[Federal Register Volume 67, Number 248 (Thursday, December 26, 2002)]
[Notices]
[Pages 78864-78869]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-32468]



[[Page 78864]]

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DEPARTMENT OF THE TREASURY


Departmental Offices; Interim Guidance Concerning Definition of 
Insurers, Scope of Insurance Coverage, and Disclosures Mandated by the 
Terrorism Risk Insurance Act of 2002

AGENCY: Department of the Treasury, Departmental Offices.

ACTION: Notice.

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SUMMARY: This notice provides additional interim guidance concerning 
entities that are ``insurers'' as defined in Title I of the Terrorism 
Risk Insurance Act of 2002 and, therefore, are required to be 
participants in the Department of Treasury's Terrorism Risk Insurance 
Program. This notice also provides interim guidance concerning the 
scope of insurance coverage under the Program, including guidance to 
assist participating insurers in estimating their ``insurer 
deductible,'' prior to the issuance of regulations, based on how they 
report their ``direct earned premium'' (or comparable format). 
Additional guidance concerning required disclosures under the Act is 
also provided by this notice.

DATES: This notice is effective immediately and will remain in effect 
until superceded by regulations or by subsequent notice.

FOR FURTHER INFORMATION CONTACT: Mario Ugoletti, Deputy Director, 
Office of Financial Institutions and GSE Policy 202-622-2730; Martha 
Ellett, Attorney-Advisor, Office of the Assistant General Counsel 
(Banking and Finance) 202-622-0480.

SUPPLEMENTARY INFORMATION: This notice provides additional interim 
guidance to assist insurers in ascertaining whether they are covered 
by, and how they may comply with, certain immediately applicable 
provisions of Title I of the Terrorism Risk Insurance Act of 2002 (Pub. 
L. 107-297) (the Act) prior to the issuance of regulations by the 
Department of the Treasury (Treasury). The interim guidance contained 
in this notice, along with interim guidance issued previously by 
Treasury, may be relied upon by insurers in complying with these 
statutory requirements and is intended to assist insurers prior to the 
issuance of regulations on these issues. This interim guidance remains 
in effect until superceded by regulations or subsequent notice.

I. Background

    On November 26, 2002, the President signed into law the Terrorism 
Risk Insurance Act of 2002. The Act became effective immediately. It 
establishes a temporary federal program of shared public and private 
compensation for insured commercial property and casualty losses 
resulting from an ``act of terrorism,'' as defined in the Act. The 
Terrorism Risk Insurance Program is administered and implemented by 
Treasury and will sunset on December 31, 2005.

II. Interim Guidance

    Treasury will be issuing regulations to administer and implement 
certain elements of the Terrorism Risk Insurance Program (Program). To 
assist insurers in complying with certain statutory requirements prior 
to the issuance of regulations, Treasury issued initial interim 
guidance at 67 FR 76206 (December 11, 2002) (also located on Treasury's 
Terrorism Risk Insurance Program web site at http://www.treasury.gov/trip). This notice contains additional interim guidance concerning 
entities within the definition of ``insurer'' in section 102(6) of the 
Act. This notice also provides interim guidance concerning the scope of 
insurance coverage based on the definition of ``insured loss'' and 
guidance to assist insurers in estimating their ``insurer deductible'' 
under the Program prior to the issuance of regulations by Treasury. 
This notice also provides additional guidance concerning the Act's 
disclosure requirements.

A. Insurer Participation in General

What Entities Must Participate in the Program?
    Section 103(a)(3) of the Act requires that each entity that meets 
the definition of insurer in section 102(6) of the Act shall 
participate in the Program. Under the Act, among other requirements, 
participation means that insurers must comply with the ``make 
available'' requirements and the disclosure provisions in section 103, 
as further described in Treasury's initial interim guidance at 67 FR 
76206. In addition, participation in the Program means that an insurer 
is subject to the policy surcharge (recoupment) provisions of the Act 
on the insurer's property and casualty insurance policies as provided 
in section 103(e)(8).
What Entities Are ``Insurers'' for Purposes of the Program?
    Section 102(6) of the Act defines the term ``insurer'' for purposes 
of the Program to mean, any entity, including an affiliate of that 
entity, that meets the statutory requirements contained in section 
102(6)(A),(B) and (C), as described below.
    First, to be an insurer, an entity must fall within at least one of 
the categories in section 102(6)(A):
    (i) Licensed or admitted to engage in the business of providing 
primary or excess insurance in any State (``State'' includes the 
District of Columbia and territories of the United States);
    (ii) Not so licensed or admitted, but is an eligible surplus line 
carrier listed on the Quarterly Listing of Alien Insurers of the 
National Association of Insurance Commissioners;
    (iii) Approved for the purpose of offering property and casualty 
insurance by a Federal agency in connection with maritime, energy or 
aviation activity; or
    (iv) A State residual market insurance entity or State workers' 
compensation fund.
    The definition of ``insurer'' in section 102(6)(A)(v) also includes 
captive and self-insurance arrangements, not otherwise covered in 
clauses (i)-(iv) above, to the extent provided in rules issued by 
Treasury under this section 103(f) (emphasis supplied). Treasury has 
not issued such rules.
    In addition to coming within a category in section 102(6)(A), to be 
an ``insurer'' under the Act, an entity must receive ``direct earned 
premiums'' on any type of commercial ``property and casualty 
insurance.'' (Section 102(6)(B) excepts state residual market insurance 
entities and captives and self-insurance arrangements that do not fall 
into the categories listed in section 102(6)(A)(i),(ii) or (iii) from 
this direct earned premium requirement.)
    Third, the entity must meet ``any other criteria that the Secretary 
of the Treasury may reasonably prescribe'' under section 102(6)(C).
May an Affiliate of an Insurer Participate in the Program if the 
Affiliate Itself Does Not Meet the Requirements for an Insurer in 
Section 102(6)(A) and (B)?
    No. To participate in the Program, an entity, including an 
affiliate of an insurer, must itself meet all of the requirements of 
section 102(6)(A)and (B) as well any requirements that may be 
prescribed under section 102(6)(C).
If a Parent Company Meets the Requirements of section 102(6)(A) and 
(B), But Not All of the Parent Company's Affiliates Meet the 
Requirements for an Insurer Under Section 102(6)(A) and (B), How Will 
These Entities be Treated Purposes of the Program?
    Treasury intends to consider the parent company, and all affiliates 
that meet the requirements of ``insurer'' in

[[Page 78865]]

section 102(6)(A) and (B) (and, if issued (C)), to be, collectively one 
``insurer'' for purposes of the Program. Any affiliate that does not 
meet these statutory requirements is not an insurer under the Act, and 
therefore is not a participant in the Program. For example, if an 
insurance company is licensed or admitted to engage in the business of 
providing primary or excess insurance in a State and receives direct 
earned premiums as required in section 102(6)(B), and three out of four 
of its affiliate insurance companies also are State licensed and meet 
the requirements of section 102(6)(B), then the parent company and the 
three affiliates that meet the requirements of section 102(6)(A) and 
(B) are collectively, one insurer for purposes of the Program. The 
affiliate that does not fall within one of the categories in section 
102(6)(A) or fails to meet all the requirements to be an ``insurer'' 
under section 102(6) is not included in the Program.
If an Entity Meets the Definition of Insurer But Its Parent Company 
Does Not, Is the Entity an Insurer for Purposes of the Act?
    Yes. Any entity that meets the requirements of section 102(A) and 
(B) (and, if issued, (C)), is an ``insurer'' under the Act, and 
therefore is required to participate in the Program under section 
103(a)(3) of the Act. If an entity is ``under common control with the 
insurer,'' and that entity meets the requirements of section 102(A) and 
(B) (and if issued (C)) Treasury intends to consider that entity 
collectively with the other insurer (its affiliate) as one ``insurer'' 
for purposes of the Program. For example, assume that two insurance 
companies are licensed to engage in the business of providing primary 
or excess insurance in any State (either in one State or in separate 
States) and both receive direct earned premiums as required by section 
102(6)(B). Each company, therefore, meets the definition of 
``insurer,'' but assume that the common parent of the two companies 
does not fall into any of the categories in section 102(6)(A). Treasury 
intends to consider the two affiliated companies to be, collectively, 
one insurer for purposes of the Program, but their parent company is 
not an insurer and not included in the Program.
If an Entity Falls Within More Than One Category in Section 102(6)(A), 
How is it Treated for Purposes of the Program?
    An entity that falls within two categories will be considered as 
falling within the first category it meets under section 102(6)(A)(i)-
(v), as described in further detail below in part C of this interim 
guidance.
Is Reinsurance Included in the Program?
    No. Although the legislative history and design of the Act envision 
reinsurance arrangements as an important component of capacity within 
the insurance market, the Act excludes reinsurance from the federal 
loss sharing Program. Section 103(g) of the Act expressly provides that 
the Act does not limit or prevent ``insurers'' from obtaining 
reinsurance coverage for ``insurer deductibles'' or ``insured losses'' 
retained by insurers. For the purposes of this interim guidance, if an 
entity does not receive direct earned premiums as required by section 
102(6)(B), then the entity is not an ``insurer'' under the Act.

B. Scope of Coverage in General

What Is an Insured Loss Under the Program?
    The Act defines the term ``insured loss'' for purposes of the 
Program in section 102(5). An insured loss means any loss resulting 
from a certified ``act of terrorism'' covered by primary or excess 
``property and casualty insurance,'' that is issued by an ``insurer,'' 
if such loss:
    [sbull] ``Occurs within the United States'' or
    [sbull] occurs to an ``air carrier''; a U.S. 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'', 
or
    [sbull] occurs ``at the premises of any United States mission.''
    The Act defines ``United States'' in section 102(15) as the several 
``States'' (defined in section 102(14) and including the District of 
Columbia), as well as the territorial sea and the continental shelf of 
the United States, as those terms are defined in the Violent Crime 
Control and Law Enforcement Act of 1994 (18 U.S.C. 2280, 2281).
What Insurance Coverage Is Within the Scope of ``Insured Loss''?
    In general, if the property and casualty insurance coverage is 
provided within the geographic and other statutory parameters of the 
definition of ``insured loss'' in the Act as described above, and is 
provided by an ``insurer'' as defined in section 102(6) of the Act 
(whether or not the insurer is foreign based or owned), then such 
losses will be covered by the Program, subject to the conditions for 
payment and other requirements of the Act. However, if insurance 
coverage is provided by an entity that is not an ``insurer'' under the 
Act, then, even if a loss occurs within the United States, or otherwise 
meets the definitional parameters of ``insured loss,'' e.g. occurs to 
an air carrier or vessel or mission as defined in the Act, the loss 
would not be covered by the Program. In addition, if insurance is 
provided by a U.S. insurer but the loss does not fall within the 
definition of ``insured loss'' e.g. occurs on foreign soil and not to a 
U.S. mission or covered air carrier or vessel, then the loss would not 
be covered by the Program.

C. Categories of Insurers Under Section 102(6)(A)

1. State Licensed or Admitted
Which State Licensed or Admitted Insurance Companies Are Required to 
Participate in the Program?
    For purposes of this interim guidance, this category includes any 
insurer that
    [sbull] Is licensed or admitted in any State as defined in the Act,
    [sbull] And that provides direct property and casualty insurance 
coverage as defined in the Act and provided in Treasury's previous 
interim guidance at 67 FR 76206 (December 11, 2002),
    [sbull] And that reports its direct earned premiums as described in 
Treasury's previous interim guidance (cited above), or that reports 
comparable direct earned premium information to any State, e.g. county 
mutual insurance companies.
What Insurance Coverage Provided by State Licensed and Admitted 
Insurers Is Under the Program?
    Treasury has issued interim guidance concerning lines of insurance 
coverage included in the Program and ``direct earned premiums'' at 67 
FR 76206 (December 12, 2002). The direct earned premium income for the 
lines of coverage included in the Program described in that guidance 
(direct premiums earned as reported to the NAIC in the Annual Statement 
in column 2 of the Exhibit of Premiums and Losses--commonly known as 
Statutory Page 14) primarily covers premiums and associated policies 
for property and casualty insurance risks in the United States. Thus, 
this direct earned premium information is generally consistent with 
scope of ``insured loss'' as defined in the Act. If a State licensed or 
admitted insurer within this category provides insurance coverage that 
is not reported in the premium information submitted on Statutory Page 
14, (or does not report comparable premium information to its licensing 
or admitting State, e.g. as a county mutual insurance company) then

[[Page 78866]]

such insurance coverage will not be considered within the scope of the 
Program prior to the issuance of regulations. Insurers and other 
interested parties will have the opportunity to submit formal comments 
to Treasury on lines of commercial property and casualty insurance 
coverage that were specified in Treasury's initial interim guidance.
How May a State Licensed and Admitted Insurer Estimate Its Insurer 
Deductible for Purposes of the Program?
    The Act defines an ``Insurer Deductible'' in Section 102(7) for the 
various ``Program Years'' and other periods covered by the Program. For 
example, Section 102(7)(B) defines the insurer deductible for Program 
Year 1 (January 1, 2003 through December 31, 2003) as ``the value of an 
insurer's direct earned premiums over the calendar year immediately 
preceding Program Year 1 multiplied by 7 percent.'' Prior to the 
issuance of regulations, a State licensed or admitted insurer may 
estimate its insurer deductible by multiplying the applicable 
percentage (listed in the Act for the Transition Period and each of the 
Program Years) by the direct earned premium information that the 
insurer reports on Statutory Page 14, as described in Treasury's 
previous interim guidance at 67 FR 76206 (or as comparably reported by 
the insurer to its licensing or admitting State).
If an Entity Is State Licensed or Admitted Within Section 102(6)(A)(i) 
and Also Is a Self-Insured or Captive Insurance Company (or Risk 
Retention Group), How Is the Entity Treated For Purposes of the 
Program?
    Any entity that falls within the State ``licensed or admitted'' 
category 102(6)(A)(i), and receives and reports direct earned premiums 
in accordance with section 102(6)(B) and Treasury's interim guidance at 
67 FR 76206 (or reports comparable information to its licensing or 
admitting State), will be considered by Treasury as an insurer under 
section102(6)(A)(i), even if the entity is also in a self-insured or 
captive arrangement. Such entities are required by section 103(a)(3) to 
participate in the Program. In contrast, if a captive insurance company 
or a risk retention group is licensed or admitted by a State, but does 
not collect direct earned premiums as required by section 102(6)(B), 
then such entities are not ``insurers'' under section 102(6)(A)(i). 
These other entities may be addressed under subsequent Treasury 
regulations, if issued for self-insured or captive entities under 
section 103(f).
2. Eligible Alien Surplus Line Carriers
What Entities Are Covered by the Eligible Surplus Line Category?
    Any eligible alien surplus line carrier listed on the NAIC 
Quarterly Listing of Alien Insurers (Quarterly Listing) that receives 
direct earned premiums as required in section 102(6)(B) is an insurer 
and required to participate under the Program.
What Portion of Insurance Coverage Provided by Eligible Surplus Line 
Carriers Is Required to Come Under the Terrorism Risk Insurance 
Program?
    The scope of insurance coverage provided by eligible surplus line 
carriers covered by the Program for policies that are in-force as of 
the date of enactment or that are entered into prior to January 1, 
2003, may be determined by a surplus line carrier with reference to the 
geographic scope in the definition of ``insured loss,'' and with 
reference to the covered property and casualty lines of insurance 
described in Treasury's previous interim guidance at 67 FR 76206, and 
with reference to premium information collected using a format 
consistent with Treasury's interim guidance for those entities that 
report to the NAIC (i.e. direct earned premium information reported on 
Statutory Page 14).
    Treasury is coordinating with the NAIC and will be issuing 
regulations governing the scope of insurance coverage provided by 
eligible surplus line carriers under the Program for policies issued by 
them and entered into after January 1, 2003. For purposes of interim 
guidance, Treasury expects to propose that insurance coverage is within 
the Program if (i) provided for losses within the geographic scope of 
the definition of ``insured loss'' and (ii) within the lines of the 
property and casualty insurance described in Treasury's interim 
guidance at 67 FR 76206 and (iii) the premium income is calculated 
using a format consistent with the format referred to in that interim 
guidance (i.e. Statutory Page 14). Treasury also expects to propose 
that the premium for insurance coverage within the geographic scope of 
``insured loss'' must be priced separately by eligible surplus line 
insurers for policies issued after January 1, 2003.
How May Eligible Surplus Line Carriers Calculate Their Insurer 
Deductibles?
    For purposes of this interim guidance, in calculating an ``Insurer 
Deductible'' as defined in Section 102(7), eligible surplus line 
carriers may use the premium base that corresponds to the coverage 
requirements described in the previous question. In calculating the 
deductible for Program Year 1, prior to the issuance of regulations, 
eligible surplus line carriers may use and rely on the same allocation 
methodologies contained within the NAIC's ``Allocation of Surplus Lines 
and Independently Procured Insurance Premium Tax on Multi-State Risks 
Model Regulation'' for allocating premium between coverage within the 
geographic scope of ``insured loss'' and all other coverage to estimate 
the appropriate percentage of premium income for such policies that 
applies to such risks. A similar procedure may be relied upon to 
calculate an eligible surplus line carrier's deductible for the 
Transition Period.
3. Insurers Approved by Federal Agencies
Which Federally Approved Insurers Are Required to Participate in the 
Terrorism Risk Insurance Program?
    If an entity does not fall within section 102(6)(A)(i) or (ii), but 
is approved by a Federal agency to offer property and casualty 
insurance in connection with maritime, energy or aviation activities 
and the entity receives direct earned premiums for any type of property 
and casualty insurance, then, for purposes of this interim guidance, 
such entity is considered by Treasury to be an ``insurer'' under 
section 102(6)(A)(iii). This category of federally approved insurers 
under section 102(6)(A)(iii) will be administered in a manner that is 
consistent with any other reasonable criteria that may be prescribed at 
a later date by Treasury pursuant to section 102(6)(C).
    Examples of insurers under section 102(6)(A)(iii) are those 
insurers that do not fall within section 102 (6)(A)(i) or (ii) and are 
approved or accepted by a Federal agency under the following programs 
and/or statutes:
    [sbull] Approval of Underwriters for Marine Hull Insurance 
(Maritime Administration, U.S. Department of Transportation)
    [sbull] Aircraft Accident Liability Insurance (U.S. Department of 
Transportation)
    [sbull] Oil Spill Financial Responsibility for Offshore Facilities 
(Minerals Management Service, U.S. Department of the Interior
    [sbull] Oil Spill Financial Responsibility for Vessels (United 
States Coast Guard, U.S. Department of Transportation)
    [sbull] Longshoremen's and Harbor Workers' Compensation Act 
(Employment Standards Administration, U.S. Department of Labor)

[[Page 78867]]

    The above list of Federal insurance programs is not exclusive. Any 
entity that is approved by a U.S. agency to offer property and casualty 
insurance in connection with maritime, energy or aviation activities by 
a program that is not listed above is encouraged to notify the 
designated Treasury contacts in this notice prior to the issuance of 
Treasury regulations or to submit a comment once regulations are 
proposed.
    Treasury intends to propose regulations providing that scope of 
insurance coverage under the Program for insurers that are within 
section 102(6)(A)(iii) is only the insurance coverage approved by the 
Federal Agency.
How May Insurers Approved by a Federal Agency Calculate Their 
Deductibles?
    In estimating an ``Insurer Deductible'' as defined in Section 
102(7), federally approved insurers may use the premium base that 
corresponds to the coverage approved by the Federal agency. In 
addition, Treasury expects to propose regulations that treat federally 
approved insurers in a manner consistent with eligible alien surplus 
line carriers as described above in the second question under Section 
C.2.
    For the purposes of this interim guidance, because insurers 
approved by a Federal agency share many of the same characteristics as 
eligible surplus line carriers on the NAIC's Quarterly Listing of Alien 
Insurers, this class of insurers may estimate their insured deductible 
under the Program in a similar manner as described for eligible surplus 
line carriers. In calculating the deductible for Program Year 1, prior 
to the issuance of regulations, and because insurance policies issued 
by federally approved insurers may not have specifically allocated the 
percentage of premium income that is attributable to risks within the 
geographic scope of the definition of ``insured loss,'' federally 
approved insurers may use the same allocation methodologies that are 
contained within the NAIC's ``Allocation of Surplus Lines and 
Independently Procured Insurance Premium Tax on Multi-State Risks Model 
Regulation'' for allocating premiums between coverage within the 
geographic scope of ``insured loss'' and all other coverage, to 
estimate the appropriate percentage of premium income for such policies 
that applies to such risks. A similar procedure may be relied upon to 
calculate a federally approved insurer's deductible for the Transition 
Period.
4. State Residual Insurance Market and Workers Compensation Funds
Which State Residual Insurance Market Entities or State Workers' 
Compensation Funds Are Required to Participate in the Program?
    These entities fall within section 102(6)(A)(iv) of the definition 
of insurer and are required to participate in the Program. For the 
purposes of this interim guidance, the Treasury, in consultation with 
the NAIC, has identified a group of entities that fall within this 
class of insurers (see attached list at the end of this interim 
guidance). Any state residual insurance market entity or state workers' 
compensation fund that is not on this list is encouraged to notify 
Treasury through the designated contacts in this interim guidance.
How Do the Provisions of the Act Apply to State Residual Market 
Insurance Entities or State Workers Compensation Funds?
    Section 102(6)(A)(iv) provides a category for State residual market 
insurance entities and State workers' compensation funds within the 
definition of insurer. Section 102(6)(B) provides an exception for such 
insurers from the requirement that they receive direct earned premiums, 
but section 103(d) requires Treasury to issue regulations as soon as 
practicable to apply the provisions of the Act to these types of 
entities. Treasury is working with the NAIC on a methodology to address 
a data reporting anomaly that arises when insurers act as servicing 
carriers for residual market mechanisms. For purposes of interim 
guidance, insurers within this category that have insufficient 
information to issue disclosures under section 103(b)(2) are being 
given a waiver from these disclosure requirements until Treasury issues 
regulations governing how such requirements can and should be applied 
to State Residual Market Entities and State Workers Compensation Funds 
to fulfill the purposes of the Act. Treasury is giving priority 
consideration to the development and issuance of proposed rules 
applying provisions of the Act to State residual market insurance 
entities and State workers compensation funds, as required by section 
103(d).
5. Newly Formed Insurers
How Does an Insurer Determine Its Insured Deductible if It Was Not in 
Business for the Full Calendar Year Prior to the Program Year?
    Section 102(7) of the Act defines an ``insurer deductible.'' In 
general, this is the value of a participating insurer's ``direct earned 
premium'' over the calendar year immediately preceding the Program Year 
(as defined). Section 102(7)(E) provides Treasury with authority to 
determine the appropriate methodology for measuring the direct earned 
premium if an insurer has not had a full year of operations during the 
calendar year immediately preceding the Program Year.
    Because new companies have only had limited business operations, it 
is likely that their premium income will be somewhat volatile. Such 
volatility could persist throughout the life of the three-year Program. 
Thus, to administer these newly formed insurers in a manner that is 
consistent with other insurers under the Program and to prevent newly 
formed insurers from having the unfair advantage of lower relative 
deductibles, Treasury intends to propose that the deductible measure 
for new companies formed after the date of enactment (November 26) will 
be based on contemporaneous data for direct earned premium that 
corresponds to the current Program Year. If a newly formed insurer does 
not have a full year of operations within a particular Program year, 
Treasury intends to propose that insurer's direct earned premium for 
Program year will be annualized to determine an insurer's deductible.

D. Additional Disclosure Guidance

If an Insurer Chooses To Use the NAIC's Model Disclosure Forms To 
Satisfy the Disclosure Requirements of Section 103, Does the Insurer 
Have To Follow the Model Disclosure Form Exactly?
    No. As described in previous interim guidance, the NAIC disclosure 
forms are ``model'' forms. Treasury's previous interim guidance 
provides a safe harbor to insurers that use such model forms for the 
purposes described in that guidance, but that guidance states that this 
is not the exclusive means of complying with the disclosure provisions.
    The NAIC's model disclosure forms reflect key information regarding 
the Terrorism Risk Insurance Program that is required to be disclosed 
to policyholders as a condition for federal payment under the Program, 
such as Federal participation in the Program and any premium that is 
being charged by the insurer for ``insured losses.'' However, insurers 
may decide to modify such model forms to fit individual circumstances. 
For example, if an insurer is providing disclosures under Section 
103(b) and there is no change in the premium, the signature line on the 
model form may be unnecessary. In

[[Page 78868]]

addition, in complying with the disclosure requirements, an insurer may 
communicate the price to a policyholder in a manner that is consistent 
with standard business practice, which, in some cases, may be as 
percentage of overall policy premium.
    Treasury intends to propose regulations that will indicate that 
compliance with the disclosure provisions may be evidenced by an 
insurer in a variety of ways, including but not limited to, a proof of 
mailing process, certificates of mailing, returned forms signed by the 
policyholders, and other methods consistent with the normal forms of 
communication with policyholders that demonstrate that the disclosures 
have been provided.
If Two or More Insurers Participate In Insuring a Single Commercial 
Risk Through a Joint Underwriting or Risk Sharing Plan, Would Policies 
Written Under Such Plans Be Under the Program?
    Yes, if the insurers meet the definition of insurer and the joint 
underwriting or risk sharing plans are authorized by the laws of the 
state where the risk is located and where the policy or policies are 
issued or delivered. To satisfy the ``make available'' requirement the 
policy or policies should make available to the insured, 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.
Are the Property and Casualty Lines of Coverage Described in Treasury's 
Initial Interim Guidance the Only Lines Covered Under the Program?
    Until Treasury proposes and issues regulations concerning the 
definition of property and casualty insurance for purposes of the 
Program, insurers should refer to the definition contained within the 
Act and the guidance provided in Treasury's previous interim guidance. 
As part of the rulemaking process, interested parties will have a 
chance to provide comments on Treasury's proposed regulation on this 
definition.
Are All Types of Insurance Coverage Reported Under the Lines of 
Coverage Listed Described in Treasury's Initial Interim Guidance 
Covered Under the Program?
    Until Treasury proposes and issues regulations concerning the 
definition of property and casualty insurance for purposes of the 
Program, insurers should refer to the definition contained within the 
Act and the guidance provided in Treasury's previous interim guidance. 
As part of the rulemaking process, interested parties will have a 
chance to provide comments on Treasury's proposed regulation on this 
definition.

    Dated: December 18, 2002.
Wayne A. Abernathy,
Assistant Secretary of the Treasury.

Attachment--List of State Residual Market Mechanisms

----------------------------------------------------------------------------------------------------------------
                                                                                                   Workers'
              State                   Automobile           Liability           Property          compensation
----------------------------------------------------------------------------------------------------------------
Alabama.........................  Assigned Risk Plan  ..................  ..................  NCCI.
Alaska..........................  Assigned Risk Plan  ..................  ..................  NCCI.
American Samoa..................  None..............
Arizona.........................  Assigned Risk Plan  JUA--Liability....  ..................  NCCI.
Arkansas........................  Assigned Risk Plan  ..................  ..................  NCCI-Ark. Service
                                                                                               Center.
California......................  Assigned Risk Plan  ..................  Syndicate.........  State Compensation
                                                                                               Insurance Fund.
Colorado........................  Assigned Risk Plan  JUA--Commercial     ..................  Colorado
                                                       Lines.                                  Compensation
                                                                                               Insurance
                                                                                               Authority.
Connecticut.....................  Assigned Risk Plan  ..................  Syndicate.........  NCCI.
Delaware........................  Assigned Risk Plan  JUA--Property.....  Syndicate.........  Delaware
                                                                                               Compensation
                                                                                               Rating Bureau.
District of Columbia............  D.C. Auto           ..................  Syndicate.........  NCCI.
                                   Insurance Plan.
Florida.........................  Joint Underwriting  JUA--Unavailable    Multiple Servicing  Florida W.C. JUA.
                                   Assoc.              Lines.              Carrier.
Georgia.........................  Assigned Risk Plan  JUA--Casualty.....  Syndicate.........  NCCI.
Guam............................  None..............
Hawaii..........................  Assigned Risk Plan  ..................  Single Servicing    Hawaii Employers
                                                                           Carrier.            Mutual Insurance
                                                                                               Company.
Idaho...........................  Assigned Risk Plan  ..................  ..................  NCCI.
Illinois........................  Assigned Risk Plan  ..................  Syndicate.........  NCCI.
Indiana.........................  Assigned Risk Plan  ..................  Multiple Servicing  Indiana
                                                                           Car.                Compensation
                                                                                               Rating Bureau.
Iowa............................  Assigned Risk Plan  JUA--All P/C......  Syndicate.........  NCCI.
Kansas..........................  Assigned Risk Plan  JUA--Liability....  Single Servicing    NCCI.
                                                                           Carrier.
Kentucky........................  Insurance Plan....  ..................  Syndicate.........  Kentucky
                                                                                               Employers' Mutual
                                                                                               Insurance Co.
Louisiana.......................  Assigned Risk Plan  ..................  Single Servicing    Louisiana Workers'
                                                                           Carrier.            Compensation
                                                                                               Corp.
Maine...........................  Assigned Risk Plan  ..................  ..................  Maine Employers
                                                                                               Mutual Insurance
                                                                                               Company.
Maryland........................  State Fund........  ..................  Syndicate.........  Injured Workers'
                                                                                               Insurance Fund.
Massachusetts...................  Assigned Risk Plan  ..................  Syndicate.........  WCRIB of
                                   & Reinsurance                                               Massachusetts.
                                   Facility.
Michigan........................  Placement Facility  ..................  Syndicate.........  Michigan Workers'
                                                                                               Comp. Placement
                                                                                               Facility.
Minnesota.......................  Assigned Risk Plan  JUA--Liability,     Syndicate.........  Minnesota Workers'
                                                       except Product                          Comp. Insurers'
                                                       Liability.                              Assoc.
Mississippi.....................  Assigned Risk Plan  ..................  ..................  NCCI.
Missouri........................  Joint Underwriting  ..................  Syndicate.........  Travelers
                                   Assoc..                                                     Insurance Co.
Montana.........................  Assigned Risk Plan  ..................  ..................  State Compensation
                                                                                               Insurance Fund.

[[Page 78869]]

 
Nebraska........................  Assigned Risk Plan  ..................  ..................  Travelers
                                                                                               Insurance Co.
Nevada..........................  Assigned Risk Plan  JUA--All Lines....  ..................  NCCI.
New Hampshire...................  Insurance Plan &    JUA--Liability....  ..................  NCCI.
                                   Reinsurance
                                   Facility.
New Jersey......................  Assigned Risk Plan  ..................  Syndicate.........  Compensation
                                                                                               Rating and
                                                                                               Inspection
                                                                                               Bureau.
New Mexico......................  Assigned Risk Plan  JUA--Essential      Single Servicing    NCCI-NM Service
                                                       Property.           Carrier.            Center.
New York........................  Assigned Risk Plan  ..................  Syndicate.........  NY State Insurance
                                                                                               Fund.
North Carolina..................  Reinsurance         JUA--Essential      ..................  NC Rate Bureau.
                                   Facility.           Property.
North Dakota....................  Assigned Risk Plan  ..................  ..................  ND Workmen's
                                                                                               Compensation
                                                                                               Bureau.
Ohio............................  Assigned Risk Plan  JUA--Classes of     Syndicate.........  Ohio Bureau of
                                                       Commercial Lines                        Workers'
                                                       Designated by the                       Compensation.
                                                       Commissioner.
Oklahoma........................  Assigned Risk Plan  JUA--Liability....  ..................  OK State Insurance
                                                                                               Fund.
Oregon..........................  Assigned Risk Plan  JUA--Liability....  Single Servicing    NCCI.
                                                                           Carrier.
Pennsylvania....................  Assigned Risk Plan  ..................  Syndicate.........  State Workmen's
                                                                                               Insurance Fund.
Puerto Rico.....................  Assigned Risk Plan  ..................  ..................  State Insurance
                                                                                               Fund Corporation
                                                                                               of Puerto Rico.
Rhode Island....................  Assigned Risk Plan  ..................  Syndicate.........  Beacon Mutual Ins.
                                                                                               Co.
South Carolina..................  JUA \1\/Assigned    JUA--Prof.          ..................  NCCI.
                                   Risk Plan.          Liability and
                                                       Liability for
                                                       Daycare Providers.
South Dakota....................  Assigned Risk Plan  ..................  ..................  NCCI.
Tennessee.......................  Assigned Risk Plan  JUA--Unavailable    ..................  Aon Risk Services.
                                                       Lines.
Texas...........................  Assigned Risk Plan  JUA--Non-Profits..  ..................  Texas Workers'
                                                                                               Comp. Insurance
                                                                                               Fund.
Utah............................  Assigned Risk Plan  JUA--Unavailable    ..................  Workers'
                                                       Lines.                                  Compensation Fund
                                                                                               of Utah.
Vermont.........................  Assigned Risk Plan  JUA--Unavailable    ..................  NCCI.
                                                       Lines, except
                                                       Pollution.
Virgin Islands..................  None..............
Virginia........................  Assigned Risk Plan  JUA--Commercial     Syndicate.........  NCCI.
                                                       Line.
Washington......................  Assigned Risk Plan  JUA--Daycare......  Single Servicing    Washington
                                                                           Carrier.            Department of
                                                                                               Labor & Industry.
West Virginia...................  Assigned Risk Plan  JUA--Fire & EC....  Syndicate.........  West Virginia
                                                                                               Workmen's
                                                                                               Compensation
                                                                                               Fund.
Wisconsin.......................  Assigned Risk Plan  JUA--Liability....  Syndicate.........  Wisconsin
                                                                                               Compensation
                                                                                               Rating Bureau.
Wyoming.........................  Assigned Risk Plan  ..................  ..................  Wyoming Workers
                                                                                               Safety and
                                                                                               Compensation.
----------------------------------------------------------------------------------------------------------------
\1\ South Carolina operates a JUA until Feb. 28, 2002 and will convert to an assigned risk plan thereafter.

[FR Doc. 02-32468 Filed 12-24-02; 8:45 am]
BILLING CODE 4810-25-P