Interim Guidance Concerning the Terrorism Risk Insurance Program Reauthorization Act of 2015, 6656-6657 [2015-02556]

Agencies

• DEPARTMENT OF THE TREASURY

[Federal Register Volume 80, Number 25 (Friday, February 6, 2015)]
[Rules and Regulations]
[Pages 6656-6657]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02556]


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DEPARTMENT OF THE TREASURY

31 CFR Part 50


Interim Guidance Concerning the Terrorism Risk Insurance Program 
Reauthorization Act of 2015

AGENCY: Department of the Treasury, Departmental Offices.

ACTION: Notice of interim guidance.

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SUMMARY: This notice provides interim guidance concerning the Terrorism 
Risk Insurance Program (Program) under the Terrorism Risk Insurance Act 
of 2002, as amended (TRIA). In this notice, the Department of the 
Treasury (Treasury) addresses issues that have arisen under Treasury's 
regulations for the Program (Program regulations) due to the enactment 
of the Terrorism Risk Insurance Program Reauthorization Act of 2015 
(2015 Reauthorization Act).

DATES: February 4, 2015.

FOR FURTHER INFORMATION CONTACT: Kevin K. Meehan, Policy Advisor, 
Federal Insurance Office, 202-622-7009; Thomas E. Scanlon, Senior 
Counsel, Office of General Counsel (Banking and Finance), 202-622-8170.

SUPPLEMENTARY INFORMATION: This notice provides interim guidance 
addressing the application of certain provisions of TRIA \1\ and the 
Program regulations \2\ following enactment of the 2015 Reauthorization 
Act.\3\
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    \1\ 15 U.S.C. 6701, note.
    \2\ 31 CFR part 50.
    \3\ Public Law 114-1, 129 Stat. 3.
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    Treasury expects to issue a proposal to amend the Program 
regulations; this interim guidance may be relied upon by members of the 
public until superseded by the Program regulations, as amended, or by 
subsequent guidance.\4\
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    \4\ 31 CFR 50.7.
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I. Background

    TRIA was enacted following the attacks on September 11, 2001, to 
address disruptions in the market for terrorism risk insurance, to help 
ensure the continued widespread 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. Title I of TRIA 
creates the Program, requires insurers to ``make available'' terrorism 
risk insurance for commercial property and casualty losses resulting 
from certified acts of terrorism (insured losses), and provides for 
shared public and private compensation for such insured losses. 
Pursuant to TRIA, the Secretary of the Treasury administers the 
Program. The Federal Insurance Office assists the Secretary of the 
Treasury in administering the Program.
    The Program was originally scheduled to terminate on December 31, 
2005; however, the Terrorism Risk Insurance Extension Act of 2005 \5\ 
extended the Program through December 31, 2007, and the Terrorism Risk 
Insurance Program Reauthorization Act of 2007 \6\ further extended the 
Program through December 31, 2014. On January 12, 2015, the President 
signed into law the 2015 Reauthorization Act; Section 101 of that Act 
amends the Program's termination date to December 31, 2020.
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    \5\ Public Law 109-144, 119 Stat. 2660.
    \6\ Public Law 110-160, 121 Stat. 1839.
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II. Interim Guidance

    Treasury considers the Program regulations to be in effect, except 
to the extent that any provision of the Program regulations is 
inconsistent with TRIA, as amended by the 2015 Reauthorization Act. In 
the case of an inconsistency, the provision(s) of TRIA, as amended by 
the 2015 Reauthorization Act, shall apply. Furthermore, Treasury 
recognizes that the 2015 Reauthorization Act introduces ambiguities 
regarding application of certain sections of the Program regulations. 
This interim guidance is designed to address certain requirements under 
the Program

[[Page 6657]]

regulations and TRIA, as amended by the 2015 Reauthorization Act.

Interim Guidance One (Documentation)

    Due to requirements under state law regulating rates and forms, an 
insurer may need additional time to provide disclosures and offers of 
coverage for insured losses in compliance with the Program regulations 
and TRIA, as amended by the 2015 Reauthorization Act. An insurer should 
provide disclosures and offers that comply with the Program regulations 
and TRIA, as amended by the 2015 Reauthorization Act, as soon as 
possible and not later than April 13, 2015.

Interim Guidance Two (Form of Disclosure)

    Section 50.17(c) of the Program regulations provides that an 
insurer may use NAIC Model Disclosure Form No. 1 or NAIC Model 
Disclosure Form No. 2, or other disclosures that meet the requirements 
of the Program regulations. NAIC Model Disclosure Form No. 1 and NAIC 
Model Disclosure Form No. 2, as amended in 2015, are consistent with 
the disclosure requirements of the Program regulations and TRIA, as 
amended by the 2015 Reauthorization Act.

Interim Guidance Three (Timing of Disclosure)

    As amended by the 2015 Reauthorization Act, TRIA no longer requires 
an insurer to provide to a policyholder certain disclosures at the time 
of a policy's ``purchase,'' but still requires the insurer to provide 
such disclosures at the time of ``offer'' and ``renewal.'' The timing 
of an insurer's disclosures may conform with either subpart B of the 
Program regulations or Section 103(b)(2) of TRIA, as amended by the 
2015 Reauthorization Act.

Interim Guidance Four (Content of Disclosure)

    An insurer that offered coverage for insured losses prior to 
January 12, 2015, using the then-current NAIC Model Disclosure Form No. 
1, NAIC Model Disclosure Form No. 2, or other disclosures consistent 
with the Program regulations, is not required to provide a revised 
disclosure to the policyholder. Subject to Interim Guidance One, 
disclosures on or after January 12, 2015 provided in connection with a 
new or mid-term offer of coverage for insured losses should be based on 
the requirements of the Program regulations and TRIA, as amended by the 
2015 Reauthorization Act.

Interim Guidance Five (New Offers of Coverage)

    (a) Except as described herein, Treasury expects that an insurer 
will make a new offer of coverage for insured losses with respect to 
any in-force policy that does not provide coverage for insured losses.
    (b) An insurer is not expected to make a new offer of coverage for 
insured losses if--
    (i) the policy incorporates a conditional exclusion or change of 
terms and conditions relating to coverage for insured losses and, 
because the Program is in effect, the insurer forbears effective 
January 1, 2015 (or as of the effective date of the policy, if later) 
on the exercise of the conditional exclusion or change in terms and 
conditions. Not later than April 13, 2015, an insurer should provide to 
the policyholder written notice of the insurer's forbearance or written 
notice of the insurer's withdrawal of any previous exercise of the 
conditional exclusion or change in terms and conditions. In the written 
notice, the insurer should state that the insurer's forbearance or 
withdrawal, as applicable, is effective January 1, 2015 (or as of the 
effective date of the policy, if later); or
    (ii) the policyholder declined coverage for insured losses, so long 
as the insurer's offer did not materially differ in price from that 
which the insurer would have offered following enactment of the 2015 
Reauthorization Act.
    (c) If a policyholder declined coverage for insured losses but the 
insurer's offer did materially differ in price from that which the 
insurer would have offered following enactment of the 2015 
Reauthorization Act, then the insurer should consider making a new 
offer to that policyholder.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act,\7\ the information 
collections contained in this document have been approved by the Office 
of Management and Budget (OMB) under control number 1505/0197. Any 
agency may not conduct or sponsor and a person is not required to 
respond to a collection of information unless it displays a valid OMB 
control number.
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    \7\ 44 U.S.C. 3501 et seq.

    Dated: February 4, 2015.
Michael T. McRaith,
Director, Federal Insurance Office.
[FR Doc. 2015-02556 Filed 2-4-15; 4:15 pm]
BILLING CODE 4810-25-P