PART 50—TERRORISM RISK INSURANCE PROGRAM 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, Pub. L. 114-1, 129 Stat. 3, and Pub. L. 116-94, 133 Stat. 2534 (15 U.S.C. 6701 note); Pub. L. 114-74, 129 Stat. 601, Title VII (28 U.S.C. 2461 note). Source: 81 FR 93765, Dec. 21, 2016, unless otherwise noted. Subpart A—General Provisions § 50.1 Authority, purpose, and scope. (a) Authority. (b) Purpose. (c) Scope. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.2 Responsible office. The office responsible for the administration of the Terrorism Risk Insurance Act in the Department of the Treasury is the Terrorism Risk Insurance Program Office within the Federal Insurance Office. The Treasury Assistant Secretary for Financial Institutions prescribes the regulations under the Act. § 50.3 Mandatory participation in program. Any entity that meets the definition of an insurer under the Act is required to participate in the Program. § 50.4 Definitions. For purposes of this part: (a) Act (b) Act of terrorism In general. act of terrorism (i) To be an act of terrorism; (ii) To be a violent act or an act that is dangerous to human life, property, or infrastructure; (iii) To have resulted in damage within the United States, or outside of the United States in the case of: (A) An air carrier (as defined in 49 U.S.C. 40102) or a United States flag vessel (or a vessel based principally in the United States, on which United States income tax is paid and whose insurance coverage is subject to regulation in the United States); or (B) The premises of a United States mission; and (iv) To have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. (2) Limitations. (i) The act is committed as part of the course of a war declared by the Congress (except with respect to any coverage for workers' compensation); or (ii) Property and casualty insurance losses resulting from the act, in the aggregate, do not exceed $5,000,000. For these purposes, property and casualty insurance losses include any amounts subject to payment under a property and casualty insurance policy, even if the policyholder declined to obtain terrorism risk insurance under the policy or is otherwise ultimately responsible for the payment. (3) Judicial review precluded. (c)(1) Affiliate (2)(i) For purposes of paragraph (c)(1) of this section, an insurer has control over another insurer for purposes of the Program if: (A) The insurer directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the other insurer; (B) The insurer controls in any manner the election of a majority of the directors or trustees of the other insurer; or (C) The Secretary determines, after notice and opportunity for hearing, that an insurer directly or indirectly exercises a controlling influence over the management or policies of the other insurer, even if there is no control as defined in paragraph (c)(2)(i)(A) or (c)(2)(i)(B) of this section. (ii) An entity, including any affiliate thereof, does not have control or exercise controlling influence over a reciprocal insurer under this section if, as of January 12, 2015, the entity, including any affiliate thereof, was acting as an attorney-in-fact for the reciprocal insurer, provided that the entity does not, for reasons other than activities it may perform under the attorney-in-fact relationship, have control over the reciprocal insurer as otherwise defined under this section. (3) An insurer described in paragraph (c)(2)(i)(A) or (B) of this section is conclusively deemed to have control. (4) For purposes of a determination of controlling influence under paragraph (c)(2)(i)(C) of this section, if an insurer is not described in paragraph (c)(2)(i)(A) or (B) of this section, the following rebuttable presumptions will apply: (i) If an insurer controls another insurer under the laws of a state, and at least one of the factors listed in paragraph (c)(4)(iv) of this section applies, there is a rebuttable presumption that the insurer that has control under state law exercises a controlling influence over the management or policies of the other insurer for purposes of paragraph (c)(2)(i)(C) of this section. (ii) If an insurer provides 25 percent or more of another insurer's capital (in the case of a stock insurer), policyholder surplus (in the case of a mutual insurer), or corporate capital (in the case of other entities that qualify as insurers), and at least one of the factors listed in paragraph (c)(4)(iv) of this section applies, there is a rebuttable presumption that the insurer providing such capital, policyholder surplus, or corporate capital exercises a controlling influence over the management or policies of the receiving insurer for purposes of paragraph (c)(2)(i)(C) of this section. (iii) If an insurer, at any time during a calendar year, supplies 25 percent or more of the underwriting capacity for that year to an insurer that is a syndicate consisting of one or more incorporated or individual unincorporated underwriters, and at least one of the factors in paragraph (c)(4)(iv) of this section applies, there is a rebuttable presumption that the insurer exercises a controlling influence over the syndicate for purposes of paragraph (c)(2)(i)(C) of this section. (iv) If paragraphs (c)(4)(i) through (iii) of this section are not applicable, but two or more of the following factors apply to an insurer, with respect to another insurer, there is a rebuttable presumption that the insurer exercises a controlling influence over the management or policies of the other insurer for purposes of paragraph (c)(2)(i)(C) of this section: (A) The insurer is one of the two largest shareholders of any class of voting stock; (B) The insurer holds more than 35 percent of the combined debt securities and equity of the other insurer; (C) The insurer is party to an agreement pursuant to which the insurer possesses a material economic stake in the other insurer resulting from a profit-sharing arrangement, use of common names, facilities or personnel, or the provision of essential services to the other insurer; (D) The insurer is party to an agreement that enables the insurer to influence a material aspect of the management or policies of the other insurer; (E) The insurer would have the ability, other than through the holding of revocable proxies, to direct the votes of more than 25 percent of the other insurer's voting stock in the future upon the occurrence of an event; (F) The insurer has the power to direct the disposition of more than 25 percent of a class of voting stock of the other insurer in a manner other than a widely dispersed or public offering; (G) The insurer and/or the insurer's representative or nominee constitute more than one member of the other insurer's board of directors; or (H) The insurer or its nominee or an officer of the insurer serves as the chairman of the board, chairman of the executive committee, chief executive officer, chief operating officer, chief financial officer or in any position with similar policymaking authority in the other insurer. (5) An insurer that is not described in paragraph (c)(2)(i) or (ii) of this section may request a hearing in which the insurer may rebut a presumption of controlling influence under paragraph (c)(4)(i) through (iv) of this section or otherwise request a determination of controlling influence by presenting and supporting its position through written submissions to Treasury, and in Treasury's discretion, through informal oral presentations, in accordance with the procedure in § 50.7. (6) An insurer's affiliates for a calendar year, for purposes of subpart H of this part, shall be determined in accordance with the timing requirements laid out in § 50.75 of this part. (d) Aggregate Federal share of compensation (e) Assessment period (f) Attorney-in-fact (g) Captive insurer (h) Direct earned premium (1) State-licensed or admitted insurers. (i) Premium information as reported to state regulators through the NAIC should be included in the calculation of direct earned premiums for purposes of the Program only to the extent it reflects premiums for property and casualty insurance issued by the insurer against losses occurring at the locations described in section 102(5)(A) and (B) of the Act. (ii) Premiums for personal property and casualty lines of insurance (insurance primarily designed to cover personal, family or household risk exposures, with the exception of insurance written to insure 1 to 4 family rental dwellings owned for the business purpose of generating income for the property owner), or premiums for any other insurance coverage that does not meet the definition of property and casualty insurance, should be excluded in the calculation of direct earned premiums for purposes of the Program. (iii) Personal property and casualty lines of insurance coverage that includes incidental coverage for commercial purposes are primarily personal coverage, and therefore premiums may be fully excluded by an insurer from the calculation of direct earned premium. For purposes of this section, commercial coverage is incidental if less than 25 percent of the total direct earned premium is attributable to commercial coverage. Property and casualty insurance against losses occurring at locations other than the locations described in section 102(5)(A) and (B) of the Act, or other insurance coverage that does not meet the definition of property and casualty insurance, but that includes incidental coverage for commercial risk exposures at such locations, is primarily not commercial, and therefore premiums for such insurance may also be fully excluded by an insurer from the calculation of direct earned premium. For purposes of this section, property and casualty insurance for losses occurring at the locations described in section 102(5)(A) and (B) of the Act is incidental if less than 25 percent of the total direct earned premium for the insurance policy is attributable to coverage at such locations. Also for purposes of this section, coverage for commercial risk exposures is incidental if it is combined with coverages that otherwise do not meet the definition of property and casualty insurance and less than 25 percent of the total direct earned premium for the insurance policy is attributable to the coverage for commercial risk exposures. (iv) If an insurance policy covers both commercial and personal property and casualty exposures, insurers may allocate the premiums in accordance with the proportion of risk between commercial and personal components in order to ascertain direct earned premium. If a policy includes insurance coverage that meets the definition of property and casualty insurance for losses occurring at the locations described in section 102(5)(A) and (B) of the Act, but also includes other coverage, insurers may allocate the premiums in accordance with the proportion of risk attributable to the components in order to ascertain direct earned premium. (2) Insurers that do not report to NAIC. (i) Direct earned premium may be ascertained by adjusting data maintained by such insurer or reported by such insurer to its state regulator to reflect a breakdown of premiums for commercial and personal property and casualty exposure risk as described in paragraph (h)(1) of this section and, if necessary, re-stated to reflect the accrual method of determining direct earned premium versus direct premium. (ii) Such an insurer should consider other types of payments that compensate the insurer for risk of loss (contributions, assessments, etc.) as part of its direct earned premium. (3) Certain eligible surplus line carrier insurers. (4) Federally approved insurers. i.e., (i) Direct written premium (j) Discretionary recoupment amount (k) Federal Insurance Office (l) Federal terrorism policy surcharge (m) Insurance marketplace aggregate retention amount (1) For calendar years beginning with 2015 through 2019, 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: (i) For calendar year 2015: $29,500,000,000; (ii) For calendar year 2016: $31,500,000,000; (iii) For calendar year 2017: $33,500,000,000; (iv) For calendar year 2018: $35,500,000,000; and (v) For calendar year 2019: $37,500,000,000. (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 (ii) Multiplying the resulting three-year average figure by 20%. (3) For calendar year 2020 and each subsequent calendar year, Treasury shall publish in the Federal Register (n) Insured loss. (i) Occurs within the United States; (ii) Occurs to an air carrier (as defined in 49 U.S.C. 40102), or to a United States flag vessel (or a vessel based principally in the United States, on which United States income tax is paid and whose insurance coverage is subject to regulation in the United States), regardless of where the loss occurs; however, to the extent a loss occurs to such an air carrier or vessel outside the United States, the insured loss does not include losses covered by third party insurance contracts that are separate from the insurance coverage provided to the air carrier or vessel; or (iii) Occurs at the premises of any United States mission. (2) The term insured loss includes reasonable loss adjustment expenses, incurred by an insurer in connection with insured losses, that are allocated and identified by claim file in insurer records, including expenses incurred in the investigation, adjustment, and defense of claims, but excluding staff salaries, overhead, and other insurer expenses that would have been incurred notwithstanding the insured loss. (3) The term insured loss does not include: (i) Punitive or exemplary damages awarded or paid in connection with the Federal cause of action specified in section 107(a)(1) of the Act. The term “punitive or exemplary damages” means damages that are not compensatory but are an award of money made to a claimant solely to punish or deter; or (ii) Extra-contractual damages awarded against, or paid by, an insurer; or (iii) Payments by an insurer in excess of policy limits; or (iv) Amounts paid by a policyholder as required under the terms and conditions of property and casualty insurance issued by an insurer. (o) Insurer (1)(i) The entity must fall within at least one of the following categories: (A) It is licensed or admitted to engage in the business of providing primary or excess insurance in any state (including, but not limited to, state licensed captive insurance companies, state licensed or admitted risk retention groups, and state licensed or admitted farm and county mutuals) and, if a joint underwriting association, pooling arrangement, or other similar entity, then the entity must: ( 1 ( 2 ( 3 (B) It is not licensed or admitted to engage in the business of providing primary or excess insurance in any state, but is an eligible surplus line carrier listed on the NAIC Quarterly Listing of Alien Insurers; (C) It is approved or accepted for the purpose of offering property and casualty insurance by a Federal agency in connection with maritime, energy, or aviation activity, but only to the extent of such Federal approval of property and casualty insurance coverage offered by the insurer in connection with maritime, energy, or aviation activity; (D) It is a state residual market insurance entity or state workers' compensation fund; or (E) As determined by the Secretary, it falls within any of the classes or types of captive insurers or other self-insurance arrangements by municipalities and other entities. (ii) If an entity falls within more than one category described in paragraph (o)(1)(i) of this section, the entity is considered to fall within the first category within which it falls for purposes of the program. (2) The entity must receive direct earned premium, except in the case of: (i) State residual market insurance entities and state workers' compensation funds, to the extent provided in subpart D of this part; and (ii) Other classes or types of captive insurers and other self-insurance arrangements by municipalities and other entities to the extent provided for in subpart E of this part. (3) The entity must meet any other criteria as prescribed by Treasury. (p) Insurer deductible (1) For an insurer that has had a full year of operations during the calendar year immediately preceding the applicable calendar year, the value of an insurer's direct earned premiums during the immediately preceding calendar year, multiplied by 20 percent; and (2) For an insurer that has not had a full year of operations during the immediately preceding calendar year, the insurer deductible will be based on data for direct earned premiums for the applicable calendar year multiplied by 20 percent. If the insurer does not have a full year of operations during the applicable calendar year, the direct earned premiums for the applicable calendar year will be annualized to determine the insurer deductible. (q) Mandatory recoupment amount (r) NAIC (s) Person (t) Professional liability insurance (u) Program (v) Program Trigger Event (1) $100,000,000 with respect to calendar year 2015 insured losses; (2) $120,000,000 with respect to calendar year 2016 insured losses; (3) $140,000,000 with respect to calendar year 2017 insured losses; (4) $160,000,000 with respect to calendar year 2018 insured losses; (5) $180,000,000 with respect to calendar year 2019 insured losses; or (6) $200,000,000 with respect to calendar year 2020 insured losses and with respect to any calendar year thereafter. (w) Property and casualty insurance (1) Means commercial lines within only the following lines of insurance from the NAIC's Exhibit of Premiums and Losses (commonly known as Statutory Page 14): Line 1—Fire; Line 2.1—Allied Lines; Line 5.1—Commercial Multiple Peril (non-liability portion); Line 5.2—Commercial Multiple Peril (liability portion); Line 8—Ocean Marine; Line 9—Inland Marine; Line 16—Workers' Compensation; Line 17—Other Liability; Line 18—Products Liability; Line 22—Aircraft (all perils); and Line 27—Boiler and Machinery; a stand-alone cyber liability policy falling within Line 17—Other Liability, is property and casualty insurance, so long as it is not otherwise identified for state reporting purposes as a policy that is not property and casualty insurance, such as professional liability insurance. (2) Property and casualty insurance does not include: (i) Federal crop insurance issued or reinsured under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq. (ii) Private mortgage insurance (as defined in section 2 of the Homeowners Protection Act of 1998) (12 U.S.C. 4901) or title insurance; (iii) Financial guaranty insurance issued by monoline financial guaranty insurance corporations; (iv) Insurance for medical malpractice; (v) Health or life insurance, including group life insurance; (vi) Flood insurance provided under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq. (vii) Reinsurance or retrocessional reinsurance; (viii) Commercial automobile insurance, including insurance reported under Lines 19.3 (Commercial Auto No-Fault (personal injury protection)), 19.4 (Other Commercial Auto Liability) and 21.2 (Commercial Auto Physical Damage) of the NAIC's Exhibit of Premiums and Losses (commonly known as Statutory Page 14); (ix) Burglary and theft insurance, including insurance reported under Line 26 (Burglary and Theft) of the NAIC's Exhibit of Premiums and Losses (commonly known as Statutory Page 14); (x) Surety insurance, including insurance reported under Line 24 (Surety) of the NAIC's Exhibit of Premiums and Losses (commonly known as Statutory Page 14); (xi) Professional liability insurance as defined in paragraph (t) of this section; or (xii) Farm owners multiple peril insurance, including insurance reported under Line 3 (Farmowners Multiple Peril) of the NAIC's Exhibit of Premiums and Losses (commonly known as Statutory Page 14). (x) Reciprocal insurer (y) Secretary (z) Small insurer (aa) State (bb) Surcharge (cc) Surcharge effective date (dd) Treasury (ee) Uncompensated insured losses (1) Are within the insurer deductibles of insurers, or (2) Are within the portions of losses in excess of insurer deductibles that are not compensated through payments made as a result of claims for the Federal share of compensation. (ff) United States [81 FR 93765, Dec. 21, 2016, as amended at 84 FR 62452, Nov. 15, 2019; 86 FR 30540, June 9, 2021] § 50.5 Rule of construction for dates. Unless otherwise expressly provided in the regulation, any date in these regulations is intended to be applied so that the day begins at 12:01 a.m. and ends at midnight on that date. § 50.6 Special rules for Interim Guidance safe harbors. (a) An insurer will be deemed to be in compliance with the requirements of the Act to the extent the insurer reasonably relied on Interim Guidance prior to the effective date of applicable regulations. (b) For purposes of this section, any Interim Guidance will be posted by Treasury at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.7 Procedure for requesting determinations of controlling influence. (a) An insurer or insurers not having control over another insurer under § 50.4(c)(2)(i) or (ii) may make a written submission to Treasury to rebut a presumption of controlling influence under § 50.4(c)(4)(i) through (iv) or otherwise to request a determination of controlling influence. Such submissions shall be made to the Terrorism Risk Insurance Program Office, Department of the Treasury, Room 1410, 1500 Pennsylvania Ave. NW., Washington, DC 20220. The submission should be entitled, “Controlling Influence Submission,” and should provide the full name and address of the submitting insurer(s) and the name, title, address and telephone number of the designated contact person(s) for such insurer(s). (b) Treasury will review submissions and determine whether Treasury needs additional written or orally presented information. In its discretion, Treasury may schedule a date, time, and place for an oral presentation by the insurer(s). (c) An insurer or insurers must provide all relevant facts and circumstances concerning the relationship(s) between or among the affected insurers and the control factors in § 50.4(c)(4)(i) through (iv); and must explain in detail any basis for why the insurer believes that no controlling influence exists (if a presumption is being rebutted) in light of the particular facts and circumstances, as well as the Act's language, structure and purpose. Any confidential business or trade secret information submitted to Treasury should be clearly marked. Treasury will handle any subsequent request for information designated by an insurer as confidential business or trade secret information in accordance with Treasury's Freedom of Information Act regulations at 31 CFR part 1. (d) Treasury will review and consider the insurer submission and other relevant facts and circumstances. Unless otherwise extended by Treasury, within 60 days after receipt of a complete submission, including any additional information requested by Treasury, and including any oral presentation, Treasury will issue a final determination of whether one insurer has a controlling influence over another insurer for purposes of the Program. The determination shall set forth Treasury's basis for its determination. (Approved by the Office of Management & Budget under control number 1505-0190) § 50.8 Procedure for requesting general interpretations of statute. Persons actually or potentially affected by the Act or regulations in this Part may request an interpretation of the Act or regulations by writing to the Terrorism Risk Insurance Program Office, Room 1410, Department of the Treasury, 1500 Pennsylvania Ave. NW., Washington, DC 20220, giving a detailed explanation of the facts and circumstances and the reason why an interpretation is needed. A requester should segregate and mark any confidential business or trade secret information clearly. Treasury in its discretion will provide written responses to requests for interpretation. Treasury reserves the right to decline to provide a response in any case. Except in the case of any confidential business or trade secret information, Treasury will make written requests for interpretations and responses publicly available at the Treasury Department Library, on the Treasury Web site, or through other means as soon as practicable after the response has been provided. Treasury will handle any subsequent request for information that had been designated by a requester as confidential business or trade secret information in accordance with Treasury's Freedom of Information Act regulations at 31 CFR part 1. Subpart B—Disclosures as Conditions for Federal Payment § 50.10 General disclosure requirements. (a) Content of disclosure. (1) The premium charged for insured losses covered by the Program; and (2) The Federal share of compensation for insured losses under the Program. (b) Form and timing of disclosure. § 50.11 Definition. For purposes of this Subpart, unless the context indicates otherwise, the term “disclosure” or “disclosures” refers to the disclosure described in section 103(b)(2) of the Act and § 50.10. The term “cap disclosure” refers to the disclosure required by section 103(b)(3) of the Act and § 50.15. § 50.12 Clear and conspicuous disclosure. (a) General. (b) Description of premium. (c) Method of disclosure. (d) Use of producer. (e) Demonstration of compliance. (f) Certification of compliance. § 50.13 Offer and renewal. An insurer is deemed to be in compliance with the requirement of providing disclosure “at the time of offer and of renewal of the policy” under § 50.10(b) if the insurer makes the disclosure no later than the time the insurer first formally offers to provide insurance coverage or renew a policy for a current policyholder. § 50.14 Separate line item. An insurer is deemed to be in compliance with the requirement of providing disclosure on a “separate line item in the policy” under § 50.10(b) if the insurer makes the disclosure: (a) On the declarations page of the policy; (b) Elsewhere within the policy itself; or (c) In any rider or endorsement, or other document that is made a part of the policy. § 50.15 Cap disclosure. (a) General. (b) Other requirements. (c) Offer, purchase, and renewal. (1) Makes the disclosure no later than the time the insurer first formally offers to provide insurance coverage or renew a policy for a current policyholder; and (2) If terrorism risk coverage is purchased, the insurer makes clear and conspicuous reference back to that disclosure, as well as the final terms of terrorism insurance coverage, at the time the transaction is completed. (d) Other applicable rules. § 50.16 Use of model forms. (a) General. (b) Not exclusive means of compliance. (c) Definitions. https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.17 General disclosure requirements for State residual market insurance entities and State workers' compensation funds. (a) Residual market mechanism disclosure. (b) Other requirements. Subpart C—Mandatory Availability § 50.20 General mandatory availability requirements. (a) General requirements. (1) Make available, in all of its property and casualty insurance policies, coverage for insured losses; and (2) Make available property and casualty insurance coverage for insured losses that does not differ materially from the terms, amounts, and other coverage limitations applicable to losses arising from events other than acts of terrorism. (b) Compliance through 2027. (c) Beyond 2027. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.21 Make available. (a) General. (b) Offer consistent with definition of act of terrorism. (c) Changes negotiated subsequent to initial offer. (d) Demonstrations of compliance. § 50.22 No material difference from other coverage. (a) Terms, amounts, and other coverage limitations. (b) Limitations on types of risk. § 50.23 Applicability of State law requirements. (a) General. (b) Examples. (2) If an insurer subject to state regulation first makes available coverage in accordance with § 50.20 and the state permits certain exclusions or allows for other limitations, or an insurance policy is not governed by state law requirements, then the insurer may subsequently offer limited coverage or coverage with exclusions. Subpart D—State Residual Market Insurance Entities; State Workers' Compensation Funds § 50.30 General participation requirements. (a) Insurers. (b) Mandatory participation. (c) Identification. https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.31 Entities that do not share profits and losses with private sector insurers. (a) Treatment. (b) Premium calculation. § 50.32 Entities that share profits and losses with private sector insurers. (a) Treatment. (b) Premium and loss calculation. § 50.33 Allocation of premium income associated with entities that do share profits and losses with private sector insurers. (a) Servicing carriers. (b) Participant insurers. Subpart E [Reserved] Subpart F—Data Collection § 50.50 General. Treasury may request from insurers such data and information as may be reasonably required in support of Treasury's administration of the Program. § 50.51 Annual data reporting. (a) General. (b) Scope. (c) Method of reporting. (2) The data and information required to be provided under this subsection may be modified annually by Treasury. Any modification shall be made during the prior calendar year, and Treasury shall provide insurers at least 90 days before requiring collection of any newly specified data or information. (d) Supplemental requests. (e) Small insurer exception. § 50.52 Small insurer data. (a) General. (b) Scope. (1) Changes to the market share, premium volume, and policyholder surplus of small insurers relative to large insurers; (2) How the property and casualty insurance market for terrorism risk differs between small and large insurers, and whether such a difference exists within other perils; (3) The impact on small insurers of the Program's mandatory availability requirement under section 103(c) of the Act; (4) The effect on small insurers of increasing the trigger amount for the Program under section 103(e)(1)(B) of the Act; (5) The availability and cost of private reinsurance for small insurers; and (6) The impact that state workers compensation laws have on small insurers and workers compensation carriers in the terrorism risk insurance marketplace. § 50.53 Collection of claims data. (a) General. (b) Contents of periodic reporting. (1) A listing of each claim by name of insured, catastrophe code, line of business, and in the case of an affiliated group of insurers, the particular insurer or insurers within the group associated with each claim; (2) Amounts paid, both loss and loss adjustment expenses, in connection with the claim as of the effective date of the report; and (3) Amounts reserved, both loss and loss adjustment expenses, in connection with the claim as of the effective date of the report. (c) Timing of reporting. (d) Interrelationship with other reporting requirements. (e) Other sources of information. § 50.54 Handling of data. (a) General. (1) Be handled and stored by Treasury in an appropriately secure manner; (2) Be considered, where appropriate, to be trade secrets or commercial or financial information obtained from a person and privileged or confidential; and (3) Not be publicly released in any unaggregated form in which a consumer, policyholder, or insurer is identifiable. (b) Use of insurance statistical aggregator. (c) Confidentiality. (2) Any requirement under Federal or state law to the extent otherwise applicable, or any requirement pursuant to a written agreement in effect between the original source of any non-publicly available data or information and the source of such data or information to the Secretary, regarding privacy or confidentiality of any data or information in the possession of the source to the Secretary, shall continue to apply to such data or information after the data or information has been provided pursuant to this subpart. (3) Any data or information obtained by the Secretary under subparts F or G of this part may be made available to state insurance regulatory authorities, individually or collectively through an information-sharing agreement that: (i) Shall comply with applicable Federal law; and (ii) Shall not constitute a waiver of, or otherwise affect, any privilege or immunity under Federal or state law (including any privilege referred to in paragraph (b)(1) of this section and the rules of any Federal or State court) to which the data or information is otherwise subject. (4) Section 552 of title 5, United States Code, including any exceptions thereunder, shall apply to any data or information submitted under this Subpart by an insurer or affiliate of an insurer. Subpart G—Certification § 50.60 Certification. (a) Certification decision. (b) Timeline for eligibility. (1) The Secretary commences review of whether an act satisfies the definition in § 50.4(b); (2) Within 30 days of the Secretary commencing review, Treasury publishes the notice required by § 50.61(a). During such review, the schedule of public notifications in § 50.61(b) shall apply, as appropriate; (3) The Secretary's review finds that the act satisfies the elements for certification under § 50.4(b)(1)(i) through (iv), and that it is not otherwise precluded from certification by § 50.4(b)(2); and (4) Within 30 days or as soon as otherwise practicable after the review identified in paragraph (b)(3) of this section concludes that the act satisfies the necessary criteria, the Secretary consults with the Attorney General of the United States and the Secretary of Homeland Security pursuant to section 102(1)(A) of the Act. (c) Other consultation. (d) Finality. (e) Nondelegation. § 50.61 Public communication. (a) Initial notification. Federal Register (b) Update notification. Federal Register (c) Contents of notification. (d) Rules of construction. (e) Nonbinding decision. § 50.62 Certification data collection. (a) General. (2) An insurer not required by Treasury to submit information under paragraph (a)(1) of this section may voluntarily submit information to the Secretary as specified in public notifications issued by Treasury. (b) Other sources of information. § 50.63 Notification of certification determination. (a) Public notification. Federal Register (b) Insurance supervisor notification. (c) Congressional notification. (d) Rule of construction. Subpart H—Claims Procedures § 50.70 Federal share of compensation. (a) General. (i) 85 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2015; (ii) 84 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2016; (iii) 83 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2017; (iv) 82 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2018; (v) 81 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2019; and (vi) 80 percent of that portion of the insurer's aggregate insured losses that exceeds its insurer deductible during calendar year 2020 and any calendar year thereafter. (2) The percentages in paragraph (a)(1) of this section are subject to any adjustments described in § 50.71 and to the cap of $100 billion as provided in section 103(e)(2) of the Act. (b) Program Trigger amounts. (1) For insured losses resulting from acts of terrorism taking place in calendar year 2015: $100 million; (2) For insured losses resulting from acts of terrorism taking place in calendar year 2016: $120 million; (3) For insured losses resulting from acts of terrorism taking place in calendar year 2017: $140 million; (4) For insured losses resulting from acts of terrorism taking place in calendar year 2018: $160 million; (5) For insured losses resulting from acts of terrorism taking place in calendar year 2019: $180 million; (6) For insured losses resulting from acts of terrorism taking place in calendar year 2020 and any calendar year thereafter: $200 million. (c) Conditions for payment of Federal share. (1) The insurer is an entity, including an affiliate thereof, that meets the requirements of § 50.4(o); (2) The insurer's insured losses, as defined in § 50.4(n) and limited by paragraph (d) of this section (including the allocated dollar value of the insurer's proportionate share of insured losses from a state residual market insurance entity or a state workers' compensation fund as described in § 50.33), have exceeded its insurer deductible as defined in § 50.4(p); (3) The insurer has paid or is prepared to pay an insured loss, based on a filed claim for the insured loss; (4) Neither the insurer's claim for Federal payment nor any underlying claim for an insured loss is fraudulent, collusive, made in bad faith, dishonest or otherwise designed to circumvent the purposes of the Act and regulations; (5) The insurer has provided a clear and conspicuous disclosure as required by §§ 50.10 through 50.14 and a cap disclosure as required by § 50.15; (6) The insurer offered coverage for insured losses and the offer was accepted by the insured prior to the act which results in the insured loss; (7) The insurer took all steps reasonably necessary to properly and carefully investigate the insured loss and otherwise processed the insured loss using practices appropriate for the business of insurance; (8) The insured loss is within the scope of coverage issued by the insurer under the terms and conditions of one or more policies for commercial property and casualty insurance as defined in § 50.4(w); and (9) The procedures specified in this Subpart have been followed and all conditions for payment have been met. (d) Adjustments. (e) Suspension of payment for other insured losses. (f) Aggregate industry losses. Federal Register § 50.71 Adjustments to the Federal share of compensation. (a) Aggregate amount of insured losses. (b) Amount of Federal share of compensation. (1) No excess recoveries. (2) Reduction of amount payable. (i) Other Federal program compensation. (ii) Insurer due diligence. § 50.72 Notice of deductible erosion. Each insurer shall submit to Treasury a Notice on a form prescribed by Treasury whenever the insurer's aggregate insured losses (including reserves for “incurred but not reported” losses) within a calendar year exceed an amount equal to 50 percent of the insurer's deductible as specified in § 50.4(p). Insurers are advised that the form for the Notice of Deductible Erosion will include an initial estimate of aggregate insured losses for the calendar year, the amount of the insurer deductible, and an estimate of the Federal share of compensation for the insurer's aggregate insured losses. In the case of an affiliated group of insurers, the Notice will include the name and address of a single designated insurer within the affiliated group that will serve as the single point of contact for the purpose of providing loss and compliance certifications as required in § 50.73 and for receiving, disbursing, and distributing payments of the Federal share of compensation in accordance with § 50.74. An insurer, at its option, may elect to include with its Notice of Deductible Erosion the certification of direct earned premium required by § 50.73(b)(3). § 50.73 Loss certifications. (a) General. (b) Initial certification of loss. (1) Basic information, on a form prescribed by Treasury, about each insured loss paid (or to be paid pursuant to § 50.73(b)(2)(i)) by the insurer. The form will include: (i) A listing of each insured loss paid (or to be paid pursuant to § 50.73(b)(2)(i)) by the insurer by catastrophe code and line of business; (ii) The total amount of reinsurance recovered from other sources; (iii) A calculation of the aggregate insured losses sustained by the insurer above its insurer deductible for the calendar year; and (iv) The amount the insurer claims as the Federal share of compensation for its aggregate insured losses. (2) A certification that the insurer is in compliance with the provisions of section 103(b) of the Act and this part, including certifications that: (i) The underlying insured losses reported pursuant to § 50.73(b)(1) either: Have been paid by the insurer; or will be paid by the insurer upon receipt of an advance payment of the Federal share of compensation as soon as possible, consistent with the insurer's normal business practices, but not longer than five business days after receipt of the Federal share of compensation; (ii) The underlying claims for insured losses were filed by persons who suffered an insured loss, or by persons acting on behalf of such persons; (iii) The underlying claims for insured losses were processed in accordance with appropriate business practices and the procedures specified in this subpart; (iv) The insurer has complied with the disclosure requirements of §§ 50.10 through 50.14, and the cap disclosure requirement of § 50.15, for each underlying insured loss that is included in the amount of the insurer's aggregate insured losses; and (v) The insurer has complied with the mandatory availability requirements of subpart C of this part. (3) A certification of the amount of the insurer's direct earned premium, together with the calculation of its insurer deductible (provided this certification was not submitted previously with the Notice of Deductible Erosion). (4) A certification that the insurer will disburse payment of the Federal share of compensation in accordance with this Subpart. (5) A certification that if Treasury has determined a Pro Rata (c) Supplementary certifications of loss. (1) A form as described in § 50.73(b)(1); and (2) A certification as described in § 50.73(b)(2). (d) Supplementary information. (e) State Residual Market Insurance Entities and State Workers' Compensation Funds. § 50.74 Payment of Federal share of compensation. (a) Timing. (b) Payment process. https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program (c) Account for reimbursement. (d) Segregated account for advance payments. (1) Definition of segregated account. (i) Receiving payments of the Federal share of compensation; (ii) Disbursing payments to insureds and claimants; and (iii) Transferring payments to the insurer or affiliated insurers for insured losses reported as already paid. (2) Remittance of interest. (e) Denial or withholding of advance payment. (f) Affiliated group. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021] § 50.75 Determination of affiliations. For the purposes of this subpart, an insurer's affiliates for any calendar year shall be determined by the circumstances existing on the date of the act which is the Program Trigger Event for that calendar year. § 50.76 Final netting. (a) General. (b) Final Netting Date. (1) Criteria for Final Netting Date. (i) Amounts of case reserves reported by insurers to Treasury for open underlying insured losses; (ii) The rate at which claims for the Federal share of compensation for insured losses are being made by insurers to Treasury; (iii) The rate at which new underlying insured losses are being added by insurers to their Supplementary Certifications of Loss and reported; (iv) The predominant lines of business for which underlying insured losses are being reported; (v) Tort and contract statutes of limitations relevant to insured losses and the manner in which they are being applied by the Federal courts; (vi) Common business practices; (vii) Issues that are delaying final resolution of insured losses; (viii) The application of the liability limitations and procedures under the Support Anti-terrorism by Fostering Effective Technologies Act of 2002 (6 U.S.C. 441 et seq. (ix) Issues related to the cap on annual liability for insurer losses, including whether a projection that the cap on annual liability will be reached in connection with any calendar year indicates that no Final Netting Date should be set for that calendar year; (x) Treasury's claims administration costs; and (xi) [Reserved] (xii) Such other factors as the Secretary considers appropriate to take into account. (2) Notice of Final Netting Date. Federal Register Federal Register (c) Post-Final Netting Date claims. (d) Commutation. (1) In lieu of continued submission of Supplemental Certifications of Loss after the Final Netting Date as provided in paragraph (c) of this section, Treasury may require, or consider an insurer's request for, a commutation of an insurer's future claims for the Federal share of compensation based on estimates for the underlying insured losses reported to Treasury on or before the Final Netting Date. The payment by Treasury of a final commuted amount to an insurer will discharge Treasury from all future liabilities to the insurer for the Federal share of compensation for insured losses for the applicable calendar year. In the case of an affiliated group of insurers, the requirements of § 50.74(f) apply, and payment of the final commuted amount to the designated insurer of the affiliated group discharges Treasury's payment obligation to the insurers in the affiliated group for insured losses for the applicable calendar year. (2) If future claims are to be commuted, Treasury may require additional information from the insurer, including an insurer's justification for a final payment amount with necessary actuarial factors and methodology, and pertinent information regarding the insurer's business relationships and other reinsurance recoverables. Insurers will be required to justify discount and other factors from which final payment amounts are derived. If Treasury notifies an insurer of a requirement to submit additional information to inform its commutation decision, the insurer will be provided (depending upon the complexity of the material sought) no less than 90 days from the date of notification to submit material required in the notice. If the insurer fails to provide the requested information, it will forfeit the right to future payments from Treasury. Treasury will evaluate such information in order to determine a final payment amount or (if applicable) an amount to be repaid to Treasury. Treasury may determine that it will not consider commutation until it has completed an audit of an insurer's insured losses pursuant to the authority set forth in subpart I of these regulations. (3) Payments of commuted amounts are not considered to be advance payments requiring a segregated account as described in § 50.74(d). (4) Notwithstanding § 50.70(d), a payment by Treasury of a final commuted amount to an insurer is final unless: (i) Treasury is put on notice that an insurer's claim was fraudulent or that other conditions for Federal payment were not met, in which case the insurer will be required to repay amounts that were not due; or (ii) The exception in paragraph (e) of this section applies, in which case Treasury may make additional payments for insured losses, but only under the conditions described in paragraph (e). (e) Exception. Subpart I—Audit and Investigative Procedures § 50.80 Audit authority. The Secretary of the Treasury, or an authorized representative, shall have, upon reasonable notice, access to all books, documents, papers and records of an insurer that are pertinent to amounts paid to the insurer as the Federal share of compensation for insured losses, or pertinent to any Federal terrorism policy surcharge that is imposed pursuant to subpart J of this part, for the purposes of investigation, confirmation, audit, and examination. § 50.81 Recordkeeping. (a) Each insurer that seeks payment of a Federal share of compensation under subpart H of this part shall retain such records as are necessary to fully disclose all material matters pertinent to insured losses and the Federal share of compensation sought under the Program, including, but not limited to, records regarding premiums and insured losses for all commercial property and casualty insurance issued by the insurer and information relating to any adjustment in the amount of the Federal share of compensation payable. Insurers shall maintain detailed records for not less than five (5) years from the termination dates of all reinsurance agreements involving property and casualty insurance subject to the Act. Records relating to premiums shall be retained and available for review for not less than three (3) years following the conclusion of the policy year. Records relating to underlying claims shall be retained for not less than five (5) years following the final adjustment of the claim. (b) Each insurer that collects a Federal terrorism policy surcharge as required by subpart J of this part shall retain records related to such surcharge, including records of the property and casualty insurance premiums subject to the surcharge, the amount of the surcharge imposed on each policy, aggregate Federal terrorism policy surcharges collected, and aggregate Federal terrorism policy surcharges remitted to Treasury during each assessment period. Such records shall be retained and kept available for review for not less than three (3) years following the conclusion of the assessment period or settlement of accounts with Treasury, whichever is later. § 50.82 Civil penalties. (a) General. (1) Has failed to charge, collect, or remit the Federal terrorism policy surcharge under subpart J; (2) Has intentionally provided to Treasury erroneous information regarding premium or loss amounts; (3) Submits to Treasury fraudulent claims under the Program for insured losses; (4) Has failed to provide any disclosures or other information required by Treasury; or (5) Has otherwise failed to comply with provisions of the Act or these regulations. (b) Recovery of amount in dispute. (c) Procedure. (1) The opportunity for a written submission by the insurer that provides all relevant facts and circumstances concerning the alleged conduct, including any information that the insurer wishes Treasury to consider in connection with the alleged conduct; and (2) A hearing on the record, unless waived by the insurer, during which Treasury and the insurer may present further information respecting the conduct in question. (d) Other remedies preserved. § 50.83 Adjustment of civil monetary penalty amount. (a) Inflation adjustment. (b) Annual adjustment. Federal Register https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30540, June 9, 2021; 88 FR 16887, Mar. 21, 2023; 89 FR 4820, Jan. 25, 2024; 90 FR 25484, June 17, 2025] Subpart J—Recoupment and Surcharge Procedures § 50.90 Mandatory and discretionary recoupment. (a) Pursuant to section 103(e) of the Act, the Secretary shall impose, and insurers shall collect, such Federal terrorism policy surcharges as needed to recover 140 percent of the mandatory recoupment amount for any calendar year. (b) In the Secretary's discretion, the Secretary may recover any portion of the aggregate Federal share of compensation that exceeds the mandatory recoupment amount through a Federal terrorism policy surcharge based on the factors set forth in section 103(e)(7)(D) of the Act. (c) If the Secretary imposes a federal terrorism policy surcharge as provided in paragraph (a) of this section, then the required amounts, based upon the extent to which payments for the Federal Share of Compensation have been made by the collection deadlines in section 103(e)(7)(E) of the Act, shall be collected in accordance with such deadlines: (1) For any act of terrorism that occurs on or before December 31, 2022, the Secretary shall collect all required amounts by September 30, 2024; (2) For any act of terrorism that occurs between January 1, 2023 and December 31, 2023, the Secretary shall collect 35% of any required amounts by September 30, 2024, and the remainder by September 30, 2029; and (3) For any act of terrorism that occurs on or after January 1, 2024, the Secretary shall collect all required amounts by September 30, 2029. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30541, June 9, 2021] § 50.91 Determination of recoupment amounts. (a) If payments for the Federal share of compensation have been made for a calendar year, and Treasury determines that insured loss information is sufficiently developed and credible to serve as a basis for calculating recoupment amounts, Treasury will make an initial determination of any mandatory or discretionary recoupment amounts for that calendar year. (b)(1) Within 90 days after certification of an act of terrorism, the Secretary shall publish in the Federal Register (2) If at any time Treasury projects that payments for the Federal share of compensation will be made for a calendar year, and that in order to meet the collection timing requirements of section 103(e)(7)(E) of the Act it is necessary to use an estimate of such payments as a basis for calculating recoupment amounts, Treasury will make an initial determination of any mandatory recoupment amounts for that calendar year. (c) Following the initial determination of recoupment amounts for a calendar year, Treasury will recalculate any mandatory or discretionary recoupment amount as necessary and appropriate, and at least annually, until a final recoupment amount for the calendar year is determined. Treasury will compare any recalculated recoupment amount to amounts already remitted and/or to be remitted to Treasury for a Federal terrorism policy surcharge previously established to determine whether any additional amount will be recouped by Treasury. (d) For the purpose of determining initial or recalculated recoupment amounts, Treasury may issue a data call to insurers for insurer deductible and insured loss information by calendar year. Treasury's determination of the aggregate amount of insured losses from Program Trigger Events of all insurers for a calendar year will be based on the amounts reported in response to a data call and any other information Treasury in its discretion considers appropriate. Submission of data in response to a data call shall be on a form promulgated by Treasury. § 50.92 Establishment of Federal terrorism policy surcharge. (a) Treasury will establish the Federal terrorism policy surcharge based on the following factors and considerations: (1) In the case of a mandatory recoupment amount, the requirement to collect 140 percent of that amount; (2) The total dollar amount to be recouped as a percentage of the latest available annual aggregate industry direct written premium information; (3) The adjustment factors for terrorism loss risk-spreading premiums described in section 103(e)(8)(D) of the Act; (4) The annual 3 percent limitation on terrorism loss risk-spreading premiums collected on a discretionary basis as provided in section 103(e)(8)(C) of the Act; (5) A preferred minimum initial assessment period of one full year and subsequent extension periods in full year increments; (6) The collection timing requirements of section 103(e)(8)(E) of the Act; (7) The likelihood that the amount of the Federal terrorism policy surcharge may result in the collection of an aggregate recoupment amount in excess of the planned recoupment amount; and (8) Such other factors as the Secretary considers appropriate to take into account. (b) The Federal terrorism policy surcharge shall be the obligation of the policyholder and is payable to the insurer with the premium for a property and casualty insurance policy in effect during the assessment period established by Treasury. See § 50.94(c). § 50.93 Notification of recoupment. (a) Treasury will provide notifications of recoupment through publication of notices in the Federal Register (b) Treasury will provide reasonable advance notice to insurers of any initial Federal terrorism policy surcharge effective date. This effective date shall be January 1 of the calendar year following publication of the notice, unless such date would not provide for sufficient notice of implementation while meeting the collection timing requirements of section 103(e)(8)(E) of the Act. (c) Treasury will provide reasonable advance notice to insurers of any modification or cessation of the Federal terrorism policy surcharge. (d) Treasury will provide notification to insurers annually as to the continuation of the Federal terrorism policy surcharge. § 50.94 Collecting the surcharge. (a) Insurers shall collect a Federal terrorism policy surcharge from policyholders as required by Treasury. (b) Policies subject to the Federal terrorism policy surcharge are those for which direct written premium is reported on commercial lines of business on the NAIC's Exhibit of Premiums and Losses of the NAIC Annual Statement (commonly known as Statutory Page 14) as provided in § 50.4(w)(1), or equivalently reported. (c) For policies subject to the Federal terrorism policy surcharge, the surcharge shall be imposed and collected on a written premium basis for policies that become effective or renew during the assessment period. All new, renewal, mid-term, and audit premiums for a policy term are subject to the surcharge in effect on the policy term effective date. Notwithstanding this paragraph, if the premium for a policy term that would otherwise be subject to the surcharge is revised after the end of the reporting period described in § 50.95(e), then any additional premium attributable to such revision is not subject to the Surcharge. For purposes of this subpart: (1) Written premium basis means the premium amount charged a policyholder by an insurer for property and casualty insurance, including all premiums, policy expense constants and fees defined as premium pursuant to the Statements of Statutory Accounting Principles established by the NAIC, as adopted by the state for which the premium will be reported. (2) In the case of a policy providing multiple insurance coverages, if an insurer cannot identify the premium amount charged a policyholder specifically for property and casualty insurance under the policy, then: (i) If the insurer estimates that the portion of the premium amount charged for coverage other than property and casualty insurance is de minimis (ii) If the insurer estimates that the portion of the premium amount charged for coverage other than property and casualty insurance is not de minimis, (3) The Federal terrorism policy surcharge is not considered premium. (d) A policyholder must pay the applicable Federal terrorism policy surcharge when due. The insurer shall have such rights and remedies to enforce the collection of the surcharge that are the equivalent to those that exist under applicable state or other law for nonpayment of premium. (e) When an insurer returns an unearned premium, or otherwise refunds premium to a policyholder, it shall also return any Federal terrorism policy surcharge collected that is attributable to the refunded unearned premium. Notwithstanding this paragraph, if the written premium for a policy is revised and refunded after the end of the reporting period described in § 50.95(e), then the insurer is not required to refund any Surcharge that is attributable to the refunded premium. (f) Notwithstanding paragraphs (a), (b), and (c) of this section, if the expense of collecting the Federal terrorism policy surcharge from all policyholders of an insurer during an assessment period exceeds the amount of the Surcharges anticipated to be collected, such insurer may satisfy its obligation to collect by omitting actual collection and instead remitting to Treasury the amount otherwise due. (g) The Federal terrorism policy surcharge is repayment of Federal financial assistance in an amount required by law. No fee or commission shall be charged on the Federal terrorism policy surcharge. § 50.95 Remitting the surcharge. (a) Each insurer shall report direct written premium and Federal terrorism policy surcharges to Treasury on a monthly and annual basis during the assessment period. Reporting will be on a form prescribed by Treasury and will be due according to the following schedule: (1) Monthly: (2) Annually: (b) The monthly statements provided to Treasury will include the following: (1) Cumulative calendar year direct written premium adjusted for premium not subject to the Federal terrorism policy surcharge, summarized by policy year. (2) The aggregate Federal terrorism policy surcharge amount calculated by applying the established surcharge percentage to the insurer's adjusted direct written premium by policy year. (3) Insurer certification of the submission. (c) The annual statements to be provided to Treasury will include the following: (1) Direct written premium, adjusted for premium not subject to the Federal terrorism policy surcharge, summarized by policy year and by commercial line of insurance as specified in § 50.4(w). (2) The aggregate Federal terrorism policy surcharge amount calculated by applying the established surcharge percentage to the insurer's adjusted direct written premium by policy year. (3) In the case of an insurer that has chosen not to collect the Federal terrorism policy surcharge from its policyholders as provided in § 50.94(f), a certification that the expense of collecting the Surcharge during the assessment period would have exceeded the amount of the surcharges collected over the assessment period. (4) Insurer certification of the submission. (d) The calculated aggregate Federal terrorism policy surcharge amount, as described in paragraphs (b)(2) and (c)(2) of this section, shall be remitted to Treasury upon submission of each monthly and annual statement. Through its submitted statements, an insurer obtains credit for a refund of any Federal terrorism policy surcharge previously remitted to Treasury that was subsequently returned by the insurer to a policyholder as attributable to refunded premium under § 50.94(e). A negative calculated amount in a monthly or annual statement indicates payment from Treasury is due to the insurer. (e) Reporting shall continue for the one-year period following the end of the assessment period established by Treasury, unless otherwise permitted by Treasury. § 50.96 Insurer responsibility. Notwithstanding § 50.4(o), for purposes of the collection, reporting and remittance of Federal terrorism policy surcharges to Treasury, the definition of insurer shall not include any affiliate of the insurer. Subpart K—Federal Cause of Action; Approval of Settlements § 50.100 Federal cause of action and remedy. (a) General. (b) Jurisdiction. (c) Effective period. (d) Rights not affected. (1) Limit the liability of any government, organization, or person who knowingly participates in, conspires to commit, aids and abets, or commits any act of terrorism; (2) Affect any party's contractual right to arbitrate a dispute; or (3) Affect any provision of the Air Transportation Safety and System Stabilization Act (Pub. L. 107-42; 49 U.S.C. 40101 note). § 50.101 State causes of action preempted. All State causes of action of any kind for property damage, personal injury, or death arising out of or resulting from an act of terrorism that are otherwise available under state law are preempted, except that, pursuant to section 107(b) of the Act, nothing in this section shall limit in any way the liability of any government, organization, or person who knowingly participates in, conspires to commit, aids and abets, or commits the act of terrorism certified by the Secretary. § 50.102 Advance approval of settlements. (a) Mandatory submission of settlements for advance approval. (1) Any portion of the proposed settlement amount that is attributable to an insured loss or losses involving personal injury or death in the aggregate is $2 million or more per third-party claimant, regardless of the number of causes of action or insured losses being settled; or (2) Any portion of the proposed settlement amount that is attributable to an insured loss or losses involving property damage (including loss of use) in the aggregate is $10 million or more per third-party claimant, regardless of the number of causes of action or insured losses being settled. (b) Discretionary review of other settlements. (c) Factors. (1) The proposed settlement compensates for a third-party's loss, the liability for which is an insured loss under the terms and conditions of the underlying commercial property and casualty insurance policy, as certified by the insurer pursuant to § 50.103(d)(2); (2) Any amount of the proposed settlement is attributable to punitive or exemplary damages intended to punish or deter (whether or not specifically so described as such damages); (3) The settlement amount offsets amounts received from the United States pursuant to any other Federal program; (4) The settlement amount does not include any items such as fees and expenses of attorneys, experts, and other professionals that have caused the insured losses under the underlying commercial property and casualty insurance policy to be overstated; and (5) Any other criteria that Treasury may consider appropriate, depending on the facts and circumstances surrounding the settlement, including the information contained in § 50.103. (d) Settlement without seeking advance approval or despite disapproval. § 50.103 Procedure for requesting approval of proposed settlements. (a) Submission of notice. https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program (b) Complete notice. (c) Treasury response or deemed approval. (d) Notice format. (1) A brief description of the claim against the insured, the amount of the claim, the operative policy terms, and defenses to coverage; (2) A certification by the insurer that the settlement is for a third-party's loss, the liability for which is an insured loss under the terms and conditions of the underlying commercial property and casualty insurance policy; (3) A brief description of all damages allegedly sustained and an itemized statement of all damages by category ( i.e., (4) A statement from the insurer or its attorney in support of the settlement; (5) The total dollar amount of the proposed settlement and the amount of the proposed settlement which is an insured loss; (6) Indication as to whether the settlement was negotiated by counsel; (7) The amount to be paid that will compensate for any items such as fees and expenses of attorneys, experts, and other professionals for their services and expenses related to the insured loss and/or settlement and the net amount to be received by the third-party after such payment; (8) The amount(s) received from the United States pursuant to any other Federal program(s) for compensation of insured losses related to an act of terrorism; (9) The proposed terms of the written settlement agreement, including release language and subrogation terms; (10) Other relevant agreements, including: (i) Admissions of liability or insurance coverage; (ii) Determinations of the number of occurrences under a commercial property and casualty insurance policy; (iii) The allocation of paid amounts or amounts to be paid to certain policies, or to a specific policy, coverage and/or aggregate limits; (iv) Any other agreement that may affect the payment or amount of the Federal share of compensation to be paid to the insurer; and (v) Any other relevant agreement requested by Treasury. (11) A statement indicating whether the proposed settlement has been approved by the Federal court or is subject to such approval and whether such approval is expected or likely; and (12) Such other information that is related to the insured loss as may be requested by Treasury that it deems necessary to evaluate the proposed settlement. [81 FR 93765, Dec. 21, 2016, as amended at 86 FR 30541, June 9, 2021] § 50.104 Subrogation. An insurer shall not waive its rights of subrogation under its property and casualty insurance policy with respect to any losses the payment of which the insurer intends to include in its insurer deductible or the aggregate insured losses for purposes of calculating the Federal share of compensation of its insured losses and shall, unless upon request the United States agrees in writing to forbear from exercising such right, preserve the subrogation right of the United States as provided by section 107(c) of the Act by not taking any action that would prejudice the subrogation right of the United States. Subpart L—Cap on Annual Liability § 50.110 Cap on annual liability. Pursuant to section 103 of the Act, if the aggregate insured losses exceed $100,000,000,000 during a calendar year: (a) The Secretary shall not make any payment for any portion of the amount of such losses that exceeds $100,000,000,000; (b) An insurer that has met its insurer deductible shall not be liable for the payment of any portion of the amount of such losses that exceeds $100,000,000,000; and (c) The Secretary shall determine the pro rata § 50.111 Notice to Congress. Pursuant to section 103(e)(3) of the Act, the Secretary shall provide an initial notice to Congress within 15 days of the certification of an act of terrorism, stating whether the Secretary estimates that aggregate insured losses will exceed $100,000,000,000 for the calendar year in which the event occurs. Such initial estimate may be based on insured loss amounts as compiled by insurance industry statistical organizations, data previously collected by the Secretary, and any other information the Secretary in his or her discretion considers appropriate. The Secretary shall also notify Congress if estimated or actual aggregate insured losses exceed $100,000,000,000 during any calendar year. § 50.112 Determination of pro rata (a) Pro rata loss percentage (PRLP) (b) Except as provided in paragraph (e) of this section, if Treasury estimates that aggregate insured losses may exceed the cap on annual liability for a calendar year, then Treasury will determine a PRLP. The PRLP applies to insured loss payments by insurers for insured losses incurred in the subject calendar year, as specified in § 50.113, from the effective date of the PRLP, as established by Treasury, until such time as Treasury provides notice that the PRLP is revised. Treasury will determine the PRLP based on the following considerations: (1) Estimates of insured losses from insurance industry statistical organizations; (2) Any data calls issued by Treasury (see § 50.114); (3) Expected reliability and accuracy of insured loss estimates and likelihood that insured loss estimates could increase; (4) Estimates of insured losses and expenses not included in available statistical reporting; (5) Such other factors as the Secretary considers important. (c) Treasury shall provide notice of the determination of the PRLP through publication in the Federal Register, (d) As appropriate, Treasury will determine any revision to a PRLP based on the same considerations listed in paragraph (b) of this section, and will provide notice for its application to insured loss payments. (e) If Treasury estimates based on an initial act of terrorism or subsequent act of terrorism within a calendar year that aggregate insured losses may exceed the cap on annual liability, but an appropriate PRLP cannot yet be determined, Treasury will provide notification advising insurers of this circumstance and, after consulting with the relevant state authorities, may initiate the action described in either paragraph (e)(1) or (2) of this section. (1) Hiatus in payments. pro rata (2) Determine an interim PRLP. (ii) In such a circumstance, Treasury will determine a PRLP to replace the interim PRLP as quickly as possible. The PRLP, as later determined, will be effective retroactively as of the effective date of the interim PRLP. Any insured losses submitted in support of an insurer's claim for the Federal share of compensation will be reviewed for the insurer's compliance with pro rata § 50.113 Application of pro rata An insurer shall apply the PRLP to determine the pro rata pro rata pro rata pro rata (a) The pro rata (b) All policies. pro rata (c) Certain workers' compensation insurance policies. (d) If an insurer has not yet made payments in excess of its insurer deductible, the rules in this paragraph apply. (1) If the insurer estimates that it will exceed its insurer deductible making payments based on the application of the PRLP to its insured losses, then the insurer shall apply the PRLP as of the effective date specified in § 50.112(b). (2)(i) If the insurer estimates that it will not exceed its insurer deductible making payments based on the application of the PRLP to its insured losses, then the insurer may make payments on the same basis as prior to the effective date of the PRLP. The insurer may also make payments on the basis of applying some other pro rata pro rata (ii) If an insurer estimates that it will not exceed its insurer deductible and has made payments on the basis provided in paragraph (d)(2)(i) of this section, but thereafter reaches its insurer deductible, then the insurer shall apply the PRLP to any remaining insured losses. When such an insurer submits a claim for the Federal share of compensation, the amount of the insurer's losses will be deemed to be the amount it would have paid if it had applied the PRLP as of the effective date, and the Federal share of compensation will be calculated on that amount. However, an insurer may request an exception if it can demonstrate that its estimate was invalidated as a result of insured losses from a subsequent act of terrorism. § 50.114 Data call authority. For the purpose of determining initial or recalculated PRLPs, Treasury may issue a data call to insurers for insured loss information, seeking information in addition to any information provided to Treasury under subparts F and H of this part. § 50.115 Final amount. (a) Treasury shall determine if, as a final proration, remaining insured loss payments, as well as adjustments to previous insured loss payments, can be made by insurers based on an adjusted PLRP, and aggregate insured losses still remain within the cap on annual liability. In such a circumstance, Treasury will notify insurers as to the final PRLP and its application to insured losses. (b) If paragraph (a) of this section applies, Treasury may require, as part of the insurer submission for the Federal share of compensation for insured losses, a supplementary explanation regarding how additional payments will be provided on previously settled insured losses. (c) An insurer that has prorated its insured losses, but that has not met its insurer deductible, remains liable for loss payments that in the aggregate bring the insurer's total insured loss payments up to an amount equal to the lesser of its insured losses without proration or its insurer deductible.