By Paul Howard, Counsel, Coalition to Insure Against Terrorism (CIAT).
The Coalition to Insure Against Terrorism (CIAT), of which URMIA is a member, released the following summary of the Federal Insurance Office’s (FIO) final rule implementing the latest Terrorism Risk Insurance Act (TRIA) regulations. CIAT filed these comments in response to the Notice of Proposed Rulemaking (NPRM) by the FIO published in the April 1, 2016, Federal Register (81 Fed. Reg. 18950). CIAT is a broad coalition of commercial insurance consumers formed immediately after 9/11 to ensure that American businesses could obtain comprehensive and affordable terrorism insurance. The diverse CIAT membership represents commercial real estate, banking, energy, construction, hotel and hospitality, entertainment, manufacturing, transportation, the major league sports, higher education, as well as public sector buyers of insurance. The current list of CIAT members can be found here.
Following up on its release of an interim final rule on TRIA certification, on December 21 the Federal Register published the final rule implementing the rest of the TRIA regulations contemplated in this spring’s proposed rulemaking. This rule will go into effect on January 17, 2017.
In general, there are relatively few changes between the proposed rulemaking and the final rule, reflecting the fact that many of the changes were dictated by the latest reauthorization and fairly noncontroversial to begin with. In May, CIAT provided comments on the participation of captive insurers in TRIA, as well as a brief mention of the process for benchmarking the insurance marketplace aggregate retention amount in 2020.
On the latter point, CIAT stated simply that Treasury’s rule was adequate and aligned with the statutory requirements, which Treasury cites on p. 10 of the final rule. On the issue of captives, Treasury indicates that they are continuing to evaluate the comments received in order to determine whether they should issue additional rules regarding their participation in the TRIA program. Consequently, this final rule does not address CIAT’s comments on captives, and it remains to be seen whether a subsequent rulemaking is in our future.
The rule does make one point relevant to captives, however. In response to some commenters who argued that the definition of “small insurer” should not exclude captives, Treasury has noted that captives are essentially controlled by the insured and thus do not face the same sort of competitive challenges that small insurers face which led Congress to require the small insurer study. The offshoot of this was a concern that captives might not be exempted from FIO’s annual data calls if they are not considered “small insurers,” but Treasury has indicated that their modification of the data call rules permits Treasury to modify data requests by type of insurer. Specifically, “Treasury intends to develop data requests for participating captive insurers that will be tailored to the manner in which these entities participate in the Program, which will allow such insurers to provide necessary information in an efficient fashion.” We will, of course, want to monitor just how efficient these data calls on captives will prove to be, but Treasury has at least acknowledged that they do not want to place overly burdensome requirements on captives.
CIAT is continuing to review these new regulations closely for any unforeseen issues, but as a general matter the rules otherwise follow the proposed rule and do not appear to contain any surprises.
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