Rule2021-12014
Terrorism Risk Insurance Program; Updated Regulations in Light of the Terrorism Risk Insurance Program Reauthorization Act of 2019, and for Other Purposes
Primary source
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Published
June 9, 2021
Effective
July 12, 2021
Issuing agencies
Treasury Department
Abstract
The Department of the Treasury (Treasury) is issuing this final rule to implement technical changes to the Terrorism Risk Insurance Program (TRIP or Program) rules in response to the Terrorism Risk Insurance Program Reauthorization Act of 2019. In addition, Treasury is issuing this final rule to: Clarify the manner in which Treasury will calculate "property and casualty insurance losses" for purposes of considering certification of an act of terrorism, and "insured losses" when administering the financial sharing mechanisms under the Program, including the Program Trigger and Program Cap; incorporate into the Program rules the prior guidance provided by Treasury in connection with stand-alone cyber insurance under the Program; and provide updated links to additional information found on the Program's website relating to administration of the Program. The changes were published in proposed form for public comment by Treasury on November 10, 2020.
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<title>Federal Register, Volume 86 Issue 109 (Wednesday, June 9, 2021)</title>
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[Federal Register Volume 86, Number 109 (Wednesday, June 9, 2021)]
[Rules and Regulations]
[Pages 30537-30541]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-12014]
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DEPARTMENT OF THE TREASURY
31 CFR Part 50
Terrorism Risk Insurance Program; Updated Regulations in Light of
the Terrorism Risk Insurance Program Reauthorization Act of 2019, and
for Other Purposes
AGENCY: Departmental Offices, Department of the Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Treasury) is issuing this
final rule to implement technical changes to the Terrorism Risk
Insurance Program (TRIP or Program) rules in response to the Terrorism
Risk Insurance Program Reauthorization Act of 2019. In addition,
Treasury is issuing this final rule to: Clarify the manner in which
Treasury will calculate ``property and casualty insurance losses'' for
purposes of considering certification of an act of terrorism, and
``insured losses'' when administering the financial sharing mechanisms
under the Program, including the Program Trigger and Program Cap;
incorporate into the Program rules the prior guidance provided by
Treasury in connection with stand-alone cyber insurance under the
Program; and provide updated links to additional information found on
the Program's website relating to administration of the Program. The
changes were published in proposed form for public comment by Treasury
on November 10, 2020.
DATES: This rule is effective July 12, 2021.
FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance
Regulatory Policy Analyst, Federal Insurance Office, 202-622-2922,
Lindsey Baldwin, Senior Insurance Regulatory Policy Analyst, Federal
Insurance Office, 202-622-3220, or Daniel McKnight, Policy Analyst,
202-622-7009.
SUPPLEMENTARY INFORMATION:
I. Background
The Terrorism Risk Insurance Act of 2002 (as amended, the Act or
TRIA) \1\ was enacted on November 26, 2002, following the attacks of
September 11, 2001, to address disruptions in the market for terrorism
risk insurance, help ensure the continued availability and
affordability of commercial property and casualty insurance for
terrorism risk, and allow for the private markets to stabilize and
build insurance capacity to absorb any future losses for terrorism
events.\2\ TRIA requires insurers to ``make available'' terrorism risk
insurance for commercial property and casualty losses resulting from
certified acts of terrorism (termed ``insured losses'' under TRIA), and
provides for shared public and private compensation for such insured
losses. The Program has been reauthorized four times, most recently by
the Terrorism Risk Insurance Program Reauthorization Act of 2019 (2019
Reauthorization Act).\3\
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\1\ Public Law 107-297, 116 Stat. 2322, codified at 15 U.S.C.
6701 note. Because the provisions of TRIA (as amended) appear in a
note instead of particular sections of the U.S. Code, the provisions
of TRIA are identified by the sections of the law.
\2\ TRIA sec. 101(b).
\3\ See Terrorism Risk Insurance Extension Act of 2005, Public
Law 109-144, 119 Stat. 2660; Terrorism Risk Insurance Program
Reauthorization Act of 2007, Public Law 110-160, 121 Stat. 1839;
Terrorism Risk Insurance Program Reauthorization Act of 2015, Public
Law 114-1, 129 Stat. 3; Terrorism Risk Insurance Program
Reauthorization Act of 2019, Public Law 116-94, 133 Stat. 2534.
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The Secretary of the Treasury (Secretary) administers the Program,
with the assistance of the Federal Insurance Office (FIO).\4\ To assist
insurers, policyholders, and other interested parties in understanding
and complying with the requirements of the Act, Treasury has issued
regulations implementing the Program (the Program Rules).\5\ In some
instances, Treasury has also issued interim guidance that may be relied
upon by insurers until superseded by any regulations. Of relevance to
this final rule, in December 2016, Treasury issued interim guidance
confirming that certain stand-alone cyber coverage written in a TRIP-
eligible line of insurance was within the scope of the Program, such
that insurers were obligated to adhere to the ``make available'' and
disclosure requirements under TRIA for such coverage (Cyber
Guidance).\6\
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\4\ 31 U.S.C. 313(c)(1)(D).
\5\ See 31 CFR part 50. Treasury summarized the history of prior
rulemakings in connection with the Program in a 2016 proposed
rulemaking proposing rule changes to implement the 2015
Reauthorization Act. See 81 FR 18950, 18950-91 (Apr. 1, 2016),
<a href="https://www.federalregister.gov/documents/2016/04/01/2016-06920/terrorism-risk-insurance-program">https://www.federalregister.gov/documents/2016/04/01/2016-06920/terrorism-risk-insurance-program</a>.
\6\ Guidance Concerning Stand-Alone Cyber Liability Insurance
Policies Under the Terrorism Risk Insurance Program, 81 FR 95312
(Dec. 27, 2016), <a href="https://www.federalregister.gov/documents/2016/12/27/2016-31244/guidance-concerning-stand-alone-cyber-liability-insurance-policies-under-the-terrorism-risk">https://www.federalregister.gov/documents/2016/12/27/2016-31244/guidance-concerning-stand-alone-cyber-liability-insurance-policies-under-the-terrorism-risk</a>.
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Treasury proposed the changes in this final rule in a November 2020
notice of proposed rulemaking (the November 2020 NPRM).\7\ In response
to the reauthorization of the Program for an additional seven years
under the 2019 Reauthorization Act, Treasury proposed certain technical
changes to align the Program Rules to the new dates for expiration of
the Program and schedule for recoupment of any payments. Treasury also
proposed in the November 2020 NPRM certain definitional changes to
confirm and clarify the guidance on cyber coverage in this area that
Treasury provided in its December 2016 Cyber Guidance. In addition,
Treasury proposed in the November 2020 NPRM several changes, in part in
response to a report by the Government Accountability Office (GAO),
addressing certain sources of risk and uncertainty related to the
Program.\8\ In its report, GAO indicated that, based upon its
engagement with stakeholders during the preparation of the report, some
uncertainty may exist about how Treasury would apply policyholder
retention amounts in calculating ``property and casualty insurance
losses'' versus ``insured losses'' to determine the Program
certification threshold, Program Trigger, and Program Cap.\9\ GAO
recommended that Treasury provide further clarification to ``prevent
uncertainty in the insurance market and potential litigation following
a terrorist event that that could delay insurance payments and economic
recovery.'' \10\ Treasury proposed certain
[[Page 30538]]
rule changes in the November 2020 NPRM designed to clarify how Treasury
will apply these terms to effectuate the intent and goals of the
Program. Finally, Treasury proposed updating certain references to the
TRIP website in the Program Rules to the current website URLs.
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\7\ Terrorism Risk Insurance Program; Updated Regulations in
Light of the Terrorism Risk Insurance Program Reauthorization Act of
2019, and for Other Purposes, 85 FR 71588 (Nov. 10, 2020), <a href="https://www.federalregister.gov/documents/2020/11/10/2020-24522/terrorism-risk-insurance-program-updated-regulations-in-light-of-the-terrorism-risk-insurance">https://www.federalregister.gov/documents/2020/11/10/2020-24522/terrorism-risk-insurance-program-updated-regulations-in-light-of-the-terrorism-risk-insurance</a>.
\8\ GAO, Terrorism Risk Insurance: Program Changes Have Reduced
Federal Fiscal Exposure (GAO-20-348) (Apr. 2020), <a href="https://www.gao.gov/assets/710/706243.pdf">https://www.gao.gov/assets/710/706243.pdf</a>.
\9\ Id. at 18-19.
\10\ Id. at 19.
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II. The Proposed Rule
The November 2020 NPRM proposed various technical changes to the
Program Rules to account for the extension of the Program to December
31, 2027 as provided for in the 2019 Reauthorization Act.\11\ In
addition, the November 2020 NPRM proposed additional substantive
changes to the Program Rules by (1) incorporating, through certain
definitional changes, Treasury's prior guidance respecting the
inclusion of stand-alone cyber liability within the Program; and (2)
making certain revisions to definitional language concerning ``property
and casualty insurance losses'' (for purposes of certification of an
``act of terrorism'') and ``insured loss'' under the Program, which
governs various financial mechanics under the Program, including
calculation of an insurer's claim for the Federal Share of
Compensation, the Program Trigger and the Program Cap. In general
terms, the proposed changes in the November 2020 NPRM involving
``property and casualty insurance losses'' and ``insured loss'' were
intended to specify that amounts for which the policyholder is
responsible (whether on account of policy exclusions or deductible or
retention amounts) will be included within ``property and casualty
insurance losses,'' but excluded from ``insured loss'' for purposes of
calculating payment amounts under the Program, as well as for
determining whether the Program Trigger and Program Cap have been
satisfied.\12\ The November 2020 NPRM also updates various URL links to
the Program website, which contains further explanatory information
concerning the Program.
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\11\ In addition to seeking comments concerning the proposed
rule, the November 2020 NPRM sought comments from the public
concerning a number of other matters under the Program concerning
the certification process and the participation of captive insurers
in the Program. Treasury received a number of comments addressing
these issues, which it is continuing to review in connection with
potential future proposed rules, reports, or other actions involving
the Program.
\12\ See generally November 2020 NPRM, 85 FR at 71589-90.
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III. Summary of Comments and Final Rule
Treasury received five comments addressing the proposed rule
changes identified in the November 2020 NPRM.\13\ None of the comments
received objected to the proposed technical rule changes in response to
the 2019 Reauthorization Act. In addition, none of the comments
objected to Treasury's proposed codification of its December 2016 Cyber
Guidance or the provisions updating Treasury's website references.\14\
Those proposed rules, accordingly, are being finalized as proposed.
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\13\ See Comment from Centers for Better Insurance, LLC (Dec. 3,
2020) (CBI Comments); Comment from Lloyd's of London (Jan. 8, 2021)
(Lloyd's Comments); Comment from National Association of Mutual
Insurance Companies (Jan. 11, 2021) (NAMIC Comments); Comment from
American Property Casualty Insurance Association (Jan. 11, 2021)
(APCIA Comments); and Comment from the Coalition to Insure Against
Terrorism and the Council of Insurance Agents and Brokers (Jan. 11,
2021) (CIAT/CIAB Comments), all available at <a href="https://www.regulations.gov/document/TREAS-TRIP-2020-0022-0001/comment">https://www.regulations.gov/document/TREAS-TRIP-2020-0022-0001/comment</a>. As
noted above, Treasury solicited and received additional comments
concerning certification and captive insurer issues, which Treasury
will not address in this final rule.
\14\ See Lloyd's Comments at 1 (``Lloyd's is grateful to FIO for
issuing its guidance relating to cyber liability lines in 2016, and
for now codifying that guidance in the proposed rule.''); APCIA
Comments at 3 (``The NPRM proposes to codify Treasury's previous
guidance on cyber stand-alone policies. In the NPRM, Treasury
confirmed APCIA's understanding of the intent of that previous
guidance, i.e., to make clear that any cyber risk reported on Line
17--Other Liability on insurers' annual state statutory financial
statements is considered to be covered by TRIA unless the risk is
statutorily excluded. Therefore, APCIA supports Treasury's proposed
rulemaking in this regard.''); NAMIC Comments at 2 (``The NPRM
proposes to codify Treasury's previous guidance on stand-alone cyber
insurance policies to make clear that any cyber risk reported on
Line 17--Other Liability on insurers' annual state statutory
financial reporting statements is considered covered by TRIA unless
the risk is statutorily excluded. NAMIC believes this is an
appropriate interpretation and has no issue in this regard.''); and
CIAT/CIAB Comments at 3 (``In December 2016, Treasury issued
guidance relating to whether certain standalone cyber coverage
written in a TRIP-eligible line of insurance was within the scope of
the TRIA program, such that insurers were obligated to adhere to the
`make available' and disclosure requirements under TRIA for such
coverage. 81 FR 95312. We thank FIO for codifying this previously
issued guidance in the current NPRM, as greater clarity on the
relationship between cyberterrorism and TRIA is always appreciated,
and welcome future clarifying guidance related to cyber insurance,
particularly as it relates to the certification of cyber events.'').
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Some commenters addressed Treasury's proposed rule changes
regarding the interpretation of the terms ``property and casualty
insurance losses'' for purposes of the certification process, and
``insured loss'' for purposes of the sharing mechanisms under the
Program. Treasury's proposed rules clarified that ``property and
casualty insurance losses,'' for certification purposes, would include
loss amounts ultimately sustained by the policyholder (on account of
deductibles, retentions, or other mechanisms); however, an ``insured
loss'' (a term used in relation to payments under the Program rather
than the certification process) would not include such amounts, because
payments in connection with the Program are limited to loss amounts
that are actually paid (or in some cases to be paid) by insurers.\15\
Treasury explained that the certification analysis looks to the size of
the event in question, so it is appropriate to consider all amounts
associated with TRIP-eligible policies in connection with that inquiry
to determine whether the event is of sufficient size to warrant
potential consideration for certification purposes. By contrast, since
the term ``insured loss'' measures amounts payable under the Program,
and payments under the Program are made only to insurers, Treasury
observed that ``insured loss'' cannot include losses not paid by
insurers to ensure that the financial mechanisms underlying the Program
operate as intended.\16\
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\15\ November 2020 NPRM, 85 FR at 71589-90.
\16\ Id. For example, the Program Cap of $100 billion limits
``insured losses'' payable by Treasury and insurers that have met
their Program deductible to no more than $100 billion in any single
annual period. See TRIA sec. 103(e)(2); 31 CFR Subpart L (Cap on
Annual Liability). If amounts paid by policyholders were included
within this calculation, insurers could be excused from payment by
the Program on account of amounts paid or absorbed by their
policyholders, as distinguished from the combined amount of their
own payments and Treasury reimbursement of insurer payments. In an
extreme case, if policyholders sustained $100 billion in losses
associated with certified ``acts of terrorism'' in a given year
because of their retained obligations, insurers could be excused of
any payments under their policies if those policyholder payments
operated to exhaust the $100 billion Program Cap of ``insured
losses.'' Such a result is not consistent with the statutory
language of TRIA or the Congressional intent underlying the Program.
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One commenter, while not expressing a preference for the elements
to be included within the two terms (``property and casualty insurance
losses'' and ``insured loss''), did suggest that these terms should
have the same interpretation for reasons of administrative
efficiency.\17\ This commenter also noted that it might be difficult in
some cases to determine the amount of policyholder obligations in
connection with a certification inquiry. Another commenter echoed the
preference for equating the meaning of the two terms and suggested that
policyholder losses should be included in both calculations, as they
are commonly considered to be part of
[[Page 30539]]
``insured loss'' in the insurance industry.\18\ Although Treasury
values administrative efficiency in the operation of the Program, the
two terms are different and address different (although related)
matters. ``Property and casualty insurance losses'' measures the size
of the event in question, which logically means any insurance-related
loss associated with the event. By contrast, ``insured loss'' in the
context of the Program must be limited to the actual losses of
participating insurers, when calculating Federal Share of Compensation
payments to participating insurers in the event that payments under the
Program are triggered, or when determining the cap on total payments by
participating insurers.
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\17\ See APCIA Comments at 1.
\18\ See NAMIC Comments at 1-2.
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Accordingly, Treasury will not apply the same definition where
Congress chose not to do so. Furthermore, and for the reasons explained
above, including policyholder obligations within the meaning of
``insured loss'' would potentially permit recoveries by insurers for
amounts not paid by such insurers, and excuse insurer payments to some
extent on account of policyholder payments through operation of the
Program Cap. Treasury therefore declines to interpret ``insured loss''
in this fashion.
A third commenter offered alternative language to clarify the terms
``property and casualty insurance losses'' and ``insured loss.'' \19\
Specifically, the commenter suggested that the ``property and casualty
insurance losses'' should only include losses ``after the hypothetical
application of any terrorism exclusions,'' reasoning that such an
approach would be more favorable to a policyholder that chose not to
take up its insurer's mandatory offer of terrorism risk insurance under
TRIA.\20\ Treasury declines to adopt the approach proposed by this
commenter, which would result in Treasury adopting a definition that
would facilitate the provision of coverage to policyholders that
consciously declined to purchase it. As Treasury explained in the
November 2020 NPRM, the purpose of the certification analysis is to
``accurately assess the size of an event'' and it therefore focuses on
the total economic loss of an event involving TRIP-eligible lines of
insurance. When the Secretary is making a certification decision under
the Program, it is important for Treasury to be in a position to
identify the relevant size of a particular event that might be
considered for certification.\21\ In Treasury's view, Congress did not
intend to limit the Secretary's ability to certify an event as an act
of terrorism in the manner proposed by this commenter. Moreover, the
concern identified by this commenter is addressed by the fact that it
is within the Secretary's discretion to consider factors, such as
policyholder take-up rates, when determining whether to certify any
particular event as an act of terrorism.\22\
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\19\ See CBI Comments, 3, 6.
\20\ Id. To the extent the Secretary does not certify an event
as an act of terrorism under TRIA, policy exclusions for certified
acts of terrorism that can be (and typically are) included in a
policy where the policyholder fails to accept the mandatory offer
under TRIA would not apply, and the policyholder would be entitled
to coverage for associated losses assuming all other policy terms
and conditions were met.
\21\ Treasury has also considered the additional wording issues
identified by this commenter concerning the clarifications proposed
to ``property and casualty insurance losses'' for certification
purposes (CBI Comments at 3-4) and finds that they do not warrant
revisions to the proposed rule. No new concepts are introduced by
Treasury in connection with the Program by referencing terrorism
risk insurance. Second, a first-party policyholder remains
``responsible for the payment'' of losses within an assumed
deductible amount, even where it elects not to repair the property
at all.
\22\ See TRIA sec. 102(1); 31 CFR 50.4(b).
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Regarding the proposed modification to the ``insured loss''
definition, the same commenter generally approved of the concept behind
Treasury's proposed rule (i.e., that amounts paid or absorbed by the
policyholder are not an ``insured loss'' under the Program). However,
this commenter suggested that the ``proposed rule could be gamed'' by
insurers and policyholders by not going far enough in protecting
against abuses intended to augment insurer recoveries to the benefit of
both participating insurers and their policyholders.\23\ However, the
commenter recognized that attempting to anticipate ``the full range of
sophistication, complexity, and ingenuity'' that might be deployed to
obtain an unfair advantage under the Program may not be possible.\24\
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\23\ See CBI Comments at 5 (``The insurer could issue a policy
that simply waives collection of any deductible in the event of a
certified act of terrorism.'').
\24\ Id.
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As Treasury has advised from the outset of the Program, efforts to
avoid the requirements of TRIA so as to artificially increase
recoveries under the Program are impermissible and will have adverse
consequences when Treasury evaluates claims for the Federal Share of
Compensation in the event of a certified act of terrorism.\25\ Policy
structures and arrangements providing for special treatment where an
``act of terrorism'' is involved, with the goal of increasing claims
for the Federal Share of Compensation, will be subject to significant
scrutiny by Treasury in both the claim approval process and any
subsequent audit process as contemplated under TRIA.\26\
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\25\ See, e.g., Interpretative Letter, TRIA-Only Captives/TRIA
Section 102(6)(c)/31 CFR 50.5(d) (Mar. 2, 2004) (``We believe that
an entity considering forming a captive insurer for stand-alone,
single risk terrorism insurance should be strongly cautioned and
advised against undertaking such proposed action if it is doing so
in order to avoid the Act's deductible requirements.''), <a href="https://home.treasury.gov/system/files/311/redactedv.pdf">https://home.treasury.gov/system/files/311/redactedv.pdf</a>.
\26\ TRIA sec. 104(a)(1); 31 CFR Subpart I (Audit and
Investigative Procedures). In addition, significant civil penalty
provisions apply under TRIA where a participating insurer
``[s]ubmits to Treasury fraudulent claims under the Program for
insured losses.'' TRIA sec. 104(e)(1)(C); 31 CFR 50.82(a)(3).
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Accordingly, Treasury is also adopting without change in this final
rule the interpretation of ``property and casualty insurance losses''
and ``insured loss'' proposed in the November 2020 NPRM.
IV. Procedural Requirements
Executive Order 12866, ``Regulatory Planning and Review.'' This
final rule is not a significant regulatory action for purposes of
Executive Order 12866, ``Regulatory Planning and Review,'' and thus has
not been reviewed by the Office of Management and Budget (OMB).
Regulatory Flexibility Act. Under the Regulatory Flexibility Act, 5
U.S.C. 601 et seq., Treasury must consider whether this rule will have
a ``significant economic impact on a substantial number of small
entities.'' 5 U.S.C. 605(b). In this case, Treasury certifies that this
final rule will not have a significant economic impact on a substantial
number of small entities, because the changes it implements are largely
ministerial and are not expected to impact small entities more than the
existing Program regulations.
Paperwork Reduction Act. No collection of information is addressed
in this final rule. Treasury continues to submit to OMB for review
under the requirements of the Paperwork Reduction Act, 44 U.S.C.
3507(d), material changes to existing collection requirements.
List of Subjects in 31 CFR Part 50
Insurance, Terrorism.
For the reasons stated in the preamble, 31 CFR part 50 is amended
as follows:
PART 50--TERRORISM RISK INSURANCE PROGRAM
0
1. The authority citation for part 50 continues to read as follows:
[[Page 30540]]
Authority: 5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-
297, 116 Stat. 2322, as amended by Pub. L. 109-144, 119 Stat. 2660,
Pub. L. 110-160, 121 Stat. 1839, Pub. L. 114-1, 129 Stat. 3, Pub. L.
116-94, 133 Stat. 2534 (15 U.S.C. 6701 note), Pub. L. 114-74, 129
Stat. 601, Title VII (28 U.S.C. 2461 note).
0
2. Amend Sec. 50.1 by revising paragraph (a) as follows:
Sec. 50.1 Authority, purpose, and scope.
(a) Authority. This part is issued pursuant to authority in Title I
of the Terrorism Risk Insurance Act of 2002, Public Law 107-297, 116
Stat. 2322, as amended by the Terrorism Risk Insurance Extension Act of
2005, Public Law 109-144, 119 Stat. 2660, the Terrorism Risk Insurance
Program Reauthorization Act of 2007, Public Law 110-160, 121 Stat.
1839, the Terrorism Risk Insurance Program Reauthorization Act of 2015,
Public Law 114-1, 129 Stat. 3, and the Terrorism Risk Insurance Program
Reauthorization Act of 2019, Public Law 116-94, 133 Stat. 2534.
* * * * *
0
3. Amend Sec. 50.4 by revising paragraphs (b)(2)(ii) and (n)(3)(iii),
adding paragraph (n)(3)(iv) and revising (w)(1) and (2) to read as
follows:
Sec. 50.4 Definitions.
* * * * *
(b) * * *
(2) * * *
(ii) Property and casualty insurance losses resulting from the act,
in the aggregate, do not exceed $5,000,000. For these purposes,
property and casualty insurance losses include any amounts subject to
payment under a property and casualty insurance policy, even if the
policyholder declined to obtain terrorism risk insurance under the
policy or is otherwise ultimately responsible for the payment.
* * * * *
(n) * * *
(3) * * *
(iii) Payments by an insurer in excess of policy limits; or
(iv) Amounts paid by a policyholder as required under the terms and
conditions of property and casualty insurance issued by an insurer.
* * * * *
(w) * * *
(1) Means commercial lines within only the following lines of
insurance from the NAIC's Exhibit of Premiums and Losses (commonly
known as Statutory Page 14): Line 1--Fire; Line 2.1--Allied Lines; Line
5.1--Commercial Multiple Peril (non-liability portion); Line 5.2--
Commercial Multiple Peril (liability portion); Line 8--Ocean Marine;
Line 9--Inland Marine; Line 16--Workers' Compensation; Line 17--Other
Liability; Line 18--Products Liability; Line 22--Aircraft (all perils);
and Line 27--Boiler and Machinery; a stand-alone cyber liability policy
falling within Line 17--Other Liability, is property and casualty
insurance, so long as it is not otherwise identified for state
reporting purposes as a policy that is not property and casualty
insurance, such as professional liability insurance.
(2) Property and casualty insurance does not include:
* * * * *
0
4. Amend Sec. 50.6 by revising paragraph (b) as follows:
Sec. 50.6 Special rules for Interim Guidance safe harbors.
* * * * *
(b) For purposes of this section, any Interim Guidance will be
posted by Treasury at <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program</a>.
0
5. Amend Sec. 50.16 by revising paragraph (c) to read as follows:
Sec. 50.16 Use of model forms.
* * * * *
(c) Definitions. For purposes of this section, references to NAIC
Model Disclosure Form No. 1 and NAIC Model Disclosure Form No. 2 refer
to such forms as revised in March 2020, or as subsequently modified by
the NAIC, provided Treasury has stated that usage by insurers of the
subsequently modified forms is deemed to satisfy the disclosure
requirements of the Act and the insurer uses the most current forms, so
approved by Treasury, that are available at the time of disclosure.
These forms may be found on the Treasury website at <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program</a>.
* * * * *
0
6. Amend Sec. 50.20 by revising paragraphs (b) and (c) to read as
follows:
Sec. 50.20 General mandatory availability requirements.
* * * * *
(b) Compliance through 2027. Under section 108(a) of the Act, an
insurer must comply with paragraphs (a)(1) and (2) of this section
through calendar year 2027.
(c) Beyond 2027. Notwithstanding paragraph (a)(2) of this section
and Sec. 50.22(a), property and casualty insurance coverage for
insured losses does not have to be made available beyond December 31,
2027, even if the policy period of insurance coverage for losses from
events other than acts of terrorism extends beyond that date.
0
7. Amend Sec. 50.30 by revising paragraph (c) to read as follows:
Sec. 50.30 General participation requirements.
* * * * *
(c) Identification. Treasury maintains a list of state residual
market insurance entities and state workers' compensation funds at
<a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program</a>. Procedures for providing comments and updates
to that list are posted with the list.
0
8. Amend Sec. 50.74 by revising paragraph (b) as to read as follows:
Sec. 50.74 Payment of Federal Share of Compensation.
* * * * *
(b) Payment process. Payment of the Federal Share of Compensation
for insured losses will be made to the insurer designated on the Notice
of Deductible Erosion required by Sec. 50.72. An insurer that requests
payment of the Federal Share of Compensation for insured losses must
receive payment through electronic funds transfer. The insurer must
establish either an account for reimbursement as described in paragraph
(c) of this section (if the insurer only seeks reimbursement) or a
segregated account as described in paragraph (d) of this section (if
the insurer seeks advance payments or a combination of advance payments
and reimbursement). Applicable procedures will be posted at <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program</a> or otherwise will be made publicly available.
* * * * *
0
9. Amend Sec. 50.83 by revising paragraph (b) to read as follows:
Sec. 50.83 Adjustment of civil monetary penalty amount.
* * * * *
(b) Annual adjustment. The maximum penalty amount that may be
assessed under this section will be adjusted in accordance with the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015, 28 U.S.C. 2461 note, by January 15 of each year and the updated
amount will be posted in the Federal Register and on the Treasury
website at https://
[[Page 30541]]
home.treasury.gov/policy-issues/financial-markets-financial-
institutions-and-fiscal-service/federal-insurance-office/terrorism-
risk-insurance-program.
* * * * *
0
10. Amend Sec. 50.90 by revising paragraph (c) to read as follows:
Sec. 50.90 Mandatory and discretionary recoupment.
* * * * *
(c) If the Secretary imposes a federal terrorism policy surcharge
as provided in paragraph (a) of this section, then the required
amounts, based upon the extent to which payments for the Federal Share
of Compensation have been made by the collection deadlines in section
103(e)(7)(E) of the Act, shall be collected in accordance with such
deadlines:
(1) For any act of terrorism that occurs on or before December 31,
2022, the Secretary shall collect all required amounts by September 30,
2024;
(2) For any act of terrorism that occurs between January 1, 2023
and December 31, 2023, the Secretary shall collect 35% of any required
amounts by September 30, 2024, and the remainder by September 30, 2029;
and
(3) For any act of terrorism that occurs on or after January 1,
2024, the Secretary shall collect all required amounts by September 30,
2029.
0
11. Amend Sec. 50.103 by revising paragraph (a) as to read as follows:
Sec. 50.103 Procedure for requesting approval of proposed
settlements.
(a) Submission of notice. Insurers must request advance approval of
a proposed settlement by submitting a notice of the proposed settlement
and other required information in writing to the Terrorism Risk
Insurance Program Office or its designated representative. The address
where notices are to be submitted will be available at <a href="https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program">https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program</a> following any certification of an act of
terrorism pursuant to section 102(1) of the Act.
* * * * *
Dated: June 3, 2021.
Steven E. Seitz,
Director, Federal Insurance Office, performing the Delegable Duties of
the Assistant Secretary for Financial Institutions.
[FR Doc. 2021-12014 Filed 6-8-21; 8:45 am]
BILLING CODE 4810-25-P
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</html>Indexed from Federal Register on June 9, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.