a

GAO

United States General Accounting Office

Report to the Chairman, Committee on 

Financial Services, House of 

Representatives

April 2004 TERRORISM 

INSURANCE

Implementation of the 

Terrorism Risk 

Insurance Act of 2002

GAO-04-307
www.gao.gov/cgi-bin/getrpt?GAO-04-307.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Richard J. 

Hillman at (202) 512-8678 or 

hillmanr@gao.gov. 

Highlights of GAO-04-307, a report to the 

Chairman, Committee on Financial 

Services, House of Representatives 

April 2004

TERRORISM INSURANCE 

Implementation of the Terrorism Risk 

Insurance Act of 2002 

Treasury and industry participants have made significant progress in 

implementing TRIA during its first year, but Treasury has important work 

to complete in order to comply with its responsibilities under the act. For 

example, Treasury has issued regulations to define program 

requirements, created and fully staffed the Terrorism Risk Insurance 

Program office, and begun data collection efforts in support of mandated 

studies. Insurers also have adjusted their operations and policies to 

comply with TRIA. However, insurers have expressed concerns that 

Treasury has not yet decided whether to extend through 2005 the 

requirement that insurers offer terrorism coverage on terms that do not 

differ materially from other coverage. Although the act gives Treasury 

until September 1, 2004, to decide this issue, a more timely decision is 

needed to avoid hindering underwriting and pricing decisions for policies 

that are issued or renewed through 2005. In addition, Treasury has not 

fully established a claims processing and payment structure. Insurers are 

concerned that a delayed payment of claims by Treasury, whether 

because of the length of time taken to certify that an act of terrorism met 

the requirements for federal reimbursement or from inadequate claims 

processing capability, might seriously impact insurer cash flows or, in 

certain circumstances, insurer solvency. 

It appears that Congress’s first objective in creating TRIA—to ensure that 

business activity did not materially suffer from a lack of available terrorism 

insurance—has been largely achieved. Since TRIA was enacted in November 

2002, terrorism insurance has been generally available to businesses. But 

most commercial policyholders are not buying the coverage. According to 

insurance industry experts, purchases have been higher in areas considered 

to be at high risk of another terrorist attack. However, many policyholders 

with businesses or properties not located in perceived high-risk locations are 

not buying coverage because they view any price for terrorism insurance as 

high relative to their perceived risk exposure. Further, those who have 

bought terrorism insurance remain exposed to significant perils. Insurers 

have broadened long-standing policy exclusions of nuclear, biological, and 

chemical events. Congress’s second objective—to give private industry a 

transitional period during which it could begin pricing terrorism insurance 

and develop ways to cover losses after TRIA expired—has not yet been 

achieved. Industry sources indicated that under TRIA, insurance market 

participants have made no progress to date toward the development of 

reliable methods for pricing terrorism risks and made little movement 

toward developing any mechanism that would enable insurers to provide 

terrorism insurance to businesses without government involvement. 

After the terrorist attacks of 

September 11, 2001, insurance 

coverage for terrorism largely 

disappeared. Congress passed the 

Terrorism Risk Insurance Act 

(TRIA) in 2002 to help commercial 

property-casualty policyholders 

obtain terrorism insurance and give 

the insurance industry time to 

develop mechanisms to provide 

such insurance after the act expires 

on December 31, 2005. Under 

TRIA, the Department of Treasury 

caps insurer liability and would 

process claims and reimburse 

insurers for a large share of losses 

from terrorist acts that Treasury 

certified as meeting certain criteria. 

As Treasury and industry 

participants have operated under 

TRIA for more than a year, GAO 

was asked to describe (1) their 

progress in implementing the act 

and (2) changes in the terrorism 

insurance market under TRIA. 

GAO recommends that the 

Secretary of the Treasury, as part 

of Treasury’s study of the 

effectiveness of TRIA and after 

consultation with insurance 

industry participants, identify for 

Congress alternatives that may 

exist for expanding the availability 

and affordability of terrorism 

insurance after TRIA expires. 

These alternatives could assist 

Congress during its deliberations 

about terrorism insurance. 
Page i GAO-04-307 Terrorism Risk Insurance

Contents

Letter 1

Results in Brief 3

Background 5

Treasury and Industry Participants Have Made Progress in 

Implementing TRIA, but Treasury Has Not Yet Achieved Key 

Goals 8

Despite Availability, Few Are Buying Terrorism Insurance, and the 

Industry Has Made Little Progress toward Post-TRIA 

Coverage 22

Conclusions 29

Recommendation for Executive Action 30

Agency Comments 30

Appendix

Appendix I: Comments from the Department of the Treasury 32

Table Table 1: TRIA-Mandated Studies and Data Collection 14

Figures Figure 1: Prerequisites and Limits of Coverage under TRIA 6

Figure 2: Regulations and Procedures Necessary to Implement 

TRIA 12

Abbreviations

GAO U.S. General Accounting Office

NAIC National Association of Insurance Commissioners

NBC nuclear, biological, and chemical

OMB Office of Management and Budget

RFP Request for Proposal

SFP standard fire policy

TRIA Terrorism Risk Insurance Act of 2002

TRIP Terrorism Risk Insurance Program
Contents

Page ii GAO-04-307 Terrorism Risk Insurance

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-04-307 Terrorism Risk Insurance

United States General Accounting Office

Washington, D.C. 20548

A

April 23, 2004 Letr

The Honorable Michael Oxley

Chairman, Committee on Financial Services

House of Representatives

Dear Mr. Chairman:

The terrorist attacks of September 11, 2001, drastically changed the way 

insurers viewed the risk of terrorism. An industry that had considered the 

risk of terrorism so low that it did not identify or price terrorism risk 

separate from property and casualty coverage will pay approximately $40 

billion for losses arising from September 11, according to industry experts. 

In the aftermath, we reported that insurance coverage was disappearing for 

terrorist events, particularly for large businesses and those perceived to be 

at some risk.1

 As contracts between reinsurers and insurers came up for 

renewal, reinsurers excluded terrorism from coverage.2 Without 

reinsurance, insurers retained greater levels of risks than they could 

responsibly carry, and their reaction was to exclude these risks from 

commercial policies as they were renewed. 

In light of concerns that the lack of terrorism insurance could have 

significant effects on the economy or that, in the event of another terrorist 

attack, the economic costs would fall directly on the victims and the 

government, Congress passed the Terrorism Risk Insurance Act of 2002 

(TRIA), which took effect on November 26, 2002.3

 Under TRIA, the 

Department of the Treasury (Treasury) would reimburse insurers for a 

large share of the losses associated with certain acts of foreign terrorism 

that occur during the 3-year term of the act. The purpose of TRIA is 

twofold: to make terrorism insurance widely available and affordable to 

1

U.S. General Accounting Office, Terrorism Insurance: Rising Uninsured Exposure to 

Attacks Heightens Potential Economic Vulnerabilities, GAO-02-472T (Washington, D.C.: 

Feb. 27, 2002).

2

Reinsurance is a mechanism that insurance companies routinely use to spread risk 

associated with insurance policies. Simply put, it is insurance for insurance companies. 

Reinsurance is a normal business practice that satisfies a number of needs in the insurance 

marketplace, including the need to expand capacity and obtain protection against potential 

catastrophes.

3

When the President signed TRIA into law on November 26, 2002, its provisions took effect 

immediately.
Page 2 GAO-04-307 Terrorism Risk Insurance

commercial policyholders for the duration of the act and to provide a 

transitional period during which insurance market participants could find 

ways to price terrorism insurance and develop market-driven resources 

and mechanisms that would offer terrorism insurance after TRIA expires 

on December 31, 2005. 

TRIA requires that all insurers selling commercial lines of property and 

casualty insurance “make available” coverage for certain terrorist events in 

the first 2 years of the program. TRIA defines “make available” to mean 

that the coverage must be offered for insured losses arising from terrorist 

events and that coverage not differ materially from the terms, amounts, and 

limitations applicable to coverage for losses arising from other types of 

events. However, TRIA gives Treasury the option of determining whether 

the “make available” requirement should be extended through 2005, the 

third year of the act, and gives the agency until September 1, 2004, to do so. 

Also, not all acts of terrorism will trigger reimbursements under TRIA: the 

Secretary of the Treasury must “certify” that an act of terrorism meets the 

criteria specified in TRIA.4

 For example, “an individual or individuals 

acting on behalf of any foreign person or foreign interest” must commit the 

act. After an event is certified, TRIA authorizes Treasury to reimburse 

insurers for most of the insured losses, after they have paid specified 

deductible amounts. Moreover, TRIA authorizes Treasury to administer the 

Terrorism Risk Insurance Program (TRIP) office, through which Treasury 

will administer TRIA provisions and would pay claims. TRIA also mandates 

various studies and data collection efforts and contains provisions 

affecting the National Association of Insurance Commissioners (NAIC).5

Treasury and industry participants have operated under TRIA for more 

than a year. Consistent with your request, in this report we describe (1) the 

progress made by Treasury and insurance industry participants in 

implementing TRIA provisions and (2) changes in the market for terrorism 

insurance coverage under TRIA. 

To address these objectives, we reviewed and analyzed Treasury’s final and 

proposed regulations in the Federal Register, public comments that were 

4

Section 102 of TRIA provides that the Secretary of the Treasury, in concurrence with the 

Secretary of State and the Attorney General of the United States, shall determine whether an 

event should be certified as an act of terrorism, based on certain criteria.

5

NAIC is a voluntary organization of the chief insurance regulatory officials of the 50 states, 

the District of Columbia, and four U.S. territories.
Page 3 GAO-04-307 Terrorism Risk Insurance

submitted about the regulations, relevant information concerning state 

legislation, and publicly available and proprietary industry data and studies 

on the terrorism insurance market. We interviewed officials at Treasury, 

NAIC, and state insurance regulators from six states with high insurance 

sales volumes. We also interviewed representatives of insurance 

companies, reinsurance companies, brokers for insurance and reinsurance 

companies, industry associations, property owners and developers, and 

insurance filing services and credit rating agencies.6

 In our discussions 

with these organizations, we endeavored to gain an understanding of their 

experience in implementing TRIA requirements, obtain their views on the 

effects of TRIA on the terrorism insurance market, and identify 

developments within the industry to address terrorism risks after TRIA 

expires.

We conducted our work in Chicago, New York City, and Washington, D.C., 

from January 2003 through April 2004 in accordance with generally 

accepted government auditing standards.

Results in Brief Treasury and industry participants have made significant progress in 

implementing TRIA to date, but Treasury has important actions to 

complete in order to comply with its responsibilities under TRIA. Between 

November 2002 and December 2003, Treasury issued implementing 

regulations, or final rules, on issues such as definitions of basic terms used 

in TRIA and written disclosure to policyholders about TRIA requirements, 

limits of coverage, and prices. During that same period, Treasury issued a 

proposed rule on basic claims procedures. According to Treasury officials, 

Treasury also fully staffed the TRIP office by September 2003, decided not 

to extend TRIA to group life insurance lines based on the results of a 

TRIA-mandated study, and began mandated studies and data collection 

efforts. However, Treasury has not yet decided whether to extend the 

requirement to policies issued or renewed in 2005 that insurers “make 

available” terrorism insurance on terms not differing materially from other 

coverage. In addition, it has not fully established a claims processing and 

payment structure. NAIC, in its advisory role, has effectively assisted 

Treasury in drafting guidance and regulations, and insurance companies 

generally have made policy and operational changes—including pricing 

decisions, policy language revisions, and policyholder notifications—to 

6

Filing services perform many services for insurance companies, including submitting to 

state insurance regulators the documents required to sell a line of insurance. 
Page 4 GAO-04-307 Terrorism Risk Insurance

comply with TRIA. However, insurers have expressed concerns about 

some work Treasury has not yet completed and the time frames allotted in 

TRIA that drive its work and responsibilities. For example, insurers noted 

that if Treasury waited until the TRIA deadline, September 1 of this year, to 

decide whether insurers would have to make terrorism insurance available 

through 2005, the decision would come too late for them to make 

appropriate decisions for business planning for the third year of TRIA. 

Moreover, a delayed payment of claims by Treasury, whether because of 

the length of time taken to certify that an act of terrorism met the 

requirements for federal reimbursement or from inadequate claims 

processing capability, might seriously impact insurer cash flows or, in 

certain circumstances, solvency. 

Under TRIA, insurers and, to a limited extent, reinsurers have made 

terrorism insurance available, but most commercial policyholders are not 

buying the coverage and those that do remain exposed to significant risks. 

According to real estate and risk management experts, TRIA primarily has 

benefited high-risk policyholders, such as owners and developers of large 

commercial properties located in major urban centers and geographic 

locations perceived at greater risk for terrorism. Limited, but consistent 

results from industry surveys suggest between 10 and 30 percent of 

commercial policyholders are purchasing terrorism insurance. However, 

according to insurance industry experts, many policyholders with 

businesses or properties not located near major urban centers or in 

perceived high-risk locations are not buying terrorism insurance because 

they perceive themselves at low risk for terrorism and thus view any price 

for terrorism insurance as high relative to their risk exposure. Some 

industry experts are concerned that adverse selection—where those most 

at risk from terrorism are generally the only ones buying terrorism 

insurance—may be occurring. The potential negative effects of low 

take-up, or purchase rates, in combination with adverse selection would 

become evident only in the aftermath of a terrorist attack and include more 

difficult economic recovery for businesses without terrorism coverage and 

potentially significant financial problems for insurers. Moreover, 

policyholders with terrorism insurance may still not be insured for certain 

significant perils resulting from terrorist events, even if the events were to 

be certified. These perils include losses resulting from nuclear, biological, 

and chemical (NBC) agents, radioactive contamination, and in a growing 

number of states, fire following terrorist events. The insurance industry 

has historically applied certain of these limitations and exclusions. In the 

aftermath of September 11, state legislatures have permitted their 

expansion and they remain in place. Finally, under TRIA insurance market 
Page 5 GAO-04-307 Terrorism Risk Insurance

participants have not yet developed a reliable method for pricing terrorism 

risks and made little movement toward any mechanism that would enable 

insurers to provide terrorism insurance to businesses without government 

involvement.

The Assistant Secretary for Financial Institutions, Department of the 

Treasury, provided written comments on a draft of this report. Treasury 

generally believed the report was a thorough and well-balanced discussion 

of the impact and implementation of TRIA. Treasury’s comments also 

explained how it prioritized its work at the inception of the program to help 

the insurance industry implement TRIA’s requirements and expanded upon 

the details of its contingency plans for a terrorist event occurring before all 

regulations and structures were in place and contractors hired. Treasury’s 

comments are reprinted in appendix I.

Background Under TRIA, Treasury is responsible for reimbursing insurers for a portion 

of terrorism losses under certain conditions. Payments are triggered when 

(1) the Secretary of the Treasury certifies that terrorists acting on behalf of 

foreign interests have carried out an act of terrorism and (2) aggregate 

insured losses for commercial property and casualty damages exceed 

$5,000,000 for a single event.7

 TRIA specifies that an insurer is responsible 

(i.e., will not be reimbursed) for the first dollars of its insured losses—its 

deductible amount. TRIA sets the deductible amount for each insurer 

equal to a percentage of its direct earned premiums for the previous year.8

 

Beyond the deductible, insurers also are responsible for paying a 

percentage of insured losses. Specifically, TRIA structures pay-out 

provisions so that the federal government shares the payment of insured 

losses with insurers at a 9:1 ratio—the federal government pays 90 percent 

of insured losses and insurers pay 10 percent—until aggregate insured 

losses from all insurers reach $100 billion in a calendar year (see fig. 1). 

7

Aggregate insured losses are the sum of insured property and casualty losses from all 

commercial policyholders as a result of a certified act of terrorism.

8

Section 102(4) of TRIA defines direct earned premiums as “a direct earned premium for 

property and casualty insurance issued by any insurer for insurance against losses....” 

Treasury provided further clarification that direct earned premiums are “earned as reported 

to the NAIC in the Annual Statement in column 2 of Exhibit of Premiums and Losses 

(commonly known as Statutory Page 14)” and cover all risks, not only for risks from 

terrorism. The percentage of the direct earned premium allowed as an insurer deductible 

varies over the program years: 7 percent in 2003, 10 percent in 2004, and 15 percent in 2005.
Page 6 GAO-04-307 Terrorism Risk Insurance

Thus, under TRIA’s formula for sharing losses, insurers are reimbursed for 

portions of the claims they have paid to policyholders. Furthermore, TRIA 

then releases insurers who have paid their deductibles from any further 

liability for losses that exceed aggregate insured losses of $100 billion in 

any one year. Congress is charged with determining how losses in excess 

of $100 billion will be paid.9

 

Figure 1: Prerequisites and Limits of Coverage under TRIA

a

The percentage of direct earned premiums increases each year: 7 percent in 2003, 10 percent in 

2004, and 15 percent in 2005.

TRIA also contains provisions and a formula requiring Treasury to recoup 

part of the federal share if the aggregate sum of all insurers’ deductibles 

and 10 percent share is less than the amount prescribed in the act—the 

“insurance marketplace aggregate retention amount.” TRIA also gives the 

Secretary of the Treasury discretion to recoup more of the federal payment

9

Sections 103(e)(2)(A)(i-ii) and 103(e)(3) of TRIA.

$0

$100B "Cap"

Criteria for TRIP payments

10% 90%

Event occurs

Secretary of Treasury

certifies the event as an

act of foreign terrorism

Aggregate insured losses

for commercial property

and casualty damages

exceed $5,000,000

Losses from an event

$5M

Percent of insurers' direct earned premiumsa

Payment responsibilities

Federal government reimbursement to insurers

Insurer payments to policyholders

(not federally reimbursed)

Source: GAO analysis of Terrorism Risk Insurance Act of 2002.
Page 7 GAO-04-307 Terrorism Risk Insurance

if deemed appropriate.10 Commercial property-casualty policyholders 

would pay for the recoupment through a surcharge on premiums for all the 

property-casualty policies in force after Treasury established the surcharge 

amount; the insurers would collect the surcharge. TRIA limits the 

surcharge to a maximum of 3 percent of annual premiums, to be assessed 

for as many years as necessary to recoup the mandatory amount. TRIA 

also gives the Secretary of the Treasury discretion to reduce the annual 

surcharge in consideration of various factors such as the economic impact 

on urban centers. However, if Treasury makes such adjustments, it has to 

extend the surcharges for additional years to collect the remainder of the 

recoupment.

Treasury is funding TRIP operations with “no-year money” under a TRIA 

provision that gives Treasury authority to utilize funds necessary to set up 

and run the program.11 The TRIP office had a budget of $8.97 million for 

fiscal year 2003 (of which TRIP spent $4 million), $9 million for fiscal year 

2004, and a projected budget of $10.56 million for fiscal year 2005—a total 

of $28.53 million over 3 years. The funding levels incorporate the estimated 

costs of running a claims-processing operation in the aftermath of a 

terrorist event: $5 million in fiscal years 2003 and 2004 and $6.5 million in 

fiscal year 2005, representing about 55 to 60 percent of the budget for each 

fiscal year. If no certified terrorist event occurred, the claims-processing 

function would be maintained at a standby level, reducing the projected 

costs to $1.2 million annually, or about 23 percent of the office’s budget in 

each fiscal year. Any funds ultimately used to pay the federal share after a 

certified terrorist event would be in addition to these budgeted amounts.

10According to Treasury officials, the formula for the mandatory portion of the recoupment 

is intended to ensure that the insurance industry is financially responsible for a prescribed 

level of the first dollars of losses. The prescribed loss levels are as follows: $10 billion in 

2003, $12.5 billion in 2004, and $15 billion in 2005. Therefore, if the sum of insurers’ 

aggregate payments for deductibles and the 10 percent share—the amounts paid by 

industry—is less than the level prescribed for that year, then a recoupment would be 

required to collect the difference. On the other hand, if the amounts paid by industry exceed 

the prescribed level, then a recoupment would not be needed. 

11“No-year money” is budget authority that remains available for obligation until expended, 

usually until the objectives for which the authority was made available are attained.
Page 8 GAO-04-307 Terrorism Risk Insurance

Treasury and Industry 

Participants Have 

Made Progress in 

Implementing TRIA, 

but Treasury Has Not 

Yet Achieved Key 

Goals 

More than a year after TRIA’s enactment, Treasury and insurance industry 

participants have made progress in implementing and complying with its 

provisions, but Treasury has yet to fully implement the 3-year program. 

Treasury has issued regulations (final rules) to guide insurance market 

participants, fully staffed the TRIP office, and started collecting data and 

performing studies mandated by TRIA. However, Treasury has yet to make 

the claims payment function operational and decide whether to extend the 

“make available” requirement through 2005. In its advisory role, NAIC has 

effectively assisted Treasury in drafting guidance and regulations and 

planning mandated studies. Insurance companies are also generally 

complying with TRIA requirements by making changes to their operations, 

such as revising premiums and policy terms. However, insurers do not yet 

know whether they will be required to “make available” terrorism 

insurance for policies issued or renewed in 2005. Additionally, they have 

voiced concerns about the time Treasury might take to certify an act of 

terrorism as eligible for reimbursement under TRIA and process and pay 

claims after an act was certified.

Treasury Has Issued Some 

Regulations, Staffed the 

TRIP Office, and Begun 

Studies and Data Collection

To implement TRIA and make TRIP functional, Treasury has taken 

numerous regulatory and administrative actions, which encompass 

rulemaking, creating a new program office, and collecting and analyzing 

data. To date, Treasury has issued three final rules and one proposed rule, 

which provide uniform definitions of TRIA terms, explain disclosure 

requirements, determine which insurers are subject to TRIA, and establish 

a basic claims-paying process. Treasury has also created and staffed the 

TRIP office, which will oversee claims processing, payment, and auditing. 

Finally, Treasury has completed a TRIA-mandated assessment and is 

working on other reporting and data collection mandates. 

To Be Ready for Possible 

Terrorist Events, Treasury 

Quickly Issued Interim Guidance 

and Interim Final Rules

After TRIA became effective, Treasury officials said they moved quickly to 

provide immediate guidance to the insurance industry on time-sensitive 

requirements. Because the process required to issue final regulations 

would take a few months, Treasury published four sets of interim guidance 

in the Federal Register between December 2002 and March 2003. The first 

three sets of interim guidance were in a question-and-answer format to 

provide quick answers to specific questions, and the fourth interim 

guidance contained regulatory language. The purpose of the interim 

guidance was to help insurance companies and other entities determine if 

they were subject to TRIA and to help insurers quickly modify forms and 

policies and adjust operations by providing definitions and program 
Page 9 GAO-04-307 Terrorism Risk Insurance

parameters. Interim guidance in December 2002 covered requirements for 

disclosure (e.g., notification to policyholders), the “make available” 

provision, and which lines of property-casualty insurance were subject to 

TRIA. For example, the guidance explained that under TRIA insurers are 

required to send notices to their policyholders containing information 

about the availability and cost of terrorism insurance and the 90 percent 

federal share. Subsequent guidance provided information on topics such 

as how certain insurers should allocate direct earned premiums (which are 

used to determine what their deductibles would be), alternative methods 

for complying with TRIA’s disclosure requirement, and the application of 

TRIA to non-U.S. insurers. The interim guidance remained in force while 

Treasury drafted final rules. 

In addition to interim guidance, Treasury also published two interim final 

rules and a proposed rule. The first interim final rule laid the foundation of 

the program and key definitions for terms used in TRIA. The second 

interim final rule covered disclosure and “make available” requirements. 

The proposed rule addressed “state residual market insurance entities” and 

“state workers compensation funds”—two types of state-created entities 

that will be discussed below. The interim final rules had the force of law 

until they were superseded by final rules. As a result, Treasury officials 

stated, had a terrorist act occurred before final rules took effect, a 

regulatory structure would have been in place to allow a faster response 

than would otherwise have been possible.

Treasury Also Has Published 

Final Rules

As of March 1, 2004, Treasury’s interim guidance, interim final rules, and 

proposed rule had been superseded by three final rules. The first final rule 

was published in the Federal Register on July 11, 2003, and addressed basic 

definitions of words used in TRIA, such as “insurer” and “property and 

casualty insurance.”12 Treasury officials said they completed this 

regulation first to provide a foundation for subsequent regulations, which 

would use these terms frequently. Although TRIA provided definitions for 

these terms, TRIA also specified that state insurance regulations be 

preserved where possible. According to Treasury officials, Treasury thus 

devoted much effort to ensure that TRIA’s definitions of property-casualty 

insurance terms would be consistently applied across jurisdictions—a 

difficult task because Treasury did not have existing uniform or consistent 

12The first final rule received a technical revision, dealing with the definition of direct earned 

premium. Treasury published this technical revision in August 2003 in volume 68 of the 

Federal Register, page 48280.
Page 10 GAO-04-307 Terrorism Risk Insurance

definitions of the terms used in TRIA. For example, the term “commercial 

property-casualty insurance” includes slightly different lines of insurance 

in each state’s definition. Treasury decided to use information that insurers 

submitted in annual statements to NAIC as the basis for defining 

property-casualty insurance.13

On October 17, 2003, Treasury issued its second final rule on disclosure and 

“make available” requirements for insurers (see fig. 2). These 

time-sensitive requirements, which insurers had to meet to be eligible to 

receive federal reimbursement for terrorist losses, had originally been 

spelled out in the interim final rule. Among other things, the rule stated 

that insurers that had used NAIC’s model disclosure forms to notify their 

policyholders about TRIA and terrorism insurance premiums had complied 

with TRIA disclosure requirements. The rule also clarified that insurers did 

not have to make available coverage for certain risks if the insurer’s state 

regulator permitted the exclusion of those risks and the insurer had made 

the same exclusion from coverage on all other types of policies. For 

example, Treasury’s explanations in the rule specifically used policy 

exclusions for NBC events to illustrate this point. (We discuss these 

exclusions in more detail later in this report.) 

The third final rule, also issued on October 17, 2003, instructed two kinds of 

insurers that are typically created by state governments—“state residual 

market insurance entities” and “state workers’ compensation funds”—on 

how TRIA provisions apply to them (see fig. 2). States establish residual 

market insurance entities to assume risks that are generally unacceptable 

to the normal insurance market, and state workers’ compensation funds 

are state funds established to provide workers injured on the job with 

guaranteed benefits. The other insurance companies operating in the state 

usually fund these state-created entities. The rule explained how a state 

residual market insurance entity and its insurance company members 

should allocate direct earned premiums among themselves for the 

purposes of calculating deductibles under TRIA, because the size of the 

TRIA deductible is determined by the size of a company’s direct earned 

premium. Treasury crafted provisions specific to state residual market 

insurance entities because, depending on the particular state law, both the 

premiums and the profits and losses of these entities may be shared with 

13As previously noted, the information to define “property-casualty insurance” comes from 

the exhibit of premiums and losses found in the annual statement that insurers submit to 

NAIC.
Page 11 GAO-04-307 Terrorism Risk Insurance

their insurance company members. Absent these specific provisions, in 

those cases where premiums were shared the premiums would be double 

counted, resulting in an unfair increase in the deductible of the insurance 

company. The rule also applied TRIA’s disclosure provisions to both types 

of state-created entities. 

Treasury also issued a proposed rule on December 1, 2003, which would 

establish the first stages of a basic claims-paying process (see fig. 2). 

According to Treasury officials, this proposed regulation sets up an initial 

framework for the claims process, including instructions to insurers to 

notify Treasury when they have reached 50 percent of their deductible. 

This notification provides Treasury with advance notice of possible 

impending claims. The proposed rule also contains, among other things, 

requirements for insurers to receive federal reimbursements and provides 

associated recordkeeping requirements. Treasury intends to supplement 

the proposed rule with additional, separate guidance that will provide 

detailed operating procedures for claims filing and processing. According 

to the officials, Treasury took this phased approach to get the basic rules 

out to insurers in case a terrorist event occurred. 

Finally, a Treasury official said that Treasury staff drafted another rule, 

which is currently under review by the Office of Management and Budget 

(OMB). The draft, which will be published and available for public 

comment as a proposed rule after OMB approves it, addresses litigation 

management (see fig. 2). The draft proposed rule would apply a TRIA 

provision that establishes that suits arising from certified terrorist events 

are federal causes of action and establishes litigation management 

procedures.
Page 12 GAO-04-307 Terrorism Risk Insurance

Figure 2: Regulations and Procedures Necessary to Implement TRIA

a

TRIA sections that establish specific mandates or provide authority for Treasury to develop 

regulations.

b

TRIA sections for which Treasury has said that it would issue regulations.

c

TRIA sections that by inference require Treasury to take regulatory or administrative actions.

d

For example, Treasury published a final rule on July 11, 2003 that provided basic definitions.

e

The proposed rule details basic procedures insurers would follow to file a claim for reimbursement of 

the 90 percent federal share. Treasury also plans to issue more detailed guidance that, for example, 

would provide standardized forms and explain the method of payment.

Sources: TRIA (data); GAO (analysis).

No action

Final rule effective

Under development

Proposed rule

TRIA provisions

Sec. 103(b)(2)b Provide criteria on disclosure notifications to policyholders.

Sec. 103(c)b Develop regulations to establish criteria that would fulfill 

 TRIA’s “make available” requirement.

Sec. 103(d)(1)a Extend TRIA to state residual market insurance entities and 

 state workers’ compensation funds.

Sec. 103(e)(7) Develop a process to determine the recoupment amount. 

and (8)b Develop a process to determine the surcharge on 

 policyholder premiums and the length of time for which it 

 will be in effect.

Sec. 103(f)a Apply—at Treasury’s discretion—TRIA to offshore captive 

 insurers and other types of self-insurers.

Sec. 104(a)(1)b Develop procedures for claims investigation and claims 

 audit processes.

Sec. 104(a)(2)a Develop regulations to effectively administer and 

 implement TRIA. 

Sec. 104 (e)b

 Develop procedures to assess civil monetary penalties.

Sec. 108(b)c

 Develop procedures for claims settlement and recoupment 

 after TRIA expires.

Sec. 105 (c)b Develop regulations on disclosure notice requirements for 

 reinstating terrorism exclusions on in-force policies.

Sec. 107b

 Describes litigation management.

Sec. 104(b)a Develop—at Treasury’s discretion—interim final rules on filing 

 and certifying claims, paying for estimated or actual insured 

 losses, and adjusting for over- and underpayment of 

 estimated insured losses (final netting).

Status of Treasury regulatory

and administrative actions

Final rule took effect on 

October 17, 2003. 

Final rule took effect on 

October 17, 2003. 

Final rule took effect on 

October 17, 2003. 

Final rule took effect on 

October 17, 2003. 

Ongoing. Some final rules 

completed.d

No action to date.

Work ongoing but not 

completed.

No action to date.

No action to date.

No action to date.

Draft is at OMB for review and 

has not yet been published.

Treasury published a proposed 

rule on December 1, 2003.e 
Page 13 GAO-04-307 Terrorism Risk Insurance

Writing the regulations has been a lengthy and difficult process, not only 

because of the multiple procedural review requirements of federal 

rulemaking, but also because TRIA established that state insurance 

regulations should be preserved where possible.14 For example, as 

previously discussed, creating definitions in accord with the statutory 

definitions of more than 50 jurisdictions (the states, District of Columbia, 

Puerto Rico, and U.S. territories) required extensive discussions among the 

state regulators, which in turn required additional time to plan and execute. 

Treasury Has Fully Staffed 

the TRIP Office

In addition to developing regulations to implement TRIA, Treasury fully 

staffed the TRIP office by September 2003. The TRIP office develops and 

oversees the operational aspects of TRIA, which encompass claims 

management—processing, review, and payment—and auditing functions. 

The TRIP staff consists of an executive director, a senior advisor, two 

attorneys, two policy analysts, and two administrative staff. Since 

becoming operational, TRIP staff have drafted regulations and performed 

other tasks necessary to make the program functional. For example, staff 

reviewed and incorporated appropriate public comments to proposed 

regulations and visited reinsurers to learn more about paying claims 

submitted by insurers as a prelude to developing criteria for claims 

payment and processing. Staff also will be issuing contracts for vendors to 

supply these claims services. (We discuss the claims processing function in 

more detail later in this report.) Additionally, TRIP staff have ongoing work 

such as issuing interpretive letters in response to questions submitted by 

the public and participating in conferences across the United States to 

inform regulators, industry participants, and the public about TRIA 

provisions. 

Treasury Has Begun Mandated 

Data Collection and Analysis 

Treasury has completed one TRIA mandate for data collection and a study 

and has begun work on others. Specifically, TRIA mandated that Treasury 

provide information to Congress in four areas: (1) the effects of terrorism 

on the availability of group life insurance, (2) the effects of terrorism on the 

14The procedural requirements for federal rulemaking include reviewing proposed 

regulations prior to publication in the Federal Register. Pursuant to the “Regulatory 

Planning and Review” rule (Executive Order 12866), the Regulatory Flexibility Act (5 U.S.C. 

601 et seq.), and the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), respectively: (1) all 

regulatory actions that are considered significant should be reviewed by OMB; (2) the 

economic impact of the proposed regulation on small entities should be assessed; and (3) 

the recordkeeping requirements of the proposed regulation should be assessed. In addition, 

Section 101(b)(2) of TRIA provides that state insurance regulations should be preserved.
Page 14 GAO-04-307 Terrorism Risk Insurance

availability of life and other lines of insurance, (3) annual data on premium 

rates, and (4) the effectiveness of TRIA (see table 1). Treasury’s Office of 

Economic Policy is responsible for organizing and analyzing information 

associated with the mandated studies and assessments. 

Table 1: TRIA-Mandated Studies and Data Collection 

Sources: TRIA (data); GAO (analysis).

Pursuant to TRIA section 103(h)(1), Treasury completed an assessment of 

the availability of group life insurance and reinsurance for insurers issuing 

group life policies. Treasury concluded that the terrorism threat had not 

reduced the availability of group life insurance, but had reduced the 

availability of reinsurance, finding a general lack of catastrophic 

reinsurance for group life coverage. After completing the assessment, 

Treasury issued a press release in August 2003 stating that it had decided 

not to make group life insurance subject to TRIA because it found that 

insurers had continued to provide group life coverage. According to life 

insurance experts, life insurers have done so to maintain customer 

relations that would be difficult to reestablish if the coverage were 

discontinued. Additionally, life insurance experts noted that business from 

other lines of insurance would be lost if insurers were to discontinue group 

life, which is typically sold as part of a package with disability and medical 

coverage.

TRIA citation Description of study or data-collection effort

Sec. 103(h)(1) • Determine whether adequate and affordable catastrophe 

reinsurance for terrorist events is available to life insurers that issue 

group life insurance.

• Determine the extent to which the threat of terrorism is reducing the 

availability of group life insurance.

Sec. 103(i) • Study the potential effects of terrorism on the availability of life 

insurance and other lines of insurance, including personal lines.

• Report results to Congress no later than 9 months from enactment 

of TRIA. 

Sec. 104(f) • Annually collect information on terrorism insurance risk premium 

rates for previous year.

• Make results available upon request of Congress.

Sec. 108(d)(1) • Assess the effectiveness of TRIA.

• Project the capacity of the property-casualty insurance industry to 

offer terrorism coverage after TRIA expires.

• Project the availability and affordability of terrorism insurance for 

different types of policyholders, including railroads, trucking, and 

public transit.

• Report results to Congress no later than June 30, 2005. 
Page 15 GAO-04-307 Terrorism Risk Insurance

Treasury has not yet completed a mandated study on the effects of 

terrorism on the availability of life and other lines of insurance. The study 

was to have been completed by August 2003, 9 months after TRIA was 

enacted. As of March 1, 2004, according to Treasury officials, the report 

based on this study was in draft form. Because internal Treasury reviews of 

the draft have not been completed, the draft report has not yet been made 

public.

Pursuant to TRIA sections 104(f)(1) and 108(d)(1), Treasury officials said 

they began collecting data on annual premium rates and working on the 

study that would assess the effectiveness of TRIA and project the 

availability and affordability of terrorism insurance for certain groups of 

policyholders after TRIA expires. Treasury hired a private firm to collect 

premium data and other information in surveys from policyholders, 

insurers, and reinsurers. In the surveys, policyholders are asked to provide 

information such as business size, geographic locations of insured 

properties, premium data for TRIA-related terrorism insurance, and risk 

management measures used. Insurers are asked about the types of 

insurance sold that contain TRIA coverage, number of policies sold, 

number of policies sold with TRIA coverage, and methods used for 

estimating risks.15 Reinsurers will be asked for similar information. The 

data collected from the survey will provide information for the data 

collection efforts on annual premium rates and also provide the basis for 

assessing the effectiveness of TRIA. According to Treasury officials, 

Treasury began sending surveys to a nationally representative sample of 

25,000 policyholders in November 2003 and approximately 700 insurers and 

insurance groups in January 2004. The first surveys will collect data for 

2003, as well as 2002, to establish a baseline for analysis and reporting. The 

second and third surveys will be sent in 2004 and 2005.

Treasury Has Tasks to 

Complete before TRIA Can 

Be Fully Implemented

Before TRIA can be fully implemented, Treasury has to make certain 

decisions, develop additional regulations, and make certain TRIP functions 

operational. More specifically, TRIA gave Treasury until September 1, 2004, 

to decide if the requirement that insurers offer terrorism coverage on terms 

that do not differ materially from other coverage should be extended for 

policies issued or renewed in 2005, the third and final year of the program. 

Treasury did issue a press release on December 23, 2003, clarifying that the 

15Treasury has implemented mechanisms to ensure that sensitive business data on 

individual insurers would not be made public through the Freedom of Information Act.
Page 16 GAO-04-307 Terrorism Risk Insurance

“make available” requirement for annual policies issued or renewed in 2004 

extends until the policy expiration date, even though the coverage period 

extends into 2005. As of March 1, 2004, Treasury officials said they had not 

made a decision on the “make available” extension for policies that will be 

issued or renewed in 2005. The officials indicated that they would be in a 

better position to make this decision after they obtained enough 

preliminary data from their surveys, which they anticipate receiving in 

spring 2004. The survey data are expected to provide an analytical 

framework for Treasury’s decisions by collecting information on factors 

such as premium rates, geographic locations of covered property, policy 

limits and deductibles, and the extent to which certain terrorism risks are 

covered.

Treasury has yet to develop all the regulations necessary to carry out TRIA 

provisions and make operational certain functions relating to claims 

administration, auditing, and oversight. While the implementation of some 

of these provisions and functions was covered by the proposed rule (see 

fig. 2), Treasury has not drafted final rules to cover the latter stages of the 

claims process, which would encompass resolving disputed claims with 

insurance companies, dealing with insurers that become insolvent, 

adjusting claims payments for over- and underpayments (netting), and 

handling claims submitted by insurers after aggregate insured losses have 

exceeded the $100 billion cap. Treasury officials said they plan to complete 

these regulations in the spring and summer of 2004, after they have fully 

addressed the claims-paying process. Treasury also has yet to write 

regulations addressing recoupment and surcharges and the collection of 

civil monetary penalties in cases of noncompliance or fraud. Treasury also 

plans to assess the need to develop additional regulations or refine past 

regulations on captive insurers and self-funded pools—types of 

self-insurers. Additionally, Treasury has not yet developed processes for 

auditing claims payments to insurers. However, Treasury plans to issue a 

request for proposal (RFP) for a postclaims auditing contractor in the third 

quarter of fiscal year 2004. The contractor will review claims and conduct 

field audits of insurers after an event to ensure that underlying documents 

support claims submitted to Treasury. Treasury officials anticipate 

awarding a contract in the fourth quarter of fiscal year 2004. Moreover, 

Treasury plans to develop guidance encompassing business procedures 

and audit parameters that will trigger reviews and audits. Treasury officials 

also said that other ongoing and completed work associated with the 

claims-processing function lays the foundation for the claims auditing 

process. Finally, a Treasury official estimated that by the end of fiscal year 

2004, Treasury would implement all of the processes that would have to be 
Page 17 GAO-04-307 Terrorism Risk Insurance

in place before an event occurred. After fiscal year 2004, Treasury plans to 

develop procedures for requirements that will not need to be in place until 

after an event has occurred—such as recoupment and surcharge.

Lastly, a key TRIP function—the actual processing and payment of 

claims—is not yet operational. From the beginning of its planning efforts, 

Treasury had envisioned that contractors would handle TRIA claims 

processing in the aftermath of a terrorist attack. According to TRIP 

officials, after incorporating a basic regulatory framework, one of the first 

priorities for the TRIP office was to write and issue a RFP to procure 

contractors to perform claims services. Treasury issued an RFP for 

claims-processing and payment services in December 2003, but had not 

hired any contractors as of March 1, 2004. Treasury attempted to 

accelerate the procurement process by reducing the number of days 

allowed for bidders to respond to the RFP and dedicating all TRIP staff to 

reviewing the proposals. However, the number of proposals received has 

pushed the contract award date beyond original estimates of February 

2004. Treasury officials now believe they will award a contract by April 

2004. Treasury has also continued to develop a proposed rule, related 

guidance, claims management requirements for the claims contractor and 

processes necessary to manage the claims function, and worked with 

industry to devise standard forms. Moreover, once the claims processing 

contract is awarded, Treasury plans to establish electronic interfaces 

between itself and the contractor, test the contractor’s systems and 

processes by using “dummy” claims submitted by insurers, and establish an 

electronic fund transferring process to speed reimbursement of insured 

losses. 

NAIC Is Fulfilling Its 

Advisory Role under TRIA

NAIC is working with Treasury on various aspects of implementing TRIA, 

effectively fulfilling its advisory role. In January 2003, NAIC formed the 

Terrorism Insurance Implementation Working Group to work with 

Treasury. The working group consists of representatives from nine states 

and the District of Columbia, who are led by a state insurance 

commissioner, and has provided input to Treasury on an ongoing basis.16 In 

particular, the working group assisted Treasury each time it issued 

16In 2003, the working group was chaired by the insurance commissioner for the state of 

Iowa and representatives from the insurance departments of the District of Columbia, 

Florida, Montana, Nebraska, New Jersey, New York, North Dakota, Oklahoma, and South 

Dakota.
Page 18 GAO-04-307 Terrorism Risk Insurance

guidance and rules, according to Treasury and NAIC officials. For example, 

Treasury officials reported that NAIC aided them in writing a detailed 

definition for “insurer” for its first interim final rule published in the 

Federal Register in February 2003. NAIC coordinated meetings between 

Treasury and state insurance regulators to align or address differences in 

definitions that exist across the 50 states, the District of Columbia, Puerto 

Rico, and three U.S. territories. As noted previously, TRIA directed that 

state regulations be preserved when possible; thus, the definitions had to 

be highly consistent with state regulations. The NAIC official also 

explained that NAIC tried to ensure that the language of its suggestions to 

Treasury, when implemented, would be enforceable by all state insurance 

regulators. 

NAIC also aided Treasury in outreach and education efforts. In the weeks 

before TRIA was enacted, NAIC issued press releases informing insurers of 

the impending act and urging them to prepare for its new requirements. 

Moreover, NAIC applied its expertise in developing a model bulletin, 

regulations, and forms to help state regulators and insurers expeditiously 

carry out TRIA responsibilities. For example, NAIC issued a model 

bulletin, which state regulators could use to communicate key terms and 

definitions and explain the application of TRIA to losses resulting from 

foreign sources versus domestic sources of terrorism. NAIC made the 

model bulletin available on its Web site immediately upon the enactment of 

TRIA. NAIC also developed model disclosure forms for insurers to use 

when informing their policyholders about the availability of terrorism 

insurance under TRIA. As discussed previously, TRIA requires insurers to 

send disclosure notices to their policyholders about the availability and 

cost of terrorism insurance and the 90 percent federal share. 

Insurance Companies Made 

Changes to Their 

Operations to Comply with 

TRIA 

In order to comply with TRIA requirements, primarily those concerning 

disclosure to policyholders, insurers generally have made changes to their 

operations. According to an official of a large insurance company, to 

develop and disseminate information about TRIA terms and coverage, 

insurers have changed policies, software, and forms; trained staff; revised 

actuarial information and underwriting procedures; and expanded 

outreach and marketing. For example, the insurers had to send revised 

premium information in disclosure notices to hundreds of thousands of 

policyholders as well as submit thousands of new premium rates and the 

associated policy language to state regulators for approval. If the insurers 

had failed to make these disclosures, they would have lost their eligibility 

for reimbursement under TRIA.
Page 19 GAO-04-307 Terrorism Risk Insurance

While the disclosure requirements required many revisions to insurer 

operations, the insurers did have the benefit of a “safe harbor.” As 

previously discussed, Treasury determined that use of NAIC’s model 

disclosure form constituted compliance with TRIA’s disclosure 

requirements. Moreover, insurers using NAIC’s model form could get 

coverage decisions from their policyholders without first investing time in 

devising a disclosure notice—a time-consuming process that would include 

review by an insurer’s legal staff for compliance with TRIA requirements. 

Given that TRIA invalidated terrorism exclusions as soon as it was enacted, 

insurers were exposed to uncompensated risks (i.e., the potential for 

having to pay for all the losses in a terrorism event without having received 

a premium) until their existing policyholders received written disclosures, 

accepted the coverage, or rejected it. 

Insurers Are Concerned 

That the Pace of TRIA 

Implementation Could 

Affect Business Planning, 

Reduce Cash Flow, or 

Result in Insolvency

Insurers have expressed a number of concerns about Treasury’s 

implementation of TRIA. Insurers are concerned that Treasury has not 

already made a decision about extending the “make available” requirement 

through 2005; they are also concerned about the potential length of time it 

may take for the Secretary of the Treasury to certify a terrorist event, 

potential inefficiencies and time lags in processing and paying claims once 

an event is certified, and the issue of TRIA expiration. TRIA gives Treasury 

until September 2004 to make a decision about whether to require insurers 

to make terrorism insurance available—on terms that do not differ 

materially from that of other coverage—for policies issued or renewed in 

2005, the third year of the program. Insurers have stated that this deadline 

is too late. Insurers need to make underwriting, price, and coverage 

decisions for these policies in mid-2004. However, Treasury has yet to 

make a decision about the “make available” requirement for policies issued 

or renewed in 2005. 

If Treasury did not extend the requirements through 2005, insurers would 

have to evaluate and possibly revise prices and terms for newly issued and 

renewing policies, according to an insurance official. Moreover, regulatory 

approval for these changes might take longer than the time it took to 

approve the changes to policies and procedures that insurers initially made 

to implement TRIA. TRIA allowed for federal preemption of the states’ 

authority to approve insurance policy rates and conditions, but the 

preemption expired on December 31, 2003—returning insurers to the 

previous regulatory scheme in which they must obtain regulatory approvals 

from each state that has these requirements to sell insurance. Thus, the 

timing of Treasury’s announcement on the extension may cost both 
Page 20 GAO-04-307 Terrorism Risk Insurance

companies and policyholders money if policy changes cannot be 

implemented in time to issue or renew policies. 

Insurers also are concerned that a delay in Treasury’s certification of a 

terrorist event as eligible for federal reimbursement, in conjunction with 

state regulations requiring prompt payment of claims, could create cash 

flow problems or even lead to insolvency for some insurers. While TRIA 

does not specify the length of time available for determining whether an 

event meets the criteria for certification, insurers are bound by law and 

regulations in most states to pay claims in a timely manner, which means 

they may have to pay policyholder claims in full without waiting for 

Treasury to certify an event, said an NAIC official. 

Because of this requirement to pay claims in a timely manner, insurers face 

potentially negative financial consequences under two possible scenarios: 

if Treasury made the certification decision after an extended period of time 

or if Treasury ultimately made the decision not to certify an event after an 

extended period of time. 

Under the first scenario, insurance industry observers have said that they 

could potentially experience a cash flow problem while awaiting a 

certification decision, and thus for reimbursement of the 90 percent federal 

share, because they have already paid 100 percent of the claimed losses. 

Insurers brought up the anthrax letter incidents as an example of their 

concerns about certification time frames, because law enforcement 

officials still have not identified the source, whether foreign or domestic, 

more than 2 years after the incidents. Under the second scenario, insurers 

could become insolvent if Treasury decided not to certify an event (i.e., 

decided the act was not the work of terrorists working on behalf of foreign 

interests) after insurers had already paid policyholder claims. Unless the 

policyholder had paid for coverage of all terrorist events—including those 

caused by domestic terrorists, which would be excluded from 

reimbursement under TRIA—insurers would have paid for losses for which 

they had collected no premium. Insurers would have no way to recover 

payments already made to policyholders for losses associated with the 

event other than to seek remedies through the courts, an NAIC official 

explained. 

Treasury has responded that the certification process is complex and 

possibly would require extensive investigation and correlation of 

information from many sources, most not under Treasury’s control. As a 

result, although Treasury officials said that they understood the difficulties 
Page 21 GAO-04-307 Terrorism Risk Insurance

facing insurers, they also felt that placing specific time limits on those 

making the certification decision would impose unworkable constraints on 

an already complex and difficult process. Treasury has taken some steps to 

facilitate the certification process by communicating with the Department 

of Justice and the Department of State. Specifically, Treasury has identified 

contacts within these agencies and has met with relevant individuals to 

discuss their roles in the certification process. 

Insurers are also concerned that the length of time Treasury may take to 

process and pay claims could impact an insurer’s cash flow. Treasury’s 

capacity to pay claims relatively quickly will determine how fast insurers 

receive the 90 percent federal share. According to an insurance company 

official, because of the long-standing relationships and familiarity that 

insurers have with reinsurers, it is often possible to receive speedy 

payment for losses.17 Insurers are concerned that this might not be 

possible with the TRIP office, especially since the claims-paying 

mechanism has yet to be created. Treasury officials explained that without 

a close preexisting relationship like that between an insurer and reinsurer, 

some procedures may, of necessity, differ. As noted previously, Treasury 

published a proposed rule addressing the claims-paying process. However, 

the proposed rule does not specify the maximum number of days in which 

Treasury must pay claims. According to a Treasury official, establishing a 

time frame for payment would not be appropriate. However, to address 

insurer concerns about prompt payment, Treasury has taken into 

consideration input received from the insurance industry and has been 

developing mechanisms to expedite the review, approval, and payment of 

claims. Treasury has also decided to use electronic fund transfers to 

insurer’s accounts to speed reimbursement to insurers with approved 

claims. Treasury officials said such a mechanism should reduce the 

potential for insurers to experience cash flow problems by eliminating the 

wait for Treasury to issue checks.

Finally, insurance industry officials are worried that uncertainty about 

TRIA’s extension past 2005 will impede their business and planning 

17For example, the insurance official explained that to abate the risk in lines of business that 

cover catastrophic risks such as terrorism, an insurer would typically obtain reinsurance. 

Through repeated interactions, the insurer and reinsurer develop a relationship in which the 

reinsurer becomes familiar with the insurer’s operations and finances. When a catastrophe 

strikes, the reinsurer is already familiar with the information that is necessary to 

substantiate the claims and can pay the insurer without first completing a review of the 

insurer’s accounting information; differences in over- or underpayment are settled later. 
Page 22 GAO-04-307 Terrorism Risk Insurance

processes. Although TRIA does not contain any specific extension 

provisions, Treasury officials have used forums such as NAIC and industry 

meetings to state that TRIA was designed to provide a program of three 

years duration. However, industry participants continue to believe that an 

extension is both possible and likely. As a result, they are concerned that a 

late decision to extend TRIA would create confusion and disarray in the 

industry because of the lead time needed to tailor business operations and 

plans to an insurance environment with TRIA or a federal government 

backup or, alternatively, without one. 

Despite Availability, 

Few Are Buying 

Terrorism Insurance, 

and the Industry Has 

Made Little Progress 

toward Post-TRIA 

Coverage

While TRIA has improved the availability of terrorism insurance, 

particularly for high-risk properties in major metropolitan areas, most 

commercial policyholders are not buying the coverage. Limited industry 

data suggest that 10 to 30 percent of commercial policyholders are 

purchasing terrorism insurance, perhaps because most policyholders 

perceive themselves at relatively low risk for a terrorist event. Some 

industry experts are concerned that those most at risk from terrorism are 

generally the ones buying terrorism insurance. In combination with low 

purchase rates, these conditions could result in uninsured losses for those 

businesses without terrorism coverage or cause financial problems for 

insurers, should a terrorist event occur. Moreover, even policyholders who 

have purchased terrorism insurance may remain uninsured for significant 

risks arising from certified terrorist events involving NBC agents, 

radioactive contamination, or fire following the events. Finally, although 

insurers and some reinsurers have cautiously reentered the terrorism risk 

market, insurance industry participants have made little progress toward 

developing a mechanism that could permit the commercial insurance 

market to resume providing terrorism coverage without a government 

backstop. 

TRIA Has Improved the 

Availability of Terrorism 

Insurance, and Some 

High-Risk Policyholders 

Have Bought Coverage

TRIA has improved the availability of terrorism insurance, especially for 

some high-risk policyholders. According to insurance and risk 

management experts, these were the policyholders who had difficulty 

finding coverage before TRIA. Although industry data on policyholder 

characteristics are limited and cannot be generalized to all policyholders in 

the United States, risk management and real estate representatives 

generally agree that after TRIA was passed, policyholders—including 

borrowers obtaining mortgages for “trophy” properties, owners and 
Page 23 GAO-04-307 Terrorism Risk Insurance

developers of high-risk properties in major city centers, and those in or 

near “trophy” properties—were able to purchase terrorism insurance. 

Additionally, TRIA contributed to better credit ratings for some commercial 

mortgage-backed securities. For example, prior to TRIA’s passage, the 

credit ratings of certain mortgage-backed securities, in which the 

underlying collateral consisted of a single high-risk commercial property, 

were downgraded because the property lacked or had inadequate terrorism 

insurance. The credit ratings for other types of mortgage-backed 

securities, in which the underlying assets were pools of many types of 

commercial properties, were also downgraded but not to the same extent 

because the number and variety of properties in the pool diversified their 

risk of terrorism. Because TRIA made terrorism insurance available for the 

underlying assets, thus reducing the risk of losses from terrorist events, it 

improved the overall credit ratings of mortgage-backed securities, 

particularly single-asset mortgage-backed securities. Credit ratings affect 

investment decisions that revolve around factors such as interest rates 

because higher credit ratings result in lower costs of capital. According to 

an industry expert, investors use credit ratings as guidance when 

evaluating the risk of mortgage-backed securities for investment purposes. 

Higher credit ratings reflect lower credit risks. The typical investor 

response to lower credit risks is to accept lower returns, thereby reducing 

the cost of capital, which translates into lower interest rates for the 

borrower.

Most Policyholders Have 

Not Bought Terrorism 

Insurance

Although TRIA improved the availability of terrorism insurance, relatively 

few policyholders have purchased terrorism coverage. We testified 

previously that prior to September 11, 2001, policyholders enjoyed “free” 

coverage for terrorism risks because insurers believed that this risk was so 

low that they provided the coverage without additional premiums as part of 

the policyholder’s general property insurance policy.18 After September 11, 

prices for coverage increased rapidly and, in some cases, insurance became 

very difficult to find at any price. Although a purpose of TRIA is to make 

terrorism insurance available and affordable, the act does not specify a 

price structure. 

18GAO-02-472T.
Page 24 GAO-04-307 Terrorism Risk Insurance

However, experts in the insurance industry generally agree that after the 

passage of TRIA, low-risk policyholders (e.g., those not in major urban 

centers) received relatively low-priced offers for terrorism insurance 

compared to high-risk policyholders, and some policyholders received 

terrorism coverage without additional premium charges.19 Yet according to 

insurance experts, despite low premiums, many businesses (especially 

those not in “target” localities or industries) did not buy terrorism 

insurance. Some simply may not have perceived themselves at risk from 

terrorist events and considered terrorism insurance, even at low premiums 

(relative to high-risk areas), a bad investment.20 According to insurance 

sources, other policyholders may have deferred their decision to buy 

terrorism insurance until their policy renewal date. 

Some industry experts have voiced concerns that low purchase rates may 

indicate adverse selection—where those at the most risk from terrorism 

are generally the only ones buying terrorism insurance. Although industry 

surveys are limited in their scope and not appropriate for market-wide 

projections, the surveys are consistent with each other in finding low 

“take-up” rates, the percentage of policyholders buying terrorism 

insurance, ranging from 10 to 30 percent. According to one industry 

survey, the highest take-up rates have occurred in the Northeast, where 

premiums were generally higher than the rest of the country. 

The combination of low take-up rates and high concentration of purchases 

in an area thought to be most at risk raises concerns that, depending on its 

location, a terrorist event could have additional negative effects.

• If a terrorist event took place in a location not thought to be a terrorist 

“target,” where most businesses had chosen not to purchase terrorism 

insurance, then businesses would receive little funding from insurance 

claims for business recovery efforts, with consequent negative effects 

on owners, employers, suppliers, and customers.

19According to industry experts, the insurers that provided “free” terrorism insurance likely 

did so for policies already in place at the time TRIA was enacted and may have deferred 

operational changes and difficult pricing decisions because they lacked the resources to do 

so.

20Howard Kunreuther, Erwann Michel-Kerjan, and Beverly Porter, Assessing, Managing and 

Financing Extreme Events: Dealing with Terrorism (National Bureau of Economic 

Research: December 2003), 13.
Page 25 GAO-04-307 Terrorism Risk Insurance

• Alternatively, if the terrorist event took place in a location deemed to be 

a “target,” where most businesses had purchased terrorism insurance, 

then adverse selection could result in significant financial problems for 

insurers. A small customer base of geographically concentrated, 

high-risk policyholders could leave insurers unable to cover potential 

losses facing possible insolvency. If, however, a higher percentage of 

business owners had chosen to buy the coverage, the increased number 

of policyholders would have reduced the chance that losses in any one 

geographic location would create a significant financial problem for an 

insurer.21

Tighter Exclusions Leave 

Policyholders Exposed to 

Significant Perils

Since September 11, 2001, the insurance industry has moved to tighten 

long-standing exclusions from coverage for losses resulting from NBC 

attacks and radiation contamination. As a result of these exclusions and 

the actions of a growing number of state legislatures to exclude losses from 

fire following a terrorist attack, even those policyholders who choose to 

buy terrorism insurance may be exposed to potentially significant losses. 

Although NBC coverage was generally not available before September 11, 

after that event insurers and reinsurers recognized the enormity of 

potential losses from terrorist events and introduced new practices and 

tightened treaty language to further limit as much of their loss exposures as 

possible. (We discuss some of these practices and exclusions in more detail 

in the next section.) State regulators and legislatures have approved these 

exclusions, allowing insurers to restrict the terms and conditions of 

coverage for these perils. Moreover, because TRIA’s “make available” 

requirements state that terms for terrorism coverage be similar to those 

offered for other types of policies, insurers may choose to exclude the 

perils from terrorism coverage just as they have in other types of coverage. 

According to Treasury officials, TRIA does not preclude Treasury from 

providing reimbursement for NBC events, if insurers offered this coverage. 

However, policyholder losses from perils excluded from coverage, such as 

NBCs, would not be “insured losses” as defined by TRIA and would not be 

covered even in the event of a certified terrorist attack. 

In an increasing number of states, policyholders may not be able to recover 

losses from fire following a terrorist event if the coverage in those states is 

not purchased as part of the offered terrorism coverage. We have 

21Casualty Actuarial Society, Foundations of Casualty Actuarial Science, 4th ed. (United 

Book Press, Inc.: 2001), 51, 86.
Page 26 GAO-04-307 Terrorism Risk Insurance

previously reported that approximately 30 states had laws requiring 

coverage for “fire-following” an event —known as the standard fire policy 

(SFP)—irrespective of the fire’s cause.22 Therefore, in SFP states fire 

following a terrorist event is covered whether there is insurance coverage 

for terrorism or not. After the terrorist attacks of September 11, 2001, 

some legislatures in SFP states amended their laws to allow the exclusion 

of fire following a terrorist event from coverage. As of March 1, 2004, 7 of 

the 30 SFP states had amended their laws to allow for the exclusion of acts 

of terrorism from statutory coverage requirements.23 However as 

discussed previously, the “make available” provision requires coverage 

terms offered for terrorist events to be similar to coverage for other events. 

Treasury officials explained that in all non-SFP states, and the 7 states with 

modified-SFPs, insurers must include in their offer of terrorism insurance, 

coverage for fire following a certified terrorist event because coverage for 

fire is part of the property coverage for all other risks. Thus, policyholders 

who have accepted the offer would be covered for fire following a terrorist 

event, even though their state allows exclusion of the coverage. However, 

policyholders who have rejected their offer of coverage for terrorism 

insurance would not be covered for fire following a terrorist event. 

According to insurance experts, losses from fire damage can be a relatively 

large proportion of the total property loss. As a result, excluding terrorist 

events from SFP requirements could result in potentially large losses that 

cannot be recovered if the policyholder did not purchase terrorism 

coverage. For example, following the 1994 Northridge earthquake in 

California, total insured losses for the earthquake were $15 billion—$12.5 

billion of which were for fire damage. According to an insurance expert, 

policyholders were able to recover losses from fire damage, because 

California is an SFP state, even though most policies had excluded 

coverage for earthquakes. 

22GAO-02-472T. 

23According to the National Association of Mutual Insurance Companies, Louisiana, 

Michigan, Minnesota, Nebraska, New Hampshire, Oklahoma, and Virginia have amended 

their standard fire policy to allow for exclusion of terrorism from their statutory fire 

coverage. State legislators in Massachusetts have introduced a similar bill. 
Page 27 GAO-04-307 Terrorism Risk Insurance

Reinsurers Have Cautiously 

Returned to the Terrorism 

Insurance Market, but Many 

Insurers Have Not Bought 

Reinsurance

Under TRIA, reinsurers are offering a limited amount of coverage for 

terrorist events, specifically for the insurer deductibles and 10 percent 

share, but insurers have not been buying much of this reinsurance. 

According to insurance industry sources, TRIA’s ceiling on potential losses 

has enabled reinsurers to return cautiously to the market. That is, 

reinsurers generally are not offering coverage for terrorism risk beyond the 

limits of the insurer deductibles and the 10 percent share that insurers may 

have to pay under TRIA. In spite of reinsurers’ willingness to offer this 

coverage, company representatives have said that many insurers have not 

purchased reinsurance. Insurance experts suggested that the low demand 

for the reinsurance might reflect, in part, commercial policyholders’ 

generally low take-up rate for terrorism insurance. Moreover, insurance 

experts also have suggested that insurers may believe that the price of 

reinsurance is too high relative to the premiums they are earning from 

policyholders for terrorism insurance.

The relatively high prices charged for the limited amounts of terrorism 

reinsurance available are probably the result of interrelated factors. First, 

even before September 11 both insurance and reinsurance markets were 

beginning to harden; that is, prices were beginning to increase after several 

years of lower prices. Reinsurance losses resulting from September 11 also 

depressed reinsurance capacity and accelerated the rise in prices.24 The 

resulting hard market for property-casualty insurance affected the price of 

most lines of insurance and reinsurance. A notable example has been the 

market for medical malpractice insurance.25 The hard market is only now 

showing signs of coming to an end, with a resulting stabilization of prices 

for most lines of insurance. In addition to the effects of the hard market, 

reinsurer awareness of the adverse selection that may be occurring in the 

commercial insurance market could be another factor contributing to 

higher reinsurance prices. Adverse selection usually represents a 

larger-than-expected exposure to loss. Reinsurers are likely to react by 

increasing prices for the terrorism coverage that they do sell.

In spite of the reentry of reinsurers into the terrorism market, insurance 

experts said that without TRIA caps on potential losses, both insurers and 

reinsurers likely would still be unwilling to sell terrorism coverage because 

24Capacity is the amount of reinsurance or insurance that is available for a defined risk.

25U.S. General Accounting Office, Medical Malpractice Insurance: Multiple Factors Have 

Contributed to Increased Premium Rates, GAO-03-702 (Washington, D.C.: June 27, 2003). 
Page 28 GAO-04-307 Terrorism Risk Insurance

they have not found a reliable way to price their exposure to terrorist 

losses. According to industry representatives, neither insurers nor 

reinsurers can estimate potential losses from terrorism or determine prices 

for terrorism insurance without a pricing model that can estimate both the 

frequency and the severity of terrorist events. Reinsurance experts said 

that current models of risks for terrorist events do not have enough 

historical data to dependably estimate the frequency or severity of terrorist 

events, and therefore cannot be relied upon for pricing terrorism insurance. 

According to the experts, the models can predict a likely range of insured 

losses resulting from the damage if specific event parameters such as type 

and size of weapon and the location are specified. However, the models are 

unable to predict the probability of such an attack. 

Even as they are charging high prices, reinsurers are covering less. In 

response to the losses of September 11, industry sources have said that 

reinsurers have changed some practices to limit their exposures to acts of 

terrorism. For example, reinsurers have begun monitoring their exposures 

by geographic area, requiring more detailed information from insurers, 

introducing annual aggregate limits and event limits, excluding large 

insurable values, and requiring stricter measures to safeguard assets and 

lives where risks are high.26 And as discussed previously, almost 

immediately after September 11 reinsurers began broadening NBC 

exclusions beyond scenarios involving industrial accidents, such as nuclear 

plant accidents and chemical spills, to encompass intentional destruction 

from terrorists. For example, post-September 11 exclusions for nuclear 

risks include losses from radioactive contamination to property and 

radiation sickness from dirty bombs. 

As of March 1, 2004, industry sources indicated that there has been little 

development or movement among insurers or reinsurers toward 

developing a private-sector mechanism that could provide capacity, 

without government involvement, to absorb losses from terrorist events. 

Industry officials have said that their level of willingness to participate 

more fully in the terrorism insurance market in the future will be 

determined, in part, by whether any more events occur. Industry sources 

could not predict if reinsurers would return to the terrorism insurance 

market after TRIA expires, even after several years and even if no more 

major terrorist attacks were to occur in the United States. They explained 

26Christian Brauner and Georges Galey, “Terrorism Risks in Property Insurance and Their 

Insurability after 11 September 2001,” (Swiss Reinsurance Company: 2003), 25. 
Page 29 GAO-04-307 Terrorism Risk Insurance

that reinsurers are still recovering from the enormous losses of September 

11 and still cannot price terrorism coverage. In the long term and without 

another major terrorist attack, insurance and reinsurance companies might 

eventually return. However, should another major terrorist attack take 

place, reinsurers told us that they would not return to this market—with or 

without TRIA.

Conclusions TRIA gave Treasury a very challenging task—to develop what is effectively 

the world’s largest reinsurer. This task was complicated by the very real 

possibility that Treasury could have been called on to perform at any time, 

without advance notice. More than a year after TRIA took effect, key 

pieces of this reinsurance entity are either in place or nearly in place. 

Perhaps most importantly for Treasury, the U.S. government, and the 

American people, no further terrorist attack, major or minor, has yet 

occurred on American soil. In spite of this breathing space and all that 

Treasury has accomplished, considerable work remains. Key components 

of the Terrorism Risk Insurance Program defined by TRIA remain 

uncompleted. At best, all the components will be in place shortly before 

the second anniversary of the 3-year program. Recognizing the complexity 

of the task, it is difficult to be critical, particularly given the lack of a 

terrorist event. However, had an attack occurred, the incomplete 

preparation could have added to the plight of the victims. 

Congress had two major objectives in establishing TRIA. The first was to 

ensure that business activity did not suffer from the lack of insurance by 

requiring insurers to continue to provide protection from the financial 

consequences of another terrorist attack. Since TRIA was enacted in 

November 2002, terrorism insurance generally has been available to 

businesses. While most have not purchased this coverage, purchases have 

been higher in areas considered to be at high risk of another terrorist 

attack. Quantifiable evidence is lacking on whether having TRIA coverage 

available has contributed to the economy. However, the current revival of 

economic activity suggests that the decision of most commercial 

policyholders to decline terrorism coverage has not resulted in widespread, 

negative economic effects. As a result, the first objective of TRIA appears 

largely to have been achieved.

Congress’s second objective was to give the insurance industry a 

transitional period during which it could begin pricing terrorism risks and 

developing ways to provide such insurance after TRIA expires. The 

insurance industry has not yet achieved this goal. We observed after 
Page 30 GAO-04-307 Terrorism Risk Insurance

September 11 the crucial importance of reinsurers for the survival of the 

terrorism insurance market and reported that reinsurers’ inability to price 

terrorism risks was a major factor in their departure from the market.27

Additionally, most industry experts are tentative about predictions of the 

level of reinsurer and insurer participation in the terrorism insurance 

market after TRIA expires. Unfortunately, insurers and reinsurers still have 

not found a reliable method for pricing terrorism insurance, and although 

TRIA has provided reinsurers the opportunity to reenter the market to a 

limited extent, industry participants have not developed a mechanism to 

replace TRIA. As a result, reinsurer and, consequently, insurer 

participation in the terrorism insurance market likely will decline 

significantly after TRIA expires.

Not only has no private-sector mechanism emerged for supplying terrorism 

insurance after TRIA expires, but also to date there has been little 

discussion of possible alternatives for ensuring the availability and 

affordability of terrorism coverage after TRIA expires. Congress may 

benefit from an informed assessment of possible alternatives—including 

both wholly private alternatives and alternatives that could involve some 

government participation or action. Such an assessment could be a part of 

Treasury’s TRIA-mandated study to “assess...the likely capacity of the 

property and casualty insurance industry to offer insurance for terrorism 

risk after termination of the Program.” 

Recommendation for 

Executive Action

As part of the response to Treasury’s TRIA-mandated study requiring an 

assessment of the effectiveness of TRIA and evaluating the capacity of the 

industry to offer terrorism insurance after TRIA expires, we recommend 

that the Secretary of the Treasury, after consulting with the insurance 

industry and other interested parties, also identify for Congress an array of 

alternatives that may exist for expanding the availability and affordability 

of terrorism insurance after TRIA expires. These alternatives could assist 

Congress during its deliberations on how best to ensure the availability and 

affordability of terrorism insurance after December 2005.

Agency Comments We requested comments on a draft of this report from the head of the 

Department of the Treasury or his designee. The Assistant Secretary for 

27GAO-02-472T.
Page 31 GAO-04-307 Terrorism Risk Insurance

Financial Institutions at Treasury provided written comments that are 

included in appendix I stating, in general, that Treasury believed our report 

provided a thorough and well-balanced discussion of the impact and 

implementation of the Terrorism Risk Insurance Act of 2002. These written 

comments also provided amplification of certain points related to 

Treasury’s implementation of the Act. For example, Treasury commented 

that its “... implementation of TRIA has been guided by prioritizing the 

actions that were needed to make the program operational right away.” 

Treasury also described the emergency procedures in place since “the early 

days of the program.” Treasury believes these contingency plans would 

have allowed it to establish and implement a process for receiving, 

reviewing, and paying claims that would have enabled it to respond quickly 

to a terrorist event, if it had been necessary. Treasury also provided 

technical comments on the report that were incorporated as appropriate.

As agreed with your offices, unless you publicly release its contents earlier, 

we plan no further distribution of this report until 30 days after its issuance 

date. At that time, we will send copies of this report to the Chair and 

Ranking Minority Member, Senate Committee on Banking, Housing and 

Urban Affairs; the Ranking Minority Member, Committee on Financial 

Services, House of Representatives; and other interested congressional 

members and committees. We will also make copies available to others 

upon request. In addition, this report will also be available at no charge on 

GAO’s Web site at http://www.gao.gov.

This report was prepared under the direction of Lawrence D. Cluff, 

Assistant Director. If you or your staff have any questions regarding this 

report, please contact the Assistant Director or me at (202) 512-8678. 

Barry Kirby, Tarek Mahmassani, Angela Pun and Barbara Roesmann also 

made key contributions to this report. 

Sincerely yours,

Richard J. Hillman

Director, Financial Markets 

 and Community Investments
Page 32 GAO-04-307 Terrorism Risk Insurance

Appendix I

Comments from the Department of the Apendxies

Treasury ApendxiI
Appendix I

Comments from the Department of the 

Treasury

(250124) Page 33 GAO-04-307 Terrorism Risk Insurance
GAO’s Mission The General Accounting Office, the audit, evaluation and investigative arm of 

Congress, exists to support Congress in meeting its constitutional responsibilities 

and to help improve the performance and accountability of the federal government 

for the American people. GAO examines the use of public funds; evaluates federal 

programs and policies; and provides analyses, recommendations, and other 

assistance to help Congress make informed oversight, policy, and funding 

decisions. GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and fulltext files of current reports and testimony and an expanding archive of older 

products. The Web site features a search engine to help you locate documents 

using key words and phrases. You can print these documents in their entirety, 

including charts and other graphics.

Each day, GAO issues a list of newly released reports, testimony, and 

correspondence. GAO posts this list, known as “Today’s Reports,” on its Web site 

daily. The list contains links to the full-text document files. To have GAO e-mail this 

list to you every afternoon, go to www.gao.gov and select “Subscribe to 

e-mail alerts” under the “Order GAO Products” heading.

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. A check 

or money order should be made out to the Superintendent of Documents. GAO 

also accepts VISA and Mastercard. Orders for 100 or more copies mailed to a single 

address are discounted 25 percent. Orders should be sent to:

U.S. General Accounting Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Public Affairs Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Service Requested

Presorted Standard

Postage & Fees Paid

GAO

Permit No. GI00