Departmental Offices.
respect to the collection of information Protection Act, the Federal Insurance
ACTION: Notice of guidance.
Office assists the Secretary in
in connection with data collection.
SUMMARY: This notice provides guidance administering the Program.3 The
Treasury previously analyzed the Program has been reauthorized three
(Guidance) concerning the Terrorism
potential burdens associated with the times, most recently on January 12,
Risk Insurance Program (Program) under
data collection process. See 81 FR 18950 2015, when President Obama signed
the Terrorism Risk Insurance Act of
(April 1, 2016). As explained into law the Terrorism Risk Insurance
2002, as amended (‘‘TRIA’’ or ‘‘the
previously, the data collection rules Program Reauthorization Act of 2015,
Act’’). In this notice, the Department of
propose a mandatory annual data extending the Program until December
the Treasury (Treasury) provides
collection process (beginning in 2017) 31, 2020.4
guidance regarding how insurance
which will continue from year to year TRIA requires participating insurers
recently classified as ‘‘Cyber Liability’’
as the Program remains in effect. The to ‘‘make available’’ terrorism risk
for purposes of reporting premiums and
information sought by Treasury will insurance in connection with ‘‘property
losses to state insurance regulators will
comprise data elements that insurers and casualty insurance’’ as defined in
be treated under TRIA and Treasury’s
currently collect or generate, although the Act.5 By regulation, Treasury has
regulations for the Program (Program
not necessarily grouped together the further defined ‘‘property and casualty
regulations).
way in which insurers currently collect insurance’’ by reference to the
and evaluate the data. Treasury DATES: December 27, 2016. classification of certain lines of
currently anticipates that approximately FOR FURTHER INFORMATION CONTACT: commercial insurance set forth in the
100 Program participants will be Richard Ifft, Senior Insurance National Association of Insurance
required to submit the ‘‘Insurer (Non- Regulatory Policy Analyst, Federal Commissioner’s Exhibit of Premiums
Small) Groups or Companies’’ data Insurance Office, 202–622–2922 (not a and Losses (commonly known as
collection form, 300 Program toll free number), Kevin Meehan, Senior Statutory Page 14).6 Pursuant to the
participants will submit the ‘‘Small Insurance Regulatory Policy Analyst, Program regulations, insurance reported
Insurer’’ form, 400 Program participants Federal Insurance Office, 202–622–7009 on Statutory Page 14 under ‘‘Line 17—
will submit the ‘‘Captive Insurer’’ form, (not a toll free number), or Lindsey Other Liability’’ is generally subject to
and 75 Program participants will submit Baldwin, Senior Policy Analyst, Federal TRIP. However, insurance reported on
the ‘‘Alien Surplus Lines Insurers’’ Insurance Office, 202–622–3220 (not a that page as ‘‘Professional Errors and
form. toll free number). Omissions Liability Insurance,’’ a sub-
Each set of data collection forms is SUPPLEMENTARY INFORMATION: line within ‘‘Other Liability’’ for state
expected to incur a different level of This Guidance addresses the regulatory purposes, is expressly
burden. Treasury anticipates application of certain provisions of excluded from TRIP by the Act.7 Under
approximately 75 hours will be required TRIA 1 and the Program regulations 2 the Program regulations, ‘‘professional
to collect, process, and report the data with respect to certain insurance liability insurance’’ is defined
policies covering cyber-related risks. consistently with ‘‘Professional Errors
for each Insurer (Non-Small) Group or
This Guidance may be relied upon by and Omissions Liability Insurance’’ as
Company, approximately 25 hours to
the members of the public unless that term is defined for state law
collect, process, and report data for each
superseded by subsequent amendments purposes.8
Small Insurer, and approximately 50
to the Program regulations, or by Cyber risk insurance is a broad term
hours to collect, process, and report data
subsequent guidance. that includes insurance products
for each Captive Insurer and Alien
covering risks arising ‘‘from the use of
Surplus Lines Insurer. I. Background
Assuming this breakdown, the TRIA was enacted following the 3 31 U.S.C. 313(c)(1)(D).
estimated annual burden would be attacks on September 11, 2001, to 4 Public Law 114–1, 129 Stat. 3.
38,750 hours (100 insurers × 75 hours + address disruptions in the market for 5 TRIA sec. 103(c) (‘‘make available’’

300 insurers × 25 hours + 400 insurers requirement); id., sec. 102(11) (definition of
asabaliauskas on DSK3SPTVN1PROD with NOTICES

terrorism risk insurance, to help ensure ‘‘property and casualty insurance’’).
× 50 hours + 75 insurers × 50 hours). At the continued availability and 6 31 CFR 50.4(w).
a blended, fully loaded hourly rate of 7 TRIA sec. 102(11)(xi) (excluding ‘‘professional
$85, the cost would be $3,293,750 1 Public Law 107–297, 116 Stat. 2322, codified at liability insurance’’); see also 31 CFR 50.4(w)(2)(xi).
across the industry as a whole, or $6,375 15 U.S.C. 6701, note. As the provisions of TRIA (as 8 31 CFR 50.4(t); compare National Association of

per Insurer (Non-Small) Group or amended) appear in a note, instead of particular Insurance Commissioners, Uniform Property &
sections, of the United States Code, the provisions Casualty Product Coding Matrix (Effective January
Company, $2,125 per Small Insurer, and of TRIA are identified below by the sections of the 1, 2016) (NAIC 2016 P/C Product Coding Matrix),
$4,250 per Captive Insurer or Alien law. p. 9, available at http://www.naic.org/documents/
Surplus Lines Insurer. 2 31 CFR part 50. industry_pcm_p_c_2016.pdf.

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Document Created: 2018-02-14 09:13:50
Document Modified: 2018-02-14 09:13:50

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Request for comments.
Dates		Submit comments on or before February 27, 2017.
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.
FR Citation		81 FR 95310