Departmental Offices; Interim Guidance Concerning the Terrorism Risk Insurance Reauthorization Act of 2007, 5264-5267 [E8-1467]

Download as PDF 5264 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Notices Docket ID Requester Regulation(s) Nature of waiver To authorize the operation of a 172-mile gas transmission pipeline from Carthage, TX to Perryville, LA at an MAOP of 80% of SMYS. To authorize the operation of certain segments of a proposed gas transmission pipeline from Carthage, TX to Harrisville, MS at an MAOP of 80% of SMYS. To authorize the use of automatic ultrasonic testing to inspect LNG tank welds. To authorize the movement of certain aboveground hazardous liquid pipeline sections during routine inspection and maintenance activities without reducing the operating pressure on approximately 150 miles of hazardous liquid pipelines in the North Slope of Alaska. To authorize the movement of certain aboveground hazardous liquid pipeline sections during routine inspection and maintenance activities without reducing the operating pressure on approximately 100 miles of hazardous liquid pipelines in the North Slope of Alaska. To authorize the operation of 5,722 ft of a gas transmission pipeline between Loudon and Quantico, VA without reducing the operating pressure as a result of a change from a Class 1 to a Class 3 location. To authorize the operation of 7,679 ft in two segments of the PNGTS pipeline near the town of North Windham, ME, without reducing the operating pressure as a result of a change from a Class 1 to a Class 3 location. PHMSA–2006– 25802. CenterPoint Energy Gas Transmission. 49 CFR 192.111, 192.201 & 192.619. PHMSA–2006– 26533. Gulf South Pipeline .......... 49 CFR 192.111, 192.201 & 192.619. PHMSA–2007– 28276. PHMSA–2006– 26613. Golden Pass LNG Terminal, L.L.C.. BP Exploration (Alaska) Inc.. 49 CFR 193.2301 ............. PHMSA–2006– 26529. ConocoPhillips Alaska Pipeline. 49 CFR 195.424 ............... PHMSA–2006– 26528. Dominion Transmission, Inc.. 49 CFR 192.611 ............... PHMSA–2006– 24058. TransCanada Pipelines Limited, Portland Natural Gas Transmission System (PNGTS). 49 CFR 192.611 ............... Authority: 49 U.S.C. 60118 (c)(1) and 49 CFR 1.53. Issued in Washington, DC on January 23, 2008. Barbara Betsock, Acting Director, Office of Regulations. [FR Doc. E8–1502 Filed 1–28–08; 8:45 am] BILLING CODE 4910–60–P DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 35115] Arizona Eastern Railway, Inc.— Trackage Rights Exemption—Union Pacific Railroad Company Pursuant to a written trackage rights agreement, Union Pacific Railroad Company (UP) has agreed to grant nonexclusive overhead trackage rights to Arizona Eastern Railway, Inc. (AZER) over a UP line of railroad known as the Lordsburg Subdivision, between milepost 1150.00 in Lordsburg, NM and milepost 1098.12, in Bowie, AZ, a distance of approximately 52.12 miles.1 AZER indicates that the transaction is scheduled to be consummated on or after February 11, 2008, the effective sroberts on PROD1PC70 with NOTICES 1A redacted draft version of the trackage rights agreement between AZER and UP was filed with the notice of exemption. The full draft version was concurrently filed under seal along with a motion for protective order, which will be addressed in a separate decision. As required by 49 CFR 1180.6(a)(7)(ii), the parties must file a copy of the executed agreement within 10 days of the date the agreement is executed. VerDate Aug<31>2005 22:52 Jan 28, 2008 Jkt 214001 49 CFR 195.424 ............... date of the exemption (30 days after the exemption was filed). The purpose of the trackage rights is to improve service by establishing a rail link allowing AZER to move traffic originating or terminating on its BowieMiami Line and traffic originating or terminating on its soon to be acquired Clifton Subdivision. As a condition to this exemption, any employees affected by the trackage rights will be protected by the conditions imposed in Norfolk and Western Ry. Co.—Trackage Rights—BN, 354 I.C.C. 605 (1978), as modified in Mendocino Coast Ry., Inc.—Lease and Operate, 360 I.C.C. 653 (1980). This notice is filed under 49 CFR 1180.2(d)(7). If the notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Stay petitions must be filed by February 4, 2008 (at least 7 days before the exemption become effective). Pursuant to the Consolidated Appropriations Act, 2008, Public Law 110–161, section 193, 121 Stat. 1844 (2007), nothing in this decision authorizes the following activities at any solid waste rail transfer facility: collecting, storing or transferring solid waste outside of its original shipping container; or separating or processing solid waste (including baling, crushing, compacting and shredding). The term ‘solid waste’ is defined in section 1004 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 of the Solid Waste Disposal Act, 42 U.S.C. 6903. An original and 10 copies of all pleadings, referring to STB Finance Docket No. 35115, must be filed with the Surface Transportation Board, 395 E Street, SW., Washington, DC 20423– 0001. In addition, a copy of each pleading must be served on Mack H. Shumate, Jr., 101 N. Wacker Drive, Suite 1920, Chicago, IL 60606 and John D. Heffner, 1750 K Street, NW., Suite 350, Washington, DC 20006. Board decisions and notices are available on our Web site at http:// www.stb.dot.gov. Decided: January 23, 2008. By the Board, David M. Konschnik, Director, Office of Proceedings. Anne K. Quinlan, Acting Secretary. [FR Doc. E8–1474 Filed 1–28–08; 8:45 am] BILLING CODE 4915–01–P DEPARTMENT OF THE TREASURY Departmental Offices; Interim Guidance Concerning the Terrorism Risk Insurance Reauthorization Act of 2007 Department of the Treasury. Notice. AGENCY: ACTION: SUMMARY: This notice provides interim guidance to insurers, policyholders, state insurance regulators and the public concerning recent statutory amendments to the Terrorism Risk Insurance Act of 2002 (Pub. L. 107–297, E:\FR\FM\29JAN1.SGM 29JAN1 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Notices 116 Stat. 2322) (the ‘‘Act’’). Those amendments revise the definition of an ‘‘act of terrorism’’ covered by the Act, and make certain other changes. This notice addresses the changes to mandatory availability (’’make available’’) and disclosure requirements. DATES: This notice is effective immediately and will remain in effect until superseded by regulations or by subsequent notice. FOR FURTHER INFORMATION CONTACT: Howard Leikin, Deputy Director, Terrorism Risk Insurance Program (202– 622–6770). SUPPLEMENTARY INFORMATION: This notice provides interim guidance to assist insurers, policyholders, state insurance regulators and the public in understanding certain requirements of the Terrorism Risk Insurance Act of 2002 as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007, pending the issuance of regulations by the Department of the Treasury. The interim guidance contained in this notice may be relied upon by insurers in complying with these statutory requirements prior to the issuance of regulations, but is not the exclusive means of compliance. This interim guidance remains in effect until superseded by regulations or subsequent notice. sroberts on PROD1PC70 with NOTICES I. Background On November 26, 2002, the President signed into law the Terrorism Risk Insurance Act of 2002 (Pub. L. 107–297) (‘‘TRIA’’ or the ‘‘Act’’). The Act became effective immediately. It established a temporary Terrorism Risk Insurance Program (‘‘TRIP’’ or the ‘‘Program’’) of shared public and private compensation for insured commercial property and casualty losses resulting from an act of terrorism, as defined in the Act. The Act was scheduled to expire on December 31, 2005. The Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109–144) (Extension Act) extended TRIA through December 31, 2007. On December 26, 2007, the President signed into law the Terrorism Risk Insurance Program Reauthorization Act of 2007 (‘‘Reauthorization Act’’). The Reauthorization Act extends the Program through December 31, 2014 (with calendar years 2008–2014 being called the ‘‘Additional Program Years’’). Other provisions of the Reauthorization Act: • Revise the definition of ‘‘Act of Terrorism’’ to remove the requirement that the act of terrorism be committed by an individual acting on behalf of any foreign person or foreign interest in VerDate Aug<31>2005 22:52 Jan 28, 2008 Jkt 214001 order to be certified as an ‘‘act of terrorism’’ for purposes of the Act. • Define ‘‘Insurer Deductible’’ for all Additional Program Years as the value of an insurer’s direct earned premium for commercial property and casualty insurance for the immediately preceding calendar year multiplied by 20 percent. • Set the Federal share of compensation for insured losses (subject to a $100 million Program Trigger) for all Additional Program Years at 85 percent of that portion of the amount of insured losses that exceeds the applicable insurer deductible. • Require Treasury to submit a report to Congress and issue final regulations for determining the pro rata share of insured losses to be paid under the Program when aggregate insured losses exceed the annual liability cap of $100,000,000,000. • Require the Secretary of the Treasury to notify Congress not later than 15 days after the date of an act of terrorism as to whether aggregate insured losses are estimated to exceed $100,000,000,000. • Require for policies issued after the date of enactment, that insurers provide clear and conspicuous disclosure to the policyholder of the existence of the $100,000,000,000 cap at the time of offer, purchase, and renewal of a policy (in addition to current disclosure requirements). • Revise the recoupment provisions of the Act. For purposes of recouping the Federal share of compensation under the Act, the ‘‘insurance marketplace aggregate retention amount’’ for all Additional Program Years is the lesser of $27.5 billion and the aggregate amount, for all insurers, of insured losses during each Program Year. With regard to mandatory recoupment of the Federal share of compensation through policyholder surcharges, collection is required within a certain schedule specified in the Reauthorization Act. The limitation that surcharges not exceed 3 percent of the premium charged for property and casualty insurance coverage under the policy is eliminated (but remains in the case of discretionary recoupment). • Require Treasury to issue recoupment regulations within 180 days of enactment, and publish an estimate of aggregate insured losses within 90 days after an act of terrorism. • Require the President’s Working Group on Financial Markets to perform an ongoing analysis regarding the longterm availability and affordability of terrorism risk insurance and submit reports in 2010 and 2013. • Require the Comptroller General to examine and report on the availability PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 5265 and affordability of insurance coverage for nuclear, biological, chemical, and radiological terrorist events; the future outlook for such coverage; and the capacity of insurers and State workers compensation funds to manage the risk associated with nuclear, biological, chemical, and radiological terrorist events. • Require the Comptroller General to study and report on the question of whether there are specific markets in the United States where there are unique capacity constraints on the amount of terrorism risk insurance available. II. Interim Guidance Treasury will be issuing regulations to administer and implement TRIA, as amended by the Reauthorization Act. This notice is issued to assist insurers in complying with certain new statutory requirements pending the issuance of such regulations. This notice contains interim guidance concerning compliance with the mandatory availability or ‘‘make available’’ requirements in section 103(c) of the Act, and the disclosure notice requirements in section 103(b) of the Act. Other requirements in current regulations remain in effect. Given the change in the definition of an ‘‘Act of Terrorism,’’ will Treasury be issuing specific guidance concerning the language in property and casualty insurance policies? As noted above, the Reauthorization Act revises the definition of an ‘‘act of terrorism’’ in section 102(1)(A)(iv) of TRIA and removes the requirement that the act be committed by an individual or individuals ‘‘acting on behalf of any foreign person or foreign interest’’ to be certified as an ‘‘act of terrorism’’. Treasury understands that the language in property and casualty insurance policies describing a ‘‘certified’’ act of terrorism covered by TRIA and other (or ‘‘non-certified’’) acts of terrorism has varied. In addition, insurers have designed their insurance contracts and notifications to policyholders concerning potential changes to the certification criteria for ‘‘acts of terrorism’’ differently. Insurers must determine how their policy language and particular circumstances are affected by the revised definition of an act of terrorism. It is Treasury’s intent with this guidance and in subsequent regulations to address the statutory requirements and regulations of TRIA, as amended by the Reauthorization Act. The decision whether to certify an act of terrorism will be governed by the criteria in TRIA, E:\FR\FM\29JAN1.SGM 29JAN1 5266 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Notices sroberts on PROD1PC70 with NOTICES as amended by the Reauthorization Act. Treasury will consider losses resulting from an act of terrorism (as now defined in TRIA) that are covered by an insurer under a policy for property and casualty insurance to be insured losses covered by the Program, provided the insurer makes payment to the policyholder in accordance with the terms and conditions of the policy, appropriate business practices, and other applicable requirements and conditions. How do the ‘‘make available’’ and disclosure requirements apply to initial offers of coverage and offers of renewal? There is no change to the TRIA requirements in section 103(c) that insurers make available, in all property and casualty insurance policies, coverage for insured losses that does not differ materially from the terms, amounts, and other coverage limitations applicable to losses arising from events other than acts of terrorism. However, because the ‘‘make available’’ requirements apply to ‘‘insured losses,’’ and an ‘‘insured loss’’ is defined, in part, as a loss resulting from an ‘‘act of terrorism,’’ the revision of the definition of an act of terrorism in the Reauthorization Act to eliminate the ‘‘foreign person or interest’’ element (i.e., to add what is often referred to as ‘‘domestic terrorism’’) may have an impact on an insurer’s compliance with the ‘‘make available’’ requirements. The Reauthorization Act is effective immediately upon enactment, December 26, 2007. The TRIA regulations in 31 CFR 50.21(a) generally provide that the ‘‘make available’’ requirements apply at the time of the initial offer of coverage or offer of renewal of an existing policy. Thus, any initial offers of coverage, or offers of renewal of existing policies, made on or after the date of enactment, must be consistent with the revised definition of act of terrorism. The Reauthorization Act also made no change to the requirement in section 103(b) in TRIA that insurers provide clear and conspicuous disclosure to the policyholder of the premium charged for insured losses covered by the Program and the Federal share of compensation for insured losses under the Program. These disclosures must be made on a separate line item in the policy, at the time of offer, purchase, and renewal of the policy. However, disclosure of the premium must now reflect the premium charged for insured losses (as determined by the revised definition of an act of terrorism). As stated above, any initial offers of coverage, or offers of renewal of existing policies, made on or after the date of enactment must be consistent with the VerDate Aug<31>2005 22:52 Jan 28, 2008 Jkt 214001 revised definition of ‘‘act of terrorism.’’ So too, the required disclosure must be made on a separate line item in the policy, at the time of offer, purchase, and renewal of the policy. Treasury realizes that as a practical matter, insurers may have to modify operations and may be subject to rate and policy form filing and/or prior approval processes, and therefore may need some time to meet these requirements. Treasury expects that all insurers will provide compliant initial and renewal offers and disclosures as quickly as possible. In this regard, Treasury considers March 31, 2008, to be the latest reasonable date for compliant offers of coverage and disclosures to policyholders (including reprocessing of policies, if necessary, where a compliant post-December 26, 2007 offer and/or disclosure was not possible), barring unforeseen or unusual circumstances. If the March 31 date is not met by an insurer, Treasury will expect the insurer to demonstrate, when submitting a claim for the Federal share of compensation under the Program, why it could not comply by that date. Does an insurer have to provide a separate, new offer of terrorism risk insurance coverage for property and casualty insurance policies that are in mid-term as of January 1, 2008, if the insurer previously complied with the Act’s ‘‘make available’’ requirement when the policy was issued or renewed prior to December 26, 2007? Because under TRIA regulations, the ‘‘make available’’ requirements apply at the time of the initial offer of coverage or offer of renewal of an existing policy, no new offer is required if coverage for the duration of the policy term was offered under the provisions of the Act at the time of the offer. This is the case whether the offer was accepted or rejected. If no new offer is made, then a new disclosure of the premium charged for insured losses covered by the Program and the Federal share of compensation for insured losses is also not required, because under TRIA the disclosure requirements apply at the time of offer, purchase and renewal of the policy. If existing coverage for an act of terrorism does not continue for the duration of the policy term beyond December 31, 2007, such as a case where an exclusion becomes effective upon some circumstance, then a new offer is required for the duration of the policy term. If for any reason an insurer makes a new offer mid-term, and that offer is after December 26, 2007, then the offer must be based on the Reauthorization PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 Act’s requirements. The associated disclosure of the premium must reflect the premium for insured losses in accordance with the revised definition of act of terrorism. Disclosure of the $100 billion cap must also be provided, as explained below. What if a policy renewal or application was processed in 2007 for coverage becoming effective in 2008 and the insurer did not ‘‘make available’’ terrorism coverage? The Reauthorization Act continues the ‘‘make available’’ requirement for insurers under TRIA. If an insurer wishes to receive Federal compensation under the Program for insured losses, the insurer must ‘‘make available’’ terrorism coverage for insured losses for all policies becoming effective in 2008, even if the policy was processed in late 2007 or early 2008. As noted in guidance above, Treasury expects that all insurers will provide policyholders an offer of terrorism coverage and appropriate disclosures as quickly as possible. When must the new disclosure to policyholders of the $100 billion cap on liability be made? The Reauthorization Act requires a clear and conspicuous disclosure to the policyholder of the existence of the $100 billion cap under section 103(e)(2) of TRIA. The requirement applies to ‘‘any policy that is issued after the date of enactment’’ of the Reauthorization Act, or December 26, 2007. Under section 103(e)(2), if the aggregate insured losses exceed $100 billion during a Program Year, Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion, and no insurer that has met its insurer deductible shall be liable for the payment of any portion of the amount of such losses that exceeds $100 billion. The disclosure must be made at the time of offer, purchase and renewal of the policy. For policies issued after December 26, 2007, this disclosure must be provided to the policyholder at the first occurrence thereafter of an offer, purchase or renewal. As noted above, Treasury realizes that as a practical matter, insurers may need some time to meet these requirements. Treasury expects that all insurers will provide compliant disclosures as quickly as possible. In this regard, Treasury considers March 31, 2008, to be the latest reasonable date for providing the cap disclosure (including reprocessing of policies, if necessary, where a compliant disclosure was not possible), barring unforeseen or unusual E:\FR\FM\29JAN1.SGM 29JAN1 Federal Register / Vol. 73, No. 19 / Tuesday, January 29, 2008 / Notices circumstances. If the March 31 date is not met by an insurer, Treasury will expect the insurer to demonstrate, when submitting a claim for the Federal share of compensation under the Program, why it could not comply by that date. May an insurer still use NAIC Model Disclosure Forms to meet the disclosure requirement for property and casualty insurance policies? Under 31 CFR 50.17(e) of the TRIA regulations, insurers are permitted to use NAIC Model Disclosure Forms No. 1 and 2 to satisfy the disclosure requirements of section 103(b)(2) of the Act, provided that the insurer uses the most current forms that are available at the time of disclosure and the current forms are deemed to satisfy the disclosure requirements of the Act. The National Association of Insurance Commissioners (NAIC) has recently modified the forms and Treasury has deemed the newly modified forms to satisfy the disclosure requirements, including the cap disclosure requirement. The new forms will be found on the Treasury Web site at http://www.treasury.gov/trip. Insurers are not required to use the NAIC forms, and may use other means to comply with the disclosure requirements. Dated: January 22, 2008. Taiya Smith, Executive Secretary. [FR Doc. E8–1467 Filed 1–28–08; 8:45 am] BILLING CODE 4811–42–P DEPARTMENT OF THE TREASURY Fiscal Service Financial Management Service; Proposed Collection of Information: CMIA Annual Report and Direct Cost Claims Financial Management Service, Fiscal Service, Treasury. ACTION: Notice and Request for comments. sroberts on PROD1PC70 with NOTICES AGENCY: SUMMARY: The Financial Management Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on a continuing information collection. By this notice, the Financial Management Service solicits comments concerning the ‘‘CMIA Annual Report and Direct Cost Claims.’’ DATES: Written comments should be received on or before March 31, 2008. ADDRESSES: Direct all written comments to Financial Management Service, 3700 VerDate Aug<31>2005 22:52 Jan 28, 2008 Jkt 214001 East West Highway, Records and Information Management Branch, Room 135, Hyattsville, Maryland 20782. FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the form(s) and instructions should be directed to Victor Poore, Office of the Director of Operations, 401 14th Street, SW., Room 423A, Washington, DC 20227, (202) 874–6751. Pursuant to the Paperwork Reduction Act of 1995, (44 U.S.C. 3506(c)(2)(A)), the Financial Management Service solicits comments on the collection of information described below: Title: CMIA Annual Report and Direct Cost Claims. OMB Number: 1510–0061. Form Number: None. Abstract: States and Territories must report interest owed to and from the Federal government for major Federal assistance programs on an annual basis. The data is used by Treasury and other Federal agencies to verify State and Federal interest claims, to assess State and Federal cash management practices and to exchange amounts of interest owed. Current Actions: Extension of currently approved collection. Type of Review: Regular. Affected Public: Federal Government, State, Local or Tribal Government. Estimated Number of Respondents: 56. Estimated Time per Respondent: Average of 393.5 hours per state. Estimated Total Annual Burden Hours: 22,036. Comments: Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval. All comments will become a matter of public record. Comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, SUPPLEMENTARY INFORMATION: PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 5267 maintenance and purchase of services to provide information. Sheryl R. Morrow, Assistant Commissioner, Federal Finance. [FR Doc. 08–348 Filed 1–28–08; 8:45 am] BILLING CODE 4810–35–M DEPARTMENT OF THE TREASURY Office of Thrift Supervision Proposed Agency Information Collection Activities; Comment Request—Financial Management Policies—Interest Rate Risk Office of Thrift Supervision (OTS), Treasury. ACTION: Notice and request for comment. AGENCY: SUMMARY: The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on proposed and continuing information collections, as required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3507. The Office of Thrift Supervision within the Department of the Treasury will submit the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. Today, OTS is soliciting public comments on its proposal to extend this information collection. DATES: Submit written comments on or before March 31, 2008. ADDRESSES: Send comments, referring to the collection by title of the proposal or by OMB approval number, to Information Collection Comments, Chief Counsel’s Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552; send a facsimile transmission to (202) 906–6518; or send an e-mail to infocollection.comments@ots.treas.gov. OTS will post comments and the related index on the OTS Internet Site at www.ots.treas.gov. In addition, interested persons may inspect comments at the Public Reading Room, 1700 G Street, and NW., by appointment. To make an appointment, call (202) 906–5922, send an e-mail to public.info@ots.treas.gov, or send a facsimile transmission to (202) 906– 7755. FOR FURTHER INFORMATION CONTACT: You can request additional information about this proposed information collection from Scott Ciardi, (202) 906– 6960, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. E:\FR\FM\29JAN1.SGM 29JAN1

Agencies

[Federal Register Volume 73, Number 19 (Tuesday, January 29, 2008)]
[Notices]
[Pages 5264-5267]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-1467]


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DEPARTMENT OF THE TREASURY


Departmental Offices; Interim Guidance Concerning the Terrorism 
Risk Insurance Reauthorization Act of 2007

AGENCY: Department of the Treasury.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice provides interim guidance to insurers, 
policyholders, state insurance regulators and the public concerning 
recent statutory amendments to the Terrorism Risk Insurance Act of 2002 
(Pub. L. 107-297,

[[Page 5265]]

116 Stat. 2322) (the ``Act''). Those amendments revise the definition 
of an ``act of terrorism'' covered by the Act, and make certain other 
changes. This notice addresses the changes to mandatory availability 
(''make available'') and disclosure requirements.

DATES: This notice is effective immediately and will remain in effect 
until superseded by regulations or by subsequent notice.

FOR FURTHER INFORMATION CONTACT: Howard Leikin, Deputy Director, 
Terrorism Risk Insurance Program (202-622-6770).

SUPPLEMENTARY INFORMATION: This notice provides interim guidance to 
assist insurers, policyholders, state insurance regulators and the 
public in understanding certain requirements of the Terrorism Risk 
Insurance Act of 2002 as amended by the Terrorism Risk Insurance 
Program Reauthorization Act of 2007, pending the issuance of 
regulations by the Department of the Treasury. The interim guidance 
contained in this notice may be relied upon by insurers in complying 
with these statutory requirements prior to the issuance of regulations, 
but is not the exclusive means of compliance. This interim guidance 
remains in effect until superseded by regulations or subsequent notice.

I. Background

    On November 26, 2002, the President signed into law the Terrorism 
Risk Insurance Act of 2002 (Pub. L. 107-297) (``TRIA'' or the ``Act''). 
The Act became effective immediately. It established a temporary 
Terrorism Risk Insurance Program (``TRIP'' or the ``Program'') of 
shared public and private compensation for insured commercial property 
and casualty losses resulting from an act of terrorism, as defined in 
the Act. The Act was scheduled to expire on December 31, 2005. The 
Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109-144) 
(Extension Act) extended TRIA through December 31, 2007. On December 
26, 2007, the President signed into law the Terrorism Risk Insurance 
Program Reauthorization Act of 2007 (``Reauthorization Act''). The 
Reauthorization Act extends the Program through December 31, 2014 (with 
calendar years 2008-2014 being called the ``Additional Program 
Years''). Other provisions of the Reauthorization Act:
     Revise the definition of ``Act of Terrorism'' to remove 
the requirement that the act of terrorism be committed by an individual 
acting on behalf of any foreign person or foreign interest in order to 
be certified as an ``act of terrorism'' for purposes of the Act.
     Define ``Insurer Deductible'' for all Additional Program 
Years as the value of an insurer's direct earned premium for commercial 
property and casualty insurance for the immediately preceding calendar 
year multiplied by 20 percent.
     Set the Federal share of compensation for insured losses 
(subject to a $100 million Program Trigger) for all Additional Program 
Years at 85 percent of that portion of the amount of insured losses 
that exceeds the applicable insurer deductible.
     Require Treasury to submit a report to Congress and issue 
final regulations for determining the pro rata share of insured losses 
to be paid under the Program when aggregate insured losses exceed the 
annual liability cap of $100,000,000,000.
     Require the Secretary of the Treasury to notify Congress 
not later than 15 days after the date of an act of terrorism as to 
whether aggregate insured losses are estimated to exceed 
$100,000,000,000.
     Require for policies issued after the date of enactment, 
that insurers provide clear and conspicuous disclosure to the 
policyholder of the existence of the $100,000,000,000 cap at the time 
of offer, purchase, and renewal of a policy (in addition to current 
disclosure requirements).
     Revise the recoupment provisions of the Act. For purposes 
of recouping the Federal share of compensation under the Act, the 
``insurance marketplace aggregate retention amount'' for all Additional 
Program Years is the lesser of $27.5 billion and the aggregate amount, 
for all insurers, of insured losses during each Program Year. With 
regard to mandatory recoupment of the Federal share of compensation 
through policyholder surcharges, collection is required within a 
certain schedule specified in the Reauthorization Act. The limitation 
that surcharges not exceed 3 percent of the premium charged for 
property and casualty insurance coverage under the policy is eliminated 
(but remains in the case of discretionary recoupment).
     Require Treasury to issue recoupment regulations within 
180 days of enactment, and publish an estimate of aggregate insured 
losses within 90 days after an act of terrorism.
     Require the President's Working Group on Financial Markets 
to perform an ongoing analysis regarding the long-term availability and 
affordability of terrorism risk insurance and submit reports in 2010 
and 2013.
     Require the Comptroller General to examine and report on 
the availability and affordability of insurance coverage for nuclear, 
biological, chemical, and radiological terrorist events; the future 
outlook for such coverage; and the capacity of insurers and State 
workers compensation funds to manage the risk associated with nuclear, 
biological, chemical, and radiological terrorist events.
     Require the Comptroller General to study and report on the 
question of whether there are specific markets in the United States 
where there are unique capacity constraints on the amount of terrorism 
risk insurance available.

II. Interim Guidance

    Treasury will be issuing regulations to administer and implement 
TRIA, as amended by the Reauthorization Act. This notice is issued to 
assist insurers in complying with certain new statutory requirements 
pending the issuance of such regulations. This notice contains interim 
guidance concerning compliance with the mandatory availability or 
``make available'' requirements in section 103(c) of the Act, and the 
disclosure notice requirements in section 103(b) of the Act. Other 
requirements in current regulations remain in effect.

Given the change in the definition of an ``Act of Terrorism,'' will 
Treasury be issuing specific guidance concerning the language in 
property and casualty insurance policies?

    As noted above, the Reauthorization Act revises the definition of 
an ``act of terrorism'' in section 102(1)(A)(iv) of TRIA and removes 
the requirement that the act be committed by an individual or 
individuals ``acting on behalf of any foreign person or foreign 
interest'' to be certified as an ``act of terrorism''.
    Treasury understands that the language in property and casualty 
insurance policies describing a ``certified'' act of terrorism covered 
by TRIA and other (or ``non-certified'') acts of terrorism has varied. 
In addition, insurers have designed their insurance contracts and 
notifications to policyholders concerning potential changes to the 
certification criteria for ``acts of terrorism'' differently. Insurers 
must determine how their policy language and particular circumstances 
are affected by the revised definition of an act of terrorism.
    It is Treasury's intent with this guidance and in subsequent 
regulations to address the statutory requirements and regulations of 
TRIA, as amended by the Reauthorization Act. The decision whether to 
certify an act of terrorism will be governed by the criteria in TRIA,

[[Page 5266]]

as amended by the Reauthorization Act. Treasury will consider losses 
resulting from an act of terrorism (as now defined in TRIA) that are 
covered by an insurer under a policy for property and casualty 
insurance to be insured losses covered by the Program, provided the 
insurer makes payment to the policyholder in accordance with the terms 
and conditions of the policy, appropriate business practices, and other 
applicable requirements and conditions.

How do the ``make available'' and disclosure requirements apply to 
initial offers of coverage and offers of renewal?

    There is no change to the TRIA requirements in section 103(c) that 
insurers make available, in all property and casualty insurance 
policies, coverage for insured losses that does not differ materially 
from the terms, amounts, and other coverage limitations applicable to 
losses arising from events other than acts of terrorism. However, 
because the ``make available'' requirements apply to ``insured 
losses,'' and an ``insured loss'' is defined, in part, as a loss 
resulting from an ``act of terrorism,'' the revision of the definition 
of an act of terrorism in the Reauthorization Act to eliminate the 
``foreign person or interest'' element (i.e., to add what is often 
referred to as ``domestic terrorism'') may have an impact on an 
insurer's compliance with the ``make available'' requirements.
    The Reauthorization Act is effective immediately upon enactment, 
December 26, 2007. The TRIA regulations in 31 CFR 50.21(a) generally 
provide that the ``make available'' requirements apply at the time of 
the initial offer of coverage or offer of renewal of an existing 
policy. Thus, any initial offers of coverage, or offers of renewal of 
existing policies, made on or after the date of enactment, must be 
consistent with the revised definition of act of terrorism.
    The Reauthorization Act also made no change to the requirement in 
section 103(b) in TRIA that insurers provide clear and conspicuous 
disclosure to the policyholder of the premium charged for insured 
losses covered by the Program and the Federal share of compensation for 
insured losses under the Program. These disclosures must be made on a 
separate line item in the policy, at the time of offer, purchase, and 
renewal of the policy. However, disclosure of the premium must now 
reflect the premium charged for insured losses (as determined by the 
revised definition of an act of terrorism).
    As stated above, any initial offers of coverage, or offers of 
renewal of existing policies, made on or after the date of enactment 
must be consistent with the revised definition of ``act of terrorism.'' 
So too, the required disclosure must be made on a separate line item in 
the policy, at the time of offer, purchase, and renewal of the policy. 
Treasury realizes that as a practical matter, insurers may have to 
modify operations and may be subject to rate and policy form filing 
and/or prior approval processes, and therefore may need some time to 
meet these requirements.
    Treasury expects that all insurers will provide compliant initial 
and renewal offers and disclosures as quickly as possible. In this 
regard, Treasury considers March 31, 2008, to be the latest reasonable 
date for compliant offers of coverage and disclosures to policyholders 
(including reprocessing of policies, if necessary, where a compliant 
post-December 26, 2007 offer and/or disclosure was not possible), 
barring unforeseen or unusual circumstances. If the March 31 date is 
not met by an insurer, Treasury will expect the insurer to demonstrate, 
when submitting a claim for the Federal share of compensation under the 
Program, why it could not comply by that date.

Does an insurer have to provide a separate, new offer of terrorism risk 
insurance coverage for property and casualty insurance policies that 
are in mid-term as of January 1, 2008, if the insurer previously 
complied with the Act's ``make available'' requirement when the policy 
was issued or renewed prior to December 26, 2007?

    Because under TRIA regulations, the ``make available'' requirements 
apply at the time of the initial offer of coverage or offer of renewal 
of an existing policy, no new offer is required if coverage for the 
duration of the policy term was offered under the provisions of the Act 
at the time of the offer. This is the case whether the offer was 
accepted or rejected. If no new offer is made, then a new disclosure of 
the premium charged for insured losses covered by the Program and the 
Federal share of compensation for insured losses is also not required, 
because under TRIA the disclosure requirements apply at the time of 
offer, purchase and renewal of the policy.
    If existing coverage for an act of terrorism does not continue for 
the duration of the policy term beyond December 31, 2007, such as a 
case where an exclusion becomes effective upon some circumstance, then 
a new offer is required for the duration of the policy term.
    If for any reason an insurer makes a new offer mid-term, and that 
offer is after December 26, 2007, then the offer must be based on the 
Reauthorization Act's requirements. The associated disclosure of the 
premium must reflect the premium for insured losses in accordance with 
the revised definition of act of terrorism. Disclosure of the $100 
billion cap must also be provided, as explained below.

What if a policy renewal or application was processed in 2007 for 
coverage becoming effective in 2008 and the insurer did not ``make 
available'' terrorism coverage?

    The Reauthorization Act continues the ``make available'' 
requirement for insurers under TRIA. If an insurer wishes to receive 
Federal compensation under the Program for insured losses, the insurer 
must ``make available'' terrorism coverage for insured losses for all 
policies becoming effective in 2008, even if the policy was processed 
in late 2007 or early 2008. As noted in guidance above, Treasury 
expects that all insurers will provide policyholders an offer of 
terrorism coverage and appropriate disclosures as quickly as possible.

When must the new disclosure to policyholders of the $100 billion cap 
on liability be made?

    The Reauthorization Act requires a clear and conspicuous disclosure 
to the policyholder of the existence of the $100 billion cap under 
section 103(e)(2) of TRIA. The requirement applies to ``any policy that 
is issued after the date of enactment'' of the Reauthorization Act, or 
December 26, 2007. Under section 103(e)(2), if the aggregate insured 
losses exceed $100 billion during a Program Year, Treasury shall not 
make any payment for any portion of the amount of such losses that 
exceeds $100 billion, and no insurer that has met its insurer 
deductible shall be liable for the payment of any portion of the amount 
of such losses that exceeds $100 billion. The disclosure must be made 
at the time of offer, purchase and renewal of the policy.
    For policies issued after December 26, 2007, this disclosure must 
be provided to the policyholder at the first occurrence thereafter of 
an offer, purchase or renewal.
    As noted above, Treasury realizes that as a practical matter, 
insurers may need some time to meet these requirements. Treasury 
expects that all insurers will provide compliant disclosures as quickly 
as possible. In this regard, Treasury considers March 31, 2008, to be 
the latest reasonable date for providing the cap disclosure (including 
reprocessing of policies, if necessary, where a compliant disclosure 
was not possible), barring unforeseen or unusual

[[Page 5267]]

circumstances. If the March 31 date is not met by an insurer, Treasury 
will expect the insurer to demonstrate, when submitting a claim for the 
Federal share of compensation under the Program, why it could not 
comply by that date.

May an insurer still use NAIC Model Disclosure Forms to meet the 
disclosure requirement for property and casualty insurance policies?

    Under 31 CFR 50.17(e) of the TRIA regulations, insurers are 
permitted to use NAIC Model Disclosure Forms No. 1 and 2 to satisfy the 
disclosure requirements of section 103(b)(2) of the Act, provided that 
the insurer uses the most current forms that are available at the time 
of disclosure and the current forms are deemed to satisfy the 
disclosure requirements of the Act. The National Association of 
Insurance Commissioners (NAIC) has recently modified the forms and 
Treasury has deemed the newly modified forms to satisfy the disclosure 
requirements, including the cap disclosure requirement. The new forms 
will be found on the Treasury Web site at http://www.treasury.gov/trip. 
Insurers are not required to use the NAIC forms, and may use other 
means to comply with the disclosure requirements.

    Dated: January 22, 2008.
Taiya Smith,
Executive Secretary.
 [FR Doc. E8-1467 Filed 1-28-08; 8:45 am]
BILLING CODE 4811-42-P