Terrorism Risk Insurance Program; Technical Amendments to “Make Available” Provision and “Insurer Deductible” Definition, 7403-7405 [05-2810]
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Federal Register / Vol. 70, No. 29 / Monday, February 14, 2005 / Rules and Regulations
contracts, Incorporation by reference,
Investigations, Mineral royalties, Oil
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provisions of the American Petroleum
Institute’s Pressure Vessel Inspection
Code: Maintenance Inspection, Rating,
Repair, and Alteration API 510 (except
Sections 6.5 and 8.5), which is
incorporated by reference in § 250.198
*
*
*
*
*
I 4. In § 250.1629, paragraph (b)(1)
introductory text is revised to read as
follows:
Dated: February 2, 2005.
Rebecca W. Watson,
Assistant Secretary—Land and Minerals
Management.
§ 250.1629 Additional production and fuel
gas system requirements.
*
For the reasons stated in the preamble,
the Minerals Management Service
amends 30 CFR Part 250 as follows:
I
PART 250—OIL AND GAS AND
SULPHUR OPERATIONS IN THE
OUTER CONTINENTAL SHELF
1. The authority citation for part 250
continues to read as follows:
I
Authority: 43 U.S.C. 1331 et seq.
2. In § 250.198, in the table in
paragraph (e), a new entry for document
API 510 is added in alphanumeric order
to read as follows:
I
§ 250.198 Documents incorporated by
reference.
*
*
*
(e) * * *
*
Title of document
*
*
*
*
(b) * * *
(1) Pressure and fired vessels must be
designed, fabricated, and code stamped
in accordance with the applicable
provisions of sections I, IV, and VIII of
the American Society of Mechanical
Engineers (ASME) Boiler and Pressure
Vessel Code. Pressure and fired vessels
must have maintenance inspection,
rating, repair, and alteration performed
in accordance with the provisions of the
American Petroleum Institute’s Pressure
Vessel Inspection Code: Maintenance
Inspection, Rating, Repair, and
Alteration, API 510 (except Sections 6.5
and 8.5), which is incorporated by
reference in § 250.198.
*
*
*
*
*
[FR Doc. 05–2746 Filed 2–11–05; 8:45 am]
*
BILLING CODE 4310–MR–P
Incorporated by reference at
DEPARTMENT OF THE TREASURY
31 CFR Part 50
*
*
*
API 510, Pressure Vessel Inspection Code:
Maintenance Inspection, Rating, Repair,
and Alteration, except
for Sections 6.5 and
8.5, Eighth Edition,
June 1997, API Stock
No. C51008.
*
*
§ 250.803(b)(1).
§ 250.1629(b)(1).
ACTION:
3. In § 250.803, paragraph (b)(1)
introductory text is revised to read as
follows:
§ 250.803 Additional production system
requirements.
*
*
*
*
*
(b) * * *
(1) Pressure and fired vessels.
Pressure and fired vessels must be
designed, fabricated, and code stamped
in accordance with the applicable
provisions of Sections I, IV, and VIII of
the American Society of Mechanical
Engineers (ASME) Boiler and Pressure
Vessel Code. Pressure and fired vessels
must have maintenance inspection,
rating, repair, and alteration performed
in accordance with the applicable
15:21 Feb 11, 2005
Terrorism Risk Insurance Program;
Technical Amendments to ‘‘Make
Available’’ Provision and ‘‘Insurer
Deductible’’ Definition
Departmental Offices, Treasury.
Final rule.
AGENCY:
I
VerDate jul<14>2003
RIN 1505–ZA01
Jkt 205001
SUMMARY: The Department of the
Treasury (Treasury) is issuing this final
rule as part of its implementation of
Title I of the Terrorism Risk Insurance
Act of 2002 (Act). The Act established
a temporary Terrorism Insurance
Program (Program) under which the
Federal Government will share the risk
of insured loss from certified acts of
terrorism with commercial property and
casualty insurers until the Program ends
on December 31, 2005. This final rule
makes minor technical changes to
Subpart A of Part 50 of Title 31. One
change conforms existing regulations to
the June 18, 2004 determination by the
Secretary of the Treasury to extend the
‘‘make available’’ provisions of section
103(c) of the Act through the third year
PO 00000
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7403
of the Program (calendar year 2005). A
second change clarifies the definition of
the insurer deductible for Program Year
3 for certain newly formed insurers to
more closely parallel the language of the
Act.
DATES: This final rule is effective
February 14, 2005.
FOR FURTHER INFORMATION CONTACT:
David Brummond, Legal Counsel, or
Howard Leikin, Senior Insurance
Advisor, Terrorism Risk Insurance
Program, (202) 622–6770 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
I. Background
On November 26, 2002, the President
signed into law the Terrorism Risk
Insurance Act of 2002 (Pub. L. 107–297,
116 Stat. 2322). The Act was effective
immediately. The Act’s purposes are to
address market disruptions, ensure the
continued widespread availability and
affordability of commercial property
and casualty insurance for terrorism
risk, and to allow for a transition period
for the private markets to stabilize and
build capacity while preserving state
insurance regulation and consumer
protections.
Title I of the Act establishes a
temporary Federal program of shared
public and private compensation for
insured commercial property and
casualty losses resulting from an act of
terrorism, which as defined in the Act
is certified by the Secretary of the
Treasury, in concurrence with the
Secretary of State and the Attorney
General. The Act authorizes Treasury to
administer and implement the
Terrorism Risk Insurance Program, and
to issue regulations and procedures. The
Program provides a Federal reinsurance
backstop for three years. The Program
ends on December 31, 2005. Thereafter,
the Act provides Treasury with certain
continuing authority to take actions as
necessary to ensure payment,
recoupment, adjustments of
compensation, and reimbursement for
insured losses arising out of any act of
terrorism (as defined under the Act)
occurring during the period between
November 26, 2002, and December 31,
2005.
Each entity that meets the definition
of ‘‘insurer’’ (well over 2000 firms) must
participate in the Program. The amount
of the Federal share of an insured loss
resulting from an act of terrorism is to
be determined based upon insurance
company deductibles and excess loss
sharing with the Federal Government, as
specified by the Act and the
implementing regulations. An insurer’s
deductible increases each year of the
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14FER1
7404
Federal Register / Vol. 70, No. 29 / Monday, February 14, 2005 / Rules and Regulations
Program, thereby reducing the Federal
Government’s share prior to expiration
of the Program. An insurer’s deductible
is calculated based on a percentage of
the value of direct earned premiums
collected over certain statutory periods.
Once an insurer has met its deductible,
the Federal payments cover 90 percent
of insured losses above the deductible,
subject to an annual industry-aggregate
limit of $100 billion.
II. The ‘‘Make Available’’ Provision
The mandatory availability or ‘‘make
available’’ provisions in section 103(c)
of the Act require that, for Program Year
1, Program Year 2, and, if so determined
by the Secretary, for Program Year 3, all
entities that meet the definition of
insurer under the Program must make
available in all of their commercial
property and casualty insurance policies
coverage for insured losses resulting
from an act of terrorism. This coverage
cannot differ materially from the terms,
amounts and other coverage limitations
applicable to losses arising from events
other than acts of terrorism.
A. Secretary Determination
The Act requires the Secretary of the
Treasury to determine, not later than
September 1, 2004, whether to extend
the make available requirements
through Program Year 3, based on
factors referenced in section 108(d)(1) of
the Act. The factors referred to in
section 108(d)(1) of the Act are:
• The ‘‘effectiveness of the Program;’’
• The ‘‘likely capacity of the property
and casualty insurance industry to offer
insurance for terrorism risk after
termination of the Program;’’ and
• The ‘‘availability and affordability
of such insurance for various
policyholders, including railroads,
trucking, and public transit.’’
On May 5, 2004, Treasury published
a request for comments in the Federal
Register and solicited comments and
information concerning the statutory
factors in section 108(d)(1) of the Act to
assist the Secretary with the ‘‘make
available’’ determination. See 69 FR
25168 (May 5, 2004). The comment
period closed on June 4, 2004, and
nearly 200 comments were received.
On June 18, 2004, the Secretary
announced his decision to extend the
‘‘make available’’ requirements through
Program Year 3. (See https://
www.treas.gov/press/releases/
js1734.htm; https://www.treas.gov/press/
releases/js1735.htm). This final rule
conforms the Act’s implementing
regulations to reflect the Secretary’s
determination.
VerDate jul<14>2003
15:21 Feb 11, 2005
Jkt 205001
B. The Final Rule
This final rule amends section
50.20(b), which was previously
reserved, and section 50.21 to reflect the
Secretary’s determination to extend the
‘‘make available’’ provisions of section
103(c) of the Act through Program Year
3 (calendar year 2005). The amendment
to section 50.20(b) also specifically
clarifies that insurers are not required to
provide coverage for insured losses
resulting from acts of terrorism beyond
the date the Program expires and the
Federal backstop no longer exists.
III. Insurer Deductible—Newly Formed
Insurers
The Act defines ‘‘Insurer Deductible’’
in Section 102(7) for the various
‘‘Program Years’’ of the Program.
Section 102(7)(E) provides that
notwithstanding the general rules for
each Program Year, if an insurer has not
had a full year of operations during the
calendar year immediately preceding
the applicable Program Year, the
‘‘insurer deductible’’ is ‘‘such portion of
the direct earned premiums of the
insurer as the Secretary determines
appropriate, subject to appropriate
methodologies established by the
Secretary for measuring such direct
earned premiums.’’
The current regulation at Section
50.5(g)(2) provides that for an insurer
that came into existence after November
26, 2002, the insurer deductible will be
based on data for direct earned
premiums for the current Program Year,
and that if the insurer has not had a full
year of operations during the applicable
Program Year, the direct earned
premiums for the current Program Year
will be annualized.
Treasury proposed this rule
recognizing that new companies would
have limited business operations, that
their premium income likely would be
somewhat volatile, and that this
volatility could persist throughout the
life of the Program. 68 FR 9811 (Feb. 28,
2003). Two commenters generally
supported Treasury’s determination that
premiums for new insurers would be
annualized in the calculation of their
insurer deductible. 68 FR 41263 (July
11, 2004). In revisiting this matter at this
point in the Program, however, Treasury
has concluded that while the concern
about new company premium income
volatility remains valid, the Act
provides specific guidance in the case
where an insurer was not in existence
on November 26, 2002 but nevertheless
has had a full year of operations in the
year preceding Program Year 3, the last
year of the Program. The final rule
addresses such a circumstance by
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
adding a new section 50.5(g)(3) for
Program Year 3 with language that more
closely parallels the statutory language
of the Act.
Procedural Requirements
The Act established a Program to
provide for loss sharing payments by the
Federal Government for insured losses
resulting from certified acts of terrorism.
The Act became effective immediately
upon the date of enactment (November
26, 2002). Treasury has issued and will
be issuing additional regulations to
implement the Program. This final
regulation makes two technical changes.
First, it amends section 50.20(b)
(previously reserved) to reflect the
Secretary’s decision to extend the
‘‘make available’’ provisions of section
103(c) of the Act through Program Year
3 (calendar year 2005). Second, the
regulation clarifies the definition of
‘‘insurer deductible’’ to more closely
parallel the language in the Act. The
first change reflects a determination
already made and announced. The
second change merely clarifies the
regulation and conforms it to the
language of the Act.
For these reasons, Treasury has
determined that notice and public
comment are unnecessary and contrary
to the public interest, pursuant to 5
U.S.C. 553(b)(B) and, pursuant to 5
U.S.C. 553(d)(3), that there is good cause
for this final rule to become effective
immediately upon publication.
This final rule is not a significant
regulatory action for purposes of
Executive Order 12866. Because no
notice of proposed rulemaking is
required, the provisions of the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) do not apply. However, the
Act and the Program are intended to
provide benefits to the U.S. economy
and all businesses, including small
businesses, by providing a federal
reinsurance backstop to commercial
property and casualty insurance
policyholders and spreading the risk of
insured loss resulting from an act of
terrorism.
List of Subjects in 31 CFR Part 50
Terrorism risk insurance.
PART 50—TERRORISM RISK
INSURANCE PROGRAM
1. The authority citation for part 50
continues to read as follows:
I
Authority: 5 U.S.C. 301; 31 U.S.C. 321;
Title I, Pub. L. 107–297, 116 Stat. 2322 (15
U.S.C. 6701 note).
2. Subpart A of part 50 is amended by
adding § 50.5(g)(3) to read as follows:
I
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Federal Register / Vol. 70, No. 29 / Monday, February 14, 2005 / Rules and Regulations
§ 50.5
Definitions.
*
*
*
*
*
(g) Insurer deductible means:
*
*
*
*
*
(3) Notwithstanding paragraph (g)(2)
of this section, the insurer deductible
for Program Year 3 (January 1, 2005
through December 31, 2005) for an
insurer that has not had a full year of
operations during calendar year 2004
will be based on annualized data for the
insurer’s direct earned premiums for
Program Year 3, multiplied by 15
percent. For an insurer that came into
existence after November 26, 2002 and
has had a full year of operations during
calendar year 2004, the insurer
deductible for Program Year 3 is the
value of an insurer’s direct earned
premiums over calendar year 2004,
multiplied by 15 percent.
I 3. Subpart A of part 50 is amended by
revising § 50.20(b) to read as follows:
§ 50.20 General mandatory availability
requirements.
*
*
*
*
*
(b) Program Year 3—calendar year
2005. In accordance with the
determination of the Secretary
announced June 18, 2004, an insurer
must comply with paragraphs (a)(1) and
(a)(2) of this section during Program
Year 3. Notwithstanding paragraph
(a)(2) of this section and § 50.23(a),
property and casualty insurance
coverage for insured losses does not
have to be made available beyond
December 31, 2005 (the last day of
Program Year 3) even if the policy
period of insurance coverage for losses
from events other than acts of terrorism
extends beyond that date.
I 4. Subpart A of part 50 is amended by
revising § 50.21(a) to read as follows:
§ 50.21
Make available.
(a) General. The requirement to make
available coverage as provided in
§ 50.20 applies to policies in existence
on November 26, 2002, new policies
issued and renewals of existing policies
during the period beginning on
November 26, 2002 and ending on
December 31, 2004 (the last day of
Program Year 2), and to new policies
issued and renewals of existing policies
in Program Year 3 (calendar year 2005).
The requirement applies at the time an
insurer makes the initial offer of
coverage as well as at the time an
insurer makes an initial offer of renewal
of an existing policy.
*
*
*
*
*
VerDate jul<14>2003
15:21 Feb 11, 2005
Jkt 205001
Dated: February 1, 2005.
Gregory Zerzan,
Acting Assistant Secretary of the Treasury.
[FR Doc. 05–2810 Filed 2–11–05; 8:45 am]
BILLING CODE 4810–25–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD08–04–036]
RIN 1625–AA09
Drawbridge Operation Regulation; St.
Croix River, MN
Coast Guard, DHS.
Temporary final rule.
AGENCY:
ACTION:
SUMMARY: The Coast Guard is changing
the regulation governing the Stillwater
Highway Drawbridge, across the St.
Croix River at Mile 23.4, at Stillwater,
Minnesota. Under this rule, the
drawbridge need not open for river
traffic and may remain in the closed-tonavigation position from midnight,
October 14, 2005, until midnight, March
15, 2006. This rule allows time to
perform maintenance and repairs to the
bridge.
DATES: This rule is effective from
midnight, October 14, 2005 until
midnight, March 15, 2006.
ADDRESSES: Comments and material
received from the public, as well as
documents indicated in this preamble as
being available in the docket, are part of
the docket [CGD08–04–036] and are
available for inspection or copying at
room 2.107f in the Robert A. Young
Federal Building at Eighth Coast Guard
District, between 8 a.m. and 4 p.m.,
Monday through Friday, except Federal
holidays. Commander (obr), Eighth
Coast Guard District, maintains the
public docket for this rulemaking.
FOR FURTHER INFORMATION CONTACT: Mr.
Roger K. Wiebusch, Bridge
Administrator, (314) 539–3900,
extension 2378.
SUPPLEMENTARY INFORMATION:
Regulatory History
On November 5, 2004, we published
a notice of proposed rulemaking
(NPRM) entitled, ‘‘Drawbridge
Operation Regulation; St. Croix River,
Minnesota,’’ in the Federal Register (69
FR 64553). We received no comment
letters on the proposed rule. No public
meeting was requested, and none was
held.
PO 00000
Frm 00027
Fmt 4700
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7405
Background and Purpose
On September 13, 2004, the
Minnesota Department of
Transportation, requested a temporary
change to the operation of the Stillwater
Highway Drawbridge across the St.
Croix River, Mile 23.4, at Stillwater,
Minnesota to allow the drawbridge to
remain in the closed-to-navigation
position for 152 consecutive days for
critical repairs and maintenance.
The Stillwater Highway Drawbridge
navigation span has a vertical clearance
of 10.9 feet above normal pool in the
closed to navigation position.
Navigation on the waterway consists
primarily of commercial and
recreational watercraft and will not be
significantly impacted due to the
reduced navigation in winter months.
Presently, the draw opens from October
16 until May 14 with 24 hours advance
notice for passage of river traffic. The
Minnesota Department of
Transportation requested the
drawbridge be permitted to remain
closed-to-navigation from midnight,
October 14, 2005 until midnight, March
15, 2006. Winter conditions on the St.
Croix River will preclude any
significant navigation demands for the
drawspan opening. Performing
maintenance on the bridge during the
winter, when the number of vessels
likely to be impacted is minimal, is
preferred to bridge closure or advance
notification requirements during the
navigation season. This temporary
change to the drawbridge’s operation
has been coordinated with the
commercial waterway operators.
Discussion of Comments and Changes
The Coast Guard received no
comment letters. No changes will be
made to this final rule.
Regulatory Evaluation
This rule is not a ‘‘significant
regulatory action’’ under section 3(f) of
Executive Order 12866, Regulatory
Planning and Review, and does not
require an assessment of potential costs
and benefits under section 6(a)(3) of that
Order. The Office of Management and
Budget has not reviewed it under that
Order. It is not ‘‘significant’’ under the
regulatory policies and procedures of
the Department of Homeland Security
(DHS).
The Coast Guard expects that this
temporary change to the operation of the
Stillwater Highway Drawbridge will
have minimal economic impact on
commercial traffic operating on the St.
Croix River. This temporary change has
been written in such a manner as to
allow for minimal interruption of the
drawbridge’s regular operation.
E:\FR\FM\14FER1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 29 (Monday, February 14, 2005)]
[Rules and Regulations]
[Pages 7403-7405]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-2810]
=======================================================================
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DEPARTMENT OF THE TREASURY
31 CFR Part 50
RIN 1505-ZA01
Terrorism Risk Insurance Program; Technical Amendments to ``Make
Available'' Provision and ``Insurer Deductible'' Definition
AGENCY: Departmental Offices, Treasury.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of the Treasury (Treasury) is issuing this
final rule as part of its implementation of Title I of the Terrorism
Risk Insurance Act of 2002 (Act). The Act established a temporary
Terrorism Insurance Program (Program) under which the Federal
Government will share the risk of insured loss from certified acts of
terrorism with commercial property and casualty insurers until the
Program ends on December 31, 2005. This final rule makes minor
technical changes to Subpart A of Part 50 of Title 31. One change
conforms existing regulations to the June 18, 2004 determination by the
Secretary of the Treasury to extend the ``make available'' provisions
of section 103(c) of the Act through the third year of the Program
(calendar year 2005). A second change clarifies the definition of the
insurer deductible for Program Year 3 for certain newly formed insurers
to more closely parallel the language of the Act.
DATES: This final rule is effective February 14, 2005.
FOR FURTHER INFORMATION CONTACT: David Brummond, Legal Counsel, or
Howard Leikin, Senior Insurance Advisor, Terrorism Risk Insurance
Program, (202) 622-6770 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
On November 26, 2002, the President signed into law the Terrorism
Risk Insurance Act of 2002 (Pub. L. 107-297, 116 Stat. 2322). The Act
was effective immediately. The Act's purposes are to address market
disruptions, ensure the continued widespread availability and
affordability of commercial property and casualty insurance for
terrorism risk, and to allow for a transition period for the private
markets to stabilize and build capacity while preserving state
insurance regulation and consumer protections.
Title I of the Act establishes a temporary Federal program of
shared public and private compensation for insured commercial property
and casualty losses resulting from an act of terrorism, which as
defined in the Act is certified by the Secretary of the Treasury, in
concurrence with the Secretary of State and the Attorney General. The
Act authorizes Treasury to administer and implement the Terrorism Risk
Insurance Program, and to issue regulations and procedures. The Program
provides a Federal reinsurance backstop for three years. The Program
ends on December 31, 2005. Thereafter, the Act provides Treasury with
certain continuing authority to take actions as necessary to ensure
payment, recoupment, adjustments of compensation, and reimbursement for
insured losses arising out of any act of terrorism (as defined under
the Act) occurring during the period between November 26, 2002, and
December 31, 2005.
Each entity that meets the definition of ``insurer'' (well over
2000 firms) must participate in the Program. The amount of the Federal
share of an insured loss resulting from an act of terrorism is to be
determined based upon insurance company deductibles and excess loss
sharing with the Federal Government, as specified by the Act and the
implementing regulations. An insurer's deductible increases each year
of the
[[Page 7404]]
Program, thereby reducing the Federal Government's share prior to
expiration of the Program. An insurer's deductible is calculated based
on a percentage of the value of direct earned premiums collected over
certain statutory periods. Once an insurer has met its deductible, the
Federal payments cover 90 percent of insured losses above the
deductible, subject to an annual industry-aggregate limit of $100
billion.
II. The ``Make Available'' Provision
The mandatory availability or ``make available'' provisions in
section 103(c) of the Act require that, for Program Year 1, Program
Year 2, and, if so determined by the Secretary, for Program Year 3, all
entities that meet the definition of insurer under the Program must
make available in all of their commercial property and casualty
insurance policies coverage for insured losses resulting from an act of
terrorism. This coverage cannot differ materially from the terms,
amounts and other coverage limitations applicable to losses arising
from events other than acts of terrorism.
A. Secretary Determination
The Act requires the Secretary of the Treasury to determine, not
later than September 1, 2004, whether to extend the make available
requirements through Program Year 3, based on factors referenced in
section 108(d)(1) of the Act. The factors referred to in section
108(d)(1) of the Act are:
The ``effectiveness of the Program;''
The ``likely capacity of the property and casualty
insurance industry to offer insurance for terrorism risk after
termination of the Program;'' and
The ``availability and affordability of such insurance for
various policyholders, including railroads, trucking, and public
transit.''
On May 5, 2004, Treasury published a request for comments in the
Federal Register and solicited comments and information concerning the
statutory factors in section 108(d)(1) of the Act to assist the
Secretary with the ``make available'' determination. See 69 FR 25168
(May 5, 2004). The comment period closed on June 4, 2004, and nearly
200 comments were received.
On June 18, 2004, the Secretary announced his decision to extend
the ``make available'' requirements through Program Year 3. (See http:/
/www.treas.gov/press/releases/js1734.htm; https://www.treas.gov/press/
releases/js1735.htm). This final rule conforms the Act's implementing
regulations to reflect the Secretary's determination.
B. The Final Rule
This final rule amends section 50.20(b), which was previously
reserved, and section 50.21 to reflect the Secretary's determination to
extend the ``make available'' provisions of section 103(c) of the Act
through Program Year 3 (calendar year 2005). The amendment to section
50.20(b) also specifically clarifies that insurers are not required to
provide coverage for insured losses resulting from acts of terrorism
beyond the date the Program expires and the Federal backstop no longer
exists.
III. Insurer Deductible--Newly Formed Insurers
The Act defines ``Insurer Deductible'' in Section 102(7) for the
various ``Program Years'' of the Program. Section 102(7)(E) provides
that notwithstanding the general rules for each Program Year, if an
insurer has not had a full year of operations during the calendar year
immediately preceding the applicable Program Year, the ``insurer
deductible'' is ``such portion of the direct earned premiums of the
insurer as the Secretary determines appropriate, subject to appropriate
methodologies established by the Secretary for measuring such direct
earned premiums.''
The current regulation at Section 50.5(g)(2) provides that for an
insurer that came into existence after November 26, 2002, the insurer
deductible will be based on data for direct earned premiums for the
current Program Year, and that if the insurer has not had a full year
of operations during the applicable Program Year, the direct earned
premiums for the current Program Year will be annualized.
Treasury proposed this rule recognizing that new companies would
have limited business operations, that their premium income likely
would be somewhat volatile, and that this volatility could persist
throughout the life of the Program. 68 FR 9811 (Feb. 28, 2003). Two
commenters generally supported Treasury's determination that premiums
for new insurers would be annualized in the calculation of their
insurer deductible. 68 FR 41263 (July 11, 2004). In revisiting this
matter at this point in the Program, however, Treasury has concluded
that while the concern about new company premium income volatility
remains valid, the Act provides specific guidance in the case where an
insurer was not in existence on November 26, 2002 but nevertheless has
had a full year of operations in the year preceding Program Year 3, the
last year of the Program. The final rule addresses such a circumstance
by adding a new section 50.5(g)(3) for Program Year 3 with language
that more closely parallels the statutory language of the Act.
Procedural Requirements
The Act established a Program to provide for loss sharing payments
by the Federal Government for insured losses resulting from certified
acts of terrorism. The Act became effective immediately upon the date
of enactment (November 26, 2002). Treasury has issued and will be
issuing additional regulations to implement the Program. This final
regulation makes two technical changes. First, it amends section
50.20(b) (previously reserved) to reflect the Secretary's decision to
extend the ``make available'' provisions of section 103(c) of the Act
through Program Year 3 (calendar year 2005). Second, the regulation
clarifies the definition of ``insurer deductible'' to more closely
parallel the language in the Act. The first change reflects a
determination already made and announced. The second change merely
clarifies the regulation and conforms it to the language of the Act.
For these reasons, Treasury has determined that notice and public
comment are unnecessary and contrary to the public interest, pursuant
to 5 U.S.C. 553(b)(B) and, pursuant to 5 U.S.C. 553(d)(3), that there
is good cause for this final rule to become effective immediately upon
publication.
This final rule is not a significant regulatory action for purposes
of Executive Order 12866. Because no notice of proposed rulemaking is
required, the provisions of the Regulatory Flexibility Act (5 U.S.C.
chapter 6) do not apply. However, the Act and the Program are intended
to provide benefits to the U.S. economy and all businesses, including
small businesses, by providing a federal reinsurance backstop to
commercial property and casualty insurance policyholders and spreading
the risk of insured loss resulting from an act of terrorism.
List of Subjects in 31 CFR Part 50
Terrorism risk insurance.
PART 50--TERRORISM RISK INSURANCE PROGRAM
0
1. The authority citation for part 50 continues to read as follows:
Authority: 5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-
297, 116 Stat. 2322 (15 U.S.C. 6701 note).
0
2. Subpart A of part 50 is amended by adding Sec. 50.5(g)(3) to read
as follows:
[[Page 7405]]
Sec. 50.5 Definitions.
* * * * *
(g) Insurer deductible means:
* * * * *
(3) Notwithstanding paragraph (g)(2) of this section, the insurer
deductible for Program Year 3 (January 1, 2005 through December 31,
2005) for an insurer that has not had a full year of operations during
calendar year 2004 will be based on annualized data for the insurer's
direct earned premiums for Program Year 3, multiplied by 15 percent.
For an insurer that came into existence after November 26, 2002 and has
had a full year of operations during calendar year 2004, the insurer
deductible for Program Year 3 is the value of an insurer's direct
earned premiums over calendar year 2004, multiplied by 15 percent.
0
3. Subpart A of part 50 is amended by revising Sec. 50.20(b) to read
as follows:
Sec. 50.20 General mandatory availability requirements.
* * * * *
(b) Program Year 3--calendar year 2005. In accordance with the
determination of the Secretary announced June 18, 2004, an insurer must
comply with paragraphs (a)(1) and (a)(2) of this section during Program
Year 3. Notwithstanding paragraph (a)(2) of this section and Sec.
50.23(a), property and casualty insurance coverage for insured losses
does not have to be made available beyond December 31, 2005 (the last
day of Program Year 3) even if the policy period of insurance coverage
for losses from events other than acts of terrorism extends beyond that
date.
0
4. Subpart A of part 50 is amended by revising Sec. 50.21(a) to read
as follows:
Sec. 50.21 Make available.
(a) General. The requirement to make available coverage as provided
in Sec. 50.20 applies to policies in existence on November 26, 2002,
new policies issued and renewals of existing policies during the period
beginning on November 26, 2002 and ending on December 31, 2004 (the
last day of Program Year 2), and to new policies issued and renewals of
existing policies in Program Year 3 (calendar year 2005). The
requirement applies at the time an insurer makes the initial offer of
coverage as well as at the time an insurer makes an initial offer of
renewal of an existing policy.
* * * * *
Dated: February 1, 2005.
Gregory Zerzan,
Acting Assistant Secretary of the Treasury.
[FR Doc. 05-2810 Filed 2-11-05; 8:45 am]
BILLING CODE 4810-25-P
