Notice2023-27839
IMARA Calculation for Calendar Year 2024 Under the Terrorism Risk Insurance Program
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 19, 2023
Issuing agencies
Treasury Department
Abstract
The Department of the Treasury (Treasury) is providing notice to the public of the insurance marketplace aggregate retention amount (IMARA) for calendar year 2024 for purposes of the Terrorism Risk Insurance Program (TRIP or the Program) under the Terrorism Risk Insurance Act, as amended (TRIA or the Act). As explained below, Treasury has determined that the IMARA for calendar year 2024 is $48,537,421,582.
Full Text
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<title>Federal Register, Volume 88 Issue 242 (Tuesday, December 19, 2023)</title>
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[Federal Register Volume 88, Number 242 (Tuesday, December 19, 2023)]
[Notices]
[Pages 87843-87844]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-27839]
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DEPARTMENT OF THE TREASURY
RIN 1505-AC62
IMARA Calculation for Calendar Year 2024 Under the Terrorism Risk
Insurance Program
AGENCY: Departmental Offices, Department of the Treasury.
ACTION: Notice.
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SUMMARY: The Department of the Treasury (Treasury) is providing notice
to the public of the insurance marketplace aggregate retention amount
(IMARA) for calendar year 2024 for purposes of the Terrorism Risk
Insurance Program (TRIP or the Program) under the Terrorism Risk
Insurance Act, as amended (TRIA or the Act). As explained below,
Treasury has determined that the IMARA for calendar year 2024 is
$48,537,421,582.
DATES: The IMARA for calendar year 2024 is applicable January 1, 2024,
through December 31, 2024.
FOR FURTHER INFORMATION CONTACT: Richard Ifft, Lead Management and
Senior Regulatory Policy Analyst, Terrorism Risk Insurance Program,
Federal Insurance Office, 202-622-2922 or Theodore Newman, Senior
Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-
7009.
SUPPLEMENTARY INFORMATION:
I. Background
TRIA--which established TRIP--was signed into law on November 26,
2002, following the attacks of September 11, 2001, 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.\1\ TRIA requires insurers to ``make
available'' terrorism risk insurance for commercial property and
casualty losses resulting from certified acts of terrorism, 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.\2\
The Secretary of the Treasury (Secretary) administers the Program, with
assistance from the Federal Insurance Office (FIO).\3\
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\1\ Public Law 107-297, sec. 101(b), 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\ 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 (2015 Reauthorization Act); Terrorism Risk
Insurance Program Reauthorization Act of 2019, Public Law 116-94,
133 Stat. 2534.
\3\ 31 U.S.C. 313(c)(1)(D).
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TRIA provides for an ``industry marketplace aggregate retention
[[Page 87844]]
amount'' or ``IMARA'' to be used for determining whether Treasury must
recoup any payments it makes under the Program. Under the Act, if total
annual payments by all participating insurers are below the IMARA, then
Treasury must recoup all amounts expended by it up to the IMARA
threshold. If total annual payments by all participating insurers are
above the IMARA, then Treasury has the discretionary authority (but not
the obligation) to recoup all of the expended amounts that are above
the IMARA threshold.\4\
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\4\ See TRIA, sec. 103(e)(7); see also 31 CFR part 50 subpart J
(Recoupment and Surcharge Procedures).
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TRIA provides for a schedule of defined IMARA values from calendar
year 2015 through calendar year 2019.\5\ For calendar year 2020 and
beyond, TRIA states that the IMARA ``shall be revised to be the amount
equal to the annual average of the sum of insurer deductibles for all
insurers participating in the Program for the prior 3 calendar years,''
as such sum is determined pursuant to final rules issued by the
Secretary.\6\
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\5\ In 2015, the IMARA was $29.5 billion; it increased to $31.5
billion in 2016, $33.5 billion in 2017, $35.5 billion in 2018, and
$37.5 billion in 2019. See TRIA, sec. 103(e)(6)(B).
\6\ TRIA, sec. 103(e)(6)(B)(ii) and (e)(6)(C). An insurer's
deductible under the Program for any particular year is 20 percent
of its direct earned premium subject to the Program during the
preceding year. TRIA, sec. 102(7). For example, an insurer's
calendar year 2023 Program deductible is 20 percent of its calendar
year 2022 direct earned premium.
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On November 15, 2019, Treasury issued a final rule for calculation
of the IMARA.\7\ This rule, which is codified at 31 CFR 50.4(m)(2),
provides that the IMARA will be calculated by averaging the annual
industry aggregate deductibles over the prior three calendar years,
based upon the direct earned premiums (DEP) reported to Treasury by
insurers in Treasury's annual data calls. Insurer deductibles under the
Program are based upon the DEP of individual insurers reported to
Treasury in the prior year (e.g., 2022 DEP for 2023 calendar year
program deductibles).
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\7\ See 84 FR/62450 (November 15, 2019) (Final Rule).
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Accordingly, for purposes of determining the IMARA for calendar
2024, Treasury has averaged the aggregate insurer deductibles for
calendar years 2023, 2022, and 2021 (as reported to Treasury in each of
these years), which are based on the reported DEP for calendar years
2022, 2021, and 2020, respectively.
For purposes of the 2024 IMARA calculation, those figures are as
follows:
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\8\ The figures from the 2022 and 2021 TRIP data calls were
previously reported in the IMARA calculation for calendar year 2023.
See 87 FR 78202 (December 21, 2022). The figures from the 2023 TRIP
data call were previously reported in FIO's June 2023 Study on the
Competitiveness of Small Insurers in the Terrorism Risk Insurance
Marketplace (June 2023), 16 (Figure 1), <a href="https://home.treasury.gov/system/files/311/2023%20TRIP%20Small%20Insurer%20Report%20FINAL.pdf">https://home.treasury.gov/system/files/311/2023%20TRIP%20Small%20Insurer%20Report%20FINAL.pdf</a>,
and have been updated to include data received by FIO after the
reporting deadline. Some figures may not add up on account of
rounding.
TRIP-Eligible DEP by Insurer Category \8\
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2021 TRIP data call 2022 TRIP data call 2023 TRIP data call
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2020 DEP in TRIP- 2021 DEP in TRIP- 2022 DEP in TRIP-
eligible lines % of total eligible lines % of total eligible lines % of total
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Alien Surplus Lines Ins..................... $11,043,111,847 5 $12,107,214,064 5 $ 16,954,356,655 6
Captive Insurers............................ 10,534,614,720 5 14,359,289,661 6 11,992,422,807 4
Non-Small Insurers.......................... 175,272,463,804 80 186,901,545,992 78 209,307,242,717 78
Small Insurers.............................. 22,156,599,520 10 26,226,080,899 11 31,206,381,036 12
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Total................................... 219,006,789,891 100 239,594,130,617 100 269,460,403,215 100
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Source: 2021-2023 TRIP Data Calls.
Treasury has used these reported premiums to calculate the IMARA
for calendar year 2024. The average annual DEP figure for the combined
period of 2020, 2021, and 2022 is $242,687,107,903 [($219,006,789,891 +
$239,594,130,617 + $269,460,403,215)/3 = $242,687,107,908]. The average
aggregate deductible for the prior three years is 20 percent of
$242,687,107,908, which equals $48,537,421,582.\9\ Accordingly, the
IMARA for purposes of calendar year 2024 is $48,537,421,582.
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\9\ See note 7.
Dated: December 13, 2023.
Steven E. Seitz,
Director, Federal Insurance Office.
[FR Doc. 2023-27839 Filed 12-18-23; 8:45 am]
BILLING CODE 4810-AK-P
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