Tuesday, August 3, 2010

Terrorism Risk Insurance Program NPRM

Today the Treasury Department posted a notice of proposed rule making (NPRM) in the Federal Register for additional rules for the Terrorism Risk Insurance Program (TRIP). The proposed rule would modify 31 CFR Part 50 by establishing “procedures by which, after the Secretary has determined that claims for the Federal share of insured losses arising from a particular Program Year shall be considered final, a final netting of payments to or from insurers will be accomplished. (75 FR 45563)” The proposed rule provides a certain amount of flexibility to assure an orderly close out of claims in response to a wide variety of potential terrorist attacks. The basic program would, however, include (75 FR 45564):

“(1) Treasury notifies insurers of the date by which all insured losses must be finally reported to Treasury; “(2) [I}nsurers submit their certifications of loss by that date; “(3) Treasury reviews the submissions and requires insurers to submit information supporting a commutation of claims for the Federal share of insured losses irrespective of claim status; “(4) Treasury reviews insurer submissions and conducts claims audits as needed; and, “(5) Treasury makes a final payment to each insurer that discharges Treasury's payment obligation to the insurer.”

The determination of a Final Netting Date would be based on the following factors and considerations (75 FR 45564-5):

“(i) Amounts of case reserves previously reported by insurers to Treasury for open, underlying insured losses; “(ii) [T]he rate at which claims for the Federal share of compensation for insured losses are being made by insurers to Treasury; “(iii) [T]he rate at which new, underlying insured losses are being added by insurers to their bordereaux and reported; “(iv) [T]he predominant lines of business for which underlying insured losses are being reported; “(v) [T]ort and contract statutes of limitations relevant to insured losses; “(vi) common business practices; “(vii) [I]ssues that are delaying final resolution of insured losses; “(viii) [T]he applicability of the liability limitations and procedures under the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 mayaffect final resolution of insured losses; :(ix) [I]ssues related to the cap on annual liability for insurer losses; “(x) Treasury's claims administration costs; and “(xi) [S]uch other factors as the Secretary considers important.”
Public comments on the NPRM must be filed by October 4th, 2010. Comments can be filed on the www.Regulations.gov web site (Docket No.: TREAS-FRDOC-0001-0095) All submissions must be marked with: ‘TRIA Final Netting Proposed Rule Comments’. Alternatively, they can be mailed to:
Terrorism Risk Insurance Program Public Comment Record, Suite 2100 Department of the Treasury 1425 New York Avenue, NW. Washington, DC 20220

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