Treasury, NAIC Request Terrorism Risk Insurance Program Data Call Feedback

Nov 30, 2017

The U.S. Treasury advised this week that a statutory periodic analysis of certain matters relating to the Terrorism Risk Insurance Program (“TRIP”) is now underway.

Originally enacted as part of the recovery from the 2001 World Trade Center 9-11 bombings and re-enacted several times since then, the Terrorism Risk Insurance Act of 2002 (“TRIA”) annually requires insurers to submit certain data regarding their TRIP participation.  The Treasury, together with the Federal Insurance Office (“FIO”), began collecting data from insurers in 2016 on a voluntary basis, and then on a mandatory basis in 2017.

Among other requirements, insurers with property exposures must submit to state insurance regulators an additional supplement focusing on the property lines of insurance subject to the TRIP.  This supplement calls for data with respect to geographic exposures by ZIP Code.

State insurance regulators also began annually collecting data relating to terrorism risk insurance in 2016 from commercial lines property and casualty insurers.  The state data calls have sought information similar to that collected by the Treasury, although in some cases on a more detailed, granular basis.  This was intended to enable the monitoring the affordability and availability of insurance coverage for acts of terrorism and assess insurers’ financial exposure to terrorism risk.

Given the similarity of the information sought at both the state and federal levels, and the burden presented to insurers by the existence of dual data calls on the same subject, the Treasury and state insurance regulators have sought to create a consolidated data call for 2018 intended to satisfy each entity’s respective objectives.

For the 2018 data call, the Treasury and regulators agreed on joint reporting templates substantially similar to those used by the Treasury in prior years, subject to minor changes based upon experience gained from the 2017 data call.  Also agreed upon was a process that included coordination with state insurance regulators and the National Association of Insurance Commissioners (“NAIC”), and feedback from participating insurers.

Thus, the FIO is now requesting public feedback on the proposed consolidation of the separate federal and state data calls regarding terrorism risk insurance, and the proposed data collection forms for use in the 2018 data call.  Copies of these forms and associated explanatory materials (including a document identifying specific changes to the reporting templates and instructions as previously used by the Treasury) are available for review here.

To view the Treasury’s official Federal Register Request for Comment document, click here.

The New York Department of Financial Services (“NYDFS”), which is once again handling this year’s data call on behalf of the NAIC, noted that–particularly for the liability and inland and ocean marine lines–insurers have struggled to provide ZIP Code-level data.

In addition to having concerns with the availability of quality data, states have also determined that there is limited value to ZIP Code-level data for these coverages.  With some exceptions, the risks associated with these lines are not localized, nor associated with fixed locations in a way analogous to property coverages, according to the NYDFS, which explained:

“In light of the utility and quality of ZIP Code-level data for liability and inland and ocean marine lines of business, the States have determined that for those lines, the data elements that Treasury has historically collected (and proposes to collect again in 2018) would likewise serve the needs of state regulators.  Therefore, effective with the 2018 data call, the States will use the joint data reporting templates and will not collect ZIP Code-level data for liability and inland and ocean marine lines of business.

“However, the States have determined that ZIP Code-level data collected on a company basis continues to be necessary for property coverages, so that states can properly assess financial exposures in the appropriate geographic areas.  This granular data will allow state regulators to determine the concentration of risk as it relates to insurer solvency and to assess properly the condition of the insurance market within each of the respective states.”

The entirety of the NYDFS memorandum is attached for review.

The Treasury is requesting public feedback to be submitted on the content of the 2018 data call reporting templates, and the consolidated approach to the separate federal and state reporting on or before January 29, 2018.  

Comments on a proposal related to the 2018 state regulator terrorism risk insurance data call are due to the NYDFS by January 27, 2018.  To view that proposal, click here.

Ultimately, all statutory data must be provided to the Treasury no later than May 15, 2018, which will also be the reporting deadline for state insurance regulators.

Should you have any questions or comments, please contact Colodny Fass.

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