Terrorism Risk Insurance Program 2022 Data Call, 64600-64603 [2021-25181]
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Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices
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[FR Doc. 2021–25153 Filed 11–17–21; 8:45 am]
BILLING CODE P
DEPARTMENT OF THE TREASURY
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Terrorism Risk Insurance Program
2022 Data Call
use in the 2022 data call. Copies of these
forms and associated instructions
(which identify changes to the reporting
templates and instructions as previously
used by Treasury) are available for
electronic review on the Treasury
website at https://home.treasury.gov/
policy-issues/financial-marketsfinancial-institutions-and-fiscal-service/
federal-insurance-office/terrorism-riskinsurance-program/annual-datacollection. State insurance regulators,
through the National Association of
Insurance Commissioners (NAIC), will
also be separately seeking comment
from stakeholders on the proposal.
DATES: Submit comments on or before
January 18, 2022.
ADDRESSES: Submit comments
electronically through the Federal
eRulemaking Portal: https://
www.regulations.gov, or by mail to the
Federal Insurance Office, Attn: Richard
Ifft, Room 1410 MT, Department of the
Treasury, 1500 Pennsylvania Avenue
NW, Washington, DC 20220. Because
postal mail may be subject to processing
delays, it is recommended that
comments be submitted electronically.
If submitting comments by mail, please
submit an original version with two
copies. Comments concerning the
proposed data collection forms and
collection process should be captioned
with ‘‘2022 TRIP Data Collection
Comments.’’ Please include your name,
group affiliation, address, email address,
and telephone number(s) in your
comment. Where appropriate, a
comment should include a short
Executive Summary (no more than five
single-spaced pages).
FOR FURTHER INFORMATION CONTACT:
Richard Ifft, Senior Insurance
Regulatory Policy Analyst, Federal
Insurance Office, Room 1410 MT,
Department of the Treasury, 1500
Pennsylvania Avenue NW, Washington,
DC 20220, at (202) 622–2922 (not a tollfree number), or Sherry Rowlett,
Program Analyst, Federal Insurance
Office, at (202) 622–1890. Persons who
have difficulty hearing or speaking may
access these numbers via TTY by calling
the toll-free Federal Relay Service at
(800) 877–8339.
SUPPLEMENTARY INFORMATION:
Departmental Offices, U.S.
Department of the Treasury.
ACTION: Request for comments.
I. Background
TRIA 1 created the Terrorism Risk
Insurance Program (Program) within the
U.S. Department of the Treasury
Pursuant to the Terrorism
Risk Insurance Act of 2002 (TRIA), the
Federal Insurance Office (FIO) requests
public feedback on the proposed
revisions to the data collection forms for
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 United States Code, the
provisions of TRIA are identified by the sections of
the law.
AGENCY:
SUMMARY:
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(Treasury) 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. TRIA
requires the Secretary of the Treasury
(Secretary) to perform periodic analyses
of certain matters concerning the
Program.2 In order to assist the
Secretary with this process, TRIA also
requires insurers to submit on an annual
basis certain insurance data and
information regarding their
participation in the Program.3 FIO is
authorized to assist the Secretary in the
administration of the Program.4
Treasury began collecting data from
insurers in 2016 on a voluntary basis,5
and on a mandatory basis in 2017.6
Treasury also arranged in 2017 for
workers’ compensation rating bureaus to
provide most of the workers’
compensation insurance data elements.7
Beginning in 2018, Treasury and state
insurance regulators have conducted a
consolidated data call, in which
participating insurers can, for the most
part, submit the same reporting forms to
Treasury and state regulators to satisfy
the respective objectives of both
Treasury and state insurance
regulators.8
Program regulation 31 CFR 50.51(a)
requires insurers to submit the specified
data no later than May 15 of each
calendar year. Treasury, through an
insurance statistical aggregator, uses a
web portal through which insurers must
submit the requested data; state
regulators collect the same data through
a portal operated by New York State. All
information submitted via the Treasury
web portal operated by its insurance
statistical aggregator is subject to the
confidentiality and data protection
provisions of applicable federal law.
2 TRIA, Section 104(h)(2) (requiring, inter alia, a
report on the effectiveness of the Program); Section
108(h) (requiring a report on the competitiveness of
small insurers in the terrorism risk insurance
marketplace).
3 TRIA, Section 104(h)(1). The data collection
requirements were incorporated within TRIA by
Section 111 of the Terrorism Risk Insurance
Program Reauthorization Act of 2015 (2015
Reauthorization Act), Public Law 114–1, 129 Stat.
2.
4 31 U.S.C. 313(c)(1)(D).
5 81 FR 11649 (March 4, 2016).
6 In 2016, a reporting exemption was extended to
small insurers writing less than $10 million in
TRIP-eligible lines premium in the reporting year.
See 81 FR 95312 (December 27, 2016); 82 FR 20420
(May 1, 2017). As noted below, that exemption
continues.
7 82 FR 20420 (May 1, 2017).
8 See 83 FR 14718 (April 5, 2018).
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Insurers subject to the consolidated
data call report on a group basis, if part
of a group, and otherwise report on an
individual company basis.
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II. General Reporting Issues and
Proposed Changes to Data Collection
Templates
Pursuant to TRIA, Treasury has
coordinated with publicly available
sources to collect information for the
2022 data call. Information relating to
workers’ compensation exposures
continues to be available from the
workers’ compensation rating bureaus,
and those entities have again agreed to
provide that information on behalf of
participating insurers. Treasury has
determined, however, that all other data
components remain unavailable from
other sources. Accordingly, Treasury
will continue to request this remaining
data and information directly from
insurers.
Treasury again proposes to use four
different data collection templates (see
31 CFR 50.51(c)), depending upon the
type of insurer involved. Insurers will
fill out the template identified ‘‘Insurer
(Non-Small) Groups or Companies,’’
unless the insurer meets the definition
of a small insurer, captive insurer, or
alien surplus lines insurer as set forth in
31 CFR 50.4. Such small insurers,
captive insurers, and alien surplus lines
insurers are required to complete
separate tailored templates. Each
template to be completed by each
category of insurer contains multiple
worksheets and is accompanied by
separate instructions providing
guidance on each data element
requested in each worksheet.
There are two general categories of
material changes 9 to the proposed
reporting templates for 2022—one that
applies solely to captive insurers, and
the second that applies to the Cyber
worksheet, which is contained in all
templates and is to be completed by all
participating insurers that write cyber
insurance.
In the upcoming data call, Treasury
plans to obtain more detailed
information on the terrorism risk
insurance issued by the captive
insurers. First, Treasury is now seeking
information that will allow FIO to
determine whether the insurance
9 By material changes, Treasury means changes to
the data call that require the provision of additional
types of information, or information arrayed in a
different fashion than previously requested. Nonmaterial changes that have been incorporated
include date changes to the reporting templates to
reflect the different reporting year, and revisions to
the Reinsurance worksheet to contain a new
modeled loss question for insurers (excepting small
insurers that do not respond to that question), in the
same format as prior years.
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coverage provided by the captive
insurer to a policyholder encompasses
the reimbursement of such
policyholder’s deductible that must be
satisfied under a policy issued by
another insurer. In prior data calls,
Treasury has only requested separate
information on the deductible
reimbursement coverage for workers’
compensation insurance (where it forms
a significant percentage of all workers’
compensation insurance issued by
captive insurers). For other lines of
insurance, Treasury has previously
instructed captive insurers to combine
the deductible reimbursement insurance
to policyholders with other insurance
written by the captive in the same line
of insurance. The proposed changes
request that the information be broken
out by each TRIP-eligible line of
insurance, which results in changes to
both the Premium and Exposure Bases
worksheets, where information is
collected on a line-by-line basis.
Second, in order to obtain a more
complete view of the scope of the
captive’s operations, FIO is proposing
two additional changes. The first
proposed change will require captive
insurers to provide the total amount of
all other non-TRIP eligible direct earned
premium of the captive insurer on the
Premium worksheet. The second
proposed change, on the Exposure Bases
worksheet, requests information on
whether coverage is being issued by the
captive insurer that only provides
coverage for nuclear, biological,
chemical, and radiological (NBCR)
exposures, in light of prior findings by
FIO (and others) that the ability to
obtain NBCR coverage in the
conventional market is limited.10
The second area of material changes
relates to the Cyber worksheet, which is
completed by all participating insurers
that write cyber insurance. In 2016,
Treasury issued guidance confirming
that cyber insurance written in a TRIPeligible line of insurance is subject to
the Program.11 In 2018, Treasury began
to collect cyber insurance information
10 See Federal Insurance Office, Report on the
Effectiveness of the Terrorism Risk Insurance
Program (June 2020), 48 (‘‘Because many insurers
generally exclude NBCR risks under P&C policies
(excepting workers’ compensation, as discussed
below), the amount of direct insurance coverage for
such risks may be substantially limited.’’), https://
home.treasury.gov/system/files/311/2020-TRIPEffectiveness-Report.pdf; U.S. General
Accountability Office, Terrorism Insurance: Status
of Coverage Availability for Attacks Involving
Nuclear, Biological, Chemical, or Radiological
Weapons (December 2008), 13 (‘‘Commercial
property/casualty insurers and reinsurers generally
seek to exclude coverage for NBCR risks or place
significant restrictions on such coverage.’’), https://
www.gao.gov/assets/gao-09-39.pdf.
11 81 FR 95312 (Dec. 27, 2016).
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in the TRIP data call for the first time.12
In 2021, Treasury finalized a rule
change codifying its prior guidance that
cyber insurance written in a TRIPeligible line of insurance is subject to
the Program.13 The cyber insurance
market continues to grow and evolve,
and cyber-related losses (particularly
with regard to ransomware) have
increased significantly over the past few
years.14 In view of recent market
developments and the important role of
cyber insurance in the Program,
Treasury would like to obtain more
detailed information relating to the
availability and affordability of such
coverage in the market.
Interested parties should review the
proposed Cyber worksheet contained
within each proposed reporting
template, along with the revised
Instructions for that worksheet, for
further details on the proposed changes.
The following paragraphs summarize
the changes to the overall format of the
worksheet:
(1) As Treasury recognized in its 2016
Cyber Guidance and in its final rule in
2021, not all cyber insurance is written
in TRIP-eligible lines of insurance that
would be subject to the Program. In
order to assess the amount of cyber
insurance that is not subject to the
Program, and the potential implications
for the Program, Treasury is now
requesting premium and limits
information for cyber coverages written
in non-TRIP-eligible lines of
insurance.15
(2) For cyber insurance written in
both TRIP and Non-TRIP eligible lines,
Treasury is now also requesting
premium and policy count information
broken out by size of policyholder. This
information is separated into large,
medium and small categories, as
measured by the number of employees
of the policyholder. This new data will
assist Treasury in assessing the
availability, affordability, and take up of
cyber insurance for businesses in
different size categories.
(3) Cyber extortion coverage (which
may or may not extend coverage for
ransomware payments) also can be an
element of cyber insurance coverage.
Ransomware has emerged as a
significant risk exposure for United
12 83
FR 14718, 14720 (April 5, 2018).
FR 30537, 30538 (June 9, 2021) (amending
31 CFR 50.4(w)(1)).
14 See generally Federal Insurance Office, Annual
Report on the Insurance Industry (September 2021),
74–80, https://home.treasury.gov/system/files/311/
FIO-2021-Annual-Report-Insurance-Industry.pdf.
15 As in past data calls, Treasury is not requesting
insurers to provide information on premiums or
exposures where a cyber loss may be found to be
covered on a non-affirmative, or ‘‘silent’’ basis.
13 86
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States businesses and for cyber insurers
providing coverage for those
exposures.16 In order to better
understand the scope of insurance
coverage being provided for this risk
and its potential implications for the
Program, Treasury is now requesting
more specific information on the cyber
extortion coverages provided under
cyber insurance policies.
(4) Given the significant increase in
ransomware activity and reported
substantial claims payments by insurers
providing cyber insurance, Treasury is
also requesting loss information
regarding these ransomware exposures.
For the 2022 data call (requesting
insurer data for calendar year 2021), an
insurer will qualify as a small insurer if
it had both 2020 policyholder surplus
and 2020 direct earned premium in the
TRIP-eligible lines of insurance of less
than $1 billion.17 Small insurers that
had TRIP-eligible direct earned
premium of less than $10 million in
2021 will be exempt from the 2022
consolidated TRIP data call.18 Neither
captive insurers nor alien surplus lines
insurers are eligible for this reporting
exemption. The only changes to the
small insurer template are in connection
with the global changes for cyber
insurance identified above.
The non-small insurer template
should be completed by insurance
groups (or individual insurers not
affiliated with a group) that had either
a 2020 policyholder surplus or 2020
direct earned premium in the TRIPeligible lines of insurance equal to or
greater than $1 billion and are not
otherwise subject to reporting as captive
insurers or alien surplus lines insurers.
The reporting template for non-small
insurers does not contain changes, other
than the global changes relating to cyber
insurance described above.
16 See, e.g., U.S. Treasury, Financial Crimes
Enforcement Network, Financial Trend Analysis,
Ransomware Trends in Bank Secrecy Act Data
Between January 2021 and June 2021, https://
www.fincen.gov/sites/default/files/2021-10/
Financial%20Trend%20Analysis_
Ransomware%20508%20FINAL.pdf.
17 Small insurers are defined in 31 CFR 50.4(z) as
insurers (or an affiliated group of insurers) with
policyholder surplus for the immediately preceding
year less than five times the Program Trigger for the
current year, and TRIP-eligible lines direct earned
premium for the previous year that is also five times
less than the Program Trigger. Accordingly, an
insurer qualifies as a small insurer if its 2020
policyholder surplus and 2020 direct earned
premium are less than five times the 2021 Program
Trigger of $200 million.
18 To the extent an insurer with less than this
level of TRIP-eligible lines direct earned premium
is part of a larger group that is required to report,
the insurer must report as part of the group as a
whole, even if it is under the $10,000,000 direct
earned premium threshold on an individual basis.
Individual company information for such entities
must also be reported to state insurance regulators.
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Captive insurers are defined in 31
CFR 50.4(g) as insurers licensed under
the captive insurance laws or
regulations of any state. As in prior
years, captive insurers that write
policies in TRIP-eligible lines of
insurance are required to report unless
they do not provide their insureds with
any terrorism risk insurance that is
subject to the Program. As noted above,
the captive insurer reporting template
contains changes on the Premium and
Exposure Bases worksheets,19 as well as
the global changes relating to cyber
insurance described above.
Alien surplus lines insurers are
defined in 31 CFR 50.4(o)(1)(i)(B) as
insurers not licensed or admitted to
engage in the business of providing
primary or excess insurance in any
state, but that are eligible surplus line
insurers listed on the NAIC Quarterly
Listing of Alien Insurers. Alien surplus
lines insurers that are part of a larger
group classified as a non-small insurer
or as a small insurer should report as
part of the group, using the appropriate
template. Therefore, the alien surplus
lines insurer template should only be
used by an alien surplus lines insurer
that is not part of a group that is subject
to reporting on a different template. The
reporting template for alien surplus
lines insurers does not contain changes,
other than the global changes relating to
cyber insurance described above.
As in past consolidated data calls,
state insurance regulators will provide
their own guidance regarding the
submission of reporting templates to the
New York Portal, as well as in
connection with any additional data
that may be required for the state data
call.
III. Submission of Data
Following registration with the data
aggregator, all insurers will be provided
with the appropriate reporting templates
for completion. Reporting insurers that
wish to report in .csv format can obtain
information from the data aggregator on
how to do so. Insurers will be required
to submit the completed reporting
templates through a secure web portal
provided by the data aggregator.
Submission of reports to the New York
Portal does not satisfy the obligation to
report to Treasury in the TRIP data call.
All data must be provided no later than
May 15, 2022, which will also be the
reporting deadline for state insurance
regulators. Treasury intends to provide
19 In addition, on the Affiliations worksheet for
captive insurers, there is now an additional dropdown option for Type of Insurer for affiliated
companies, adding Alien Surplus Lines Insurer to
the listing, based upon an inquiry received during
the 2021 data call.
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training and additional resources
throughout the data collection period to
facilitate the proper completion of
reporting templates.
Reporting under the 2022 data call
will be mandatory for all commercial
property and casualty insurers writing
insurance in lines subject to TRIA,
unless the insurer falls within the
exceptions for certain small insurers
and captive insurers described above.
IV. Request for Comments
To ensure efficient and accurate
completion of the forms, Treasury is
requesting public feedback on the
content of the 2022 data call reporting
templates outlined in this Request for
Comments and on associated matters. In
particular, Treasury requests comments
on the following issues:
(1) Please comment upon the
proposed material changes to the
existing data collection forms as
respects captive insurers and cyber
insurance.
(2) Are there other publicly available
information sources that bear upon the
identified issues concerning captive
insurers and insurers writing cyber
coverage that Treasury should consider
in connection with the information
identified in this Request for
Comments?
(3) Is there any additional information
that Treasury should collect given the
proposed changes regarding captive
insurers, in light of the matters
identified in this Request for
Comments?
(4) Is there any additional information
that Treasury should collect given the
proposed changes regarding insurers
writing cyber coverage, in light of the
matters identified in this Request for
Comments?
The proposed forms are available for
review at https://home.treasury.gov/
policy-issues/financial-marketsfinancial-institutions-and-fiscal-service/
federal-insurance-office/terrorism-riskinsurance-program/annual-datacollection.
V. Procedural Requirements
Paperwork Reduction Act. The
collection of information contained in
this Request for Comments will be
submitted to the Office of Management
and Budget (OMB) for review as a
revision to OMB Control Number 1505–
0257 under the requirements of the
Paperwork Reduction Act, 44 U.S.C.
3507(d). Comments should be sent to
Treasury in the form discussed in the
ADDRESSES section of this Request for
Comments. Comments on the collection
of information should be received by
January 18, 2022.
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Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices
Comments are being sought with
respect to the collection of information
in the proposed Terrorism Risk
Insurance Program 2022 data call.
Treasury specifically invites comments
on: (a) Whether the proposed collection
is responsive to the statutory
requirement; (b) the accuracy of the
estimate of the burden of the collections
of information (see below); (c) ways to
enhance the quality, utility, and clarity
of the information collection; (d) ways
to use automated collection techniques
or other forms of information
technology; and (e) estimates of capital
or start-up costs and costs of operation,
maintenance, and purchase of services
to maintain the information.
Treasury previously analyzed the
potential burdens associated with the
2021 data call. See 85 FR 41676, 41677–
78 (July 10, 2020). The information
sought by Treasury comprises data
elements that insurers currently collect
or generate, although not necessarily
grouped together the way in which
insurers currently collect and evaluate
the data. Based upon insurer
submissions in the 2021 data call,
Treasury estimates that for purposes of
the 2022 data call, approximately 100
Program participants will be required to
submit the ‘‘Insurer (Non-Small) Groups
or Companies’’ data collection form, 225
Program participants will be required to
submit the ‘‘Small Insurer’’ form, 575
Program participants will be required to
submit the ‘‘Captive Insurer’’ form, and
100 Program participants will be
required to submit the ‘‘Alien Surplus
Lines Insurers’’ form.
Each set of reporting templates is
expected to incur a different level of
burden. At the time of the 2020
estimate, the average burden estimate
for Non-Small Insurers was 82 hours; for
Small Insurers, 28 hours; for Captive
Insurers, 51 hours, and for Alien
Surplus Lines Insurers, 51 hours.20
When Treasury added a Cyber
worksheet to the reporting templates in
2018, it did not estimate any additional
material burden at that time associated
with incremental addition of requiring
some limited cyber insurance
reporting.21
The changes to the proposed data
reporting elements in 2022 are not
anticipated to have a significant impact
on Treasury’s prior burden estimates
with respect to the additional requested
information specific to captive insurers,
as the additional information is largely
the same information that has been
previously collected, with the
additional requirement that such
20 85
FR 41676, 41677–78 (July 10, 2020).
21 82 FR 56328, 56331 (Nov. 28, 2017).
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information be divided between
deductible reimbursement policies
versus other policies in the same line of
insurance. Given the relatively small
number of policies issued by captive
insurers, the additional effort to make
this separation (assuming the captive
insurer issues policies in both
categories) should not be significant.
Treasury does anticipate that the
additional information collection
concerning cyber insurance (which is
sought from each category of
participating insurer) will have an
impact upon the existing burden
estimates.
Although the amount of information
requested concerning cyber insurance is
more than has been requested in the
past, it is in generally in the same
format, with the exception that some
information is now requested to be
provided by size of policyholder. FIO
anticipates that this will require some
further manipulation of the data by
participating insurers than in prior
years. In addition, the templates now
request claims-related information.
Accordingly, for those insurers required
to respond to the Cyber (Nationwide)
worksheet, Treasury anticipates an
additional 10 hours of burden, based
upon its own evaluation and
engagement with its data aggregator.
That estimate, however, should be
reduced by the percentage of insurers in
each respective category that complete
the Cyber worksheet. Based upon the
results of the 2021 data call, 80 percent
of Non-Small Insurers, 33 percent of
Small Insurers, 10 percent of Captive
Insurers, and 60 percent of Alien
Surplus Lines Insurers provided
information in connection with this
worksheet. Accordingly, Treasury
estimates the incremental additional
burden for each group as 8 hours for
Non-Small Insurers, for 90 hours total;
4 hours for Small Insurers, or 32 hours
total; 1 hour for Captive Insurers, or 52
hours total; and 6 hours for Alien
Surplus Lines Insurers, or 57 hours
total.
Assuming this breakdown, and when
applied to the number of reporting
insurers anticipated in light of the
experience of the 2021 data call, the
estimated annual burden would be
51,800 hours ((100 insurers × 90 hours)
+ (225 insurers × 32 hours) + (575
insurers × 52 hours) + (100 insurers × 57
hours)). At a blended, fully loaded
hourly rate of $52.25,22 the anticipated
22 Based on data from the Bureau of Labor
Statistics, for Insurance Carriers and Related
Activities, https://www.bls.gov/iag/tgs/iag524.htm.
The average wage rate for all insurance employees
was $39.02 in July 2021, and the total benefit
compensation in the 2nd Quarter of 2021 was
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64603
labor cost would be $2,706,550 across
the industry as a whole, or $4,703 per
Non-Small Insurer, $1,672 per small
insurer, $2,717 per Captive Insurer, and
$2,978 per Alien Surplus Lines Insurer.
Dated: November 15, 2021.
Steven E. Seitz,
Director, Federal Insurance Office.
[FR Doc. 2021–25181 Filed 11–17–21; 8:45 am]
BILLING CODE 4810–AK–P
DEPARTMENT OF VETERANS
AFFAIRS
[OMB Control No. 2900–0021]
Agency Information Collection
Activity: VA Loan Electronic Reporting
Interface (VALERI) System
Veterans Benefits
Administration, Department of Veterans
Affairs.
ACTION: Notice.
AGENCY:
In compliance with the
Paperwork Reduction Act (PRA) of
1995, this notice announces that the
Veterans Benefits Administration,
Department of Veterans Affairs, will
submit the collection of information
abstracted below to the Office of
Management and Budget (OMB) for
review and comment. The PRA
submission describes the nature of the
information collection and its expected
cost and burden and it includes the
actual data collection instrument.
DATES: Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to www.reginfo.gov/public/do/
PRAMain. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Refer to ‘‘OMB Control
No. 2900–0021.
FOR FURTHER INFORMATION CONTACT:
Maribel Aponte, Office of Enterprise
and Integration, Data Governance
Analytics (008), 1717 H Street NW,
Washington, DC 20006, (202) 266–4688
or email maribel.aponte@va.gov. Please
refer to ‘‘OMB Control No. 2900–0021’’
in any correspondence.
SUPPLEMENTARY INFORMATION:
Authority: 38 CFR 36.4338(a)
Title: VA LOAN ELECTRONIC
REPORTING INTERFACE (VALERI)
SYSTEM.
OMB Control Number: 2900–0021.
SUMMARY:
33.9%, which is a benefit multiplier of 1.339.
Therefore, a fully-loaded wage rate for insurance
employees is $52.25, or $39.02 × 1.339.
E:\FR\FM\18NON1.SGM
18NON1
Agencies
[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64600-64603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25181]
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DEPARTMENT OF THE TREASURY
Terrorism Risk Insurance Program 2022 Data Call
AGENCY: Departmental Offices, U.S. Department of the Treasury.
ACTION: Request for comments.
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SUMMARY: Pursuant to the Terrorism Risk Insurance Act of 2002 (TRIA),
the Federal Insurance Office (FIO) requests public feedback on the
proposed revisions to the data collection forms for use in the 2022
data call. Copies of these forms and associated instructions (which
identify changes to the reporting templates and instructions as
previously used by Treasury) are available for electronic review on the
Treasury website at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program/annual-data-collection. State
insurance regulators, through the National Association of Insurance
Commissioners (NAIC), will also be separately seeking comment from
stakeholders on the proposal.
DATES: Submit comments on or before January 18, 2022.
ADDRESSES: Submit comments electronically through the Federal
eRulemaking Portal: https://www.regulations.gov, or by mail to the
Federal Insurance Office, Attn: Richard Ifft, Room 1410 MT, Department
of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220.
Because postal mail may be subject to processing delays, it is
recommended that comments be submitted electronically. If submitting
comments by mail, please submit an original version with two copies.
Comments concerning the proposed data collection forms and collection
process should be captioned with ``2022 TRIP Data Collection
Comments.'' Please include your name, group affiliation, address, email
address, and telephone number(s) in your comment. Where appropriate, a
comment should include a short Executive Summary (no more than five
single-spaced pages).
FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance
Regulatory Policy Analyst, Federal Insurance Office, Room 1410 MT,
Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC
20220, at (202) 622-2922 (not a toll-free number), or Sherry Rowlett,
Program Analyst, Federal Insurance Office, at (202) 622-1890. Persons
who have difficulty hearing or speaking may access these numbers via
TTY by calling the toll-free Federal Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
TRIA \1\ created the Terrorism Risk Insurance Program (Program)
within the U.S. Department of the Treasury (Treasury) 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. TRIA requires the Secretary of the
Treasury (Secretary) to perform periodic analyses of certain matters
concerning the Program.\2\ In order to assist the Secretary with this
process, TRIA also requires insurers to submit on an annual basis
certain insurance data and information regarding their participation in
the Program.\3\ FIO is authorized to assist the Secretary in the
administration of the Program.\4\
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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 United States Code, the
provisions of TRIA are identified by the sections of the law.
\2\ TRIA, Section 104(h)(2) (requiring, inter alia, a report on
the effectiveness of the Program); Section 108(h) (requiring a
report on the competitiveness of small insurers in the terrorism
risk insurance marketplace).
\3\ TRIA, Section 104(h)(1). The data collection requirements
were incorporated within TRIA by Section 111 of the Terrorism Risk
Insurance Program Reauthorization Act of 2015 (2015 Reauthorization
Act), Public Law 114-1, 129 Stat. 2.
\4\ 31 U.S.C. 313(c)(1)(D).
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Treasury began collecting data from insurers in 2016 on a voluntary
basis,\5\ and on a mandatory basis in 2017.\6\ Treasury also arranged
in 2017 for workers' compensation rating bureaus to provide most of the
workers' compensation insurance data elements.\7\ Beginning in 2018,
Treasury and state insurance regulators have conducted a consolidated
data call, in which participating insurers can, for the most part,
submit the same reporting forms to Treasury and state regulators to
satisfy the respective objectives of both Treasury and state insurance
regulators.\8\
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\5\ 81 FR 11649 (March 4, 2016).
\6\ In 2016, a reporting exemption was extended to small
insurers writing less than $10 million in TRIP-eligible lines
premium in the reporting year. See 81 FR 95312 (December 27, 2016);
82 FR 20420 (May 1, 2017). As noted below, that exemption continues.
\7\ 82 FR 20420 (May 1, 2017).
\8\ See 83 FR 14718 (April 5, 2018).
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Program regulation 31 CFR 50.51(a) requires insurers to submit the
specified data no later than May 15 of each calendar year. Treasury,
through an insurance statistical aggregator, uses a web portal through
which insurers must submit the requested data; state regulators collect
the same data through a portal operated by New York State. All
information submitted via the Treasury web portal operated by its
insurance statistical aggregator is subject to the confidentiality and
data protection provisions of applicable federal law.
[[Page 64601]]
Insurers subject to the consolidated data call report on a group
basis, if part of a group, and otherwise report on an individual
company basis.
II. General Reporting Issues and Proposed Changes to Data Collection
Templates
Pursuant to TRIA, Treasury has coordinated with publicly available
sources to collect information for the 2022 data call. Information
relating to workers' compensation exposures continues to be available
from the workers' compensation rating bureaus, and those entities have
again agreed to provide that information on behalf of participating
insurers. Treasury has determined, however, that all other data
components remain unavailable from other sources. Accordingly, Treasury
will continue to request this remaining data and information directly
from insurers.
Treasury again proposes to use four different data collection
templates (see 31 CFR 50.51(c)), depending upon the type of insurer
involved. Insurers will fill out the template identified ``Insurer
(Non-Small) Groups or Companies,'' unless the insurer meets the
definition of a small insurer, captive insurer, or alien surplus lines
insurer as set forth in 31 CFR 50.4. Such small insurers, captive
insurers, and alien surplus lines insurers are required to complete
separate tailored templates. Each template to be completed by each
category of insurer contains multiple worksheets and is accompanied by
separate instructions providing guidance on each data element requested
in each worksheet.
There are two general categories of material changes \9\ to the
proposed reporting templates for 2022--one that applies solely to
captive insurers, and the second that applies to the Cyber worksheet,
which is contained in all templates and is to be completed by all
participating insurers that write cyber insurance.
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\9\ By material changes, Treasury means changes to the data call
that require the provision of additional types of information, or
information arrayed in a different fashion than previously
requested. Non-material changes that have been incorporated include
date changes to the reporting templates to reflect the different
reporting year, and revisions to the Reinsurance worksheet to
contain a new modeled loss question for insurers (excepting small
insurers that do not respond to that question), in the same format
as prior years.
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In the upcoming data call, Treasury plans to obtain more detailed
information on the terrorism risk insurance issued by the captive
insurers. First, Treasury is now seeking information that will allow
FIO to determine whether the insurance coverage provided by the captive
insurer to a policyholder encompasses the reimbursement of such
policyholder's deductible that must be satisfied under a policy issued
by another insurer. In prior data calls, Treasury has only requested
separate information on the deductible reimbursement coverage for
workers' compensation insurance (where it forms a significant
percentage of all workers' compensation insurance issued by captive
insurers). For other lines of insurance, Treasury has previously
instructed captive insurers to combine the deductible reimbursement
insurance to policyholders with other insurance written by the captive
in the same line of insurance. The proposed changes request that the
information be broken out by each TRIP-eligible line of insurance,
which results in changes to both the Premium and Exposure Bases
worksheets, where information is collected on a line-by-line basis.
Second, in order to obtain a more complete view of the scope of the
captive's operations, FIO is proposing two additional changes. The
first proposed change will require captive insurers to provide the
total amount of all other non-TRIP eligible direct earned premium of
the captive insurer on the Premium worksheet. The second proposed
change, on the Exposure Bases worksheet, requests information on
whether coverage is being issued by the captive insurer that only
provides coverage for nuclear, biological, chemical, and radiological
(NBCR) exposures, in light of prior findings by FIO (and others) that
the ability to obtain NBCR coverage in the conventional market is
limited.\10\
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\10\ See Federal Insurance Office, Report on the Effectiveness
of the Terrorism Risk Insurance Program (June 2020), 48 (``Because
many insurers generally exclude NBCR risks under P&C policies
(excepting workers' compensation, as discussed below), the amount of
direct insurance coverage for such risks may be substantially
limited.''), https://home.treasury.gov/system/files/311/2020-TRIP-Effectiveness-Report.pdf; U.S. General Accountability Office,
Terrorism Insurance: Status of Coverage Availability for Attacks
Involving Nuclear, Biological, Chemical, or Radiological Weapons
(December 2008), 13 (``Commercial property/casualty insurers and
reinsurers generally seek to exclude coverage for NBCR risks or
place significant restrictions on such coverage.''), https://www.gao.gov/assets/gao-09-39.pdf.
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The second area of material changes relates to the Cyber worksheet,
which is completed by all participating insurers that write cyber
insurance. In 2016, Treasury issued guidance confirming that cyber
insurance written in a TRIP-eligible line of insurance is subject to
the Program.\11\ In 2018, Treasury began to collect cyber insurance
information in the TRIP data call for the first time.\12\ In 2021,
Treasury finalized a rule change codifying its prior guidance that
cyber insurance written in a TRIP-eligible line of insurance is subject
to the Program.\13\ The cyber insurance market continues to grow and
evolve, and cyber-related losses (particularly with regard to
ransomware) have increased significantly over the past few years.\14\
In view of recent market developments and the important role of cyber
insurance in the Program, Treasury would like to obtain more detailed
information relating to the availability and affordability of such
coverage in the market.
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\11\ 81 FR 95312 (Dec. 27, 2016).
\12\ 83 FR 14718, 14720 (April 5, 2018).
\13\ 86 FR 30537, 30538 (June 9, 2021) (amending 31 CFR
50.4(w)(1)).
\14\ See generally Federal Insurance Office, Annual Report on
the Insurance Industry (September 2021), 74-80, https://home.treasury.gov/system/files/311/FIO-2021-Annual-Report-Insurance-Industry.pdf.
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Interested parties should review the proposed Cyber worksheet
contained within each proposed reporting template, along with the
revised Instructions for that worksheet, for further details on the
proposed changes.
The following paragraphs summarize the changes to the overall
format of the worksheet:
(1) As Treasury recognized in its 2016 Cyber Guidance and in its
final rule in 2021, not all cyber insurance is written in TRIP-eligible
lines of insurance that would be subject to the Program. In order to
assess the amount of cyber insurance that is not subject to the
Program, and the potential implications for the Program, Treasury is
now requesting premium and limits information for cyber coverages
written in non-TRIP-eligible lines of insurance.\15\
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\15\ As in past data calls, Treasury is not requesting insurers
to provide information on premiums or exposures where a cyber loss
may be found to be covered on a non-affirmative, or ``silent''
basis.
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(2) For cyber insurance written in both TRIP and Non-TRIP eligible
lines, Treasury is now also requesting premium and policy count
information broken out by size of policyholder. This information is
separated into large, medium and small categories, as measured by the
number of employees of the policyholder. This new data will assist
Treasury in assessing the availability, affordability, and take up of
cyber insurance for businesses in different size categories.
(3) Cyber extortion coverage (which may or may not extend coverage
for ransomware payments) also can be an element of cyber insurance
coverage. Ransomware has emerged as a significant risk exposure for
United
[[Page 64602]]
States businesses and for cyber insurers providing coverage for those
exposures.\16\ In order to better understand the scope of insurance
coverage being provided for this risk and its potential implications
for the Program, Treasury is now requesting more specific information
on the cyber extortion coverages provided under cyber insurance
policies.
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\16\ See, e.g., U.S. Treasury, Financial Crimes Enforcement
Network, Financial Trend Analysis, Ransomware Trends in Bank Secrecy
Act Data Between January 2021 and June 2021, https://www.fincen.gov/sites/default/files/2021-10/Financial%20Trend%20Analysis_Ransomware%20508%20FINAL.pdf.
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(4) Given the significant increase in ransomware activity and
reported substantial claims payments by insurers providing cyber
insurance, Treasury is also requesting loss information regarding these
ransomware exposures.
For the 2022 data call (requesting insurer data for calendar year
2021), an insurer will qualify as a small insurer if it had both 2020
policyholder surplus and 2020 direct earned premium in the TRIP-
eligible lines of insurance of less than $1 billion.\17\ Small insurers
that had TRIP-eligible direct earned premium of less than $10 million
in 2021 will be exempt from the 2022 consolidated TRIP data call.\18\
Neither captive insurers nor alien surplus lines insurers are eligible
for this reporting exemption. The only changes to the small insurer
template are in connection with the global changes for cyber insurance
identified above.
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\17\ Small insurers are defined in 31 CFR 50.4(z) as insurers
(or an affiliated group of insurers) with policyholder surplus for
the immediately preceding year less than five times the Program
Trigger for the current year, and TRIP-eligible lines direct earned
premium for the previous year that is also five times less than the
Program Trigger. Accordingly, an insurer qualifies as a small
insurer if its 2020 policyholder surplus and 2020 direct earned
premium are less than five times the 2021 Program Trigger of $200
million.
\18\ To the extent an insurer with less than this level of TRIP-
eligible lines direct earned premium is part of a larger group that
is required to report, the insurer must report as part of the group
as a whole, even if it is under the $10,000,000 direct earned
premium threshold on an individual basis. Individual company
information for such entities must also be reported to state
insurance regulators.
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The non-small insurer template should be completed by insurance
groups (or individual insurers not affiliated with a group) that had
either a 2020 policyholder surplus or 2020 direct earned premium in the
TRIP-eligible lines of insurance equal to or greater than $1 billion
and are not otherwise subject to reporting as captive insurers or alien
surplus lines insurers. The reporting template for non-small insurers
does not contain changes, other than the global changes relating to
cyber insurance described above.
Captive insurers are defined in 31 CFR 50.4(g) as insurers licensed
under the captive insurance laws or regulations of any state. As in
prior years, captive insurers that write policies in TRIP-eligible
lines of insurance are required to report unless they do not provide
their insureds with any terrorism risk insurance that is subject to the
Program. As noted above, the captive insurer reporting template
contains changes on the Premium and Exposure Bases worksheets,\19\ as
well as the global changes relating to cyber insurance described above.
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\19\ In addition, on the Affiliations worksheet for captive
insurers, there is now an additional drop-down option for Type of
Insurer for affiliated companies, adding Alien Surplus Lines Insurer
to the listing, based upon an inquiry received during the 2021 data
call.
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Alien surplus lines insurers are defined in 31 CFR 50.4(o)(1)(i)(B)
as insurers not licensed or admitted to engage in the business of
providing primary or excess insurance in any state, but that are
eligible surplus line insurers listed on the NAIC Quarterly Listing of
Alien Insurers. Alien surplus lines insurers that are part of a larger
group classified as a non-small insurer or as a small insurer should
report as part of the group, using the appropriate template. Therefore,
the alien surplus lines insurer template should only be used by an
alien surplus lines insurer that is not part of a group that is subject
to reporting on a different template. The reporting template for alien
surplus lines insurers does not contain changes, other than the global
changes relating to cyber insurance described above.
As in past consolidated data calls, state insurance regulators will
provide their own guidance regarding the submission of reporting
templates to the New York Portal, as well as in connection with any
additional data that may be required for the state data call.
III. Submission of Data
Following registration with the data aggregator, all insurers will
be provided with the appropriate reporting templates for completion.
Reporting insurers that wish to report in .csv format can obtain
information from the data aggregator on how to do so. Insurers will be
required to submit the completed reporting templates through a secure
web portal provided by the data aggregator. Submission of reports to
the New York Portal does not satisfy the obligation to report to
Treasury in the TRIP data call. All data must be provided no later than
May 15, 2022, which will also be the reporting deadline for state
insurance regulators. Treasury intends to provide training and
additional resources throughout the data collection period to
facilitate the proper completion of reporting templates.
Reporting under the 2022 data call will be mandatory for all
commercial property and casualty insurers writing insurance in lines
subject to TRIA, unless the insurer falls within the exceptions for
certain small insurers and captive insurers described above.
IV. Request for Comments
To ensure efficient and accurate completion of the forms, Treasury
is requesting public feedback on the content of the 2022 data call
reporting templates outlined in this Request for Comments and on
associated matters. In particular, Treasury requests comments on the
following issues:
(1) Please comment upon the proposed material changes to the
existing data collection forms as respects captive insurers and cyber
insurance.
(2) Are there other publicly available information sources that
bear upon the identified issues concerning captive insurers and
insurers writing cyber coverage that Treasury should consider in
connection with the information identified in this Request for
Comments?
(3) Is there any additional information that Treasury should
collect given the proposed changes regarding captive insurers, in light
of the matters identified in this Request for Comments?
(4) Is there any additional information that Treasury should
collect given the proposed changes regarding insurers writing cyber
coverage, in light of the matters identified in this Request for
Comments?
The proposed forms are available for review at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program/annual-data-collection.
V. Procedural Requirements
Paperwork Reduction Act. The collection of information contained in
this Request for Comments will be submitted to the Office of Management
and Budget (OMB) for review as a revision to OMB Control Number 1505-
0257 under the requirements of the Paperwork Reduction Act, 44 U.S.C.
3507(d). Comments should be sent to Treasury in the form discussed in
the ADDRESSES section of this Request for Comments. Comments on the
collection of information should be received by January 18, 2022.
[[Page 64603]]
Comments are being sought with respect to the collection of
information in the proposed Terrorism Risk Insurance Program 2022 data
call. Treasury specifically invites comments on: (a) Whether the
proposed collection is responsive to the statutory requirement; (b) the
accuracy of the estimate of the burden of the collections of
information (see below); (c) ways to enhance the quality, utility, and
clarity of the information collection; (d) ways to use automated
collection techniques or other forms of information technology; and (e)
estimates of capital or start-up costs and costs of operation,
maintenance, and purchase of services to maintain the information.
Treasury previously analyzed the potential burdens associated with
the 2021 data call. See 85 FR 41676, 41677-78 (July 10, 2020). The
information sought by Treasury comprises data elements that insurers
currently collect or generate, although not necessarily grouped
together the way in which insurers currently collect and evaluate the
data. Based upon insurer submissions in the 2021 data call, Treasury
estimates that for purposes of the 2022 data call, approximately 100
Program participants will be required to submit the ``Insurer (Non-
Small) Groups or Companies'' data collection form, 225 Program
participants will be required to submit the ``Small Insurer'' form, 575
Program participants will be required to submit the ``Captive Insurer''
form, and 100 Program participants will be required to submit the
``Alien Surplus Lines Insurers'' form.
Each set of reporting templates is expected to incur a different
level of burden. At the time of the 2020 estimate, the average burden
estimate for Non-Small Insurers was 82 hours; for Small Insurers, 28
hours; for Captive Insurers, 51 hours, and for Alien Surplus Lines
Insurers, 51 hours.\20\ When Treasury added a Cyber worksheet to the
reporting templates in 2018, it did not estimate any additional
material burden at that time associated with incremental addition of
requiring some limited cyber insurance reporting.\21\
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\20\ 85 FR 41676, 41677-78 (July 10, 2020).
\21\ 82 FR 56328, 56331 (Nov. 28, 2017).
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The changes to the proposed data reporting elements in 2022 are not
anticipated to have a significant impact on Treasury's prior burden
estimates with respect to the additional requested information specific
to captive insurers, as the additional information is largely the same
information that has been previously collected, with the additional
requirement that such information be divided between deductible
reimbursement policies versus other policies in the same line of
insurance. Given the relatively small number of policies issued by
captive insurers, the additional effort to make this separation
(assuming the captive insurer issues policies in both categories)
should not be significant. Treasury does anticipate that the additional
information collection concerning cyber insurance (which is sought from
each category of participating insurer) will have an impact upon the
existing burden estimates.
Although the amount of information requested concerning cyber
insurance is more than has been requested in the past, it is in
generally in the same format, with the exception that some information
is now requested to be provided by size of policyholder. FIO
anticipates that this will require some further manipulation of the
data by participating insurers than in prior years. In addition, the
templates now request claims-related information. Accordingly, for
those insurers required to respond to the Cyber (Nationwide) worksheet,
Treasury anticipates an additional 10 hours of burden, based upon its
own evaluation and engagement with its data aggregator. That estimate,
however, should be reduced by the percentage of insurers in each
respective category that complete the Cyber worksheet. Based upon the
results of the 2021 data call, 80 percent of Non-Small Insurers, 33
percent of Small Insurers, 10 percent of Captive Insurers, and 60
percent of Alien Surplus Lines Insurers provided information in
connection with this worksheet. Accordingly, Treasury estimates the
incremental additional burden for each group as 8 hours for Non-Small
Insurers, for 90 hours total; 4 hours for Small Insurers, or 32 hours
total; 1 hour for Captive Insurers, or 52 hours total; and 6 hours for
Alien Surplus Lines Insurers, or 57 hours total.
Assuming this breakdown, and when applied to the number of
reporting insurers anticipated in light of the experience of the 2021
data call, the estimated annual burden would be 51,800 hours ((100
insurers x 90 hours) + (225 insurers x 32 hours) + (575 insurers x 52
hours) + (100 insurers x 57 hours)). At a blended, fully loaded hourly
rate of $52.25,\22\ the anticipated labor cost would be $2,706,550
across the industry as a whole, or $4,703 per Non-Small Insurer, $1,672
per small insurer, $2,717 per Captive Insurer, and $2,978 per Alien
Surplus Lines Insurer.
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\22\ Based on data from the Bureau of Labor Statistics, for
Insurance Carriers and Related Activities, https://www.bls.gov/iag/tgs/iag524.htm. The average wage rate for all insurance employees
was $39.02 in July 2021, and the total benefit compensation in the
2nd Quarter of 2021 was 33.9%, which is a benefit multiplier of
1.339. Therefore, a fully-loaded wage rate for insurance employees
is $52.25, or $39.02 x 1.339.
Dated: November 15, 2021.
Steven E. Seitz,
Director, Federal Insurance Office.
[FR Doc. 2021-25181 Filed 11-17-21; 8:45 am]
BILLING CODE 4810-AK-P