[Federal Register Volume 85, Number 245 (Monday, December 21, 2020)]
[Notices]
[Pages 83159-83160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27996]


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DEPARTMENT OF THE TREASURY


IMARA Calculation for Calendar Year 2021 Under the Terrorism Risk 
Insurance Program

AGENCY: Departmental Offices, Department of the Treasury.

ACTION: Notice.

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SUMMARY: The Department of the Treasury (Treasury) is providing notice 
to the public of the insurance marketplace aggregate retention amount 
(IMARA) for calendar year 2021 for purposes of the Terrorism Risk 
Insurance Program (TRIP or the Program) under the Terrorism Risk 
Insurance Act, as amended (TRIA or the Act). As explained below, 
Treasury has determined that the IMARA for calendar year 2021 is 
$41,705,989,523.

DATES: The IMARA for calendar year 2021 is effective January 1, 2021 
through December 31, 2021.

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

SUPPLEMENTARY INFORMATION:

I. Background

    TRIA--which established TRIP--was signed into law on November 26, 
2002, following the attacks of September 11, 2001, to address 
disruptions in the market for terrorism risk insurance, to help ensure 
the continued availability and affordability of commercial property and 
casualty insurance for terrorism risk, and to allow the private markets 
to stabilize and build insurance capacity to absorb any future losses 
for terrorism events.\1\ TRIA requires insurers to ``make available'' 
terrorism risk insurance for commercial property and casualty losses 
resulting from certified acts of terrorism, and provides for shared 
public and private compensation for such insured losses. The Program 
has been reauthorized four times, most recently by the Terrorism Risk 
Insurance Program Reauthorization Act of 2019.\2\ The Secretary of the 
Treasury (Secretary) administers the Program, with assistance from the 
Federal Insurance Office (FIO).\3\
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    \1\ Public Law 107-297, sec. 101(b), 116 Stat. 2322, codified at 
15 U.S.C. 6701 note. Because the provisions of TRIA (as amended) 
appear in a note instead of particular sections of the U.S. Code, 
the provisions of TRIA are identified by the sections of the law.
    \2\ See Terrorism Risk Insurance Extension Act of 2005, Public 
Law 109-144, 119 Stat. 2660; Terrorism Risk Insurance Program 
Reauthorization Act of 2007, Public Law 110-160, 121 Stat. 1839; 
Terrorism Risk Insurance Program Reauthorization Act of 2015, Public 
Law 114-1, 129 Stat. 3 (2015 Reauthorization Act); Terrorism Risk 
Insurance Program Reauthorization Act of 2019, Public Law 116-94, 
133 Stat. 2534.
    \3\ 31 U.S.C. 313(c)(1)(D).
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    TRIA provides for an ``industry marketplace aggregate retention 
amount'' or ``IMARA'' to be used for determining whether Treasury must 
recoup any payments it makes under the

[[Page 83160]]

Program. Under the Act, if total annual payments by all participating 
insurers are below the IMARA, then Treasury must recoup all amounts 
expended by it up to the IMARA threshold. If total annual payments by 
all participating insurers are above the IMARA, then Treasury has 
discretionary authority (but not the obligation) to recoup all of the 
expended amounts that are above the IMARA threshold.\4\
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    \4\ See TRIA, sec. 103(e)(7); see also 31 CFR part 50 subpart J 
(Recoupment and Surcharge Procedures).
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    TRIA provides for a schedule of defined IMARA values for calendar 
year 2015 through calendar year 2019.\5\ For calendar year 2020 and 
beyond, TRIA states that the IMARA ``shall be revised to be the amount 
equal to the annual average of the sum of insurer deductibles for all 
insurers participating in the Program for the prior 3 calendar years,'' 
as such sum is determined pursuant to final rules issued by the 
Secretary.\6\
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    \5\ In 2015, the IMARA was $29.5 billion; it increased to $31.5 
billion in 2016, $33.5 billion in 2017, $35.5 billion in 2018, and 
$37.5 billion in 2019. See TRIA, sec. 103(e)(6)(B).
    \6\ TRIA, sec. 103(e)(6)(B)(ii) and (e)(6)(C). An insurer's 
deductible under the Program for any particular year is 20 percent 
of its direct earned premium subject to the Program during the 
preceding year. TRIA, sec. 102(7). For example, an insurer's 
calendar year 2020 Program deductible is 20 percent of its calendar 
year 2019 direct earned premium.
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    On November 15, 2019, Treasury issued a final rule for calculation 
of the IMARA.\7\ This rule, which is codified at 31 CFR 50.4(m)(2), 
provides that the IMARA will be calculated by averaging the annual 
industry aggregate deductibles over the prior three calendar years, 
based upon the direct earned premium (DEP) reported to Treasury by 
insurers in Treasury's annual data calls. Insurer deductibles under the 
Program are based upon the DEP of individual insurers reported to 
Treasury in the prior year (e.g., 2018 DEP for 2019 calendar year).
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    \7\ 84 FR 62450 (November 15, 2019) (Final Rule). On December 
18, 2019, Treasury issued a notice that the IMARA calculation for 
calendar year 2020 was $40,878,630,900. 84 FR 69462 (December 18, 
2019).
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    Accordingly, for purposes of determining the IMARA for calendar 
2021, Treasury has averaged the aggregate insurer deductibles for 
calendar years 2020, 2019, and 2018 (as reported to Treasury in each of 
these years), which are based on the reported DEP for calendar years 
2019, 2018, and 2017, respectively.
    FIO's 2020 Report on the Effectiveness of the Terrorism Risk 
Insurance Program \8\ identified the DEP amounts participating insurers 
reported to Treasury in the TRIP-eligible lines of insurance in the 
2018, 2019, and 2020 TRIP data calls. For purposes of the 2021 IMARA 
calculation, those figures are as follows:
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    \8\ FIO, Report on the Effectiveness of the Terrorism Risk 
Insurance Program (June 2020) (2020 Effectiveness Report), 11 
(Figure 1), https://home.treasury.gov/system/files/311/2020-TRIP-Effectiveness-Report.pdf.

                                                        TRIP-Eligible DEP by Insurer Category \9\
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                                                                        2018 TRIP data call          2019 TRIP data call          2020 TRIP data call
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                                                                    2017 DEP in TRIP-    % of    2018 DEP in TRIP-    % of    2019 DEP in TRIP-    % of
                                                                      eligible lines     Total     eligible lines     Total     eligible lines    Total
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Alien Surplus Lines Ins...........................................     $9,492,933,571        5      $7,618,548,358        4     $11,149,972,542        5
Captive Insurers..................................................      9,052,630,571        4       8,937,119,082        4       9,083,384,310        4
Non-Small Insurers................................................    163,891,791,592       80     166,188,192,378       81     172,970,757,331       80
Small Insurers....................................................     21,806,195,201       11      22,516,178,612       11      22,882,139,290       11
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    Total.........................................................    204,243,550,936      100     205,260,038,430      100     216,086,253,473      100
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Source: 2018-2020 TRIP Data Calls.

    Treasury has used these reported premiums to calculate the IMARA 
for calendar year 2021. The average annual DEP figure for the combined 
period of 2017, 2018, and 2019 is $208,529,947,613 [($204,243,550,936 + 
$205,260,038,430 + $216,086,253,473)/3 = $208,529,947,613]. The average 
aggregate deductible for the prior three years is 20 percent of 
$208,529,947,613, which equals $41,705,989,523.\10\ Accordingly, the 
IMARA for purposes of calendar year 2021 is $41,705,989,523.
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    \9\ The figures from the 2019 and 2018 TRIP data calls (some 
figures may not add up on account of rounding) were previously 
reported in the IMARA calculation for calendar year 2020. See 84 FR 
69462 (December 18, 2019). Figures from the 2020 TRIP data call were 
previously reported in FIO's June 2020 Effectiveness Report, as 
available at that time and rounded. 2020 Effectiveness Report, 11 
(Figure 1). The figures from the 2020 TRIP data call as originally 
reported in June 2020 have been updated to include data received by 
FIO after the reporting deadline.
    \10\ See note 6.

    Dated: December 15, 2020.
Steven E. Seitz,
Director, Federal Insurance Office.
[FR Doc. 2020-27996 Filed 12-18-20; 8:45 am]
BILLING CODE 4810-25-P