IMARA Calculation Under the Terrorism Risk Insurance Program, 46907-46909 [2019-18728]

Download as PDF Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Proposed Rules * * * * * Issued in Washington, DC, on August 28, 2019. Rodger A. Dean Jr., Manager, Airspace Policy Group. [FR Doc. 2019–19112 Filed 9–5–19; 8:45 am] BILLING CODE 4910–13–P DEPARTMENT OF THE TREASURY 31 CFR Part 50 RIN 1505–AC62 IMARA Calculation Under the Terrorism Risk Insurance Program Departmental Offices, Department of the Treasury. ACTION: Notice of proposed rulemaking. AGENCY: The Department of the Treasury (Treasury) is issuing this proposed rule to implement technical changes to program regulations that address the calculation and notification to the public of the Terrorism Risk Insurance Program’s (Program) insurance marketplace aggregate retention amount (IMARA) under the Terrorism Risk Insurance Act (Act), as amended. SUMMARY: Written comments must be submitted on or before October 7, 2019. Early submissions are encouraged. ADDRESSES: Submit comments electronically through the Federal eRulemaking Portal, https:// www.regulations.gov, or by mail (if hard copy, preferably an original and two copies) to the Federal Insurance Office, Attention: Richard Ifft, Room 1410 MT, Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220. Because postal mail may be subject to processing delay, it is recommended that comments be submitted electronically. All comments should be captioned with ‘‘IMARA Calculation Proposed Rule Comments.’’ Please include your name, group affiliation, address, email address, and telephone number in your comment. In general, received comments will be posted on https://www.regulations.gov without change, including any business or personal information provided. Received comments, including attachments and other supporting materials, will be part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure. FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance jspears on DSK3GMQ082PROD with PROPOSALS DATES: VerDate Sep<11>2014 16:25 Sep 05, 2019 Jkt 247001 Regulatory Policy Analyst, Federal Insurance Office, 202–622–2922 or Lindsey Baldwin, Senior Policy Analyst, Federal Insurance Office, 202–622– 3220. SUPPLEMENTARY INFORMATION: I. Background The Terrorism Risk Insurance Act of 2002 (as amended, the Act or TRIA) 1 was enacted on November 26, 2002, following the attacks of September 11, 2001, to address disruptions in the market for terrorism risk insurance, to help ensure the continued 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.2 TRIA 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. The Program has been reauthorized three times, most recently by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (the 2015 Reauthorization Act).3 The Secretary of the Treasury (Secretary) administers the Program. The Federal Insurance Office (FIO) assists the Secretary in administering the Program.4 To assist insurers, policyholders, and other interested parties in complying with the applicable requirements of the Act, Treasury has issued regulations implementing the Program. In some instances, Treasury has also issued interim guidance to be relied upon by insurers until superseded by any regulations.5 Most recently, Treasury issued regulations implementing the changes to the Program required under the 2015 Reauthorization Act.6 1 Public Law 107–297, 116 Stat. 2322, codified at 15 U.S.C. 6701 note. Because the provisions of TRIA (as amended) appear in a note instead of particular sections of the U.S. Code, the provisions of TRIA are identified by the sections of the law. 2 TRIA, sec. 101(b). 3 See Terrorism Risk Insurance Extension Act of 2005, Public Law 109–144, 119 Stat. 2660; Terrorism Risk Insurance Program Reauthorization Act of 2007, Public Law 110–160, 121 Stat. 1839; Terrorism Risk Insurance Program Reauthorization Act of 2015, Public Law 114–1, 129 Stat. 3. 4 31 U.S.C. 313(c)(1)(D). 5 Treasury summarized the history of prior rulemakings in connection with the Program in its last notice of proposed rulemaking proposing rule changes to implement the 2015 Reauthorization Act. See 81 FR 18950 (April 1, 2016) (2016 NPRM). 6 See 81 FR 88592 (December 7, 2016) (Certification Interim Final Rule); 81 FR 93756 (December 21, 2016) (Program Final Rules Except Certification). PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 46907 The Act established an industry marketplace aggregate retention amount (IMARA) as a threshold figure to determine whether any Treasury payments under the Program are subject to mandatory recoupment. Under the Act, if total annual payments by participating insurers are below the IMARA, Treasury must recoup all expended amounts up to the IMARA threshold (mandatory recoupment). If total annual payments by participating insurers are above the IMARA, Treasury has the discretion to recoup all expended amounts above the IMARA threshold (discretionary recoupment).7 The 2015 Reauthorization Act established an IMARA of $29.5 billion beginning in calendar year 2015, and provided for an annual $2 billion increase in the IMARA until the IMARA reached $37.5 billion in calendar year 2019.8 Once the $37.5 billion figure was reached in 2019, the 2015 Reauthorization Act provided that the IMARA ‘‘shall be revised to be the amount equal to the annual average of the sum of insurer deductibles for all insurers participating in the Program for the prior 3 calendar years,’’ as such sum is determined by the Secretary.9 An insurer’s deductible under the Program for any particular year is 20 percent of its direct earned premium subject to the Program during the preceding year.10 For example, an insurer’s calendar year 2019 Program deductible is 20 percent of its calendar year 2018 direct earned premium. The 2015 Reauthorization Act required the Secretary to issue a final rule for determining how subsequent IMARA amounts would be calculated and providing a timeline for public notification of the amount each year.11 The 2015 Reauthorization Act also required that Treasury collect data from participating insurers related to the effectiveness of the Program.12 Accordingly, Treasury stated in the preamble to the 2016 NPRM that it would calculate the IMARA beginning in calendar year 2020 based upon the data that it would be collecting: The approach follows the direction in the 2015 Reauthorization Act that the insurance marketplace aggregate retention amount for any calendar year after the Program Trigger reaches $37.5 billion should be based upon the average of insurer deductibles during the three prior calendar years. It calculates this 7 See TRIA, sec. 103(e)(7); see also 31 CFR part 50 subpart J (Recoupment and Surcharge Procedures). 8 TRIA, sec. 103(e)(6)(A). 9 TRIA, sec. 103(e)(6)(B)(ii). 10 TRIA, sec. 102(7). 11 TRIA, sec. 103(e)(6)(C). 12 TRIA, sec. 104(h). E:\FR\FM\06SEP1.SGM 06SEP1 46908 Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Proposed Rules figure by reference to the data that Treasury will be collecting concerning insurer participation in the Program under proposed § 50.51.13 In any year, Treasury collects data for the prior year. For example, in 2019, Treasury collected calendar year 2018 data, which is used to determine 2019 insurer deductibles. Therefore, to calculate the IMARA for 2020, Treasury calculates the average deductibles for the three prior years (2019, 2018, and 2017), which are based on the direct earned premiums reported in those years for the prior calendar years (2018, 2017, and 2016, respectively). Although the preamble to the 2016 NPRM correctly explained the methodology for calculating the IMARA in 2020 and beyond, as required by the 2015 Reauthorization Act, the language in the Program rules is ambiguous as to how the IMARA should be calculated. Under § 50.4(m)(2)(i) of the Program rules, the IMARA calculation is to be based on the ‘‘direct earned premium reported by insurers to Treasury . . . for the three calendar years prior to the calendar year in question’’ (emphasis added.) 14 This language could be interpreted to mean, for example, that the 2020 IMARA would be calculated using direct earned premiums in 2019, 2018, and 2017, rather than using the data reported in 2019, 2018, and 2017 for calendar years 2018, 2017, and 2016, as intended. This unintended interpretation would be inconsistent with the methodology specified in the 2015 Reauthorization Act and would result in an incorrect IMARA. jspears on DSK3GMQ082PROD with PROPOSALS II. The Proposed Rule A. Overview Treasury is proposing a technical correction to 31 CFR 50.4(m)(2)(i) to clarify that the IMARA calculation is based upon direct earned premium reported ‘‘in’’ the three calendar years prior to the calendar year in question, instead of ‘‘for’’ the three calendar years prior to the calendar year in question. For example, this would result in a proper calculation of the 2020 IMARA by referring to the insurer deductibles for the previous three years (2019, 2018, and 2017), which are based on reported data for calendar years 2018, 2017, and 2016. In addition, Treasury is proposing to modify 31 CFR 50.4(m)(3) to accelerate the notification date of the IMARA, in an effort to improve administrative efficiency. The Program rules provide 13 81 FR 18950, 18952 (April 1, 2016). language was proposed in the 2016 NPRM and included in the Program Final Rules Except Certification. 14 This VerDate Sep<11>2014 16:25 Sep 05, 2019 Jkt 247001 that, for any year, Treasury will publish the notification of the IMARA in the Federal Register by April 30 of that year. (The Program rules also state that if an event is certified as an act of terrorism by the Secretary before any April 30, Treasury will publish notice of the IMARA ‘‘as soon as practicable thereafter.’’ 15) The proposed rule change described above, which directs use of data reported ‘‘in’’ as opposed to ‘‘for’’ the prior three years, will provide Treasury with additional time to make the IMARA calculation by reference to data reported in the prior three years. This notice of proposed rulemaking therefore proposes to change the IMARA notification requirement such that, for any year, Treasury will publish the IMARA no later than December 31 of the prior year. This change will notify participating insurers of the new IMARA figure in advance of the IMARA taking effect (rather than during the year the IMARA is already in effect). The change will also provide Treasury with time to assess and respond to any late reported or corrected data in the last year. This will also alert participating insurers of potential changes in their obligations under the Program before the IMARA takes effect. Additionally, this change promotes efficient operation of the Program by the Federal Insurance Office. As noted above, the Program rules also address situations where an act of terrorism is certified before the establishment of that year’s IMARA. Because the IMARA under the proposed rule would be calculated and announced before the year begins, this provision would no be longer necessary and would be eliminated from the regulations. Treasury seeks comment on all aspects of the proposed rule changes from interested persons and entities. an act of terrorism prior to April 30 of any year. B. Description of the Proposed Rule List of Subjects in 31 CFR Part 50 Treasury proposes the following changes: (1) In existing 31 CFR 50.4(m)(2)(i), change the word ‘‘for’’ to ‘‘in,’’ so that this subsection refers to amounts reported ‘‘in the three calendar years prior to the calendar year in question’’; (2) In existing 31 CFR 50.4(m)(3), change the annual deadline for Treasury to publish the IMARA from April 30 of the year in question to December 31 of the prior year; and (3) Eliminate current language in 31 CFR 50.4(m)(3) addressing the timing for publication of the IMARA in situations where the Secretary certifies 15 31 PO 00000 CFR 50.4(m)(3). Frm 00013 Fmt 4702 Sfmt 4702 III. Procedural Requirements Executive Order 12866, ‘‘Regulatory Planning and Review.’’ This rule is not a significant regulatory action for purposes of Executive Order 12866, ‘‘Regulatory Planning and Review,’’ and thus has not been reviewed by the Office of Management and Budget (OMB). Regulatory Flexibility Act. Under the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., Treasury must consider whether this rule, if promulgated, will have a ‘‘significant economic impact on a substantial number of small entities.’’ 5 U.S.C. 605(b). In this case, Treasury certifies that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The rule provides for a technical change in the manner in which Treasury will calculate a figure relevant to operation of the Program and to better conform it to Congressional requirements. The only other rule change is to provide for earlier notice to insurers of the IMARA calculation than the existing rule. It has no effect on the collection of the data (including data collected from small entities) under the Program rules. Paperwork Reduction Act. The proposed rule does not involve the collection of information and thus has not been submitted to OMB for review under the requirements of the Paperwork Reduction Act, 44 U.S.C. 3507(d). The proposed rule only involves the calculation and public notification of the IMARA in connection with the Program based on data collected by Treasury under rules which have already been subject to OMB review and approval under Control No. 1505–0257. Insurance, Terrorism. For the reasons stated in the preamble, the Department of the Treasury proposes to amend 31 CFR part 50 as follows: PART 50—TERRORISM RISK INSURANCE PROGRAM 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, as amended by Pub. L. 109–144, 119 Stat. 2660, Pub. L. 110–160, 121 Stat. 1839 and Pub. L. 114–1, 129 Stat. 3 (15 U.S.C. 6701 note) Pub. L. 114–74, 129 Stat. 601, Title VII (28 U.S.C. 2461 note). E:\FR\FM\06SEP1.SGM 06SEP1 Federal Register / Vol. 84, No. 173 / Friday, September 6, 2019 / Proposed Rules 2. Amend § 50.4 by revising paragraphs (m)(2) introductory text, (m)(2)(i) and (m)(3) to read as follows: ■ § 50.4 Definitions. * * * * * (m) * * * (2) For calendar years beginning with 2020 and any calendar year thereafter as may be necessary, such amount is the lesser of the aggregate amount, for all insurers, of insured losses once there has been a Program Trigger Event during the calendar year and the annual average of the sum of insurer deductibles for all insurers for the prior 3 years, to be calculated by taking: (i) The total amount of direct earned premium reported by insurers to Treasury pursuant to § 50.51 in the three calendar years prior to the calendar year in question, and then dividing that figure by three; and * * * * * (3) For calendar year 2020 and each subsequent calendar year, Treasury shall publish in the Federal Register the insurance marketplace aggregate retention amount no later than December 31 of the prior calendar year. * * * * * Dated: August 21, 2019. Bimal Patel, Assistant Secretary for Financial Institutions. [FR Doc. 2019–18728 Filed 9–5–19; 8:45 am] BILLING CODE 4810–25–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 80 and 1042 [EPA–HQ–OAR–2018–0638; FRL–9999–22– OAR] RIN 2060–AU30 Marine Diesel Engine Emission Standards Environmental Protection Agency (EPA). ACTION: Proposed rule. AGENCY: The Environmental Protection Agency (EPA) is proposing to amend the national marine diesel engine program to provide relief provisions to address concerns associated with finding and installing certified Tier 4 marine diesel engines in certain high-speed commercial vessels. The proposed relief is in the form of additional lead time for qualifying engines and vessels. EPA is also making a technical correction to the diesel fuel regulations to allow fuel jspears on DSK3GMQ082PROD with PROPOSALS SUMMARY: VerDate Sep<11>2014 16:25 Sep 05, 2019 Jkt 247001 manufacturers and distributors to make distillate diesel fuel that complies with the global sulfur standard that applies internationally instead of the fuel standards that otherwise apply to distillate diesel fuel in the United States. DATES: Comments: Written comments must be received by October 21, 2019. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before October 7, 2019. Public Hearing: There will be a public hearing September 20, 2019, in Bath, Maine. Inquire about arrangements for a public hearing using the contact information in FOR FURTHER INFORMATION CONTACT. ADDRESSES: Public hearing. We will hold a public hearing September 20, 2019 at the Maine Maritime Museum, 243 Washington Street, Bath, Maine 04530, (207) 443–1316. The hearing will start at 9:30 a.m. local time and continue until everyone has had a chance to speak. Public Participation: Public hearing: Hearing participants are invited to notify EPA of interest in presenting testimony at the public hearing; see FOR FURTHER INFORMATION CONTACT. We encourage commenters to provide a copy of oral testimony by email or in hard copy. EPA may ask clarifying questions during the oral presentations but will generally not respond to the presentations at the hearing. Written statements and supporting information submitted during the comment period will be considered with the same weight as oral comments and supporting information presented at the public hearing. Comments. Submit your comments, identified by Docket ID No. EPA–HQ– OAR–2018–0638, at https:// www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 46909 official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https:// www.epa.gov/dockets/commenting-epadockets. Docket. EPA has established a docket for this action under Docket ID No. EPA–HQ–OAR–2018–0638. All documents in the docket are listed on the www.regulations.gov website. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in www.regulations.gov or in hard copy at Air and Radiation Docket and Information Center, EPA Docket Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW, Room 3334, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566–1744, and the telephone number for the Air Docket is (202) 566–1742. FOR FURTHER INFORMATION CONTACT: Alan Stout, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214–4805; email address: stout.alan@epa.gov. SUPPLEMENTARY INFORMATION: Does this action apply to me? This action relates to marine diesel engines with rated power between 600 and 1,400 kW intended for installation on vessels flagged or registered in the United States, vessels that use those engines, and companies that manufacture, repair, or rebuild those engines and vessels. This action also relates to companies that produce and distribute distillate diesel fuel. Proposed categories and entities that might be affected include the following: E:\FR\FM\06SEP1.SGM 06SEP1

Agencies

DEPARTMENT OF THE TREASURY

[Federal Register Volume 84, Number 173 (Friday, September 6, 2019)]
[Proposed Rules]
[Pages 46907-46909]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18728]


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DEPARTMENT OF THE TREASURY

31 CFR Part 50

RIN 1505-AC62


IMARA Calculation Under the Terrorism Risk Insurance Program

AGENCY: Departmental Offices, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of the Treasury (Treasury) is issuing this 
proposed rule to implement technical changes to program regulations 
that address the calculation and notification to the public of the 
Terrorism Risk Insurance Program's (Program) insurance marketplace 
aggregate retention amount (IMARA) under the Terrorism Risk Insurance 
Act (Act), as amended.

DATES: Written comments must be submitted on or before October 7, 2019. 
Early submissions are encouraged.

ADDRESSES: Submit comments electronically through the Federal 
eRulemaking Portal, https://www.regulations.gov, or by mail (if hard 
copy, preferably an original and two copies) to the Federal Insurance 
Office, Attention: Richard Ifft, Room 1410 MT, Department of the 
Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220. Because 
postal mail may be subject to processing delay, it is recommended that 
comments be submitted electronically. All comments should be captioned 
with ``IMARA Calculation Proposed Rule Comments.'' Please include your 
name, group affiliation, address, email address, and telephone number 
in your comment.
    In general, received comments will be posted on https://www.regulations.gov without change, including any business or personal 
information provided. Received comments, including attachments and 
other supporting materials, will be part of the public record and 
subject to public disclosure. Do not include any information in your 
comment or supporting materials that you consider confidential or 
inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance 
Regulatory Policy Analyst, Federal Insurance Office, 202-622-2922 or 
Lindsey Baldwin, Senior Policy Analyst, Federal Insurance Office, 202-
622-3220.

SUPPLEMENTARY INFORMATION:

I. Background

    The Terrorism Risk Insurance Act of 2002 (as amended, the Act or 
TRIA) \1\ was enacted on November 26, 2002, following the attacks of 
September 11, 2001, to address disruptions in the market for terrorism 
risk insurance, to help ensure the continued 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.\2\ TRIA 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. The Program 
has been reauthorized three times, most recently by the Terrorism Risk 
Insurance Program Reauthorization Act of 2015 (the 2015 Reauthorization 
Act).\3\
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    \1\ Public Law 107-297, 116 Stat. 2322, codified at 15 U.S.C. 
6701 note. Because the provisions of TRIA (as amended) appear in a 
note instead of particular sections of the U.S. Code, the provisions 
of TRIA are identified by the sections of the law.
    \2\ TRIA, sec. 101(b).
    \3\ See Terrorism Risk Insurance Extension Act of 2005, Public 
Law 109-144, 119 Stat. 2660; Terrorism Risk Insurance Program 
Reauthorization Act of 2007, Public Law 110-160, 121 Stat. 1839; 
Terrorism Risk Insurance Program Reauthorization Act of 2015, Public 
Law 114-1, 129 Stat. 3.
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    The Secretary of the Treasury (Secretary) administers the Program. 
The Federal Insurance Office (FIO) assists the Secretary in 
administering the Program.\4\ To assist insurers, policyholders, and 
other interested parties in complying with the applicable requirements 
of the Act, Treasury has issued regulations implementing the Program. 
In some instances, Treasury has also issued interim guidance to be 
relied upon by insurers until superseded by any regulations.\5\ Most 
recently, Treasury issued regulations implementing the changes to the 
Program required under the 2015 Reauthorization Act.\6\
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    \4\ 31 U.S.C. 313(c)(1)(D).
    \5\ Treasury summarized the history of prior rulemakings in 
connection with the Program in its last notice of proposed 
rulemaking proposing rule changes to implement the 2015 
Reauthorization Act. See 81 FR 18950 (April 1, 2016) (2016 NPRM).
    \6\ See 81 FR 88592 (December 7, 2016) (Certification Interim 
Final Rule); 81 FR 93756 (December 21, 2016) (Program Final Rules 
Except Certification).
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    The Act established an industry marketplace aggregate retention 
amount (IMARA) as a threshold figure to determine whether any Treasury 
payments under the Program are subject to mandatory recoupment. Under 
the Act, if total annual payments by participating insurers are below 
the IMARA, Treasury must recoup all expended amounts up to the IMARA 
threshold (mandatory recoupment). If total annual payments by 
participating insurers are above the IMARA, Treasury has the discretion 
to recoup all expended amounts above the IMARA threshold (discretionary 
recoupment).\7\
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    \7\ See TRIA, sec. 103(e)(7); see also 31 CFR part 50 subpart J 
(Recoupment and Surcharge Procedures).
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    The 2015 Reauthorization Act established an IMARA of $29.5 billion 
beginning in calendar year 2015, and provided for an annual $2 billion 
increase in the IMARA until the IMARA reached $37.5 billion in calendar 
year 2019.\8\ Once the $37.5 billion figure was reached in 2019, the 
2015 Reauthorization Act provided that the IMARA ``shall be revised to 
be the amount equal to the annual average of the sum of insurer 
deductibles for all insurers participating in the Program for the prior 
3 calendar years,'' as such sum is determined by the Secretary.\9\ An 
insurer's deductible under the Program for any particular year is 20 
percent of its direct earned premium subject to the Program during the 
preceding year.\10\ For example, an insurer's calendar year 2019 
Program deductible is 20 percent of its calendar year 2018 direct 
earned premium.
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    \8\ TRIA, sec. 103(e)(6)(A).
    \9\ TRIA, sec. 103(e)(6)(B)(ii).
    \10\ TRIA, sec. 102(7).
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    The 2015 Reauthorization Act required the Secretary to issue a 
final rule for determining how subsequent IMARA amounts would be 
calculated and providing a timeline for public notification of the 
amount each year.\11\
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    \11\ TRIA, sec. 103(e)(6)(C).
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    The 2015 Reauthorization Act also required that Treasury collect 
data from participating insurers related to the effectiveness of the 
Program.\12\ Accordingly, Treasury stated in the preamble to the 2016 
NPRM that it would calculate the IMARA beginning in calendar year 2020 
based upon the data that it would be collecting:
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    \12\ TRIA, sec. 104(h).

    The approach follows the direction in the 2015 Reauthorization 
Act that the insurance marketplace aggregate retention amount for 
any calendar year after the Program Trigger reaches $37.5 billion 
should be based upon the average of insurer deductibles during the 
three prior calendar years. It calculates this

[[Page 46908]]

figure by reference to the data that Treasury will be collecting 
concerning insurer participation in the Program under proposed Sec.  
50.51.\13\
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    \13\ 81 FR 18950, 18952 (April 1, 2016).

    In any year, Treasury collects data for the prior year. For 
example, in 2019, Treasury collected calendar year 2018 data, which is 
used to determine 2019 insurer deductibles. Therefore, to calculate the 
IMARA for 2020, Treasury calculates the average deductibles for the 
three prior years (2019, 2018, and 2017), which are based on the direct 
earned premiums reported in those years for the prior calendar years 
(2018, 2017, and 2016, respectively).
    Although the preamble to the 2016 NPRM correctly explained the 
methodology for calculating the IMARA in 2020 and beyond, as required 
by the 2015 Reauthorization Act, the language in the Program rules is 
ambiguous as to how the IMARA should be calculated. Under Sec.  
50.4(m)(2)(i) of the Program rules, the IMARA calculation is to be 
based on the ``direct earned premium reported by insurers to Treasury . 
. . for the three calendar years prior to the calendar year in 
question'' (emphasis added.) \14\ This language could be interpreted to 
mean, for example, that the 2020 IMARA would be calculated using direct 
earned premiums in 2019, 2018, and 2017, rather than using the data 
reported in 2019, 2018, and 2017 for calendar years 2018, 2017, and 
2016, as intended. This unintended interpretation would be inconsistent 
with the methodology specified in the 2015 Reauthorization Act and 
would result in an incorrect IMARA.
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    \14\ This language was proposed in the 2016 NPRM and included in 
the Program Final Rules Except Certification.
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II. The Proposed Rule

A. Overview

    Treasury is proposing a technical correction to 31 CFR 
50.4(m)(2)(i) to clarify that the IMARA calculation is based upon 
direct earned premium reported ``in'' the three calendar years prior to 
the calendar year in question, instead of ``for'' the three calendar 
years prior to the calendar year in question. For example, this would 
result in a proper calculation of the 2020 IMARA by referring to the 
insurer deductibles for the previous three years (2019, 2018, and 
2017), which are based on reported data for calendar years 2018, 2017, 
and 2016.
    In addition, Treasury is proposing to modify 31 CFR 50.4(m)(3) to 
accelerate the notification date of the IMARA, in an effort to improve 
administrative efficiency. The Program rules provide that, for any 
year, Treasury will publish the notification of the IMARA in the 
Federal Register by April 30 of that year. (The Program rules also 
state that if an event is certified as an act of terrorism by the 
Secretary before any April 30, Treasury will publish notice of the 
IMARA ``as soon as practicable thereafter.'' \15\) The proposed rule 
change described above, which directs use of data reported ``in'' as 
opposed to ``for'' the prior three years, will provide Treasury with 
additional time to make the IMARA calculation by reference to data 
reported in the prior three years.
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    \15\ 31 CFR 50.4(m)(3).
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    This notice of proposed rulemaking therefore proposes to change the 
IMARA notification requirement such that, for any year, Treasury will 
publish the IMARA no later than December 31 of the prior year. This 
change will notify participating insurers of the new IMARA figure in 
advance of the IMARA taking effect (rather than during the year the 
IMARA is already in effect). The change will also provide Treasury with 
time to assess and respond to any late reported or corrected data in 
the last year. This will also alert participating insurers of potential 
changes in their obligations under the Program before the IMARA takes 
effect. Additionally, this change promotes efficient operation of the 
Program by the Federal Insurance Office.
    As noted above, the Program rules also address situations where an 
act of terrorism is certified before the establishment of that year's 
IMARA. Because the IMARA under the proposed rule would be calculated 
and announced before the year begins, this provision would no be longer 
necessary and would be eliminated from the regulations.
    Treasury seeks comment on all aspects of the proposed rule changes 
from interested persons and entities.

B. Description of the Proposed Rule

    Treasury proposes the following changes:
    (1) In existing 31 CFR 50.4(m)(2)(i), change the word ``for'' to 
``in,'' so that this subsection refers to amounts reported ``in the 
three calendar years prior to the calendar year in question'';
    (2) In existing 31 CFR 50.4(m)(3), change the annual deadline for 
Treasury to publish the IMARA from April 30 of the year in question to 
December 31 of the prior year; and
    (3) Eliminate current language in 31 CFR 50.4(m)(3) addressing the 
timing for publication of the IMARA in situations where the Secretary 
certifies an act of terrorism prior to April 30 of any year.

III. Procedural Requirements

    Executive Order 12866, ``Regulatory Planning and Review.'' This 
rule is not a significant regulatory action for purposes of Executive 
Order 12866, ``Regulatory Planning and Review,'' and thus has not been 
reviewed by the Office of Management and Budget (OMB).
    Regulatory Flexibility Act. Under the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq., Treasury must consider whether this rule, if 
promulgated, will have a ``significant economic impact on a substantial 
number of small entities.'' 5 U.S.C. 605(b). In this case, Treasury 
certifies that this proposed rule, if adopted, would not have a 
significant economic impact on a substantial number of small entities. 
The rule provides for a technical change in the manner in which 
Treasury will calculate a figure relevant to operation of the Program 
and to better conform it to Congressional requirements. The only other 
rule change is to provide for earlier notice to insurers of the IMARA 
calculation than the existing rule. It has no effect on the collection 
of the data (including data collected from small entities) under the 
Program rules.
    Paperwork Reduction Act. The proposed rule does not involve the 
collection of information and thus has not been submitted to OMB for 
review under the requirements of the Paperwork Reduction Act, 44 U.S.C. 
3507(d). The proposed rule only involves the calculation and public 
notification of the IMARA in connection with the Program based on data 
collected by Treasury under rules which have already been subject to 
OMB review and approval under Control No. 1505-0257.

List of Subjects in 31 CFR Part 50

    Insurance, Terrorism.

    For the reasons stated in the preamble, the Department of the 
Treasury proposes to amend 31 CFR part 50 as follows:

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, as amended by Pub. L. 109-144, 119 Stat. 2660, 
Pub. L. 110-160, 121 Stat. 1839 and Pub. L. 114-1, 129 Stat. 3 (15 
U.S.C. 6701 note) Pub. L. 114-74, 129 Stat. 601, Title VII (28 
U.S.C. 2461 note).


[[Page 46909]]


0
2. Amend Sec.  50.4 by revising paragraphs (m)(2) introductory text, 
(m)(2)(i) and (m)(3) to read as follows:


Sec.  50.4  Definitions.

* * * * *
    (m) * * *
    (2) For calendar years beginning with 2020 and any calendar year 
thereafter as may be necessary, such amount is the lesser of the 
aggregate amount, for all insurers, of insured losses once there has 
been a Program Trigger Event during the calendar year and the annual 
average of the sum of insurer deductibles for all insurers for the 
prior 3 years, to be calculated by taking:
    (i) The total amount of direct earned premium reported by insurers 
to Treasury pursuant to Sec.  50.51 in the three calendar years prior 
to the calendar year in question, and then dividing that figure by 
three; and
* * * * *
    (3) For calendar year 2020 and each subsequent calendar year, 
Treasury shall publish in the Federal Register the insurance 
marketplace aggregate retention amount no later than December 31 of the 
prior calendar year.
* * * * *

    Dated: August 21, 2019.
Bimal Patel,
Assistant Secretary for Financial Institutions.
[FR Doc. 2019-18728 Filed 9-5-19; 8:45 am]
 BILLING CODE 4810-25-P

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