Report on the Effectiveness of the 

Terrorism Risk Insurance Program

FEDERAL INSURANCE OFFICE, U.S. DEPARTMENT OF THE TREASURY 

Completed pursuant to the Terrorism Risk Insurance Program 

Reauthorization Act of 2015

JUNE 2018 
Report on the Effectiveness of the Terrorism Risk Insurance Program (June 2018) 

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FEDERAL INSURANCE OFFICE, U.S. DEPARTMENT OF THE TREASURY

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Table of Contents

I. INTRODUCTION AND EXECUTIVE SUMMARY ..................................................... 1

II. BACKGROUND ................................................................................................................. 3

III. TERRORISM RISK INSURANCE PROGRAM ............................................................ 5

IV. DATA COLLECTION ....................................................................................................... 9

A. Data Collection Process ................................................................................................... 9

B. Responding Insurer Categories ...................................................................................... 11

C. Response Rate ................................................................................................................ 13

D. Data Quality Evaluation ................................................................................................. 13

V. ANALYSIS OF THE OVERALL EFFECTIVENESS OF THE PROGRAM ........... 16

A. Availability of Terrorism Risk Insurance ...................................................................... 17

B. Affordability of Terrorism Risk Insurance .................................................................... 19

1. Embedded Terrorism Risk Insurance.......................................................................... 19

2. Standalone Terrorism Risk Insurance ......................................................................... 26

C. Take-Up Rates for Terrorism Risk Insurance ................................................................ 28

D. Private Reinsurance Availability ................................................................................... 40

E. Projections from Modeled Loss Questions .................................................................... 47

F. Terrorism Risk Insurance for Cyber Losses .................................................................. 53

VI. ADDITIONAL ANALYSIS ON INSURER CATEGORIES ....................................... 57

A. Small Insurers ................................................................................................................ 57

B. Captive Insurers ............................................................................................................. 59

C. Alien Surplus Lines Insurers .......................................................................................... 65

VII. WORKERS’ COMPENSATION .................................................................................... 67

VIII. TERRORISM RISK PREMIUMS EARNED OVER TIME ....................................... 71

A. Non-Small and Small Insurers ....................................................................................... 71

B. Alien Surplus Lines Insurers .......................................................................................... 73

C. Captive Insurers ............................................................................................................. 74

D. Aggregate Industry Totals.............................................................................................. 74

IX. CONCLUSION ................................................................................................................. 76
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Glossary

2015 Reauthorization 

Act

............ Terrorism Risk Insurance Program Reauthorization 

Act of 2015, Pub. L. 114-1, 129 Stat. 3

2016 Effectiveness 

Report

............ FIO, Report on the Overall Effectiveness of the 

Terrorism Risk Insurance Program (June 2016)

2017 TRIP Data Call ............ CY 2016 data requested by Treasury pursuant to 82 

Fed. Reg. 20420 (May 1, 2017)

2017 Small Insurer 

Study

............ FIO, Study of Small Insurer Competitiveness in the 

Terrorism Risk Insurance Marketplace (June 2017)

2018 TRIP Data Call ............ CY 2017 data requested by Treasury pursuant to 83 

Fed. Reg. 14718 (April 5, 2018)

Act of Terrorism ............ Under TRIA, an act certified as terrorism by the 

Secretary, in consultation with the Attorney General 

and the Secretary of Homeland Security 

Alien Surplus Lines 

Insurer

............ Non-U.S. insurer that is an eligible surplus lines 

insurer as listed on the NAIC’s Quarterly Listing of 

Alien Surplus Lines Insurers

Captive Insurer ............ Insurer formed to insure the risk exposures of its 

policyholder owner(s), which is regulated by the 

captive insurance laws of a particular state 

jurisdiction

Certified Policy ............ Standalone terrorism risk policy written subject to 

the terms and conditions of TRIP

Co-Pay Share ............ The percentage of losses that an insurer is obligated 

to pay after meeting its deductible and the Program 

Trigger is satisfied. The federal government is 

responsible for the remaining percentage of losses 

above the insurer’s deductible. The co-pay share for 

CY 2017 was 17 percent

CY ............ Calendar year

CMP ............ Commercial Multi-Peril

DEP ............ Direct earned premiums

Embedded Terrorism 

Insurance

............ Terrorism insurance provided within a P&C policy 

that also covers other risks

Federal Share of 

Compensation

............ The percentage of an insurer’s losses that the federal 

government will pay after the insurer meets its 
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deductible and the Program Trigger is satisfied. The 

insurer is responsible for the remaining percentage 

of losses above its deductible. The federal share of 

compensation for CY 2017 was 83 percent

FIO ............ Federal Insurance Office

Insurer Deductible ............ The amount an individual insurer must pay before 

receiving the federal share of compensation, after an 

event is certified as an act of terrorism and the 

Program Trigger is exceeded. An insurer’s 

deductible is 20 percent of its TRIP-eligible DEP in 

the prior year

NAIC ............ National Association of Insurance Commissioners

NBCR ............ Nuclear, biological, chemical, or radiological

Non-Certified Policy ............ Standalone terrorism policy which responds to 

terrorism-related losses, as defined in the policy, 

regardless of whether the Secretary has certified that 

an “act of terrorism” under TRIA has given rise to 

those losses

Non-Small Insurer ............ Domestic insurer or group (including affiliated alien 

surplus lines insurers) with DEP in TRIP-eligible 

lines of insurance or policyholder surplus above the 

small insurer threshold

P&C ............ Property and casualty

PML ............ Probable maximum loss

Program ............ Terrorism Risk Insurance Program (also, TRIP)

Program Cap ............ Maximum aggregate exposure limit for the federal 

government and insurers under TRIP in any calendar 

year 

Program Trigger ............ Minimum amount of insurance industry aggregate 

insured losses resulting from certified act(s) of 

terrorism that must occur in a calendar year before 

any federal payments can be made under TRIP

Report ............ FIO, Report on the Overall Effectiveness of the 

Terrorism Risk Insurance Program (June 2018)

Secretary ............ Secretary of the Treasury

September 11 Attacks ............ Terrorist attacks occurring on September 11, 2001

Small Insurer ............ An insurer as defined under 31 C.F.R. § 50.4(z)
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Standalone Policy ............ Insurance policy which provides coverage only for 

terrorism risk

Take-Up Rate ............ Extent to which terrorism risk insurance is 

purchased by policyholders

Treasury ............ U.S. Department of the Treasury

TRIA ............ Terrorism Risk Insurance Act of 2002, as amended

TRIP ............ Terrorism Risk Insurance Program (also, Program)

TRIP-Eligible Lines of 

Insurance

............ Commercial P&C insurance subject to TRIP 

pursuant to 31 C.F.R. § 50.4(w)
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I. INTRODUCTION AND EXECUTIVE SUMMARY

Under the Terrorism Risk Insurance Program Reauthorization Act of 2015 (2015 

Reauthorization Act),1 the Secretary of the Treasury (Secretary) is required to submit a report 

regarding the Terrorism Risk Insurance Program (TRIP or Program) to the Committee on 

Financial Services of the House of Representatives, and the Committee on Banking, Housing, 

and Urban Affairs of the Senate.2

 The report must be submitted no later than June 30, 2018, and 

must include: 

(1) an analysis of the overall effectiveness of the Program;

(2) an evaluation of any changes or trends in the data collected by the Secretary; 

(3) an evaluation of whether any aspects of the Program have the effect of discouraging or 

impeding insurers from providing commercial property and casualty (P&C) insurance 

coverage or coverage for acts of terrorism; 

(4) an evaluation of the impact of the Program on workers’ compensation insurers; and 

(5) an estimate of the total amount of premiums earned on terrorism risk insurance since 

January 1, 2003.3 

The 2015 Reauthorization Act also requires the Secretary to collect data related to the Program

on an annual basis.4

 Since the 2015 Reauthorization Act, the U.S. Department of the Treasury

(Treasury) has conducted three data calls – a voluntary call in 2016 seeking calendar year 2015 

data, and two mandatory calls in 2017 and 2018 requiring, respectively, the production of 2016 

and 2017 data. This report (Report) addresses the five statutory considerations identified above, 

and uses the 2017 and 2018 TRIP data calls to comply with the requirements of the 2015 

Reauthorization Act. 

 

1 Terrorism Risk Insurance Reauthorization Act of 2015, Pub. L. 114-1, 129 Stat. 3 (2015). The provisions of the 

Terrorism Risk Insurance Act of 2002 (TRIA), Pub. L. No. 107-297, 116 Stat. 2322 (2002), as amended (including 

the 2015 Reauthorization Act), appear in a note of the United States Code (15 U.S.C. § 6701 note), and, therefore, 

references to the provisions of TRIA or the 2015 Reauthorization Act are identified by the sections of the law [e.g., 

“TRIA § 102(1) (definition of an “act of terrorism”)”].

2 Beginning in 2016, the Secretary was required to submit a report to the Committee of Financial Services of the 

House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate no later than 

June 30, 2016, and every other June 30 thereafter through the Program’s expiration date of December 31, 2020. 

Treasury published its first Program effectiveness report on June 30, 2016. See FIO, U.S. Department of the 

Treasury, Report on the Overall Effectiveness of the Terrorism Risk Insurance Program (2016), 

https://www.treasury.gov/initiatives/fio/reports-andnotices/Documents/2016_TRIP_Effectiveness_%20Report_FINAL.pdf. This is the second Program effectiveness 

report published by Treasury; the third must be submitted no later than June 30, 2020. 

3 TRIA § 104(h)(2).

4 TRIA § 104(h)(1).
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Based on analysis of the collected information and identified issues, Treasury has reached the 

following conclusions: 

(1) The Program generally has been effective in making terrorism risk insurance available 

and affordable in the insurance marketplace. Refer to Sections V, VI, and VII.

(2) The 2016 and 2017 data collected by Treasury indicates that the market for terrorism risk 

insurance has been relatively stable over this two-year period, with few observable 

differences in relevant benchmarks, such as price and take-up rate. Refer to Sections V, 

VI, and VII. 

(3) Treasury has not observed any aspects of the Program (either based upon the collected 

data or operation of the Program generally) that have had the effect of discouraging or 

impeding insurers from providing P&C insurance in general, or coverage for acts of 

terrorism specifically. Refer to Sections V, VI, and VII.

(4) The Program serves as an important backstop to workers’ compensation insurance, given 

that under state law, workers’ compensation insurance must cover terrorism risk, is not 

subject to limits of liability, and cannot exclude causes of loss posing extreme 

aggregation risks. Refer to Section V and VII.

(5) Treasury’s estimate of total earned premiums for terrorism risk insurance from 2003 to 

2017 is approximately $37.6 billion (excepting captive insurers), which is between 1 and 

2 percent of the total premiums earned in the TRIP-eligible lines of insurance during that 

period. Refer to Section VIII. 
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II. BACKGROUND

Prior to September 11, 2001, commercial P&C insurance policies generally did not exclude 

coverage for losses resulting from terrorism. The events of September 11, 2001 (September 11 

attacks) resulted in approximately $44 billion of P&C insurance losses,5

 more than two-thirds of 

which were reimbursed by reinsurers to insurers.6 Following the September 11 attacks, insurers 

and reinsurers began to exclude coverage for terrorism risk from commercial P&C policies.

The Terrorism Risk Insurance Act of 2002 (TRIA) was enacted, in part, because the widespread 

unavailability of terrorism risk insurance “could seriously hamper ongoing and planned 

construction, property acquisition, and other business projects, generate a dramatic increase in 

rents, and otherwise suppress economic activity.”7 TRIA established the Program, which 

requires insurers to make terrorism risk coverage available within certain lines of commercial 

P&C insurance (TRIP-eligible lines of insurance).8

 To assist insurers with the potential financial 

exposure resulting from this required offer of terrorism risk insurance, certain insurance losses 

resulting from an “act of terrorism” within the meaning of TRIA and certified by the Secretary

are eligible for reimbursement through the Program.9

 The Program is housed in Treasury and 

administered by the Secretary with the assistance of the Federal Insurance Office (FIO).

10

TRIA originally authorized the Program for a three-year period ending December 31, 2005. The 

Program has since been reauthorized three times,11 most recently by the 2015 Reauthorization 

Act, which extended the Program through December 31, 2020.12 Changes enacted with each 

 

5 Insured losses shown in 2016 dollars. See Charlene Chia, “Assessing Terrorism Risk 15 Years After 9/11,” AIR 

Worldwide, September 8, 2016, http://www.air-worldwide.com/Publications/AIR-Currents/2016/AssessingTerrorism-Risk-15-Years-After-9/11/. 

6 “9/11 and Insurance: The Eight Year Anniversary,” Insurance Journal, September 11, 2009, 

http://www.insurancejournal.com/news/national/2009/09/11/103694.htm. 

7 TRIA § 101(a)(5).

8 See TRIA § 103(c). Treasury has implemented regulations defining the “TRIP-eligible lines of insurance” with 

reference to certain lines identified for state regulatory purposes as follows: Fire, Allied Lines, Commercial 

Multiple Peril (non-liability), Commercial Multiple Peril (liability), Ocean Marine, Inland Marine, Workers’ 

Compensation, Other Liability (but not including Professional Liability, which is otherwise within this line for state 

reporting purposes), Products Liability, Aircraft, and Boiler and Machinery. Definitions, 31 C.F.R. § 50.4(w)(1) 

(2018). Some of these lines also contain personal P&C premium exposures that are not subject to the Program. 

There are also certain other defined exclusions within these lines. See Definitions, 31 C.F.R. § 50.4(w)(2) (2018). 

9 Further details concerning the operation of the Program are provided in Section III of this Report. 

10 Federal Insurance Office Act of 2010, 31 U.S.C. § 313(c)(1)(D) (2012).

11 See Terrorism Risk Insurance Extension Act of 2005, Pub. L. 109-144, 119 Stat. 2660 (2005); Terrorism Risk 

Insurance Program Reauthorization Act of 2007, Pub. L. 110-160, 121 Stat. 1839 (2007); 2015 Reauthorization Act.

12 Treasury issued rules in December 2016 to implement changes to TRIA under the 2015 Reauthorization Act, and 

for other purposes. See 81 Fed. Reg. 88592 (December 7, 2016) (Certification Interim Final Rule); 81 Fed. Reg. 

93756 (December 21, 2016) (Program Final Rules except Certification).
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Program renewal have generally reduced potential federal exposure to insured losses and 

increased private market exposure. 

The 2015 Reauthorization Act provides that beginning in calendar year 2016 the Secretary shall 

require participating insurers to provide information and data for the Secretary to analyze the 

overall effectiveness of the Program.13 The information to be provided to the Secretary by 

participating insurers includes information regarding: 

(1) lines of insurance with exposure to terrorism losses; 

(2) premiums earned on coverage offered for terrorism losses;

(3) geographical location of exposures; 

(4) pricing of terrorism risk coverage offered;

(5) the take-up rate for terrorism risk coverage; 

(6) the amount of private reinsurance for acts of terrorism purchased; and 

(7) such other matters as the Secretary considers appropriate.14

The 2017 and 2018 TRIP data calls are discussed in Section IV below. 

 

13 TRIA § 104(h)(1).

14 TRIA §§ 104(h)(1)(A)-(G).
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III. TERRORISM RISK INSURANCE PROGRAM

The Program requires that each entity meeting the definition of an insurer make available 

coverage for insured losses resulting from acts of terrorism.15 This offer must “not differ 

materially from the terms, amounts, and other coverage limitations applicable to losses arising 

from events other than acts of terrorism.”16 The “make available” requirement applies only to 

TRIP-eligible lines of insurance.17 TRIA does not mandate that insurers offer terrorism risk 

insurance at a particular price,18 nor does TRIA require any policyholder to purchase insurance 

for terrorism risk.19 All commercial P&C insurers writing in TRIP-eligible lines and required to 

make terrorism risk insurance available under their policies are considered Program participants, 

regardless of whether their policyholders accept the offer to take-up the coverage. 

Insurers are eligible for federal payments under the Program only for losses resulting from “acts 

of terrorism.” An act of terrorism is defined under TRIA as an act certified by the Secretary in 

consultation with the Attorney General of the United States and the Secretary of Homeland 

Security:

• to be an act of terrorism;

• to be a violent act or an act that is dangerous to human life, property, or infrastructure; 

• to have resulted in damage within the United States;20 and

• to have been committed by an individual or individuals, as part of an effort to coerce the 

civilian population of the United States or to influence the policy or affect the conduct of 

the U.S. government by coercion.21

 

15 An insurer is defined under TRIA as any entity, including any affiliate thereof, which receives direct earned 

premiums (DEP) for TRIP-eligible lines of insurance and is licensed or admitted to engage in the business of 

insurance in any state; an eligible surplus lines carrier; a federally-approved maritime, energy, or aircraft insurer; a 

state residual market insurance entity or workers’ compensation fund; or, to the extent provided in rules issued by 

the Secretary, a captive insurer or a self-insurance arrangement. TRIA § 102(6). 

16 TRIA §103(c)(2).

17 Reinsurance is excluded from the TRIP-eligible lines of insurance. TRIA § 102(11)(B)(vii). Issues concerning 

the availability of private reinsurance for terrorism risk are discussed further below in Section V.D.

18 State insurance rating laws and regulations may affect the price that can be charged by insurers writing terrorism 

risk insurance subject to TRIA.

19 In some circumstances, state law may require the purchase of (or limit the ability to exclude) coverage for 

terrorism risk, such as in the case of workers’ compensation insurance, discussed further below in Section VII.

20 TRIA also provides that an act of terrorism may occur outside the United States in the case of certain air carriers 

or vessels, or on the premises of a U.S. mission. TRIA § 102(1)(A)(iii).

21 TRIA § 102(1)(A).
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Additionally, the Secretary may not certify an act that results in P&C insurance losses totaling $5 

million or less,

22 or that was committed as part of the course of a war declared by Congress.23 

If the Secretary certifies an act of terrorism, participating insurers may submit claims to 

Treasury, and Treasury will determine whether, and in what amounts, insurers are eligible for 

payments under the Program.24 Treasury is then required to obtain reimbursement of certain 

payments of the federal share of compensation through a recoupment process, and may obtain 

reimbursement of additional payments depending on the amount of total losses. 

A participating insurer’s recovery under the Program is based on a number of factors, including 

its individual deductible, the Program Trigger, the federal share of compensation of an insurer’s 

losses, and the Program Cap. These factors are described in greater detail below.

Insurer Deductible

After the Secretary certifies one or more acts of terrorism, two prerequisites must be met before 

an insurer is eligible for payments from Treasury under the Program: the insurer’s losses must 

exceed its deductible (as defined under the Program), and the Program Trigger must be satisfied. 

An individual insurer’s deductible is 20 percent of the insurer’s direct earned premiums (DEP) in 

the TRIP-eligible lines for the prior calendar year.25

Program Trigger

The Program Trigger is the minimum amount of insurance industry aggregate insured losses 

resulting from a certified act (or acts) of terrorism taking place in a particular calendar year that 

must be sustained before any federal payments are made. The Program Trigger was $120 

million in calendar year 2016 and $140 million in calendar year 2017 (the principal years 

addressed by this Report);26 it will continue to increase by $20 million per calendar year until it 

reaches $200 million in 2020.27 Once the Program Trigger has been satisfied, Treasury will 

 

22 TRIA § 102(1)(B)(ii).

23 This limiting clause regarding an act of war does not apply to coverage under the Program for workers’ 

compensation insurance. TRIA § 102(1)(B)(i).

24 Any determination by Treasury is made pursuant to the Program regulations. See Terrorism Risk Insurance 

Program, 31 C.F.R. Part 50 (2018).

25 TRIA § 102(7).

26 TRIA § 103(e)(1)(B). The 2015 Reauthorization Act provided for certain changes in Program mechanics from the 

date of the 2015 Reauthorization through the expiration date for the Program in 2020. This Report focuses upon the 

Program structure in place in 2016 and 2017 because much of the Report’s analysis is based on the 2017 and 2018 

TRIP data calls, which collected year-end data for Calendar Year (CY) 2016 and CY 2017, respectively.

27 TRIA § 103(e)(1)(B). TRIP did not originally have a Program Trigger. This requirement was introduced in the 

2005 Extension Act. It was initially set at $50 million (for losses occurring in 2006), and increased to $100 million 

for losses occurring in 2007. When TRIP was reauthorized through 2014 in the 2007 Reauthorization Act, no 
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make payments to individual insurers for the federal share of compensation above their 

respective deductibles. 

Federal Share of Compensation

After an insurer meets its deductible and the Program Trigger is satisfied, the federal government 

will pay a certain percentage of that insurer’s losses in excess of the insurer’s deductible. For 

calendar year 2016, the federal share of compensation was 84 percent of an insurer’s losses 

above its deductible, with the insurer responsible for the remaining 16 percent. In calendar year

2017, the federal share of compensation decreased to 83 percent and the insurer share increased 

to 17 percent. The federal share of compensation will continue to decrease (and the insurer share 

will correspondingly increase) by one percentage point per year through 2020, at which time the 

federal share of compensation will be 80 percent and the insurer share will be 20 percent.28

Program Cap

TRIA limits the aggregate exposure of both insurers and the federal government arising from 

insured losses for an act or acts of terrorism. Specifically, TRIA prohibits the Secretary from 

making payments for any portion of aggregate insured losses (counting amounts paid by 

Program participants as well as the federal government) from acts of terrorism which exceed the 

“Program Cap” of $100 billion during any calendar year.29 If the Program Cap is reached, an 

insurer that has met its insurer deductible by making payments for insured losses subject to the 

Program is not liable for any portion of losses that exceeds the Program Cap.30 

Recoupment

TRIA includes a mechanism for the Secretary to collect “terrorism loss risk-spreading 

premiums” from insurers if federal payments are made to insurers. Under this mechanism,

known as recoupment, insurers writing in TRIP-eligible lines of insurance may be required to 

collect funds from policyholders by placing a surcharge on insurance policies written in those 

lines. The surcharges will be set based upon the amount that must be recovered by Treasury and 

the time within which they must be recovered as required by TRIA. These surcharges must then 

be remitted to the Secretary.31 The requirement to collect, or recoup, terrorism loss risk-

 

change was made to the Program Trigger, which remained at $100 million. The 2015 Reauthorization Act, 

however, provided for an annual increase in the Program Trigger beginning in 2016.

28 TRIA § 103(e)(1)(A).

29 TRIA § 103(e)(2)(A).

30 TRIA § 103(e)(2)(A). TRIA requires the Secretary to notify Congress if insured losses are projected to exceed the 

Program Cap and in that case to determine the pro rata share of insured losses to be paid by each affected insurer. 

TRIA §§ 103(e)(2)-(3).

31 TRIA §§ 103(e)(7)-(8).
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spreading premiums applies not only to insurers that received federal payments under the 

Program, but also to all insurers writing policies in TRIP-eligible lines of insurance. Surcharges 

are placed on all eligible insurance policies regardless of whether the policyholder purchases 

terrorism risk insurance.32

 

32 Depending on how any federal payments under TRIP compare with the total insured losses paid by participating 

insurers, TRIA provides that recoupment under the Program may be mandatory, or may be subject to the Secretary’s 

discretion. In connection with amounts subject to mandatory recoupment, Treasury must collect 140 percent of total 

amounts expended. See TRIA §§ 103(e)(7)-(8).
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IV. DATA COLLECTION

A. Data Collection Process

This Report is based primarily on the results of Treasury’s 2017 and 2018 TRIP data calls. In 

addition, Treasury performed qualitative research and sought input from stakeholders, including 

insurers, state insurance regulators, the National Association of Insurance Commissioners 

(NAIC), and the general public, through a Federal Register Notice seeking comments.33 

Treasury also reviewed publicly-available data reported by insurers to state regulators.

The 2017 and 2018 TRIP data calls were mandatory for participating insurers, subject to an 

exception for small insurers that wrote less than $10 million in TRIP-eligible lines premiums in 

each reporting year, respectively.34 

Treasury collected data on a group basis (combining affiliated companies) because TRIP is 

generally administered on a group basis.35 The information collected included data concerning 

premiums, policy exposures, policyholder take-up rates, and reinsurance.36 Treasury collected 

 

33 See 2018 Report on the Effectiveness of the Terrorism Risk Insurance Program, 83 Fed. Reg. 11815 (March 16, 

2018), https://www.gpo.gov/fdsys/pkg/FR-2018-03-16/pdf/2018-05433.pdf. In response to the foregoing notice for 

comments, Treasury received 10 substantive comments addressing the Program, from: the National Association of 

Insurance Commissioners (NAIC Comments); the National Council on Compensation Insurance (NCCI Comments); 

Marsh & McLennan Companies, attaching Marsh’s 2018 Terrorism Risk Insurance Report (Marsh Comments); a 

consolidated submission from the American Insurance Association, the National Association of Mutual Insurance 

Companies, and the Property Casualty Insurers Association of America (AIA/NAMIC/PCI Comments); the 

Reinsurance Association of America (RAA Comments); the National Association of Realtors (NAR Comments), 

Lloyd’s of London (Lloyd’s Comments); the Vermont Captive Insurance Association (VCIA Comments), the 

Coalition to Insure Against Terrorism (CIAT Comments); and the Council of Insurance Agents and Brokers (CIAB 

Comments). All comments are available at https://www.regulations.gov/docket?D=TREAS-TRIP-2018-0005. 

34 Treasury estimates that insurers eligible for this reporting exception (approximately 400 in total) represented less 

than 0.5 percent of the TRIP-eligible lines premium market for purposes of both the 2017 and 2018 TRIP data call. 

See S&P Global Market Intelligence (as of May 31, 2018).

35 An “affiliate” under TRIP is “any entity that controls, is controlled by, or is under common control with the 

insurer.” Definitions, 31 C.F.R. § 50.4(c) (2018). Calculation of the deductible and the submission of claims under 

TRIP is on a group basis, in light of the “affiliate” definition in the regulations. Recoupment surcharges, however, 

are assessed and collected on an individual company basis. See Insurer Responsibility, 31 C.F.R. § 50.96 (2018). 

Insurer groups may include both domestic insurers as well as foreign insurers that write business in the United States 

only on a surplus lines basis.

36 See Annual Data Reporting, 31 C.F.R § 50.51(b) (2018).
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information from four insurer categories: small insurers,37 larger licensed insurers above the 

small insurer threshold (non-small insurers), captive insurers, and alien surplus lines insurers.38

Treasury collected data through a third-party insurance statistical aggregator, as required by the 

2015 Reauthorization Act.39 The statistical aggregator provided results to Treasury in an 

aggregated, anonymous format that did not identify any particular reporting insurer. Treasury 

obtained most of the workers’ compensation insurance elements from the National Council on 

Compensation Insurance (providing data from the states in which it operates as well as on behalf 

of other independent state workers’ compensation rating bureaus), the California Workers’ 

Compensation Insurance Rating Bureau, and the New York Compensation Insurance Rating 

Board, thereby reducing the burden of the reporting requirements on the insurance industry. 

State insurance regulators also began annually collecting data relating to terrorism risk insurance 

in 2016. The state insurance regulator data calls have sought information similar to that 

collected by Treasury, although in some cases on a more detailed, granular basis. Given the 

similarity of the information sought by Treasury and state insurance regulators, and the burden 

caused to insurers by the existence of dual data calls on the same subject, industry commenters 

advocated for the development of a consolidated data collection approach.40 Beginning with the 

2018 TRIP data call, Treasury and state insurance regulators developed a consolidated data call 

designed to satisfy each of their respective statutory mandates and objectives while permitting 

reporting insurers to submit, for the most part, the same information to both Treasury and state 

insurance regulators.41 The consolidated collection approach has and will continue to 

 

37 Small insurers are defined with reference to the size of the insurer’s policyholder surplus and TRIP-eligible DEP 

in the immediately preceding year as compared with an amount five times the size of the Program Trigger See

Definitions, 31 C.F.R. § 50.4(z). See also FIO, U.S. Department of the Treasury, Study of Small Insurer 

Competitiveness in the Terrorism Risk Insurance Marketplace (2017), 6-7, 

https://www.treasury.gov/initiatives/fio/reports-andnotices/Documents/Study_of_Small_Insurer_Competitiveness_in_the_Terrorism_Risk_Insurance_Marketplace_(Jun

e_2017).pdf. 

38 Each insurer category was provided with a different reporting template which was tailored to that category. 

39 TRIA § 104(h)(3). The data aggregator for the 2017 and 2018 TRIP data calls was Insurance Services Office, Inc.

40 See generally AIA/NAMIC/PCI Comments.

41 For the 2018 TRIP data call, Treasury and state insurance regulators used joint reporting templates that were 

substantially similar to those used by Treasury in prior years, subject to minor changes based upon Treasury’s 

experience with the 2017 TRIP data call, coordination with state insurance regulators and the NAIC, and feedback 

from participating insurers. See Terrorism Risk Insurance Program 2018 Data Call, 82 Fed. Reg. 56328 (November 

28, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-11-28/pdf/2017-25402.pdf; 2018 Data Call Under the Terrorism 

Risk Insurance Program, 83 Fed. Reg. 14718 (April 5, 2018), https://www.gpo.gov/fdsys/pkg/FR-2018-04-

05/pdf/2018-06996.pdf. Treasury received 5 non-duplicative substantive comments from interested parties 

addressing the proposed 2018 TRIP data call templates and data collection approach, which are available at 

https://www.regulations.gov/docket?D=+TREAS-TRIP-2017-0015. 
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significantly reduce burdens on insurers required to report information to both Treasury and state 

insurance regulators.42 

B. Responding Insurer Categories

Insurer groups were required to report in one of four insurer categories, based on the 

requirements of TRIA and its implementing regulations. These insurer categories included nonsmall and small domestic insurers that are “admitted” or licensed to write business in at least one 

U.S. jurisdiction,43 domestic and foreign insurers that have been permitted as a matter of state 

law to write U.S. business on a surplus lines basis, and captive insurers admitted or licensed to 

write TRIP-eligible lines of insurance in at least one U.S. jurisdiction.44 

For 2018, the four insurer categories required to report information were as follows:

(1) Small Insurers: Domestic insurers or groups (including affiliated alien surplus lines 

insurers) with both 2016 DEP in TRIP-eligible lines of insurance of less than $700 

million and a 2016 policyholder surplus of less than $700 million. The small insurer 

threshold is calculated annually in relation to the Program Trigger amount.45

(2) Non-Small Insurers: Domestic insurers or groups (including affiliated alien surplus 

lines insurers) with either DEP in TRIP-eligible lines of insurance above the small insurer 

threshold or a policyholder surplus above the small insurer threshold. 

(3) Captive Insurers: Insurers formed to insure the risk exposures of their policyholder 

owners, and are regulated by the captive insurance laws of a particular state jurisdiction. 

Captive insurers are discussed in further detail in Section VI.B, below.

(4) Alien Surplus Lines Insurers: Alien surplus lines insurers that are not affiliated with 

either a domestic non-small or small insurer. Alien surplus lines insurers are discussed in 

further detail in Section VI.C, below. 

 

42 See AIA/NAMIC/PCI Comments, 15 (acknowledging that the coordinated data call has “reduced reporting 

burdens on insurers”).

43 An admitted company is “an insurance company licensed to do business in a state(s), domiciled in an alternative 

state or country.” “Glossary of Insurance Terms,” NAIC, http://www.naic.org/consumer_glossary.htm. 

44 Non-admitted insurers can write insurance on a surplus lines basis when the desired coverage cannot be obtained 

from admitted insurers in the jurisdiction in question. See Definitions, 31 C.F.R. § 50.4(o)(1)(i)(B). See also 

“Glossary of Insurance Terms,” NAIC, http://www.naic.org/consumer_glossary.htm. 

45 See FIO, 2017 Small Insurer Study, 6-7, 21-23.
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As shown in Figure 1, the 2017 and 2018 TRIP data calls yielded the following statistics 

concerning the insurer categories participating in TRIP, as indicated by reported TRIP-eligible 

DEP. 

Figure 1: TRIP-Eligible DEP By Insurer Category46

2017 TRIP Data Call 2018 TRIP Data Call

2016 DEP in TRIPEligible Lines% of

Total 

2017 DEP in TRIPEligible Lines% of

Total 

Alien Surplus Lines Insurers $ 7,421,060,583 4% $ 9,492,933,571 5%

Captive Insurers 7,930,646,027 4% 9,046,977,906 4%

Non-Small Insurers 168,238,219,882 83% 168,843,991,084 81%

Small Insurers 20,085,947,637 10% 21,763,719,578 10%

Total $ 203,675,874,129 100% $ 209,147,622,139 100%

 Source: 2017 and 2018 TRIP data calls

Figure 2 illustrates the total amount of premiums in the TRIP-eligible lines of insurance reported 

by non-small and small insurers in the 2017 and 2018 TRIP data calls. For a breakdown of the 

terrorism risk insurance premium component of this premium, see Figure 46 (Section VII).

Figure 2: TRIP-Eligible DEP by TRIP-Eligible Lines of Insurance

(Non-Small and Small Insurers)

2017 TRIP Data Call 2018 TRIP Data Call

2016 DEP in TRIPEligible Lines% of 

Total 

2017 DEP in TRIPEligible Lines% of 

Total

Aircraft (all perils) $ 1,200,951,210 1% $ 1,394,564,096 1%

Allied Lines 6,454,504,641 3% 6,218,007,728 3%

Boiler and Machinery 1,438,747,105 1% 1,489,496,637 1%

Commercial Multiple Peril (liab.) 13,845,387,346 7% 14,157,059,153 7%

Commercial Multiple Peril (non-liab.) 24,006,088,416 13% 23,751,976,210 12%

Excess Workers' Compensation 1,010,954,299 1% 1,289,645,245 1%

Fire 7,685,944,056 4% 9,366,961,098 5%

Inland Marine 14,329,918,264 8% 14,654,016,568 8%

Ocean Marine 2,404,937,056 1% 2,217,096,257 1%

Other Liability 43,672,168,577 23% 44,255,197,602 23%

Products Liability 3,399,518,654 2% 3,208,655,630 2%

Workers’ Compensation 68,875,047,895 37% 68,605,034,438 36%

Total $ 188,324,167,519 100% $ 190,607,710,662 100%

 Source: 2017 and 2018 TRIP data calls

 

46 Some figures may not add to 100 percent due to rounding.
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C. Response Rate

Treasury estimates that the response rate for domestic insurers in the 2018 TRIP data call 

(measured by TRIP-eligible DEP) was at least 99 percent for non-small insurers, and at least 85 

percent for small insurers. Treasury estimates that at least 98 percent of non-small insurers and 

at least 88 percent of small insurers reported in the 2017 TRIP data call.47 

Treasury estimates that at least 95 percent of alien surplus lines insurers responded to the 2018 

TRIP data call, an increase from the 2017 estimated data call response rate of 85 percent.

48

Determining the response rate for captive insurers under TRIP is more difficult because captive 

insurers typically do not submit publicly available information that could be used by Treasury to 

independently evaluate their response rate. Therefore, Treasury also consulted with state 

insurance regulators to help determine whether the appropriate number of captive insurers 

reported for the TRIP data calls.

49 Treasury estimates that the significant majority of captive 

insurers participating in the Program provided information in response to both the 2017 and 2018 

TRIP data calls.

Treasury used the data from the 2017 and 2018 TRIP data calls as one of the main bases upon 

which to draw conclusions respecting the effectiveness of the Program.50 

D. Data Quality Evaluation 

TRIA’s coverage extends to “commercial property and casualty insurance.” Treasury 

implemented this statutory coverage mandate at the outset of the Program by defining it using 

the lines of insurance established for purposes of state regulation and reporting. This 

implementation promoted the efficient administration of the Program for companies accustomed 

 

47 Treasury evaluated the response rates to the 2017 and 2018 TRIP data calls by analyzing information reported to 

state insurance regulators as well as independently analyzing insurers where the available state data was not 

dispositive of the particular insurer’s obligation to participate in the TRIP data call. Some amount of non-reporting 

may be attributable to small insurers that are under the reporting threshold. Treasury will continue to analyze its 

response rate.

48 Alien surplus lines insurers also report certain information to state regulators, and Treasury used a similar process 

to evaluate the response rate for alien surplus lines insurers as the process used for domestic insurers. 

49 Treasury only requires reporting from captive insurers to the extent that they issue terrorism risk insurance that is 

subject to the Program. Captive insurers that write policies in the TRIP-eligible lines of insurance, but which do not 

provide any terrorism risk insurance, do not have a reporting requirement. See 83 Fed. Reg. 14718 (April 5, 2018). 

50 By comparison, Treasury’s initial 2016 Effectiveness Report was based upon Treasury’s voluntary 2016 TRIP 

data call, in which only approximately 41 percent (by TRIP-eligible DEP) of participating insurers reported data, 

and only limited information was reported by alien surplus lines and captive insurers. See FIO, 2016 Effectiveness 

Report, 8-9, https://www.treasury.gov/initiatives/fio/reports-andnotices/Documents/2016_TRIP_Effectiveness_%20Report_FINAL.pdf. 
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to reporting data according to existing standards.51 This also enables Treasury to determine 

whether the data reported by non-small and small insurers under TRIP data calls is generally 

consistent with similar data reported for state regulatory purposes.52 

Although TRIA generally applies to these lines of insurance, it excludes certain types of

insurance from the Program that otherwise falls within these lines for state statutory reporting 

purposes. The principal differences between state reporting lines and TRIP-eligible lines are: (1) 

certain lines of insurance (principally Fire and Allied Lines, but also other lines) encompass

policies written to cover personal, and not commercial, exposures, which are not subject to 

TRIP; and (2) Professional Liability insurance is not subject to TRIP, even though it is reported 

for state purposes under the Other Liability line of insurance, which is otherwise a TRIP-eligible 

line of insurance.53 

 

51 See, e.g., Terrorism Risk Insurance Program, 68 Fed. Reg. 41250, 41256-59 (July 11, 2003), 

https://www.gpo.gov/fdsys/pkg/FR-2003-07-11/pdf/03-17585.pdf. 

52 For purposes of this Report, Treasury evaluated the data reported by domestic non-small and small insurers that 

regularly make public statutory insurance filings by comparing the Treasury data with the reporting lines for state 

insurance regulatory purposes. Treasury has previously addressed this adjustment process in prior reports. See 2017 

Small Insurer Study, 11. Most alien surplus lines and captive insurers do not make such filings; therefore, this 

analysis does not extend to those Program participants. 

53 See generally TRIA § 102(11). Other small (and offsetting) differences arise from the manner in which Treasury 

collects data. Although Treasury does not require reporting from insurers that have written less than $10 million of 

premiums in TRIP-eligible lines of insurance in the reporting period, this accounts for less than 0.5 percent of all 

TRIP-eligible lines premiums in a given year. On the other hand, although Treasury requires alien surplus lines 

insurers that are affiliated with domestic insurers to report their activities as part of those affiliated entities, which is 

not included in the data reported by domestic insurers for state regulatory purposes, this only accounts for 

approximately 0.5 percent in additional TRIP-eligible lines premiums in a given year than would otherwise be 

reported to state regulators.
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The premiums reported to Treasury in the 2017 and 2018 TRIP data calls compare to the 

premiums reported by non-small and small insurers for state regulatory purposes as detailed in 

Figure 3. 

Figure 3: Comparison of TRIP-Eligible DEP Reported in Treasury Data Calls

To TRIP-Eligible DEP Reported to State Regulators54

Source: 2017 and 2018 TRIP data calls; S&P Global Market Intelligence as of June 1, 2018

The data provided by reporting insurers in the 2017 and 2018 TRIP data calls, to the extent it can 

be compared, is consistent with the more general information reported for state regulatory 

purposes. Therefore, it provides a sufficient basis upon which to analyze the effectiveness of the 

Program. 

 

54 In the 2017 Small Insurer Study, Treasury adjusted state reporting data to account for the premium differential 

between the TRIP-eligible lines of insurance and the state reporting lines. See FIO, 2017 Small Insurer Study, 11.
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V. ANALYSIS OF THE OVERALL EFFECTIVENESS OF THE PROGRAM

TRIA was established to “protect consumers by addressing market disruptions and ensure the 

continued widespread availability and affordability of property and casualty insurance for 

terrorism risk,” and to permit private markets to stabilize, resume pricing, and build capacity.55 

Based on Treasury’s analysis, the Program has been largely effective in meeting its statutory 

objectives. Terrorism risk insurance is now available in the market for a relatively low cost and 

is purchased by the majority of commercial policyholders in the United States. Private 

reinsurance capacity for terrorism risk insurance has increased since the creation of the Program. 

Stakeholders – including insurers, reinsurers, and commercial policyholders – also state the 

Program has been effective in achieving its statutory objectives.

56 Treasury addresses these 

issues in more detail below, relying upon the data it has collected.

The 2017 and 2018 TRIP data calls indicate that the market for P&C insurance in general and 

terrorism risk insurance in particular has been relatively stable, with insurance both affordable 

and available to U.S. policyholders. Commenters cited the Program as the principal mechanism 

that has made terrorism risk insurance available and affordable since the inception of the 

Program in 2002, and observed that the Program has had a stabilizing effect on the market for 

P&C insurance generally and terrorism risk insurance in particular.57 One commenter also 

identified market fluctuations that have taken place in light of uncertainty over whether the 

Program would be reauthorized.58 

 

The Program mechanics – the amount of the Program Trigger, the individual insurer deductibles, 

and the co-pay shares – also have an impact upon how the market for terrorism risk insurance 

 

55 TRIA §101(b).

56 See note 33 (identifying commenters).

57 See NAIC Comments, 1 (“We believe that the presence of a federal partnership with the private insurance markets 

has provided a measure of security to the insurance industry by minimizing market disruptions and ensuring the 

widespread availability of property and casualty insurance for terrorism risks.”); AIA/NAMIC/PCI Comments, 3 

(“TRIP has worked well to provide stability in the terrorism insurance market and to ensure that the industry is well 

positioned to meet the nation’s need for insurance coverage in the event of certified acts of terrorism.”); RAA 

Comments, 1 (“By limiting insurers’ exposure to catastrophic terrorism losses, TRIA has enhanced the private 

market for such coverage and has had a stabilizing influence on the economy.”); CIAB Comments, 3-4 (“Twentyfour of twenty-nine respondents believe that TRIP has not discouraged/impeded insurers from providing commercial 

P/C coverage or coverage for acts of terrorism. To the contrary, one respondent asserted that there would be no 

terrorism coverage without TRIP, and another said that having TRIP provides an ‘air support’ feeling to the private 

insurance market.”); CIAT Comments, 1 (“TRIP has been the key factor in ensuring that the private insurance 

market remained intact and has continued to meet the American economy’s needs in this respect largely through 

private risk capacity backstopped by this Program.”); VCIA Comments, 1 (“VCIA’s members would expect a 

significant market disruption if TRIA were not available.”). 

58 See NAR Comments, 2 (identifying the use of “springing exclusions” that would void coverage in the event TRIP 

was not reauthorized, which would have placed real estate owners at risk of default on account of requirements in 

financing agreements). 
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now operates. Some observed that the current mechanics may place too much risk in the private 

market, given the nature of the risk and the potential exposure,59 although it was also recognized 

that these elements of the Program do not pose an impediment to participation in the market.60 

A. Availability of Terrorism Risk Insurance

The availability of insurance for terrorism risk refers to whether insurers offer coverage for 

losses arising from an act of terrorism. Even when insurers “make available” terrorism risk 

coverage as required by TRIA, they retain the ability to limit their terrorism risk exposure in 

various ways. For example, insurers can limit their exposure to terrorism risk through pricing

mechanisms, by declining to underwrite particular risks, or by excluding coverage for certain 

forms of terrorism loss (where permitted by state law) such as for nuclear, biological, chemical, 

or radiological (NBCR) attacks. Insurers may also decline to write a particular line of insurance 

entirely if that line presents too great a risk of loss on account of terrorism. 

In assessing whether participating insurers are complying with the “make available” requirement, 

this Report considers the specific experience indicated by the data calls for Commercial MultiPeril (CMP) insurance. CMP insurance is a type of commercial package policy sold in the 

United States that contains coverage for more than one line of insurance in a single policy. Such 

insurance products are more typically purchased by smaller or medium-sized business entities,

61

and they constitute a significant proportion (32 percent) of all policy premiums reported by nonsmall and small insurers in the TRIP-eligible lines of insurance, excluding workers’ 

compensation.62 The high take-up rate for these products by large numbers of commercial 

businesses indicates that participating insurers are regularly “making available” terrorism risk 

insurance to their policyholders. In the 2017 and 2018 TRIP data calls, 79 percent and 80 

percent, respectively, of CMP policies (as measured by TRIP-eligible DEP) included coverage 

for terrorism risk, with high percentages observed in all geographic areas of the United States.63 

 

59 See AIA/NAMIC/PCI Comments, 2 (stating that TRIA reauthorizations “have not worked to stimulate private 

market growth,” noting the “mistaken belief that simply increasing the financial responsibility placed on insurers 

will force private market growth.”). 

60 See Lloyd’s Comments, 2 (while noting there is “room for debate” concerning the Program mechanics as 

currently set, and that the mechanics if set too high “might have a chilling effect on certain insurers’ willingness to 

write terrorism cover,” concluding that “these elements themselves do not pose any structural impediments to 

market participation”).

61 Policies that package together multiple lines typically needed by small businesses are generally more cost 

effective for such businesses than purchasing separate policies for each line of insurance. See generally

“Understanding Business Owners Policies (BOPs),” Insurance Information Institute, 

https://www.iii.org/article/understanding-business-owners-policies-bops. 

62 Availability issues in connection with workers’ compensation are addressed separately in Section VII.

63 Using policy count data reported by non-small insurers (such information is not collected from small insurers), the 

take-up rate for terrorism risk insurance in commercial multi-peril lines increased to 91 percent (in the 2018 TRIP 

data call) and 89 percent (in the 2017 TRIP data call), respectively. See also Section V.C.
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In addition, commenters representing the consumers of terrorism risk insurance generally 

acknowledge the availability of the insurance within the marketplace.64

The take-up rate for terrorism risk coverage in workers’ compensation is 100 percent because all 

jurisdictions require that it be provided as part of all workers’ compensation policies. 

Accordingly, assessing “availability” in the workers’ compensation market is perhaps best 

considered by reference to shifts between the voluntary and residual markets, as well as the 

percentage of policyholders that elect to self-insure workers’ compensation risks. 

If any business is unable to obtain a workers’ compensation policy in the “voluntary” insurance 

market from a licensed insurance company, then it must instead purchase insurance in the 

“residual” market (in which insurance must be provided) or qualify as a self-insurer for workers’ 

compensation purposes. State insurance laws require licensed insurance companies to participate 

in residual insurance markets through risk-sharing arrangements that vary from state to state. 

Policies purchased in the residual market are generally characterized by higher risks and higher 

premiums. In situations where the residual market share is large or growing it may indicate

market stress or inefficiency and may put commensurate pressure on insurers in the voluntary 

market that are required to assume a large or growing share of risk through involuntary policy 

writing.65

Since the enactment of TRIA, the residual market share of total workers’ compensation 

premiums has been stable, ranging between 4 to 6 percent of total workers’ compensation 

premiums between 2007 and 2017.66 Similarly, the percentage of policyholders self-insuring in 

the workers’ compensation market has remained constant between 23.9 percent in 2007 and 24.5 

percent in 2015.67 Accordingly, in the specific context of workers’ compensation insurance,

terrorism risk insurance is generally available in the marketplace.

 

 

64 See, e.g., CIAT Comments, 2 (“Because of TRIA, it has been possible for businesses to purchase terrorism risk 

coverage continuously since its enactment.”); NAR Comments, 1 (“Since its reauthorization in January 2015, NAR 

members have not reported any difficulties for themselves or their clients in obtaining terrorism risk insurance 

policies, and studies have found that more than 60% of American businesses have terrorism coverage, a testament to 

the program’s effectiveness.”).

65 See NCCI Comments, 2-3 (noting impact of the September 11 attacks on the increase in the share of the residual 

market for workers’ compensation risks and follow-on impact on insurers in the voluntary market). Workers’ 

compensation issues under TRIA are discussed in Section VII.

66 NCCI Comments, 3.

67 See National Academy of Social Insurance, Workers’ Compensation: Benefits, Coverage, and Costs - 2015 Data

(October 2017), 17, https://www.nasi.org/research/2017/report-workers%E2%80%99-compensation-benefitscoverage-costs-%E2%80%93-2015. 
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B. Affordability of Terrorism Risk Insurance

Terrorism risk coverage provided under TRIP is generally “embedded” in policies that also cover 

other risks. Coverage also may be provided on a “standalone” basis where the policy provides 

coverage only for terrorism risk. Such standalone policies generally are used when properties or 

operations present heightened exposure to terrorism risk. 

Approximately 80 percent of the U.S. terrorism risk insurance market (as measured by terrorism 

risk insurance DEP) is comprised of embedded policies, while the remaining 20 percent is 

comprised of standalone terrorism policies. However, the amount of risk covered under 

embedded policies, as measured by policy limits of liability, is far greater than the limits of 

liability under standalone policies. 

1. Embedded Terrorism Risk Insurance

Embedded terrorism risk insurance is provided within P&C policies that also cover other risks. 

TRIA requires that insurers disclose to policyholders the amount of premium charged for 

embedded terrorism risk insurance.

68 This premium can be expressed to the policyholder as a 

percentage of the total premium charged for the policy. Similarly, analyses of terrorism risk 

insurance also typically express the cost of terrorism risk insurance as a percentage of the total 

premiums charged. In many cases, terrorism risk insurance is provided at a disclosed premium 

of $0, meaning it is provided by insurers at no additional charge.

Although approximately 70 percent of insurers charge a premium for terrorism risk insurance 

within embedded policies, approximately 30 percent provide terrorism risk coverage for no 

additional charge. Figure 4 illustrates premium charges in the terrorism risk insurance 

marketplace for embedded terrorism risk insurance coverage on a line-by-line basis and overall 

when a charge is made for the insurance.69

 

68 See General Disclosure Requirements, 31 C.F.R. § 50.10 (2018); Clear and Conspicuous Disclosures, 31 C.F.R. § 

50.12 (2018).

69 The figures in this section are based upon the information reported to Treasury by non-small and small insurers. 

Similar information for captive and alien surplus lines insurers is reported in Sections VI.B and VI.C, respectively.
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Figure 4: Percentage of Total Policy DEP Allocated to Terrorism Risk70

Source: 2017 and 2018 TRIP data calls

 

70 The premiums for embedded terrorism risk insurance are slightly overstated because total premiums contain a 

small amount of premium for standalone policies that cannot be removed on a line-by-line basis. When removed 

from the total figures, however, the total cost declines by only a few hundredths of a percentage point, and remains 

at 3.0 percent in 2016 and 2.5 percent in 2017. 
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Figure 5 identifies policies where terrorism risk coverage is provided for no additional charge.

Figure 5: Percentage of DEP Where Policies Include Terrorism Coverage

At No Additional Cost (By Line of Insurance)

Source: 2017 and 2018 TRIP data calls
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Charges for terrorism risk coverage vary not only by line of insurance but also by geographic

area. For purposes of analysis by geographic area, Treasury generally uses either U.S. Census 

Regions, or individual state jurisdictions. State jurisdictions fall into four Census Regions as 

reflected in Figure 6. 

Figure 6: U.S. Census Regions 

Source: U.S. Census Bureau

Figure 7 illustrates the percentage of total premiums charged for terrorism risk insurance by 

region. 

Figure 7: Percentage of Total Policy DEP Allocated to Terrorism Risk (By Region)

Source: 2017 and 2018 TRIP data calls
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Figure 8 illustrates the percentage of total direct earned premiums for terrorism risk insurance by 

state. 

Figure 8: 2017 Percentage of Total Policy DEP Allocated to Terrorism Risk (By State) 

Source: 2018 TRIP data call

Figure 9 illustrates where terrorism risk insurance was provided for no additional charge by 

region. 

Figure 9: Percentage of DEP Where Policies Include Terrorism Coverage

At No Additional Cost (By Region) 

Source: 2017 and 2018 TRIP data calls
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Figure 10 illustrates where terrorism risk insurance was provided for no additional charge by 

state.

Figure 10: 2017 Percentage of DEP Where Policies Include Terrorism Coverage

At No Additional Cost (By State) 

Source: 2018 TRIP data call

Charges for terrorism risk insurance also vary by the policyholder’s industry sector. Figure 11 

illustrates the policyholder industry sectors of terrorism risk insurance premiums as 

71

a percentage

of total insurance premiums, as reported by non-small and alien surplus line insurers. 

 

71 Policyholder industry code data was not requested from small insurers. Industry code data for policyholders 

insured by captive insurers is provided in Section VI.B.
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Figure 11: Percentage of Total Policy DEP Allocated to Terrorism Risk

For Non-Small and Alien Surplus Lines Insurers (By Policyholder Industry Sector) 

Source: 2017 and 2018 TRIP data calls

The data from the 2017 and 2018 TRIP data calls demonstrates that terrorism risk insurance 

provided on an “embedded” basis is priced at a relatively small percentage of the total premium 

charged for the policy, ranging from 2.5 to 3.0 percent on average when a charge is made. 

Additionally, approximately 30 percent of the time, as measured by DEP, terrorism risk 

insurance is provided for no additional charge. Charges for terrorism risk insurance do vary to 

some extent by line of insurance, geographic area, and the policyholder’s industry sector.
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2. Standalone Terrorism Risk Insurance

Standalone terrorism risk insurance only provides coverage for losses arising from terrorism, 

unlike embedded terrorism risk insurance. Standalone coverage 

is purchased primarily by organizations that are viewed by insurers as being at 

high risk of loss due to terrorism in one of the following situations: when 

terrorism coverage is not available as part of the commercial property policy, 

when the price of terrorism coverage from the insurer providing the commercial 

property policy is too high, or when the terrorism coverage offered by the insurer 

providing the commercial property policy is too narrow.72

Standalone terrorism coverage can be provided either through “certified” standalone terrorism 

risk policies which are written subject to the terms and conditions of TRIP or through “noncertified” standalone terrorism policies which do not meet the terms and conditions of TRIP. 

Non-certified standalone terrorism policies therefore insure terrorism-related losses (as defined 

in the specific policy) regardless of whether the Secretary has certified an act of terrorism under 

TRIA.

73 Any losses paid by insurers under non-certified standalone terrorism risk policies 

would not be eligible for reimbursement under TRIP. 

 

72 “Stand Alone Terrorism Coverage,” International Risk Management Institute, 

https://www.irmi.com/online/insurance-glossary/terms/s/stand-alone-terrorism-coverage.aspx. 

73 Such “non-certified standalone terrorism” policies, in addition to insuring losses to an “act of terrorism” definition 

that can be broader than the TRIA definition, can also be used to cover international locations outside the scope of 

TRIP, or provide coverage that may not be available on an embedded basis under other policies. See Neil 

Silverblatt, “7 Reasons to Consider a Stand-Alone Policy,” PropertyCasualty360, January 31, 2017, 

http://www.propertycasualty360.com/2017/01/31/7-reasons-to-consider-a-stand-alone-terrorism-poli; CIAT 

Comments, 2-3. 
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As shown in Figure 12, direct earned premiums under non-certified standalone terrorism risk 

insurance policies were much lower, for most insurer categories, than total premiums earned

under certified standalone policies. Only alien surplus lines insurers reported earning a majority 

of their premiums for standalone terrorism risk insurance policies under non-certified policies.

Figure 12: Percentage of Standalone Policies 

That are Certified Versus Non-Certified (By DEP) 

Certified Policies Non-Certified Policies

2016 2017 2016 2017

Alien Surplus Lines Insurers 22.4% 39.0% 77.6% 61.0%

Captive Insurers 95.3% 95.3% 4.6% 4.7%

Non-Small Insurers 69.0% 48.0% 30.3% 52.0%

Small Insurers74 N/A 77.4% N/A 22.6%

All Insurer Categories 83.9% 80.0% 16.0% 20.0%

Source: 2017 and 2018 TRIP data calls

The data also suggests that standalone terrorism policies in each insurer category vary 

significantly in terms of cost and whether they provide coverage under TRIA. Figure 13 

illustrates the average cost for standalone terrorism policies, by insurer category, depending on 

upon whether certified or non-certified coverage is provided. 

Figure 13: 2017 Certified Standalone versus Non-Certified Standalone Policies

By Policy Count and DEP 

Certified Standalone Policies Non-Certified Standalone Policies

# of 

Policies Total DEP

Average 

Policy Cost

# of 

Policies Total DEP

Average 

Policy Cost

Alien Surplus Lines Insurers 3,262 $ 78,162,288 $ 23,961 2,810 $122,059,656 $ 43,438

Captive Insurers 337 636,055,611 1,887,405 12 31,263,364 2,605,280

Non-Small Insurers 4,223 30,497,344 7,222 2,188 33,038,374 15,100

Small Insurers 14 69,173 4,941 8 20,230 2,529

Source: 2018 TRIP data call

The 2016 and 2017 TRIP data calls did not request information on the total coverage (i.e., policy 

limits) provided under non-certified standalone policies, and the disparity in average policy cost 

between certified and non-certified policies may be due to differences in the relative size or 

nature of exposures covered under each type of policy. However, the disparity could also 

indicate a higher cost associated with non-certified standalone policies compared to certified 

standalone policies.75 Treasury cannot determine, based upon the data, the extent to which the 

 

74 Treasury did not require small insurers to provide information concerning standalone terrorism policies during the 

2017 TRIP data call, although it did in connection with the 2018 TRIP data call.

75 Some commenters stated that without the support offered by the Program in connection with exposures covered 

by the Program, the ability of insurers to offer coverage on a non-certified basis outside the scope of TRIP could be 

further limited, and could not substitute for the support provided by the Program. See CIAT Comments, 3; Lloyd’s 

Comments, 3.
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cost difference is due to the lack of federal support for non-certified policies, higher policy limits 

under non-certified policies, a combination of these factors, or other considerations. Treasury 

will continue to monitor and assess these issues in its ongoing TRIA work. 

Certified standalone terrorism risk insurance policies, which do provide TRIA coverage, account 

for approximately one-fifth of all terrorism risk insurance DEP subject to the Program (17 

percent in 2016 and 20.5 percent in 2017), with the other 80 percent earned through embedded 

policies. However, the cost of coverage under certified standalone policies is also significantly 

higher than the cost of coverage under embedded policies. Measured by the limits of liability of 

all policies insuring terrorism risk under the Program, certified standalone policies accounted for 

less than 0.5 percent of total policy limits in both 2016 and 2017. 

Figure 14 shows the amount of premium charged per $1 million in coverage under embedded 

policies compared to standalone policies covering TRIA-certified events. 

Figure 14: Embedded Policies versus Certified Standalone Policies: 

Premium Charged Per $1 Million in Policy Limits 

Embedded Terrorism Standalone Terrorism

2016 2017 2016 2017

Alien Surplus Lines Insurers $ 29 $ 127 $ 122 $ 183

Captive Insurers $ 915 $ 1,300 $ 1,641 $ 1,464

Non-Small Insurers $ 4 $ 8 $ 1,059 $ 572

Small Insurers $ 9 $ 5 N/A $ 339

All Insurer Categories $ 6 $ 13 $ 1,115 $ 813

Source: 2017 and 2018 TRIP data calls

As noted above, the data indicates that the rate charged for terrorism coverage under embedded 

policies is typically lower than the rate charged for standalone policies. This indicates that 

standalone policies are more likely to be issued in situations with a higher risk of terrorism. 

C. Take-Up Rates for Terrorism Risk Insurance

TRIA requires an offer – but does not mandate the purchase – of terrorism risk insurance.76 

Therefore, the extent to which terrorism risk insurance is purchased by policyholders (the takeup rate) may approximate the distribution of insured payments in the event of a terrorist attack. 

A higher take-up rate means that the losses arising from a terrorist attack will be more likely to

be covered by private insurers. 

A take-up rate based on the number of policies will be likely influenced by the large number of 

small policies covering risks with lower insured values. Alternatively, a take-up rate measured 

 

76The take-up rate data discussed in this section do not consider workers’ compensation, which has a 100 percent 

take-up rate as a matter of state law. Section VII discusses the impact of the Program on workers’ compensation 

insurers.
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by DEP or policy limits will be more influenced by policies covering larger businesses with 

more insured property and liability exposure. The latter comes closer to reflecting the amount of 

insured business activity in the economy. 

Prior analyses by Treasury found that the take-up rate, when measured by the percentage of 

policies containing terrorism coverage, increased from 27 percent in 2003 (the first full year of 

the Program) to approximately 60 percent by 2006.77 In a more recent study using partial 2015 

data, Treasury found the take-up rate to be even higher, ranging from approximately 70 percent 

to 80 percent depending upon whether it was measured by policy count, DEP, or insured 

values.

78

Figure 15 illustrates the take-up rates in 2016 by policy count, DEP, and policy property and 

liability limits. Information is based upon non-small, small, and alien surplus lines insurer 

reported data.

79

Figure 15: 2016 Terrorism Risk Insurance Take-Up Rates

By Policy Count, DEP, and Policy Limits (By Insurer Category) 

Policy Count DEP Property Limits Liability Limits

Alien Surplus Lines Insurers 20% 33% 50% 60%

Non-Small Insurers 76% 64% 83% 84%

Small Insurers80 N/A 55% 49% 60%

All Insurer Categories 75% 61% 81% 83%

Source: 2017 TRIP data call

 

77 Office of Economic Policy, U.S. Department of the Treasury, Assessment: The Terrorism Risk Insurance Act of 

2002 (2005), 3, 84, https://www.treasury.gov/resource-center/fin-mkts/Documents/tria_studyby_treas.pdf; 

President’s Working Group on Financial Markets (PWG), 2006 Terrorism Risk Insurance (2006), 42-44; PWG, 

Market Conditions for Terrorism Risk Insurance 2010 (2010), 23, https://www.treasury.gov/resource-center/finmkts/Documents/PWG%20Report%20Final%20January%2013.pdf; PWG, The Long-Term Availability and 

Affordability of Insurance for Terrorism Risk (2014), 30, https://www.treasury.gov/resource-center/finmkts/Documents/PWG_Terrorism_2014.pdf. 

78 FIO, 2016 Effectiveness Report, 14-15.

79 Captive insurers do not present similar issues to admitted insurers with respect to take-up rates, because the 

decision of a captive owner to insure its terrorism risk exposure with a captive insurer is a self-insurance decision as 

opposed to a market decision (although the cost of terrorism risk insurance in the marketplace at large may influence 

to decision to self-insure through a captive insurer). The captive insurance market for terrorism risk insurance is 

addressed in Section VI.B.

80 Treasury did not require small insurers to provide policy count information in the 2017 TRIP data call.
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Figure 16 illustrates the take-up rates in 2017 by policy count, DEP, and policy property and 

liability limits; and for non-small, small, and alien surplus lines insurers.

Figure 16: 2017 Terrorism Risk Insurance Take-Up Rates

By Policy Count, DEP, and Policy Limits (By Insurer Category) 

Policy Count DEP Property Limits Liability Limits

Alien Surplus Lines Insurers 17% 40% 30% 68%

Non-Small Insurers 79% 66% 72% 69%

Small Insurers81 N/A 55% 74% 43%

All Insurer Categories 78% 63% 72% 62%

Source: 2018 TRIP data call

The results shown in Figures 15 and 16 are generally consistent with similar figures cited by 

stakeholders.82

Similar to the price of terrorism risk insurance, the take-up rate of terrorism risk insurance also 

varies by the geographic region of the United States, and by state. Figure 17 shows the take-up 

rates indicated for the Northeast, Midwest, South, and West regions, using the same benchmarks 

of policy count, DEP, and insured value, for 2016. 

Figure 17: 2016 Terrorism Risk Insurance Take-Up Rates

By Policy Count, DEP, and Insured Value (By Region) 

Policy Count DEP Property Limits Liability Limits

Northeast 73% 66% 84% 84%

Midwest 80% 64% 81% 80%

South 71% 58% 81% 84%

West 77% 60% 79% 81%

All Regions 75% 61% 81% 83%

Source: 2017 TRIP data call

Figure 18 shows the 2017 take-up rates using the same metrics.

Figure 18: 2017 Terrorism Risk Insurance Take-Up Rates

By Policy Count, DEP, and Insured Value (By Region) 

Policy Count DEP Property Limits Liability Limits

Northeast 74% 67% 72% 78%

Midwest 82% 66% 82% 76%

South 76% 61% 69% 62%

West 82% 62% 63% 43%

All Regions 78% 63% 72% 62%

Source: 2018 TRIP data call

 

81 Treasury did not require small insurers to provide policy count information in the 2018 TRIP data call.

82 See Marsh Comments, 4 (reflecting 2016 and 2017 take-up rates of 63 percent and 62 percent, respectively). 
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Figure 19 illustrates take-up rates, based upon DEP, by region (for both 2016 and 2017). 

Variations in take-up rates by geographic area are consistent with those reflected by other 

sources.83

Figure 19: Terrorism Risk Insurance Take-Up Rates By DEP (By Region) 

Source: 2017 and 2018 TRIP data calls

 

83 See Marsh Comments, 9 (reflecting take-up rates of 73 percent in the Northeast, 59 percent in the Midwest, 58 

percent in the South, and 54 percent in the West). As is the case with Treasury’s other analyses by Region, the 

information illustrated is based upon non-small and small insurer reporting only.
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Figure 20 illustrates take-up rates, based upon DEP, by state (for 2017 only). 

Figure 20: 2017 Terrorism Risk Insurance Take-Up Rates By DEP (By State) 

Source: 2018 TRIP data call

Take-up rates also vary by line of insurance.84 Figure 21 shows the take-up rate within each 

TRIP-eligible line of insurance (excluding workers’ compensation), by DEP, as reflected by both 

the 2017 and 2018 TRIP data calls. 

 

84 Some of the variance in take-up rates can be explained by other factors. In the Aircraft line (covering property 

and liability risks arising from the manufacture, ownership, and operation of aircraft), the indicated take-up rate does 

not account for the fact that many policyholders with exposures in this line (including most common carriers) obtain 

coverage for terrorism risk through the purchase of war risk coverage under Aircraft policies. See generally 

Congressional Research Service, Aviation War Risk Insurance: Background and Options for Congress (September 

5, 2014), 2, https://fas.org/sgp/crs/misc/R43715.pdf. Accordingly, the take-up rate indicated by the TRIP data calls

significantly understates the extent to which terrorism risks are insured in this policyholder sector. Treasury also 

considered whether the take-up rate in the Fire line is reduced because of rules in 13 so-called “fire following” 

jurisdictions that require coverage for fire loss arising from terrorism even where the insured does not purchase 

terrorism insurance. See Property Casualty Insurers Association of America, SFP States and States Allowing 

Insurers to Exclude Fire Following an Act of Terrorism, http://www.pciaa.net/docs/default-source/industryissues/sfp_terrorism_exclusions_012015.pdf. Based upon the Treasury data calls, however, the average take-up rate 

in 2016 and 2017 for terrorism risk insurance in all “fire-following” jurisdictions was somewhat higher than the 

average take-up rate in that line in all other jurisdictions.
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Figure 21: Terrorism Risk Insurance Take-Up Rates in TRIP-Eligible Lines 

(By DEP) 

Source: 2017 and 2018 TRIP data calls
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Figure 22 shows the take-up rate by policy count. 

Figure 22: Terrorism Risk Insurance Take-Up Rates in TRIP-Eligible Lines 

(By Policy Count) 

Source: 2017 and 2018 TRIP data calls
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Figure 23 shows the take-up rate in TRIP-eligible property lines by property policy limits. 

Figure 23: Terrorism Risk Insurance Take-Up Rates in TRIP-Eligible Lines

(By Property Policy Limits) 

Source: 2017 and 2018 TRIP data calls
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Figure 24 shows the take-up rate in TRIP-eligible lines by liability policy limits.

Figure 24: Terrorism Risk Insurance Take-Up Rates in TRIP-Eligible Lines

(By Liability Policy Limits)

Source: 2017 and 2018 TRIP data calls
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Take-up rates also vary by policyholder industry sector, as illustrated by Figure 25. 

Figure 25: Terrorism Risk Insurance Take-Up Rates

By Policyholder Industry Sector (By TRIP-Eligible DEP)85

Source: 2017 and 2018 TRIP data calls

 

85 Data provided for non-small and alien surplus lines insurers. Small insurers were not required to report 

policyholder industry sector information in the 2018 TRIP data call. Take-up rates for captive insurers were not 

analyzed because the decisions of a captive owner to self-insure through a captive insurer is different from the 

decision whether to purchase terrorism risk insurance in the market generally. See note 79.
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While other sources reporting this information do not use the same policyholder sector 

descriptions as Treasury, their data reflects a similar variance in take-up rates by policyholder 

industry sectors, particularly where the sector descriptions are comparable.86

Treasury also requested more specific data from non-small, alien surplus lines, and captive 

insurers concerning risk exposures in 26 specific metropolitan areas.

87 This information 

addressed, among other things, the policy property limits assumed by each reporting insurer that 

are subject to (and not subject to) the Program (because terrorism risk insurance was not 

obtained). In the 2017 or 2018 TRIP data call, 80 percent or more of the reported policy 

exposures were identified with a particular geographic region.88 Furthermore, the results 

obtained for each metropolitan area show that, with some exceptions, the aggregate policy 

property limits are proportional to gross domestic product (GDP) in most metropolitan areas.

89 

Figure 26 illustrates the combined results obtained from the 2017 and 2018 TRIP data calls. 

 

86 See Marsh Comments, 6 (attributing varying take-up rates to the different concentration risks posed by different 

industries).

87 The metropolitan areas identified are identical to those utilized by A.M. Best when considering the terrorism risk 

exposures of the companies it evaluates.

88 Reporting insurers were permitted to identify premiums by geographic region in an “Unknown” category, 

indicating that the policy exposure could not be retrieved by geographic location. Approximately 18 percent of the 

total property exposure was reported in the Unknown category in the 2017 TRIP data call. This amount declined to 

approximately 14 percent in the 2018 TRIP data call.

89 As determined by the Bureau of Economic Analysis. See “Regional Data,” Bureau of Economic Analysis 

https://www.bea.gov/iTable/iTableHtml.cfm?reqid=70&step=1&isuri=1. 
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Figure 26: Terrorism Risk Insurance Take-Up Rates by Metropolitan Area

(By Policy Property Limits)

Source: 2017 and 2018 TRIP data calls
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Take-up rates by property exposure for all other areas in the United States (a figure requested 

separately for all other areas, where the exposure was allocated) was reported to be 78.5 percent 

in 2016 and 76.8 percent in 2017 – figures comparable to the indicated figures for all 

metropolitan areas combined (82.0 percent in 2016 and 74.8 percent in 2017).90 The exposure 

that is covered under the Program in all other areas in the United States is significant and 

exceeds the total property limits covered in the 26 metropolitan areas. Based upon the results of 

the data calls, 68.6 percent of all property exposures reported to be insured under the Program 

fell within the “all other locations in the United States” category in 2016 versus 31.4 percent in 

the identified metropolitan areas. In 2017, the reported figures were the same – 68.6 percent and 

31.4 percent, respectively. 

D. Private Reinsurance Availability

To the extent it is available and purchased by insurers writing terrorism risk insurance, private 

reinsurance may serve both to increase the availability of terrorism risk insurance and to reduce 

or minimize Program exposure. Reinsurance mechanisms support the proper functioning of 

insurance markets, and Treasury has evaluated in prior reports the amount of reinsurance 

capacity for terrorism risk since the enactment of TRIA. In its 2006, 2010, and 2014 analyses, 

Treasury found that such capacity was limited and had remained relatively static since shortly 

after the September 11 attacks.91 In connection with Treasury’s recent TRIP data calls, however, 

more reinsurance capacity for terrorism risk has been observed,92 which is consistent with the 

observations of commenters that reinsurers may now have a greater willingness to cover 

conventional (i.e., non-NBCR) terrorism risks than was indicated by these prior analyses.93

In recent years, the reinsurance market in the United States has generally been characterized by 

large amounts of capacity for P&C business, and a resulting decline in prices as reinsurers seek 

 

90 Based upon the voluntary data call collecting CY 2015 information, the property exposure data also reflected 

take-up rates that were comparable for metropolitan areas combined (71.9 percent) versus all other locations in the 

United States combined (73.3 percent). See FIO, 2016 Effectiveness Report, 15-16. 

91 See PWG, 2006 Terrorism Risk Insurance Report, 26 ($6-$8 billion of terrorism reinsurance capacity in 2006, $4-

6 billion in 2005), PWG, 2010 Market Conditions Report, 19 (between $6-8 billion to $8-10 billion); and PWG, 

2014 Availability and Affordability Report, 19 ($6-8 billion). 

92 Treasury’s 2016 Effectiveness Report, based upon partial industry data collected by Treasury that year, noted that 

a subset of responding insurers reported a total of $21.4 billion in reinsurance coverage for a single loss resulting 

from terrorism. Based other reported information, approximately 82 percent of that $21.4 billion amount fell within 

the co-pay obligations of the reporting insurers above their Program deductibles, with the remaining balance falling 

within the insurer’s TRIP deductible. FIO, 2016 Effectiveness Report, 18.

93 See RAA Comments, 3 (“Reinsurers have been willing to put a defined amount of capital at risk for terrorismrelated losses due to the nature of the risk, insurer demand for risk transfer and the price they are willing to pay. In 

2017 . . . the combined property and workers’ compensation private conventional-only terrorism reinsurance 

capacity was estimated to be $2.5 billion per cedent program.”); Marsh Comments, 17 (reporting on per program 

limits and noting further limitations on reinsurance coverage that extends to NBCR exposures). 
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to place business.94 Capacity has also been augmented by significant competition from 

alternative risk mechanisms such as insurance-linked securities, although to date there has not 

been significant investor interest in insurance-linked securities with terrorism risk exposure.95

Many reinsurers have been increasingly willing to offer reinsurance coverage for conventional 

terrorism risk as part of ceding insurers’ catastrophic risk reinsurance programs otherwise 

principally devoted to natural catastrophe risks.96 While this development means that a larger 

amount of terrorism risk reinsurance is available to potentially satisfy losses, it also makes those 

same reinsurance limits subject to erosion or exhaustion on account of non-terrorism related 

claims, such as hurricane losses. 

The data reported to Treasury, applicable to 2016 and 2017, supports the observation that many

insurers are obtaining terrorism risk reinsurance in connection with reinsurance placements for 

natural catastrophe risks. However, the total amount of purchased reinsurance that will respond 

to terrorism risk continues to lag behind the amount of reinsurance purchased for natural 

catastrophe risks. For comparison purposes, Treasury requested information about the 

reinsurance contract terms (i.e., amount of coverage, attachment point, and co-participation 

share) for treaties covering terrorism risk and natural catastrophe risk. Figure 27 identifies the 

total amounts of per loss terrorism risk reinsurance purchased by responding insurers that will 

cover losses subject to the Program.97

 

94 See, e.g., Guy Carpenter, “Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 

Renewals,” news release, January 5, 2017, 

http://www.guycarp.com/content/dam/guycarp/en/documents/PressRelease/2017/Guy%20Carpenter%20Reports%2

0Moderating%20Reinsurance%20Pricing%20Decline%20at%20January%201%202017%20Renewals.pdf; Guy 

Carpenter, “Guy Carpenter Reports Capital Growth and Market Resilience Despite 2017 Losses,” news release, 

January 18, 2018, 

http://www.guycarp.com/content/dam/guycarp/en/documents/PressRelease/2018/Guy%20Carpenter%20Reports%2

0Capital%20Growth%20and%20Market%20Resilience%20Depsite%202017%20Losses.pdf. See also CIAB 

Comments, 2 (noting that “there is abundant risk transfer capacity in the form of excess traditional and 

nontraditional capital and competition remains high in the market,” although also observing that “today’s 

environment includes a different threat landscape with higher natural catastrophe, cyber security and political risks 

that were not as prevalent when TRIP was addressed in 2015”). 

95 See AIA/NAMIC/PCI Comments, 9.

96 Marsh Comments, 15; RAA Comments, 2-3.

97 Treasury sets forth the total amounts of per loss limits purchased by responding insurers as a measure of total 

market capacity. On an individual basis, industry sources state that reinsurance capacity for conventional terrorism 

losses is approximately $2.5 billion per cedent program. See Marsh Comments, 17. This is generally consistent 

with the information reported to Treasury, although a small number of insurers in both the 2017 and 2018 TRIP data 

calls reported total per loss limits in excess of this estimate.
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Figure 27: Total Per Loss Reinsurance Limits Purchased for Losses Subject to TRIP 

Source: 2017 and 2018 TRIP data calls

Figure 28 reflects the total amounts of per loss natural catastrophe reinsurance purchased by 

responding insurers. It reflects larger total amounts of natural catastrophe reinsurance versus 

terrorism risk reinsurance purchased on a per loss basis for non-small and small insurers, and

lower amounts for both alien surplus lines and captive insurers.

98

 

98 As in other areas, captive insurers present different issues concerning purchase of reinsurance applicable to 

terrorism risk losses. Captive insurers’ reinsurance experience is further evaluated in Section VI.B.
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Figure 28: Total Per Loss Reinsurance Limits Purchased for Natural Catastrophes 

Source: 2017 and 2018 TRIP data calls

Participating insurers will have exposure under TRIP for amounts within their Program 

deductibles and within their co-pay share above the Program deductible. These amounts are not 

subject to payment of the federal share of compensation under TRIP. Private reinsurance 

purchases by participating insurers could cover the direct insurance exposure of participating 

insurers within either of these areas. Based upon the retention information reported, Treasury 

calculated, as reflected in Figure 29, the degree to which reinsurance purchased by participating 

insurers for terrorism risk insurance would respond to losses within the ceding insurer’s Program

deductible versus within the co-pay layer above the Program deductible. 
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Figure 29: Total Per Loss Reinsurance Limits Purchased for TRIP Losses

Within TRIP Deductible Layer and TRIP Co-Pay Layer (By Percentage)

Source: 2017 and 2018 TRIP data calls

Each column in Figure 29 totals 100 percent of reinsurance purchases, as divided between 

amounts within TRIP deductibles (below the 0 percent line) and within the co-pay layer once the 

TRIP deductible has been satisfied (above the 0 percent line). The figure shows that private 

reinsurance remains more heavily concentrated in the exposure retained by participating insurers 

above their TRIP deductibles. Based on reported 2016 data, 86 percent of the purchased private 

reinsurance attaches above the participating insurer’s TRIP deductible; in 2017, 84 percent was 

in the area above the deductible. These figures are significantly affected by the experience of 

captive insurers, which purchase large amounts of reinsurance but have very small TRIP 

deductibles. When captive insurers are excluded, the amount of reinsurance responding above 

the TRIP deductible was 78 percent of the total in 2016 and 77 percent in 2017. 

In many individual cases, reinsurance purchased for terrorism risk insurance remains subject to 

limitations and exclusions for specified risks. Many reporting insurers, for example, identified 

various exclusions from – or limitations to – coverage under their terrorism risk reinsurance, 

typically for exposures at particular locations and more generally for NBCR risks, discussed 

further below. Such limitations are consistent with the reported risk appetite of reinsurers for 

terrorism risk.

99

 

99 See Marsh Comments, 17 (“Insurers with significant property and workers’ compensation accumulations in Tier 

1 cities should expect to have less access to reinsurance capital than those portfolios with exposure in Tier 2 and 

Tier 3 cities and regions.”). The U.S. Government Accountability Office also found that reinsurers frequently write 
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Treasury also requested data regarding the reinsurance coverage that is expressly available for 

terrorism risks involving NBCR exposures. Many reporting insurers indicated that while they 

had some amount of reinsurance coverage for NBCR-related terrorism risk,

100 the total per loss 

figures identified by those insurers in Figure 30 – for property, liability, and workers’ 

compensation exposures involving NBCR-related terrorism risks – were far below the generally

available limits identified (i.e., as described above and in Figure 27). 

Figure 30: Total Per Loss Reinsurance Limits Purchased

For NBCR Losses Subject to TRIP (By Type of Insurance)

Source: 2017 and 2018 TRIP data calls

 

terrorism risk reinsurance with specific limits for particular properties, as distinguished from a share of all properties 

insured by the ceding insurer. See U.S. Government Accountability Office, Terrorism Insurance: Treasury Needs 

to Collect and Analyze Data to Better Understand Fiscal Exposure and Clarify Guidance (2014), 35, 

http://www.gao.gov/assets/670/663387.pdf.

100 Fifty percent of non-small insurers, 30 percent of small insurers, 22 percent of captive insurers, and 20 percent of 

alien surplus lines insurers reported that they had some amount of terrorism risk reinsurance for NBCR exposures in 

2016.
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The reported reinsurance purchases for NBCR exposures is allocated among the various insurer 

categories as shown in Figures 31 (for 2016) and Figure 32 (for 2017). 

Figure 31: 2016 Total Per Loss Reinsurance Limits Purchased

For NBCR TRIP Losses (By Type of Insurance), Allocated by Insurer Category ($ millions)

Source: 2017 TRIP data call

Figure 32 illustrates the NBCR reinsurance purchases for 2017. 

Figure 32: 2017 Total Per Loss Reinsurance Limits Purchased

For NBCR TRIP Losses (By Type of Insurance), Allocated by Insurer Category ($ millions)

Source: 2018 TRIP data call

Although TRIA requires participating insurers to offer insurance for terrorism risk on the same 

basis as for other perils, it does not require such insurance to be offered for exposures for which 

coverage is otherwise generally not provided (or specifically excluded) under the policy in 

question.101 Because many insurers generally exclude NBCR risks under P&C policies 

 

101 See No Material Difference from Other Coverage, 31 C.F.R. § 50.22(b) (2018). 
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(excepting workers’ compensation, as discussed below), the amount of direct insurance coverage 

for such risks may be substantially limited. The reported data reflects, however, that regardless 

of the amount of direct coverage available for NBCR exposures, it is less likely to be supported 

by private reinsurance than is the case with losses arising from conventional acts of terrorism. 

Furthermore, a large portion of the limited reinsurance obtained for NBCR exposures supports 

the risks assumed by captive insurers which – while potentially significant on an individual basis 

– represents only a small percentage of total risk exposures assumed by insurers participating in 

the Program.102 

As described above, private reinsurance capacity for terrorism risk has improved significantly 

since the immediate aftermath of the September 11 attacks. Many commenters attribute this 

improvement in large part to the backstop support the Program provides for a major portion of 

insurers’ exposure to terrorism risk nationwide.103 Nevertheless, the aggregation risks presented 

by terrorism continues to be a limiting factor upon the development of private reinsurance 

capacity, as does the difficulty of modeling potential terrorism exposure from both a frequency 

and severity standpoint.104 Commenters (including state regulators) generally supported the 

proposition that there is sufficient private reinsurance capacity to support the risk exposures to 

which participating insurers remain exposed under the Program. However, commenters did not 

believe that there was sufficient private reinsurance capacity for the exposure the Program 

currently supports in connection with a catastrophic terrorism loss.105 The TRIP data reflects 

that private reinsurance capacity is reduced as the aggregation risk presented by a particular type 

of terrorism loss (such as from an NBCR attack) increases.

E. Projections from Modeled Loss Questions

To assist in evaluating Program effectiveness and obtain some tangible assessment of the likely

impact of the Program in a specific loss situation, Treasury posed modeled loss questions in both 

the 2017 and 2018 TRIP data calls.106

 

102 See Section VI.B, addressing captive insurers.

103 See, e.g., Lloyd’s Comments, 4 (“The TRIP program is indeed the stabilizing factor that has allowed private 

reinsurance to come back to the terrorism space in the years following 9/11, and to grow over time.”); Marsh 

Comments, 15 (“Since 2002, the federal terrorism risk insurance program has helped facilitate increased private 

market involvement, with commercial treaty and facultative reinsurance capacity increasing each year.”). 

104 See NAIC Comments, 1; RAA Comments, 3.

105 See NAIC Comments, 1 (“State insurance regulators have not seen evidence to suggest that the insurance 

marketplace is capable or willing to voluntarily take on a substantial portion of the risk of providing terrorism risk 

coverage.”); AIA/NAMIC/PCI Comments, 4 (“The private reinsurance market generally has the requisite capacity to 

meet insurers’ need to protect portions of their net retentions under the program trigger, individual insurer 

deductibles and co-pays.”); RAA Comments, 3 (“Market reports reflect that for the foreseeable future . . . there will 

be an adequate supply of reinsurance capacity for coverage within the limits and deductible currently provided by 

the federal program.”).

106 Small insurers were not asked to complete the modeled loss questions in the 2017 and 2018 TRIP data calls. 

Given the size of the market represented by small insurers, and where their risks tend to concentrate, the experience 
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In both the 2017 and 2018 TRIP data calls, Treasury posed a question to non-small, alien surplus 

lines, and captive insurers asking them to report projected loss information based upon a defined, 

hypothetical terrorism event. For the 2017 TRIP data call, an event in New York City was used, 

and for the 2018 TRIP data call, an event in Chicago was used. In both data calls, insurers were 

given a description of the location and nature of the event, with certain specified assumptions 

concerning numbers of deaths and injuries, and the scope of property damage.107 Based on this 

information, Treasury asked responding insurers to project the total amount of exposure arising 

from the event under the TRIP-eligible policies in force at the time of each event. Treasury 

further requested that insurers then divide that amount between (1) payments within the insurer’s 

TRIP deductible; (2) private reinsurance payments within the insurer’s TRIP deductible; (3) 

federal share payment under TRIP; (4) payments by the insurer in the co-pay layer above the 

TRIP deductible; and (5) private reinsurance payments within the co-pay layer above the 

insurer’s TRIP deductible. 

This data was used to assess the cost to taxpayers, and the likely reimbursement of any such 

amount through the recoupment process, caused by the scenarios. It also permits an evaluation 

as to how much loss falls within the various categories (losses to Program participants, private 

reinsurers, and the Program), and how the loss is sustained by the different insurer categories. 

Finally, the data also allows an assessment of how these insurer categories (non-small, alien 

surplus lines, and captive insurers) have been able to access private reinsurance in a way that is 

likely to respond to a terrorism loss. This can be compared to the nominal amounts of 

reinsurance limits otherwise being purchased by these sectors. 

 

of small insurers may not significantly impact the aggregate results, even though certain small insurers might sustain 

a significant loss.

107 No assumptions were posed about potential exposure under liability policies because of the difficulty to 

reasonably project how liability claims might be made in connection with an act of terrorism committed by a third 

party. Nonetheless, the possibility of liability claims remains an additional source of exposure to participating 

insurers and the Program. See, e.g., Insurance Information Institute, Terrorism Risk: A Constant Threat (March 

2014), 6 (loss distribution estimates for losses arising from September 11 attacks reflecting that liability claims 

resulted in 12 percent of total losses), 

https://www.iii.org/sites/default/files/docs/pdf/terrorism_white_paper_0320141_0.pdf. 
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Figure 33 illustrates how the 2017 modeled loss (in New York City) is projected to result in 

payments. 

Figure 33: Total Insured Loss Payments Resulting from 2016 Modeled Loss Scenario

By Insurer Category (New York City) 

Source: 2017 TRIP data call
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Figure 34 sets forth how the loss amounts generated under the 2016 modeled loss scenario are 

distributed (on a 100 percent basis) within each insurer category. 

Figure 34: Distribution of Loss Payments Arising from 2016 Modeled Loss Scenario

Within Each Insurer Category (New York City) 

Source: 2017 TRIP data call
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Figure 35 illustrates how the 2017 modeled loss (in Chicago) is projected to result in payments. 

Figure 35: Total Insured Loss Payments Resulting from 2017 Modeled Loss Scenario

By Insurer Category (Chicago) 

Source: 2018 TRIP data call
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Figure 36 sets forth how the loss amounts generated under the 2017 modeled loss scenario are 

allocated on a 100 percent basis within each insurer category. 

Figure 36: Distribution of Loss Payments Arising from 2017 Modeled Loss Scenario 

Within Each Insurer Category (Chicago) 

Source: 2018 TRIP data call

The reported information indicates that both the New York City and Chicago scenarios – each 

involving conventional (non-NBCR) attacks – resulted in significant amounts of total losses that 

would result in payments by Treasury, although in each case those amounts will be largely or 

entirely subject to mandatory recoupment. Because of the recoupment feature of TRIP, Treasury 

would recoup at least 140 percent of the mandatory recoupment amounts in each case. Based 

upon the responses, however, there could be some payments by Treasury that would only be 

subject to discretionary recoupment, which would be determined based upon Treasury’s 

consideration of certain factors at the time of the event in question.108 Additional amounts would 

likely be subject to recoupment once losses associated with small insurers and liability claims 

involving all insurers (not captured in this analysis) are considered. 

The modeled loss questions show that non-small insurers (the largest insurers participating in 

TRIP) account for the most losses and claims against the Program. The results also show that 

losses generated by captive insurers in connection with these hypothetical loss events tend to be 

higher than their proportionate DEP share of the market. Although a proportionally greater share 

of private reinsurance participation is also generated by captive insurer losses, the data also 

 

108 See Mandatory and Discretionary Recoupment, 31 C.F.R. § 50.90(b) (2018); TRIA § 103(e)(7)(D).
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indicates that captive insurers would receive a greater proportional share of support from the 

Program under these modeled loss scenarios.109 

F. Terrorism Risk Insurance for Cyber Losses

Cyber insurance is insurance for risks arising “from the use of electronic data and its 

transmission, including technology tools such as the internet and telecommunications networks,” 

as well as “physical damage that can be caused by cyber attacks, fraud committed by misuse of 

data, any liability arising from data storage, and the availability, integrity and confidentiality of 

electronic information.”110 Although a variety of insurance products are emerging to address 

these exposures,111 they can be characterized as falling into two broad categories: (1) coverage 

provided for cyber-related losses in a separate, “standalone” policy; and (2) coverage provided as 

a component of a broader, package policy also providing coverage for non-cyber losses.

112

Cyber insurance is a relatively new coverage that is continuing to develop. At this time, the 

market for cyber insurance is most developed in the United States, which accounts for the vast 

bulk of written premiums.113 Based on data reported to state regulators, on a direct written 

premium basis (as opposed to DEP, which is the measurement used in connection with the 

Program), total cyber premiums in 2017 were $1.779 billion, consisting of $994 million under 

standalone cyber policies, and $785 million as cyber insurance premiums written under a broader 

package policy.114 These figures do not include cyber insurance premiums written by alien 

surplus lines or captive insurers. 

While the perpetrators of malicious cyber activity can have a variety of motivations, commenters 

have recognized that such malicious acts could be employed by terrorists in furtherance of their 

goals.115 Depending upon the specific circumstances presented, malicious cyber activity could 

 

109 This is consistent with the role captive insurers have had in providing “‘gap-filling’ insurance products” that 

might not be otherwise available in the market. See VCIA Comments, 1.

110 FIO, U.S. Department of Treasury, Annual Report on the Insurance Industry (2017), 54 

https://www.treasury.gov/initiatives/fio/reports-and-notices/Documents/2017_FIO_Annual_Report.pdf (citing CRO 

Forum, Cyber Resilience: The Cyber Risk Challenge and the Role of Insurance (December 2014), 5, 

https://www.thecroforum.org/wp-content/uploads/2015/01/Cyber-Risk-Paper-version-24-1.pdf).

111 FIO analyzed the cyber insurance market in its most recent Annual Report. See FIO, 2017 Annual Report, 54-58.

112 Coverage for cyber losses can also arise under policies that do not expressly state that they cover cyber-related 

losses, but which do not expressly exclude coverage for such losses. Such coverage is generally identified as “nonaffirmative” cyber coverage. See FIO, 2017 Annual Report, 54. 

113 FIO, 2017 Annual Report, 56.

114 See generally A.M. Best, “Cyber Insurance Market Sees Steady Growth but Still Awaiting a Real Growth Spurt,” 

news release, May 18, 2018, 

http://www3.ambest.com/ambv/bestnews/newscontent.aspx?AltSrc=108&refnum=208605. 

115 See, e.g., Cambridge Centre for Risk Studies, Cyber Terrorism: Assessment of the Threat to Insurance 

(November 2017), 4-5, https://www.poolre.co.uk/wp-content/uploads/2017/11/Pool-Re-Cyber-Terrorism-Insurance-
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potentially constitute an act of terrorism under TRIA. As a result, to the extent cyber insurance 

is written under a policy that is within the definition of “property and casualty insurance” under 

TRIA (i.e., the TRIP-eligible lines of insurance) the provisions of TRIA apply to such policies. 

This includes the requirement to make available terrorism risk insurance under such policies, as 

well as potential availability of the federal backstop for losses arising under such policies from a 

certified act of terrorism. Treasury’s guidance states that TRIP and the requirements of TRIA 

will apply to any policy, including a standalone cyber policy, written in a line of insurance that is

subject to the Program.116 

To gauge the extent to which terrorism risk insurance is being obtained in connection with 

standalone cyber policies, Treasury began in the 2018 TRIP data call to request information on 

such policies from all participating insurers. Figure 37 summarizes the reported information, 

based upon the United States as a whole and on a direct earned premium basis (as distinguished 

from a direct written premium basis). 

 

Figure 37: 2017 TRIP-Eligible DEP for Cyber Policies 

Standalone 

Cyber Policies

Package 

Cyber Policies

All 

Cyber Policies

Cyber DEP

% of Total 

TRIPEligible 

DEP Cyber DEP

% of Total 

TRIPEligible 

DEP Cyber DEP

% of Total 

TRIPEligible 

DEP

Alien Surplus Lines Insurers $169,607,676 17.8% $ 194,484,983 9.7% $ 364,092,660 12.3%

Captive Insurers 32,419,989 3.4% 93,643,715 4.6% 126,063,704 4.2%

Non-Small Insurers 707,547,597 74.4% 1,594,878,711 79.1% 2,302,426,306 77.6%

Small Insurers 41,750,929 4.4% $132,513,499 6.6% $174,264,428 5.9%

Total $951,326,191 100% $2,015,520,908 100% $2,966,847,098 100%

Source: 2018 TRIP data call

Non-small and small insurers reported larger cyber premiums to Treasury compared to the 

amounts they reported to state regulators. This could be caused by the fact that some of the 

premiums reported to Treasury for non-small and small insurers are from alien surplus lines 

insurers that are affiliated with those entities, and such premiums would not have been captured 

 

Futures-Print-Version-19112017-1.pdf; Marsh, 2016 Terrorism Risk Insurance Report (July 2016), 7, 

https://www.marsh.com/content/dam/marsh/Documents/PDF/USen/2016%20Terrorism%20Risk%20Insurance%20Report.pdf. 

116 See Guidance Concerning Stand-Alone Cyber Liability Insurance Policies Under the Terrorism Risk Insurance 

Program, 81 Fed. Reg. 95312 (December 27, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-

31244.pdf. For the same reason that standalone cyber insurance written in TRIP-eligible lines of insurance is subject 

to the Program, non-affirmative cyber insurance is subject to TRIP if written in a TRIP-eligible line of insurance. 

See 81 Fed. Reg. 95313 (“Certain insurance policies that may contain a ‘cyber risk’ component or which do not 

exclude losses arising from a cyber event continue to be written in existing TRIP-eligible lines of insurance and are 

thus subject to the provisions of the Program.”). On the other hand, much cyber insurance in the past has been 

written as Professional Liability Insurance, which is expressly excluded from the Program. 81 Fed. Reg. 95313;

TRIA § 102(11)(B)(xi).
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in the data reported to state regulators. As reflected by Figure 37, the information from alien 

surplus lines insurers that do report separately to Treasury indicates that such insurers have a 

larger share of the cyber insurance market than they do generally for TRIP-eligible lines of 

insurance. 

The take-up rate for terrorism risk insurance within the cyber products reported to Treasury, by 

insurer category, are reflected in Figure 38. 

Figure 38: 2017 Take-Up Rates for Terrorism Risk Insurance under Cyber Policies

(By TRIP-Eligible DEP) 

Source: 2018 TRIP data call

Treasury requested information concerning the terrorism risk premium component of cyber 

coverage under both standalone cyber policies as well as the terrorism risk premium component 

within the cyber component of package policies. Much of the information provided in 

connection with package policies, however, may reflect terrorism risk premium under the entire

policy in question, which does not provide a good comparison point for the terrorism risk 

insurance component of the cyber coverage. The information provided for standalone cyber 

policies as reflected in Figure 39, however, does appear to reflect the likely charge associated for 

obtaining terrorism risk insurance associated with cyber insurance. 
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Figure 39: 2017 Percentage of Total Policy DEP Allocated to Terrorism Risk 

Under Standalone Cyber Policies 

Source: 2018 TRIP data call

The first year of data on cyber insurance indicates that the take-up rate for cyber insurance 

covering terrorism risk subject to the Program is similar to the take-up rates generally indicated 

for lines of terrorism risk insurance that remain voluntary. Furthermore, terrorism risk insurance 

premiums appear to comprise a relatively small percentage charge of the total cyber premiums 

charged. Treasury will continue to monitor this issue.
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VI. ADDITIONAL ANALYSIS ON INSURER CATEGORIES 

As indicated in Figure 1, non-small insurers represent more than 80 percent of the market for 

terrorism risk insurance in the TRIP-eligible lines of insurance. Many of the prior analyses are 

heavily weighted by the experience of those insurers. Treasury provides further information here 

concerning the other insurer categories that participate in the Program. 

A. Small Insurers 

In 2017, Treasury issued a study addressing domestic small insurers, which Treasury defined as 

those insurers that might not be able to obtain reimbursement under the Program even after 

satisfaction of their individual deductibles due to the Program Trigger.117 Treasury will issue 

another study concerning the competitiveness of small insurers within the terrorism risk 

insurance market in 2019, as required by TRIA.118

While Treasury’s next small insurer study will seek to address the participation of small insurers 

within TRIP in general terms, Treasury will comment here on one issue concerning small 

insurers that it identified in the 2017 Small Insurer Study, based upon the further information 

developed by the 2018 TRIP data call. In that study, Treasury observed that while small insurers 

are significant purchasers of private reinsurance, they are not uniformly obtaining reinsurance to 

cover the entire risk of their potential exposure below the Program Trigger. As a result, there is 

potential for some small insurers to sustain losses above their Program deductibles, but be unable 

to receive federal reimbursement due to the Program Trigger not being met.119 In the 2018 TRIP

data call, Treasury also requested probable maximum loss (PML) information – i.e., the largest 

single loss an insurer projects it might sustain based upon the portfolio of policies it has issued – 

to assess whether this apparent lack of private reinsurance protection between a small insurer’s 

TRIP deductible and the Program Trigger amount might be explained by the insurer’s own 

assessment of its maximum likely exposure from an individual loss. Figure 40 reflects the same 

analysis respecting the reinsurance purchases of small insurers vis-à-vis the Program Trigger, but 

based upon the 2018 TRIP data call – thus showing reinsurance purchases for 2017, the higher 

Program Trigger ($140 million) in effect during 2017, and the 2017 PML figures reported by 

small insurers.

 

117 See FIO, 2017 Small Insurer Study, 6-7 (explaining definition of small insurers by reference to application of the 

Program Trigger).

118 TRIA § 108(h).

119 See FIO, 2017 Small Insurer Study, 25-27.
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Figure 40: 2017 Comparison Between 

Small Insurer Deductibles, Reported PML Figures, and Reinsurance Purchases

Source: 2018 TRIP data call 

Where reinsurance purchases approximate a small insurer’s PML, the lack of reinsurance up to 

the Program Trigger may not be significant, if the insurer is not exposed to a catastrophic loss up 

to that amount. As reflected in Figure 40, consideration of a small insurer’s PML estimate may 

explain the lack of reinsurance purchases up to the amount of the Program Trigger in many 

cases. The reported information, however, still reflects a significant component of small insurers 

that remain exposed for a PML above its Program deductible and below the Program Trigger 

amount, without the support of private reinsurance for that exposure. 
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B. Captive Insurers 

Captive insurers are licensed insurers formed to insure the risks of a parent or other affiliated 

entities. Such companies in the United States are supervised and regulated by the state insurance 

departments of their domicile, under state laws and regulations specifically applicable to captive 

insurers.120 

U.S. domestic (domiciled or licensed) captive insurers that provide insurance in TRIP-eligible 

lines participate in the Program.121 As of December 31, 2016, there were 3,285 U.S. domiciled 

captive insurers writing various lines of insurance and reinsurance (including but not limited to 

the TRIP-eligible lines of insurance), distributed among 28 states and the District of 

Columbia.122 By comparison, the number of domestic U.S. captive insurers writing insurance in 

TRIP-eligible insurance lines and required to report to Treasury for Calendar Year 2016 was 

517.123 

The potential exposure associated with terrorism risk insurance written by captive insurers for a 

parent or other affiliated entity differs from that of conventional commercial insurers that must 

“make available” terrorism risk insurance coverage to all potential, third-party policyholders in 

the TRIP-eligible lines of insurance. For captive insurers, the offer and acceptance of terrorism 

risk insurance under the Program is controlled by the insured. They are also regulated under a 

separate regulatory regime under relevant state law.124 Therefore, even though captive insurers 

underwrite a significant portion of the risks for losses arising from acts of terrorism that are 

covered under TRIP, they can also be analyzed separately. 

Captive insurers have not been required to report information publicly concerning their 

operations. However, industry information indicates that captive insurers may issue policies for 

terrorism risk subject to the Program that provide coverage that might not be readily available, 

 

120 A captive insurer is an insurer licensed under the captive insurance laws or regulations of any state. Definitions, 

31 C.F.R. §50.4(g) (2018).

121 See Definitions, 31 C.F.R. § 50.4(o)(1)(i)(A) (2018). See also Terrorism Risk Insurance Program, 68 Fed. Reg. 

41250, 41259-60 (July 11, 2003), https://www.gpo.gov/fdsys/pkg/FR-2003-07-11/pdf/03-17585.pdf. 

122 “Captives by State,” Insurance Information Institute, last updated March 2018,

https://www.iii.org/publications/a-firm-foundation-how-insurance-supports-the-economy/a-50-statecommitment/captives-by-state. 

123 The number of captive insurers reporting data to Treasury in the 2018 TRIP data call increased to 575; however, 

Treasury does not have a comprehensive U.S. captive count as of the end of 2017. In addition, there are a larger 

number of captive insurers in non-U.S. jurisdictions, estimated to be approximately 6,600 by the end of 2017. 

Non-U.S. captive insurers are unable to participate in TRIP unless they have been licensed by one or more state 

insurance departments to write insurance in one or more U.S. jurisdictions. Based on the 2018 TRIP data call, only 

one non-U.S. captive insurer reported information to Treasury as a Program participant. 

124 See Definitions, 31 C.F.R. §50.4(g) (defining captive insurer as “an insurer licensed under the captive insurance 

laws or regulations of any state”).
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such as for NBCR risks, or for “trophy” properties.125 The formation of a captive insurer may or 

may not provide certain tax advantages to a business entity that purchases conventional 

insurance, relative to one that self-insures its risks simply by putting aside funds to pay 

anticipated losses and claims.126 

Captive insurers often have premium writings (upon which Program deductible calculations are 

based) that are small, relative to other insurer categories, and as a result may be in a position to 

claim Program reimbursement subject to low thresholds (in terms of absolute dollars), assuming 

that overall losses from one or more certified acts of terrorism in a given calendar year are 

sufficient to trigger the Program.127 Given their size, however, captive insurers could be in a 

position in which they could sustain significant losses above their TRIP deductible that would 

not trigger reimbursement under TRIP in light of the Program Trigger.128

 

125 See U.S. Government Accountability Office, Terrorism Insurance: Status of Efforts by Policyholders to Obtain 

Coverage (2008), 9, 14-16, http://www.gao.gov/assets/290/280918.pdf. 

126 The totality of the tax implications of an insurance arrangement, and self-insurance arrangement, depends upon 

the specific circumstances presented. In certain cases, however, an insurer with relatively small amounts of total 

gross receipts or premiums may qualify for favorable tax treatment under 26 U.S.C. § 831(b). A stock insurance 

company (other than a life insurance company) with gross receipts of $600,000 or less (of which more than 50 

percent are premiums) is a tax-exempt corporation. A mutual non-life insurance company with gross receipts of 

$150,000 or less (of which more than 35 percent are premiums) is also tax-exempt (26 U.S.C. § 501(c)(15)). In 

2018, a non-life insurance company that meets certain diversification requirements regarding policyholders or 

ownership interests, with annual premiums of $2.3 million or less, may elect to be taxed only on its taxable net 

investment income. This premium threshold is subject to an annual inflation adjustment (26 U.S.C. § 831(b)). 

Information reported to Treasury during the 2017 and 2018 TRIP data calls, however, reflects that over 97 percent 

of captive insurers, by DEP, are ineligible to elect favorable treatment under 26 U.S.C. § 831(b) because they 

received premiums in excess of the then-specified premium threshold amount. Accordingly, Treasury’s analysis of 

captive insurers under the Program is mostly based upon data from captive insurers that are taxed on their full 

income, including both underwriting and investment income. 

127 PWG, 2010 Market Conditions Report, note 107 (observing that “[c]aptives are expect to have smaller insurer 

deductibles as compared to traditional insurers since DEP in TRIA lines is likely to be small,” but noting that total 

losses must still exceed the Program Trigger, such that “captives may require additional capital or reinsurance 

protection increasing the cost of coverage”). 

128 See FIO, 2017 Small Insurer Report, 21-23. Although this report focused upon the impact of the Program 

Trigger upon small insurers, almost all captive insurers are potentially presented with the same risk.
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Captive insurers tend to insure a similar breakdown of TRIP exposures as other insurers 

generally, and the differential as between alien surplus lines insurers is largely attributable to the 

lack of substantial participation by alien surplus lines insurers in the market for workers’ 

compensation insurance.129 Figure 41 shows the relative breakdowns based on 2017 

information. 

Figure 41: 2017 DEP in TRIP-Eligible Lines (By Insurer Category) 

Source: 2018 TRIP data call

Captive insurers underwrite risks in all policyholder industry sectors, based upon their responses 

to the TRIP data calls classifying the business operations of their principal (owner) policyholder. 

The information provided in Figure 42 reflects the manner in which policyholder industry 

categories are distributed within the insurance written by captive insurers that is subject to the 

Program. 

 

129 Captive insurers are typically unable to provide workers’ compensation insurance directly to their policyholders 

as a matter of state law. Thus, much of this coverage reflects the price of reimbursement mechanisms, where the 

captive insurer provides reimbursement of deductible amounts that the policyholder is responsible for under policies 

issued by conventional insurers subject to large deductibles.
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Figure 42: Captive Insurer TRIP-Eligible Lines DEP

Allocated by Policyholder Industry Sectors 

Source: 2017 and 2018 TRIP data calls

 
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As reflected by Figure 43, the proportion of property exposures written by captive insurers 

subject to the Program are somewhat more concentrated in the larger metropolitan areas than is 

the case for non-small and alien surplus lines insurers.

Figure 43: Percentage of Total Property Limits within Metropolitan Areas 

For Captive Insurers versus Non-Small and Alien Surplus Lines Insurers 

Source: 2017 and 2018 TRIP data calls

In the 2017 TRIP data call, approximately 37.5 percent of captive insurers reported purchasing 

reinsurance that would cover an act of terrorism occurring in 2016 and certified under TRIA; in 

the 2018 TRIP data call that figure dropped to 31.5 percent for acts of terrorism occurring in 

2017. The data also indicates that captive insurers are obtaining reinsurance coverage for a 

greater proportion of their insurance risks than is the case for other insurer categories. Figure 44 

compares the reinsurance limits for terrorism risk insurance subject to the Program against the 

total direct property and liability limits assumed under policies subject to TRIP.
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Figure 44: Reinsurance Obtained Per $1 Million in Direct Policy Limits Subject to TRIP

(Property and Liability Combined) 

 Source: 2017 and 2018 TRIP data calls

Captive insurers, as compared to other types of insurers, may be better able to purchase 

reinsurance coverage for terrorism risk. This is because conventional commercial insurers will 

generally have business to reinsure that will present a much broader range of exposures (in terms 

of type and locations), with the associated aggregation risks presented, than a captive insurer. By 

contrast, captive insurers write the range of risk exposures presented by their policyholder 

owners, which will usually be more limited and defined than the portfolio of risks underwritten 

by a conventional commercial insurer. 
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C. Alien Surplus Lines Insurers

Alien surplus lines insurers are those non-U.S. insurers that have been qualified to do business in 

the United States through a process administered by the NAIC assessing the financial stability 

and trustworthiness of the entities in question.130 Those insurers appearing on the current 

Quarterly Listing of Alien Surplus Lines Insurers participate in the Program pursuant to TRIA.131 

The companies on the Quarterly Listing of Alien Surplus Lines Insurers fall into two general 

categories: (1) insurance syndicates operating at Lloyd’s of London; and (2) insurance 

companies domiciled in various non-U.S. jurisdictions (principally European countries and nonU.S. jurisdictions in North America). Separate and apart from their participation in TRIA (like 

other insurers, not all insurance written by alien surplus lines insurers is in the TRIP-eligible 

lines of insurance), Lloyd’s accounts for approximately 76 percent of the alien surplus lines DEP

in the United States, while individual companies comprise the balance of 24 percent.132 

The TRIP data calls do not permit an exact evaluation of the participation of alien surplus lines 

insurers within the Program because of the Program data collection mechanics and the manner in 

which many such entities participate within TRIP. Many alien surplus lines insurers (Lloyd’s 

syndicates as well as individual companies) are affiliated with U.S.-based insurance groups. 

Treasury collects data for the Program by insurer group, because TRIP operates for most 

purposes on a group basis – i.e., insurer groups submit claims on a group basis, and the 

deductible that must be satisfied is calculated by reference to the TRIP-eligible lines DEP of the 

group as a whole. As a result, some of the experience of alien surplus lines insurers participating 

in the Program is incorporated within the data reported by non-small and small insurers. Given 

the size of the premium writings of alien surplus lines insurers, this does not have a significant 

impact on the reported results for non-small and small insurers. It does, however, potentially

affect the ability to analyze the data of the entire population of alien surplus lines insurers. 

Most of the experience reflected by the reporting of alien surplus lines insurers is set forth above, 

in the relevant sections of the Report. For purposes of premium, however, Treasury collects 

information from alien surplus lines insurers based upon a different array of insurance lines that 

such insurers typically utilize in connection with their other operations. Figure 45 illustrates 

charges by alien surplus lines insurers for terrorism risk insurance coverage, by the lines utilized 

for alien surplus lines reporting.133

 

130 See National Association of Insurance Commissioners, Quarterly Listing of Alien Surplus Lines Insurers (April 

2018), http://www.naic.org/prod_serv/QLS-AS-219.pdf.

131 See TRIA § 102(6); Definitions, 31 C.F.R. § 50.4(o)(1)(i)(B) (2018).

132 Based upon 2016 data. See A.M. Best, Surplus Lines Continue to Overcome Market Pressures (September 1, 

2017), 3, http://www3.ambest.com/ambv/sales/bwpurchase.aspx?record_code=265317. 

133 Only a very small amount of terrorism risk insurance is provided by alien surplus lines insurers for no additional 

charge.
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Figure 45: Terrorism Risk Insurance Premiums as a Percentage of Total Policy DEP

When a Premium is Charged By Alien Surplus Lines Insurers (By Line of Insurance)

Source: 2017 and 2018 TRIP data calls 

The information reported by unaffiliated alien surplus insurers reflects a higher percentage 

charge for terrorism risk insurance than has been reported by admitted insurers. That differential 

is to be expected since these insurers write on a surplus lines basis, which responds in large part 

to risks that may be more difficult to insure, and which cannot be placed in the admitted market. 
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VII. WORKERS’ COMPENSATION 

Workers’ compensation insurance is a product offered by insurers to employers that covers costs 

related to medical care and treatment, rehabilitation, loss of wages, and other financial hardships 

encountered by workers resulting from workplace injuries. Workers’ compensation is a TRIPeligible line of insurance and, thus, is covered under the Program. As a matter of state law, every 

state with the exception of Texas134 requires employers to possess some form of workers’ 

compensation coverage to cover injured employees,135 although self-insurance of workers’ 

compensation exposures is also permitted in most states.136 A qualified self-insurer may obtain 

excess workers’ compensation insurance from a conventional insurance carrier, which will 

respond to losses above certain thresholds, either on an aggregate or individual claimant basis.137 

Although most captive insurers are unable to write direct workers’ compensation insurance as a 

matter of state law, many captive insurers issue workers’ compensation deductible 

reimbursement policies, which reimburse their policyholders for some portion of the deductibles 

existing under policies issued to the captive insurer’s parent by conventional commercial 

insurance companies.138

Unlike most lines of insurance, state laws prohibit insurers from excluding coverage for 

terrorism risk, including NBCR risks, in conjunction with workers’ compensation coverage. 

Terrorism risk cannot be excluded from a policy and, therefore, the take-up rate for terrorism 

 

134 In Texas, an employer (subject to certain exceptions) can decline to purchase workers’ compensation insurance 

entirely (including for loss arising from terrorism), or otherwise qualify as a self-insurer for the exposure. However, 

where a Texas employer elects to remain outside of the workers’ compensation system, it also remains subject to 

common law actions for employment-related injuries. See generally Texas Labor Code, Title 5 (Workers’ 

Compensation), Chapter 401 et seq. 

135 In most states, mandatory workers’ compensation coverage does not apply to the self-employed or independent 

contractors. Additionally, in some states, mandatory coverage does not extend to some employees in certain sectors, 

such as farm and domestic workers.

136 Based upon benefits payment history, self-insurance represents an estimated 26 percent of all workers’ 

compensation. See, e.g., Christopher F. McLaren and Marjorie L. Baldwin, Workers’ Compensation: Benefits, 

Coverage, and Costs, (2015 Data), National Academy of Social Insurance (October 2017), 23, 

https://www.nasi.org/sites/default/files/research/NASI_Workers%20Comp%20Report%202017_web.pdf. Although 

self-insurers are also responsible for terrorism-related workers’ compensation losses, self-insurance arrangements 

that are not accomplished through P&C insurance within the scope of TRIA are not at this time subject to the 

Program.

137 Excess workers’ compensation insurance is “a type of coverage available for risks that choose to self-insure the 

majority of workers compensation loss exposures. Two categories of coverages are available: specific, which 

controls loss severity by placing a cap on losses the insured must pay arising out of a single occurrence, and 

aggregate, which addresses loss frequency by providing coverage once a cumulative per occurrence loss limit is 

breached. “Excess Workers Compensation Insurance,” International Risk Management Institute, 

https://www.irmi.com/term/insurance-definitions/excess-workers-compensation-insurance. 

138 See, e.g., Rodd Zolkos, “Captives Prove a Natural Fit for Workers Comp Coverage,” Business Insurance

(February 27, 2011), http://www.businessinsurance.com/article/20110227/STORY/302279997/Captives-prove-anatural-fit-for-workers-comp-coverage.
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coverage is 100 percent as it relates to workers’ compensation insurance. Furthermore, 

payments under workers’ compensation policies are only limited by the scope of workers’ 

compensation benefits available under state law to employees entitled to the payment of those 

benefits.139 

NBCR events present a more pronounced aggregation risk – where the same event causes losses 

to a large number of policyholders of the same insurer – than conventional terrorism claims 

because of the broad-based losses potentially arising from an NBCR incident.140 An insurer 

cannot decline to write terrorism risk coverage (or the NBCR component of it) in conjunction 

with workers’ compensation coverage, and workers’ compensation insurers must find other ways 

in which to manage the aggregation risk. For example, insurers attempt to avoid writing policies

that present substantial accumulation of exposures in the same particular location.141 This 

presents a greater issue for insurers and employers in large metropolitan areas, with greater 

concentrations of employees subject to workers’ compensation than in less densely populated 

areas. For employers seeking coverage in such areas, and unable to find an insurer in the 

voluntary market, the employer could be required to seek coverage from the residual market, 

which must provide coverage to all applicants, although such coverage likely comes with a 

higher premium.

 

139 See AIA/NAMIC/PCI Comments, 5 (identifying challenges in the market and observing as well that “[w]hile 

workers’ compensation insurers do purchase excess of loss reinsurance to help ensure their ability to pay 

catastrophic, multiple-injury claims, such reinsurance programs have limits beyond which the remaining obligation 

returns to the primary carrier”).

140 Estimates of aggregate loss arising from NBCR events have exceeded amounts well in excess of the $100 billion 

aggregate limit provided for under TRIP. See, e.g., PWG, 2006 Terrorism Risk Insurance Report, 72-73 (noting 

estimates of modeled NBCR event exposures up to $158 billion in property losses and $484 billion in workers’ 

compensation losses); Charles Meade and Roger C. Molander, Considering the Effects of a Catastrophic Terrorist 

Attack, RAND Corporation (2006), 6-7 (estimating potential losses arising from explosion of 10-kiloton nuclear 

bomb in a shipping container as exceeding $1 trillion), 

http://www.rand.org/content/dam/rand/pubs/technical_reports/2006/RAND_TR391.pdf. 

141 See AIA/NAMIC/PCI Comments, 5 (“The terrorism risk posed to workers’ compensation insurers, and their 

inability to limit their exposure to that risk, inevitably lead them to circumscribe their own capacity to accept 

workers’ compensation risks. This in turn can create economic challenges for employers that must have available 

and affordable workers’ compensation coverage.”).
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As reflected in Figure 2, workers’ compensation is the largest TRIP-eligible line of insurance by 

total DEP. It is also the largest TRIP-eligible line of insurance by the total amount of terrorism 

risk insurance premiums charged by non-small and small insurers, as reflected in Figure 46. 

Figure 46: Terrorism Risk Insurance Premiums by TRIP-Eligible Line of Insurance

(Non-Small and Small Insurers)

2016 2017

Terrorism Risk 

Insurance 

Premiums

Percentage of 

Total Terrorism 

Risk Insurance 

Premiums

Terrorism Risk 

Insurance 

Premiums

Percentage of 

Total Terrorism 

Risk Insurance 

Premiums

Aircraft (all perils) $ 14,636,357 0.5% $ 15,674,690 0.6%

Allied Lines 136,581,109 5.1% 109,675,979 4.2%

Boiler and Machinery 23,348,707 0.9% 17,423,611 0.7%

Comm. Multi-Peril (liab.) 123,365,098 4.6% 153,486,234 5.9%

Comm. Multi-Peril (non-liab.) 559,716,442 21.0% 510,637,056 19.5%

Excess Workers' Comp. 17,762,794 0.7% 24,204,008 0.9%

Fire 154,498,539 5.8% 154,064,588 5.9%

Inland Marine 81,211,769 3.0% 68,855,722 2.6%

Ocean Marine 12,046,579 0.5% 10,583,944 0.4%

Other Liability 409,952,955 15.4% 392,039,298 15.0%

Products Liability 25,092,928 0.9% 28,985,257 1.1%

Workers' Compensation 1,107,334,593 41.5% 1,132,898,363 43.3%

Total $ 2,665,547,870 100.0% $ 2,618,528,751 100.0%

 Source: 2017 and 2018 TRIP data calls
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The premiums charged for terrorism risk insurance in the workers’ compensation line in 2017 

varies by jurisdiction, from a high data of 13.2 percent of total premiums when a charge is made 

in the District of Columbia, to a low of 0.6 percent in Alaska.

142 Figure 47 illustrates the charges 

on a state-by-state basis across the country in 2017. 

Figure 47: 2017 Terrorism Risk Insurance Premiums for Workers’ Compensation 

As a Percentage of Total TRIP-Eligible DEP When a Charge is Made

(Non-Small and Small Insurers)

Source: 2018 TRIP data call

Insurance rates for terrorism risk insurance in the workers’ compensation line are based, at least 

in part, upon terrorism catastrophe modeling that estimates the potential impact of terrorist 

attacks upon workers’ compensation insurers.143 In the development of loss costs on a state-bystate basis, the impact of the Program is considered,144 which indicates that in the absence of the 

Program indicated costs and thus associated premium rates could be higher than at present. 

The Program constitutes an important feature of the existing market for workers’ compensation 

insurance in the United States. This is largely on account of the nature of the insurance coverage 

that must be provided as a matter of state law for workers’ compensation exposures. 

Commenters indicated that the market as a whole has been relatively stable for the past 

decade.145 

 

142 In three jurisdictions where all workers’ compensation is provided by a state entity (North Dakota, Ohio, and 

Washington), no additional charge is made for the terrorism risk portion of the coverage.

143 NCCI Comments, 3-4.

144 NCCI Comments, 4. 

145 NCCI Comments, 3-4.
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VIII. TERRORISM RISK PREMIUMS EARNED OVER TIME

Under the 2015 Reauthorization Act, Treasury is directed to provide in each Effectiveness 

Report an estimate of the total amount of premiums earned on terrorism risk insurance since 

January 1, 2003.146

A. Non-Small and Small Insurers

In the 2016 Effectiveness Report, Treasury estimated that $24.24 billion in terrorism risk 

insurance premiums were earned between 2003 and 2015. 147 Treasury’s assessment was based 

upon: (1) historical data reported to A.M. Best between 2004 and 2013; and (2) the results of 

Treasury’s voluntary 2016 TRIP data call.148 Treasury noted at the time that comprehensive 

historical terrorism risk premium data did not exist, and that the report’s estimate of earned

premiums may have been understated.149

Additional information now permits Treasury to further refine its earlier estimate from 2016. 

Treasury reviewed the most recent data from the sources noted above, as well as the historical 

responses received in the 2017 TRIP data call regarding total premiums earned during the period 

2003 through 2016.150

Treasury reviewed data reported by A.M. Best for written premiums151 in the years 2004 through

2016. A.M. Best collects and analyzes terrorism premium information through its Supplemental 

Rating Questionnaire.152 Although the A.M. Best data encompasses the vast majority of the 

terrorism insurance market,153 not every insurer (such as alien surplus lines and captive insurers) 

is included in the A.M. Best data, and of those which were included, not all responded to the 

Supplemental Rating Questionnaire. As reported in the 2016 Effectiveness Report, the data 

 

146 TRIA § 104(h)(2)(E).

147 FIO, 2016 Effectiveness Report, 25-26.

148 This included an estimate of $1.5 billion for CY 2003, which was based principally upon a prior Treasury report. 

The premium estimate was based upon nominal dollars as earned in each year. FIO, 2016 Effectiveness Report, 25-

26. 

149 FIO, 2016 Effectiveness Report, 9, 26.

150 Data on terrorism risk insurance premiums earned by captive insurers is only available in the results of the 2017 

and 2018 TRIP data calls, and is not included in other Treasury estimates nor in the A.M. Best data. As discussed 

above, the analysis of captive insurers is discussed separately in Section VI.B. 

151 Under the 2015 Reauthorization Act, Treasury is instructed to provide updated estimates of total earned 

premiums (as distinguished from total written premiums) over the period from January 1, 2003. Although in any 

given year there will be some discrepancy between earned premiums and written premiums, over time on an 

aggregated basis the difference is unlikely to be significant. 

152 Treasury appreciates the willingness of A.M. Best to provide and interpret this data.

153 FIO, 2016 Effectiveness Report, note 76. 
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provided by A.M. Best, while likely an understatement of total written terrorism risk premiums, 

provides informative context. Figure 48 arrays the information supplied by A.M. Best. 

Figure 48: Written Terrorism Risk Insurance Premiums (2003-2016)154

Year

Terrorism Written 

Premiums ($ billions)

2003 $1.500 (est.) 

2004 $ 1.968

2005 1.989

2006 1.902

2007 2.049

2008 2.012

2009 1.748

2010 1.609

2011 1.652

2012 1.663

2013 1.801

2014 1.658

2015 1.702

2016 1.717

Total: $ 24.97

Source: 2016 Effectiveness Report, 

A.M. Best Company Supplemental Rating Questionnaire

Treasury next analyzed the results of the 2017 and 2018 TRIP data calls, both of which had very 

high response rates for all insurer categories, as discussed above. Figure 49 provides information 

on terrorism risk insurance premiums earned by non-small and small insurers in 2016 and 2017 

based on the 2017 and 2018 TRIP data calls, and the percentage of total TRIP-eligible DEP 

represented by that figure.

Figure 49: Terrorism Risk Insurance DEP, Non-Small and Small Insurers

2016 2017

Terrorism Risk 

Insurance 

Premiums

% of Category’s

TRIP-Eligible 

DEP

Terrorism Risk 

Insurance Premiums

% of Category’s

TRIP-Eligible 

DEP

Non-Small Insurers $ 2,479,359,650 1.5% $ 2,415,613,573 1.4%

Small Insurers 186,188,220 0.9% 202,915,178 1.9%

Total $ 2,665,547,870 1.4% $ 2,618,528,751 1.5%

Source: 2017 and 2018 TRIP data calls

The information reported to Treasury in the 2017 TRIP data call indicated a total of $2.7 billion 

in terrorism risk premiums earned by non-small and small insurers in 2016, while $1.7 billion in 

 

154 The 2016 Effectiveness Report included an estimate for 2003 premium that is replicated here, in addition to the 

written premium data reported to A.M. Best between 2004 and 2016. See FIO, 2016 Effectiveness Report, 25.
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written premiums was reported to A.M. Best for the same period. This indicates that the 

information reported by insurers to A.M. Best likely underrepresents the total domestic admitted 

market. That disparity between the two sets of data is generally confirmed by the results of the 

2018 data call, in which 2017 earned terrorism risk premiums reported for non-small and small 

insurers were similar to the earned amounts reported for 2016. 

In addition to requesting 2016 terrorism risk premium information in the 2017 TRIP data call, 

Treasury also requested that responding insurers report all terrorism risk insurance premiums 

earned between 2003 and 2016. Many insurers were unable to provide this level of historical 

data.155 Based on this incomplete metric Treasury estimates that the total terrorism risk 

premiums earned by non-small and small insurers between 2003 and 2016 is $37.2 billion. 

After analyzing all of the information provided above, and recognizing the inherent limitations of 

this data, Treasury estimates that the terrorism risk insurance premiums earned by non-small and 

small insurers during the period 2003 to 2016 falls between $37.2 billion (as determined based 

on the information report in the 2017 TRIP data call) and $25 billion, as reported over time to 

A.M. Best. An appropriate estimate based on these data is $33 billion.156 

Adding the 2003-2016 estimated figure of $33 billion to the 2017 premium information received 

in the 2018 TRIP data call ($2.598 billion), Treasury estimates that approximately $35.6 billion 

in terrorism risk insurance premiums were earned by non-small and small insurers between 2003 

and 2017. 

B. Alien Surplus Lines Insurers

Figure 50 provides information on terrorism risk insurance premiums earned by alien surplus 

lines insurers in 2016 and 2017 based on the 2017 and 2018 TRIP data calls, and the percentage 

of total TRIP-eligible DEP represented by that figure.

Figure 50: Terrorism Risk Insurance DEP, Alien Surplus Lines Insurers

2016 2017

Terrorism Risk 

Insurance 

Premiums

% of Category’s

TRIP-Eligible 

DEP

Terrorism Risk 

Insurance

Premiums

% of Category’s

TRIP-Eligible 

DEP

Alien Surplus Lines Insurers $ 141,576,402 1.9% $ 200,586,281 2.1%

Source: 2017 and 2018 TRIP data calls

Treasury estimates that approximately 23 percent of the alien surplus lines market provided 

credible estimates for total terrorism risk insurance premiums earned between 2003 and 2015. 

 

155 After accounting for data that could not be reported, and inconsistent data reported by insurers, Treasury 

estimates that only 18 percent of the domestic admitted market provided credible information from which 

projections could be made.

156 Calculated as (.333 x $25 billion) + (.667 x $37.2 billion) = $33 billion. 
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Based upon the foregoing, and subject to the same inherent limitations in the data as observed in 

connection with the information produced by non-small and small insurers, Treasury estimates 

that $1.8 billion in terrorism risk premiums were earned by alien surplus lines insurers between 

2003 and 2016. When the reported amount for 2017 is included, a total amount of $2.0 billion in 

earned terrorism risk insurance premiums is indicated for alien surplus lines insurers for the 

entire period from 2003 through 2017. 

C. Captive Insurers

Figure 51 provides information on terrorism risk insurance premiums earned by captive insurers 

in 2016 and 2017 based on the 2017 and 2018 TRIP data calls, and the percentage of total TRIPeligible DEP represented by that figure. 

Figure 51: Terrorism Risk Insurance DEP, Captive Insurers157

2016 2017

Terrorism Risk 

Insurance 

Premiums

% of Category’s

TRIP-Eligible 

DEP

Terrorism Risk 

Insurance

Premiums

% of Category’s

TRIP-Eligible 

DEP

Captive Insurers $ 756,008,378 15.9% $ 835,818,150 9.2%

Source: 2017 and 2018 TRIP data calls

Many captive insurers did not report their total collected terrorism risk insurance premiums 

dating back to 2003; however, those that could provide credible estimates represented 43 percent 

of the market reflected in the 2017 TRIP data call. Subject to the same data limitations observed 

above, Treasury estimates based upon this information that the total terrorism risk premiums 

earned by captive insurers from 2003 through 2016 is approximately $6.6 billion. When the 

reported amount for 2017 is included, a total amount of $7.4 billion in earned terrorism risk 

insurance premiums is indicated for captive insurers for the entire period from 2003 through 

2017. 

D. Aggregate Industry Totals 

Using the estimates provided above for the years 2003 through 2015, coupled with the data 

reported for 2016 and 2017, Treasury estimates that, in the aggregate, as much as $38 billion was 

earned by non-small, small, and alien surplus lines insurers, with an additional $7.4 billion 

earned by captive insurers. In the case of the information provided by the domestic admitted 

market, this represents between 1 and 2 percent of total TRIP-eligible lines premiums earned

 

157 The differential between the captive insurer terrorism risk insurance premium figures for 2016 and 2017 is 

largely accounted for by the fact that Treasury did not collect terrorism risk insurance premiums associated with 

deductible reimbursement policies in the 2017 TRIP data call. Those amounts, however, are included within the 

overall captive insurer premium estimates provided by the 43 percent of all captive insurers that were able to 

provide that information.
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over the entire period.158 This amount of terrorism risk premiums earned over a 15-year period 

is comparable to the loss sustained by the insurance industry (without the support of the 

Program) in connection with the September 11 attacks. 

Because repeated, identical requests for the same historical data going forward are unlikely to 

result in any different or better information, Treasury discontinued the request for historical 

premium data beginning with the 2018 TRIP data call. Estimates of total earned premiums over 

time in future reports likely will be based upon the total earned premiums figure of $37.6 billion 

(or $45 billion including captive insurer premiums) provided in this Report and updated with the 

most recent year’s annual TRIP-eligible DEP figures as reported to Treasury in future data calls.

 

158 Although no acts of terrorism have been certified by the Secretary since the inception of the Program, 

commenters have noted that “premium dollars collected by insurers for terrorism [do] not distinguish between 

certified and non-certified events, and insurers have, in fact, paid claims for terrorism losses despite the program not 

being triggered.” AIA/NAMIC/PCI Comments, 3-4; see also Marsh Comments, 3. 
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IX. CONCLUSION

The Program has accomplished the principal goals identified in TRIA. The September 11 

attacks severely limited the availability and affordability of terrorism risk insurance and 

reinsurance. In turn, the lack of available coverage threatened economic activity due to 

insurance preconditions for certain business activities. 

The Program has made terrorism risk insurance available and affordable in the United States, and 

the market for terrorism risk insurance has been relatively stable for the past decade. While the 

purchase of terrorism risk insurance is not mandated by the Program, a significant proportion of 

commercial policyholders nationwide have elected to obtain such insurance, and take-up may be 

even higher in metropolitan areas at greater risk of terrorism. The Program also provides support 

for significant P&C insurance exposures across the country. The majority of the risks covered 

by disclosed limits of liability are outside the largest metropolitan areas in the United States.

In terms of the insurer categories participating in TRIP, larger U.S. domiciled insurers (or nonsmall insurers) insure the bulk of the risk to which the Program is exposed. However, small, 

alien surplus lines, and captive insurers each constitute significant components of the entire 

market. Although each is impacted differently by their participation in the Program, the market 

generally appears to work well, and provides commercial insurance buyers with a variety of 

options to obtain coverage for terrorism risk exposures. 

Private reinsurance of terrorism risk has significantly increased under the Program, and there is

now increased private reinsurance capacity for the exposures that remain wholly with the private 

market under TRIP. Nonetheless, there remains uncertainty that private reinsurance capacity 

exists for all exposures currently covered by the Program, as is reflected in the limited amount of 

reinsurance available for NBCR events, which pose the greatest risk of causing catastrophic 

industry losses on a broad scale. Furthermore, available reinsurance is much more heavily 

concentrated in those layers above a participating insurer’s TRIP deductible – by which point the 

insurer has already sustained a significant loss as measured by its total premiums in the TRIPeligible lines of insurance. 

Terrorism is caused by deliberate acts that may be expressly calculated to avoid or negate 

measures taken to mitigate against potential terrorist attacks and damages. Modeling techniques 

have improved significantly in the area of predicting loss exposures in response to specific 

events, which allows insurers to better manage their underwriting exposure. However, models 

remain relatively unsophisticated in their predictive capabilities, due to the calculated nature of 

terrorism and limited frequency of events. Most countries with substantial insurance markets 

have adopted some sort of terrorism risk program that relies (to a greater or lesser degree) upon 

government involvement in the event of a significant terrorism event.

159

 

159 See generally International Forum for Terrorism Risk (Re)Insurance Pools (IFTRIP) (organization of 

international terrorism risk insurance programs, providing general information and news), http://iftrip.org/; 
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This analysis is based principally on two years of complete industry data received by Treasury 

from insurers. Treasury will continue to analyze this collected data, continue to collect data on 

an annual basis, and provide further reports as required by the 2015 Reauthorization Act. 

 

“National Terrorism Risk Insurance Programmes of OECD Countries with Government Participation,” Organisation 

for Economic Co-Operation and Development (OECD) International Platform on Terrorism Risk Insurance 

(summarizing salient features of terrorism risk programs in OECD countries), 

https://www.oecd.org/daf/fin/insurance/Terrorism-Risk-Insurance-Country-Comparison.pdf.