market bulletin

Ref: Y4967

Title

US Terrorism Risk Insurance Act of 2002, as amended ("TRIPRA 2015").
TRIA reporting

PurposeTo Advise the Market of the Annual Reporting to Calculate Syndicates'
Deductibles

Type

Scheduled

From

Leslie Redmond, Manager, Overseas Reporting, Market FinanceDirect Tel No: +44 (0)20 7327 5490 Email: leslie.redmond@lloyds.com

Date

4 February 2016

Deadlines 14 April 2016 and 21 April 2016
Relatedlinks

http://www.naic.org/committees_c_surplus_lines_iid_plan.htm

1. Purpose
To inform the market of requirements for reporting premiums to the US National
Association of Insurance Commissioners (“NAIC”) for the purpose of calculating thedeductible under TRIA.
These reporting requirements relate to a syndicate’s entire US commercial property& casualty premiums (as defined in TRIA) and not just to premiums received inrelation to TRIA.
You are reminded that, additionally, for syndicates with an IID listing the IID Filing
Requirements have the same deadlines for completion. Details of that filing are set
out in market bulletin Y4965 dated 26 January 2016 and entitled “Listing of Lloyd’s
syndicates as eligible surplus lines insurers in the United States annual filing
requirements”.

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Lloyd’s is authorised under the Financial Services and Markets Act 2000

MARKET BULLETIN

2. Syndicate reporting procedures
All syndicates (with the exceptions noted below) are required to report their relevant
premium income for 2015 on the form available from the NAIC website at thefollowing address:
http://www.naic.org/committees_c_surplus_lines_iid_plan.htm [for access hold the
cursor over the address and press the ‘Ctrl’ key and left click with the mouse]. The
return is entitled “TRIA Schedule” and is towards the bottom of the right-hand side of
the web page.
The return is in the same format as last year and all instructions for this year are inline with what was previously issued. Historical market bulletins and information on
TRIA can be found in CRYSTAL on lloyds.com (for help with CRYSTAL pleasecontact LITA – see section 6 of this letter).
The basis on which syndicates should report their premiums is outlined in Appendix
1.

3. Syndicates who must make the TRIA deductible return
Every syndicate that was trading in 2015 must make a TRIA deductible return,whatever its US trading status. The only exceptions are syndicates whose businessis limited to life insurance or to UK motor business. Syndicates with no relevant
premium to report must make a “nil” return to Market Finance (MF).
Syndicates are not required to make a return in the year in which they commence
trading. Treasury Regulations have made provision for newly formed insurers and in
the event of a certified event, it is likely that their deductible will be fixed inaccordance with methodology drawn up by the US Treasury.
A syndicate in run-off that ceased trading prior to 2015 may be required to make areturn, if it is still party to ongoing business that could lead to a claim on the TRIA
Federal programme. Its return will report the relevant premium it received in thecourse of 2015. Every such syndicate should consider making a return – it should be
noted that a failure to file a return will make it impossible to calculate a syndicate
deductible and cover under TRIA could be jeopardised. A decision not to make areturn should therefore follow a careful analysis of the syndicate’s book of business.
4. Classification of business
The detailed instructions set out in market bulletin Y3110 (1 August 2003) remaincurrent. Syndicates should be careful to ensure that the return is completed correctly
and that the premiums reported as “business covered by TRIA requirements” areproperly identified. Appendix 3, “Risk code mapping”, to market bulletin Y3110, hasbeen updated to reflect those lines of business no longer covered by TRIA (pleaserefer to market bulletins Y3719 & Y4107 and CRYSTAL for further details) following

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the program’s extension. This is attached as Appendix 2 to this bulletin.
Instructions issued by US Treasury concerning the lines of business covered by
TRIA refer to US NAIC line of business definitions. Appendix 3 sets out how theclasses of business in the TRIA return match up with US lines of business.
Appendix 2 and Appendix 3 should be regarded as a general guide only. In
particular, the lines of business covered on the TRIA return are wide and some
types of business falling under them are in fact excluded by TRIA. Premiums relating
to such excluded classes should not be reported as “business covered by TRIA
requirements”.
Syndicates should ensure all premiums for lines of business covered by TRIA,
including that which may be incidental to the main policy coverage(s), or part ofcombined coverages, are reported for TRIA deductible calculation purposes. In
general, if the insurance coverage is provided within the geographic and otherstatutory parameters of the definition of “insured loss” for TRIA, then such losses will
be covered by the Program, subject to the conditions for payment and otherrequirements of the Act. For further guidance, please refer to previous Lloyd’s
market bulletins covering TRIA on CRYSTAL.

5. Action Required
Please ensure that an electronic version of the TRIA form is submitted by 14 April
2016 (the excel file should be named TRIA [4 digit syndicate number] 2015.xls”).
This must be submitted via the Market Reporting web-site.
The notarised TRIA form must be hand delivered to the Tenants and Couriers on
the Lower Concourse of the Lloyd’s 1986 building by close of business on 21 April
2016, so that they can be filed with the IID in Kansas City by 13 May 2016. If MF
does not receive the notarised form by that deadline, we cannot guarantee to meetthe filing date.
Please note that three originals of the TRIA forms must be notarised, using the Jurat
page. There are a number of qualified notary firms based around the City, agentsare free to use whichever firm they choose to effect the notarisation. Please send us
two paper original versions of the notarised form: one will be forwarded to the IID;
the second will be retained by Market Finance. The third copy should be kept foryour own records. To avoid confusion, managing agents are reminded that all
documents in the two versions filed with us must be originals.
Where the syndicate is required to make an IID filing the TRIA return will not be apart of that return. Accordingly, the separate Jurat page which has been issued by
the NAIC with the TRIA return must be used.

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MARKET BULLETIN

For clarification purposes please note that submission of the IID financial filingformat should follow the same timetable, i.e.: submission of the electronic version by
14 April 2016 and submission of the notarised packs by 21 April 2016.

6. Queries and circulation
If you have queries on the completion of the spreadsheet please contact Hayley
Youles on extension 5299 or email Hayley.youles@lloyds.com or me, on theextension number above.
For queries regarding class definitions please contact the LMA – Alison Colver on
Lloyd’s extension 8370 email alison.colver@lmalloyds.com.
For queries on the use of coded data and USM's, contact the Enquire team at Xchanging on +44 (0)870 3800830.
For other general enquiries relating to TRIA please contact LITA on Lloyd’s
extension 6677 LITA@lloyds.com
Please note that this return is now subject to the Lloyd’s Overseas Returns
Fining Policy (see Market Bulletin Y4843, dated 1 December 2014).

Leslie RedmondManager, Overseas Reporting
Market Finance

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MARKET BULLETIN

Appendix 1
Details of premium reporting procedures
Syndicates are required to report their relevant premium for the previous calendar year as follows:

Where possible, syndicates should report premiums on an earned basis.



If syndicates are unable to report and complete the spreadsheet on an earned basis, thenthey may report premiums on a signed basis. Signed premiums must be grossed up for
brokerage and commissions. To avoid the possibility of premiums being under-reported,
Lloyd’s has agreed to certain safeguards. The percentages below therefore relate to thecomparison of whole account all years of account combined level signed premiums
with earned premiums (grossed up for brokerage and commission) for the previous
calendar year.
The safeguard provisions are as follows:-

If the syndicate’s signed premiums are 100% or more of earned premiums – it can
submit signed figures with no adjustment. This will mean a syndicate potentially reportinga higher premium figure than if it had made the calculation on an earned basis.

-If the syndicate’s signed premiums are 90% to 99.99% of earned premiums – if it
submits signed premiums, its submission will be adjusted upwards in proportion with thedifference at whole account level between signed and earned premiums.
ExampleWhole Account
TRIA
100
95
(Earned)(Signed)
TRIA premium for the deductible-

20(Signed)= 100/95 x20=21

If the syndicates signed premiums are less than 90% of earned premiums – if it submits
signed premiums, its submission will be adjusted upwards in proportion with thedifference at whole account level between signed premiums and earned premiums plus
10%.
ExampleWhole Account
TRIA
100
80
(Earned)(Signed)
TRIA premium for the deductible

20(Signed)= 110/80 x20= 27.5The additional loading is added to take into account the uncertainties of the assumptionthat characteristics of the TRIA account will track the whole account / book of business.

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Syndicates are expected to complete the IID spreadsheet using data relating to premium processed
during the previous calendar year, provided in USMs by Xchanging In-sure Services to syndicates.
Required breakdown of data will include information split by risk codes, FIL codes and trust code
information. Syndicates should ensure that this information is retained for premium processed in theprevious year.
De minimis provision: All syndicates are encouraged to report on an earned basis if they are able
to do so. However, a syndicate may report its premiums on signed basis, without applying thesafeguard provision adjustments mentioned above, if the amount of relevant premium income it isreporting is below specified “de minimis” levels. This applies whatever the relationship of its signed toits earned premiums at a whole account level.
For reporting purposes, the NAIC agrees with Lloyd’s that an adjustment in the level of a deductibleof $100,000 or less is “de minimis” under the agreed safeguard provisions and therefore does notneed to be made. This means that in absolute terms there are premium levels below which
syndicates are not required to make any adjustments to their signed figures under the above
safeguard provisions.
For the current year which is Programme Year 12 – (i.e. 2015 reported in 2016) – the relevant
income for the calculation of the deductible (calendar year signed, gross of all deductions) is$500,000 or less.

Year-on-year consistency
Over time many syndicates have moved from reporting on a signed to an earned premium basis. A
syndicate may not change mid-year and having switched to reporting on an earned basis the
syndicate may not subsequently change back to a signed reporting basis.

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MARKET BULLETIN

Appendix 2

Terror risk
code
1T
1T
1T
1T
1T
1T
1T
1T
1T
1T
1T
1T
1T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T
2T

risk
code
DX
K
KA
KC
KD
KG
KK
KL
KM
KP
KS
KT
KX
1
2
3
4
5
6
7
8
9
AO
AP
AR
AW
AX
CX
H
H2
H3
HX
L
L2
L3
LX
PX
RX
SC
SL
SO
SX
X1
XY
XZ
Y1

FSA Accounting Class/TRIA schedule of premiums andlossesAccident & Health
Accident & Health
Accident & Health
Accident & Health
Accident & Health
Accident & health
Accident & Health
Accident & Health
Accident & Health
Accident & Health
Accident & health
Accident & health
Accident & Health
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation

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MARKET BULLETIN

2T
2T
2T
2T
2T
2T
2T
2T
2T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
3T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T
4T

Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
ZX
B
G
GC
GX
O
OX
SA
SA
SR
T
TS
TX
W
WB
WX
X2
X5
XE
XT
BS
CF
CN
CP
CR
FC
FG
FM
LE
P
PB
PC
PE
PF
PN
PO
PP
PQ
PR
PS
PU

Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
Aviation
MarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMarineMiscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss

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4T
4T
4T
4T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
6T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T

PW
PZ
WA
WS
AG
B2
B3
B4
B5
BD
CA
CB
CC
DC
F
FA
FR
GS
HA
HP
JB
NB
NP
P2
P3
P4
P5
P6
P7
PD
TE
TO
TR
TU
WL
X3
XC
XP
XX
BB
CY
CZ
D2
D3
D4
D5
DM
DO
E2

Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Miscellaneous & Pecuniary Loss
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Property
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability

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MARKET BULLETIN

7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
7T
8T
8T
8T
8T
8T
8T
8T
1E
1E
1E
1E
1E
1E
2E
2E
3E
4E
4E

E3
E4
E5
E6
E7
E8
E9
F2
F3
GP
NA
NC
NL
PI
PL
PM
UA
UC
W2
W3
W4
WC
X4
XD
XF
XG
XH
XL
CT
Q
QL
QX
V
VL
VX
EM
EN
ET
EW
EY
EZ
EG
EH
EF
EA
EB

Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Third Party Liability
Transport
Transport
Transport
Transport
Transport
Transport
Transport
MarineMarineMarineMarineMarineMarineMarineMarineProperty
Third Party Liability
Third Party Liability

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Appendix 2 should be regarded as a general guide only. In particular, the lines of business coveredon the NAIC TRIA return are wide and some types of business falling under them are in fact
excluded by TRIA. Premiums relating to such excluded classes should not be reported as “businesscovered by TRIA requirements”.
Not all risk codes shown under Appendix 2 are subject to TRIA. However, syndicates should ensure
all premiums for lines of business covered by TRIA, including that which may be incidental to themain policy coverage(s), or part of combined coverages, are reported for TRIA deductible calculation
purposes. Some of the risk codes in their application are not precise enough to exclude completely.

Appendix 3

Misc. &,
Accident

US Line ofbusiness
Fire
Allied lines
Ocean marine
Inland marine
Workers'
compensation(1)
Other liability
Products liability
Aircraft (all perils)
Boiler and machinery

Pec.

&
healthThird

Financial
Aviation

Marineloss

party
Property

liability

Transport

x
x
x

x
x

x

x

x
x
x

x
x
x

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