Report of the 

President’s Working Group on Financial Markets

Market Conditions for Terrorism Risk Insurance 

2010

 
Table of Contents

Executive Summary .............................................................................................................1 

Background ..........................................................................................................................2 

Report Mandate ....................................................................................................................2 

Findings of the PWG’s 2006 Report to Congress ................................................................2 

The 2008 GAO Report to Congress .....................................................................................3 

Scope of this Report .............................................................................................................4 

How the PWG Conducted its Analysis ................................................................................4 

Terrorism Risk Insurance Act ..............................................................................................5 

TRIA Coverage and Limitations ..........................................................................................5 

Types of Insurance Covered Under TRIA ...........................................................................6 

TRIA Requirement: Mandatory Offer of Coverage ............................................................7 

State Requirements: Mandatory Coverage .........................................................................7 

Insurers’ Retention of Losses under TRIA ..........................................................................8 

TRIA and the Market .........................................................................................................13 

Loss Experience .................................................................................................................13 

Policyholder Surplus Has Increased ..................................................................................14 

Insurers Appear Willing to Provide More Terrorism Risk Insurance; Capacity Has 

Increased ............................................................................................................................15 

Modeling and Insurer Management of Aggregate Exposure .............................................17 

Reinsurer Capital Has Increased ........................................................................................19 

Reinsurers Are Not Allocating More Capital; Capacity Has Remained Stable

or Increased Slightly ..........................................................................................................19 

Reinsurance Capacity from Other Sources Has Not Developed .......................................20 

Insurers Are Not Purchasing More Reinsurance, Even at Lower Prices ...........................20 

Take-Up Rate of Terrorism Risk Insurance Has Leveled ..................................................23 

Captives Continue to Provide Coverage ............................................................................26 

Policyholders Appear to Be Purchasing Higher Amounts of Coverage ............................27 

Terrorism Risk Insurance Premiums Have Declined.........................................................28 

Terrorism Premium as Percent of Total Insured Value (TIV) ...........................................29 

Terrorism Premium as Percentage of Overall Property Premium .....................................30 

Key Market Trends and Conclusion ..................................................................................31 

Appendix ............................................................................................................................34 
1 

Executive Summary

The terrorist attacks of September 11, 2001, occurred a little over nine years ago. The 

Terrorism Risk Insurance Program (“Program”), a temporary government intervention in 

the private insurance market for terrorism risk insurance coverage, is now entering its 

eighth year. As mandated by the Terrorism Risk Insurance Act of 2002 (Pub. L. 107-

297, 116 Stat. 2322) (“TRIA”), as amended, the President’s Working Group on Financial 

Markets (“PWG”)1

 has performed an on-going analysis of market conditions for 

terrorism risk insurance. This is the PWG’s second report of its findings to Congress; its 

first report was provided in 2006 (“2006 Report”). The key findings of this Report are:

• The availability and affordability of terrorism risk insurance provided by the private 

sector has improved since 2006. Since the PWG’s last report to Congress, insurers 

have built capital and increased marketplace capacity. 

• Overall, marketplace terrorism risk insurance capacity has increased, and 

significantly in some forms. Nevertheless, capacity is constrained in some markets 

(e.g., high-risk geographic locations and properties), and some commercial insurance 

policyholders in high-risk urban areas have difficulty obtaining coverage with 

sufficient limits. 

• Improvements in the terrorism risk insurance market may have occurred due to 

improvements in modeling and managing accumulation and concentration of 

aggregate loss exposure; new market entrants and increased competition; and 

heightened capital positions of the property and casualty insurance and reinsurance 

industries. The industry better understands aggregate risk and the increased capacity 

and competition have resulted in decreases in price generally. 

• Take-up rates among commercial insurance policyholders reached approximately 60 

percent in 2006, but have remained roughly flat since then. Among those commercial 

insurance policyholders taking up terrorism risk insurance, there is some indication 

that more coverage, as measured by policy limits, may be being purchased. 

• Market participants (policyholders, insurers, and reinsurers) remain uncertain about 

the ability of models to predict the frequency and severity of terrorist attacks. Such 

views influence policyholder perception of risk and purchase decisions, as well as 

insurer and reinsurer capacity allocations.

 

1 The PWG (established by Executive Order 12631) is comprised of the Secretary of the Treasury, the 

Chairman of the Board of Governors of the Federal Reserve System, the Chairman of the Securities and 

Exchange Commission, and the Chairman of the Commodity Futures Trading Commission. Executive 

Order No. 12,631, 53 Fed. Reg. 9421 (March 18, 1988). 
2 

Background 

The Program was established on November 26, 2002, immediately upon TRIA being 

signed into law. The Program is administered by the Department of the Treasury. 

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

which amended TRIA, provided that the PWG perform an analysis regarding the longterm availability and affordability of insurance for terrorism risk, including group life 

coverage; and coverage for chemical, nuclear, biological, and radiological (“CNBR”) 

events. In the third quarter of 2006, the PWG submitted a report of its findings to 

Congress.2 

The Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L. 110-160, 

121 Stat. 1839) further amended TRIA and mandated that the PWG perform an ongoing 

analysis of the long-term availability and affordability of insurance for terrorism risk and 

to report to Congress in 2010 and 2013. 

Report Mandate

Section 108(e) of TRIA, as amended, provides: 

(e) ANALYSIS OF MARKET CONDITIONS FOR TERRORISM RISK

INSURANCE.

(1) IN GENERAL. The President’s Working Group on Financial Markets, in 

consultation with the National Association of Insurance Commissioners, 

representatives of the insurance industry, representatives of the securities 

industry, and representatives of policy holders, shall perform an ongoing 

analysis regarding the long-term availability and affordability of insurance for 

terrorism risk. 

(2) REPORT. Not later than September 30, 2006, and thereafter in 2010 and 

2013, the President’s Working Group on Financial Markets shall submit a 

report to the Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House of 

Representatives on its findings pursuant to the analysis conducted under 

subsection (1). 

Findings of the PWG’s 2006 Report to Congress 

Some of the key findings of the 2006 Report3 were:

• The availability and affordability of terrorism risk insurance improved from 2001 to 

2006, despite the increases in insurer retentions under TRIA. Insurers were allocating 

additional capacity to terrorism risk, prices were declining, and take-up (purchase) 

rates were increasing. 

 

2 That report, Terrorism Risk Insurance (Sept. 2006) (“2006 Report”) can be found at 

http://www.treasury.gov/resource-center/fin-mkts/Documents/report.pdf. 3 2006 Report at 1-6.
3 

• The improvement in the terrorism risk insurance market was due to several important 

factors including: better risk measurement and management, improved modeling, 

greater reinsurance capacity, and the recovery in the financial condition of property 

and casualty insurers. 

• Take-up rates increased as prices fell but a significant number of policyholders were 

not purchasing terrorism coverage by 2006. The low take-up rate was identified as a 

key determinant of how much capacity insurers will allocate to underwrite the risk. 

• Further improvements in insurers’ ability to model and manage terrorism risk would 

likely contribute to the long-term development of the terrorism risk insurance market. 

The high level of uncertainty currently associated with predicting the frequency of 

terrorist attacks and a general unwillingness by a significant number of insurance 

policyholders to purchase insurance coverage, made any prediction of the potential 

degree of long-term development of the terrorism risk insurance market difficult.

• Coverage for terrorism risk in group life insurance policies remained generally 

available and at affordable prices, despite that group life insurance has not been part 

of the Program.4

 

• Insurers generally did not provide coverage for losses resulting from CNBR events 

even before September 11, 2001, and for the most part were not providing CNBR

coverage even with a Federal backstop in place. Given the general reluctance of 

insurance companies to provide coverage for these types of risks, limited capacity, 

relatively high prices, and policyholder expectations, there appeared to be little 

potential for future market development.5 Subsequently, the Government 

Accountability Office (GAO) found that available capacity for CNBR terrorism risk 

insurance and reinsurance was limited.

6

 

The 2008 GAO Report to Congress 

In 2008, the GAO issued a report to Congress finding that terrorism risk insurance was 

generally available and affordable.7 Surveyed market participants and policyholders 

reported to the GAO that terrorism risk insurance was available nationwide and 

reasonably priced and affordable in current market conditions, the exception being 

owners of large, high value properties in major cities.8

 

4 2006 Report at 63.

 However, GAO found that those 

policyholders were able to adopt various approaches to obtaining terrorism coverage, 

5 Ibid. at 72. 6 GAO, Report to Congressional Committees, Terrorism Insurance – Status of Coverage Availability for 

Attacks Involving Nuclear, Biological, Chemical, or Radiological Weapons (GA)-09-39, Dec. 2008). In 

2008, a few standalone terrorism insurers were offering standalone CNBR terrorism insurance at relatively 

viable prices. See Marsh, Terrorism Insurance Market Solutions for NBCR Exposures (2008). 7 GAO, Terrorism Insurance, Status of Efforts by Policyholders to Obtain Coverage (GAO-08-1057, Sept. 

2008).

8 Insurers and reinsurers manage aggregation or concentration of risk by limiting the amount of coverage 

provided in specific areas of cities, such as downtowns and financial districts where many large buildings 

and businesses are clustered or other areas considered at higher risk for a terrorist attack.
4 

albeit at higher rates, such as layering coverage from multiple insurers, purchasing 

standalone TRIA-only coverage to supplement coverage for other perils, or forming 

captive insurers. 

Scope of this Report

The 2006 Report analyzed data on the affordability and availability of terrorism risk 

insurance since the inception of the Program in 2002. That report identified several key 

factors expected to influence the market for terrorism insurance over the long-term, 

including the ability of insurers to measure and manage terrorism risk, and the demand 

for terrorism risk insurance by commercial insurance policyholders. The current Report 

is intended to update and supplement the 2006 Report, and should be read in conjunction 

with that report. 

This Report focused on identifying changes in market trends since the 2006 Report and 

the 2007 changes to the Program. Some trends will provide important information to 

policymakers in re-examining the need for, or appropriate level of, a continued Federal 

role in the private terrorism insurance market past 2014, when the Program is set to 

expire. This Report comes at the near mid-point of the most recent seven-year renewal of 

the Program. The PWG will issue another report in 2013. 

The long-term availability and affordability of terrorism risk insurance, like other goods 

and services, is determined by interaction between supply and demand. On the supply 

side, this Report examined the financial capability and willingness of insurance 

companies and reinsurers to allocate capacity to terrorism risk insurance. On the demand 

side, this Report reviewed purchase trends and alternative risk transfer by commercial 

insurance policyholders. As with the 2006 Report, this Report focused on overall market 

conditions while recognizing that conditions may vary by location, by sector, and by size 

of the insured. 

How the PWG Conducted its Analysis

In conducting this analysis, the PWG was assisted by staff of some of the member 

agencies who reviewed academic and industry studies on terrorism risk insurance. As the 

analysis is ongoing in nature, Treasury, as both the administrator of the Program and 

chair of the PWG, has been the principal monitor of developments in the marketplace. 

The PWG is also required to consult with the National Association of Insurance 

Commissioners (“NAIC”) and others. As a means of meeting this consultation 

requirement in the most efficient and most transparent manner, Treasury, as chair of the 

PWG, published a Notice in the Federal Register seeking comments concerning the longterm availability of terrorism risk insurance. (A copy of the Federal Register Notice is 

included in the Appendix).9

 

9 Instructions on how interested persons may review the comments received by the PWG are found in the 

appended Federal Register Notice (also published at 75 Fed. Reg. 34530 (June 17, 2010)).

 In addition to a review and analysis of the comments 

received from the Federal Register Notice, staff also spoke with State insurance 
5 

regulators to gather further information, and also had discussions with commenters and 

other stakeholders.

Terrorism Risk Insurance Act

The market for terrorism risk insurance since the enactment of TRIA cannot be analyzed 

without considering the Federal participation in the market through the Program. 

Accordingly, interpretation of data on market conditions and trends requires an 

understanding of how the Program defines the role of the Federal Government in the 

marketplace. 

TRIA was signed into law on November 26, 2002. The stated purposes of TRIA were to 

address market disruptions from the terrorist attacks of September 11, 2001, to ensure the 

continued widespread availability and affordability of commercial property and casualty 

insurance for terrorism risk, and to allow for a transition period for the private markets to 

stabilize and build capacity while preserving State insurance regulation and consumer 

protections. 

TRIA was established as a temporary Federal program of shared public and private 

compensation for privately-insured commercial property and casualty losses resulting 

from certified acts of terrorism. TRIA essentially amounts to a government reinsurance 

program in the form of a Federal backstop. Primary and excess commercial property and 

casualty insurers (including admitted, surplus lines, and captive insurers) that earn 

premiums for certain lines of commercial property and casualty insurance covering U.S. 

risks are required to participate in the Program. 

The Department of the Treasury administers TRIA through the Program. TRIA was 

originally scheduled to expire on December 31, 2005, but was extended for two 

additional years in 2005 (with modifications), and again for seven additional years in 

2007. Under current law, the Program is set to expire at the end of 2014. 

TRIA Coverage and Limitations 

The Program covers losses only for acts of terrorism that are certified by the Secretary of 

the Treasury with the concurrence of the Secretary of State and the Attorney General of 

the United States. To qualify for certification, a terrorist act must be found to be: 

• a violent act, or an act dangerous to life, property or infrastructure; 

• resulting in damage within the U.S., or to a U.S. air carrier or U.S. flagged vessel, 

or on the premises of a U.S. mission; and 

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

civilian population of the U.S. or to influence the policy or affect the conduct of 

the U.S. government. 

Prior to the changes to the Program in 2007, only “foreign” acts of terrorism (those 

committed by or on behalf of foreign interests) were eligible for certification. Despite the 

exclusion of “domestic” acts of terrorism, the 2006 Report found that private domestic 

terrorism risk insurance was reportedly available and purchased within both the insurance 
6 

and reinsurance markets (not including CNBR). However, there were concerns about 

potential difficulty in determining whether U.S. citizens were acting on behalf of foreign 

interests (sometimes referred to as “homegrown” terrorists), or not (i.e., “domestic” 

terrorists), as well as concerns about delay in certification and, in turn, coverage under 

the Program. As a result, TRIA was amended in 2007 to cover both domestic and foreign 

acts of terrorism.

In certifying an act of terrorism, some limitations apply. An act cannot be certified as an 

act of terrorism under TRIA if:

• the act is committed as part of a Congressionally-declared war (except that acts of 

war may be certified for the sole purpose of covering workers’ compensation 

insurance losses); or

• the property and casualty insurance losses from the act are less than $5 million.

Types of Insurance Covered Under TRIA

TRIA coverage applies to commercial property and casualty insurance. It does not apply 

to personal insurance, such as homeowners’, automobile, or life insurance (either 

individual or group life). Commercial property and casualty insurance includes excess 

insurance, workers’ compensation insurance, and during the first three years of the TRIA 

Program, surety insurance. By law, the TRIA Program does not apply to: 

• Federal or private crop or livestock insurance; 

• Private mortgage insurance, or title insurance; 

• Financial guaranty insurance offered by a monoline financial guaranty insurance 

corporation; 

• Insurance for medical malpractice;

• Health or life insurance, including group life insurance; 

• Federal flood insurance; 

• Reinsurance or retrocessional reinsurance;

• Commercial automobile insurance;

• Burglary and theft insurance; 

• Surety insurance; 

• Professional liability insurance; and

• Farm owners’ multiple peril insurance.

Other types of insurance were initially included in the Program but were excluded in 

2005 (these include commercial automobile insurance; burglary and theft insurance; 

surety insurance; most professional liability insurance;10 and farm owners’ multiple peril 

insurance).11

 

10 Directors’ and officers’ liability insurance, a type of professional liability insurance, remains in the 

TRIA Program. 15 U.S.C. § 6701, TRIA Section 102(12)(A).

 These changes, along with increases in private sector retentions, reduced 

the Federal role in the terrorism risk insurance market in 2005. However, the 2007 

extension of the Program did not include a similar reduction in the Federal role. 

11 Terrorism Risk Insurance Extension Act of 2005, Pub. L. 109-144, 119 Stat. 2660.
7 

Treasury, through its Program regulations, has defined the types of insurance included in 

the Program by “lines of insurance,” which refer to lines on regulatory financial reporting 

forms (i.e., NAIC Annual Statement), developed by the State insurance regulators.12

Insurers report premium written and earned for various types of insurance matched to the 

“lines.” Generally, insurance with premium that is reported on the following lines, (if not 

specifically excluded by law) is included in the Program: fire; allied lines; commercial 

multiple peril (non-liability and liability); ocean marine; inland marine; workers’ 

compensation; other liability;

13 products liability; aircraft; and boiler and machinery. 

TRIA Requirement: Mandatory Offer of Coverage 

In general, TRIA requires that insurers “make available” coverage for acts of terrorism on 

the same terms and conditions as other types of coverage offered as part of their 

commercial property and casualty insurance policies. Insurers are not required to make 

coverage available for losses from a CNBR terrorist act if coverage for CNBR exposure 

is excluded in the overall policy, regardless of the cause of the CNBR damage (i.e., the 

same terms and conditions). 

TRIA does not require a policyholder to purchase terrorism risk insurance, although in 

some cases, such as with workers’ compensation insurance, State law may require such 

purchase. Thus, if a purchaser declines the offer of terrorism coverage, the insurer can 

then exclude terrorism losses from coverage under the insurance policy or negotiate other 

limited forms of terrorism coverage (i.e., different terms and conditions than those 

applicable to the non-terrorism coverage). 

While TRIA requires insurers to make coverage generally available, TRIA leaves pricing 

of terrorism risk insurance to be subject to whatever provisions may apply under 

applicable State law and regulation, or to the market for policies that are exempt from 

State rate regulation. 

State Requirements: Mandatory Coverage 

TRIA generally preserves State insurance regulation,14 and mandatory coverage depends 

on State law requirements applicable to admitted carriers.15 For example, some States 

require that property insurers cover losses from fire from all causes (except war). Thus, 

terrorism fire and/or “fire following” an act of terrorism,16 is required to be covered in at 

least fourteen States.17

 

12 31 C.F.R. Part 50, Subpart A.

 (In the remaining States, insurers must offer the coverage per 

13 Except for professional liability insurance, which does not have a specific line. See 71 Fed. Reg. 50343. 14 15 U.S.C. §6701, TRIA Section 106. 15 Surplus lines insurers are generally exempt from State form regulation. 16 For example, since a nuclear detonation results in fire, losses from fire that follows a nuclear reaction 

may be covered in certain states despite the general presence of nuclear exclusions in policies. 17 Twenty-eight States have laws that require commercial fire insurance policies to cover loss from fire 

regardless of the cause of the fire, modeled after New York’s Standard Fire Policy (these States are referred 

to as “Standard Fire Policy States”). Since September 11, 2001, 14 of the 28 Standard Fire Policy States 

have allowed fire caused by terrorism to be excluded from commercial fire policies.
8 

TRIA). States also require that terrorism (as well as acts of war) be covered for workers’ 

compensation, and policy exclusions are not permitted (an act of war can be certified 

under the Program only for workers’ compensation insurance). 

Even in the period between September 11 and the passage of TRIA, as insurers began 

excluding terrorism risk coverage from policy renewals, State insurance regulators in 

most States approved a terrorism exclusion for use by admitted carriers, but required that

relatively small-scale terrorist attacks be covered.18 However, commenters report that 

there has been little State law or regulatory development since 2006,19

 

 and this has been 

confirmed in consultation with the NAIC and State insurance regulators. Since 2006, 

State insurance regulators have begun collecting information from insurers regarding 

catastrophic events, including acts of terrorism, as some States have begun a more riskbased focus examination of insurer solvency. This information will help regulators learn 

of insurers’ probable maximum loss, how risk concentrations are determined, and the use 

of reinsurance and capital market products to spread the risk of catastrophic losses. The 

NAIC explained that such information collection recently has begun and the collected 

data will be helpful going forward.

Insurers’ Retention of Losses under TRIA

The Program involves shared public and private compensation for privately-insured 

commercial property and casualty losses resulting from acts of terrorism. The private 

sector insurers’ share of the losses has several components: (1) the insurer deductible; (2) 

the insurer share of insured losses above the deductible; (3) a floor loss threshold before 

the Federal Government shares in the losses; (4) a ceiling loss threshold through an 

annual cap on aggregate insured losses paid under the Program; and (5) an insurance 

marketplace aggregate retention which establishes a minimum amount of aggregate 

insured losses that will be borne by private industry, both commercial insurance

policyholders and insurance companies. These elements, described in further detail 

below, combine as the insurers’ annual retention of insured losses and the insurers’ loss 

limit within which the market operates.

 

18 The exclusion most States approved for admitted carriers generally provided that terrorism resulting in 

total losses of less than $25 million or where no more than 50 people were injured (a relatively small-scale 

attack) could not be excluded (except for CNBR events).

19 Swiss Re suggests that one action States could take to improve affordability of terrorism insurance risk is 

to make the coverage mandatory for all thereby spreading the risk across the largest possible base of 

insured. Comments by Swiss Re to the PWG (Aug. 2, 2010). See also, OECD, Conference on Terrorism 

Risk Insurance, Improving Existing Solutions (June 2010).
9 

1. Insurer Deductible

If a certified terrorist act occurs, insurers may be eligible to receive the Federal 

Government’s share of the insured losses above a deductible, as specified under TRIA. 

Insurance companies will cover 100 percent of the insured losses below their deductible. 

An insurer’s TRIA deductible remains constant no matter how much terrorism risk 

insurance coverage it sells because the deductible is calculated as a percentage of the 

previous year’s direct earned premiums (DEP) from covered lines of commercial 

property and casualty insurance, not just terrorism insurance. Many insurance 

companies, including captive insurers, reinsure some portion of their insurer deductible. 

For the initial period of the temporary three-year Program, and through the Program’s 

first extension, the insurer deductible percentage increased gradually each year, but 

remained fixed starting in 2007. The insurer deductible, as a percentage of the prior 

year’s direct earned premiums, rose from 7 percent in 2003, to 10 percent in 2004, 15 

percent in 2005, 17.5 percent in 2006, and 20 percent in 2007 (though in 2006 and 2007 

there were fewer lines of insurance in the TRIA Program from which the deductible was 

calculated). However, the percentage was fixed at 20 percent starting in 2007, and is set 

to remain at 20 percent through 2014. 

Source: TRIA

Insurers are not required to report their annual insurer deductibles to either regulators or 

the Program, but will be required to do so if a claim for Federal payment is made to the 

Program.20 While individual insurer deductibles will vary based on their lines of 

business and premium volumes,21 it is nevertheless useful to examine the trend in insurer 

retention based on aggregate DEP data in TRIA lines. 

 

20 31 C.F.R. Part 50, Subpart F. 21 A large insurance company reported that its DEP in TRIA lines and insurer deductible has remained 

stable. Comments by The Hartford to the PWG dated 2010. Another, the Liberty Mutual Group reports an 

increase in its insurer deductibles from 2006 to 2010. Comments by the Liberty Mutual Group to the PWG 

(Aug. 2, 2010).

0

5

10

15

20

25

30

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Percentage

Insurer Deductible Precentage of 

Prior Year Direct Earned Premiums
10 

The chart below shows the trends in aggregate insurer deductibles based on DEP in TRIA 

lines. According to data from A.M. Best, the aggregate insurer deductibles climbed from 

$12 billion in 2003 to $32 billion in 2005, due to both an increase in DEP and the insurer 

deductible percentage. The aggregate insurer deductible leveled off in 2006 as the 

number of lines covered by TRIA declined between 2005 and 2006. DEP in TRIA lines 

has decreased since 2007, and the aggregate insurer deductible (fixed at 20 percent of the 

prior year’s DEP), has dropped from approximately $38 billion to $34 billion.22 Based 

on expectations of a “soft” market and further downward pressure on commercial 

property and casualty prices, aggregate insurer deductible may continue to decrease,23 

although the DEP and deductibles could increase if market conditions firm.24

Source: Treasury

 

22 Data was compiled from Best’s Aggregates and Averages, Property and Casualty, 2003 – 2009 editions. 

DEP data includes all premium reported in lines included in the Program, which may include some 

premium earned from insurance be excluded by TRIA but reported within the line. Insurers are required to 

not include those premiums in their deductible calculation under the Program’s claims regulations. As a 

result, for purposes of this analysis, aggregate premium may be overstated somewhat. The American 

Academy of Actuaries identified the same downward trend from 2006 to 2010 and found that the aggregate 

insurer deductible decreased by 1.4 percent from 2006 to 2007, increased by 1 percent from 2007 to 2008, 

dropped by 5 percent from 2008 to 2009, and dropped by another 6 percent from 2009 to 2010. See

Comments by the American Academy of Actuaries to the PWG (Aug. 2, 2010). Aon also found that the 

aggregate insurer deductible increased by 1.2 percent from 2007 to 2008 ($33.7 billion to $34 billion), 

declined by 4.5 percent in 2009 ($32.6 billion) and dropped another 6 percent in 2010 ($30.6 billion). See

Comments by the Aon Corporation to the PWG (Aug. 2, 2010). A similar analysis by an insurance trade 

association also found similar decreases from 2008 to 2010. See Comments by the Property and Casualty 

Insurers of America to the PWG (2010). 23 Soft market conditions generally refer to periods in which premium rates are stable or falling and 

insurance is readily available. Hard market conditions are where rates rise, coverage may be more difficult 

to find. 24 Comments by the National Association of Mutual Insurance Companies to the PWG (Aug. 2, 2010).

171 

200

214

182 189 193 183 172 

12 20 32 32 38 39 37 34 

-

50 

100 

150 

200 

250 

2003 2004 2005 2006 2007 2008 2009 2010

$ Billions

Previous Year Direct Earned Premiums (DEP) in 

TRIA Lines and Aggregate Insurer Deductible

Previous Year DEP TRIA Insurer Deductible
11 

2. Insurer Share of Losses Above the Deductible

Under the Program, insured losses above the insurer deductible amount are shared 

between the insurance company and the Federal Government. As TRIA was originally 

enacted, the insurer share was fixed at 10 percent of the insured losses, and the Federal 

Government’s share equal to 90 percent of the losses above the deductible. When the 

Program was extended in 2005, the insurer share was raised to 15 percent in 2007, 

reducing the Federal share slightly to 85 percent. Under current law, the public and 

private shares remain at these levels through 2014. 

Source: TRIA

 3. The Program Trigger of Federal Payments 

TRIA mandates certain limitations on Federal payments under the Program. The 

Terrorism Risk Insurance Extension Act of 200525 amended TRIA so the Federal 

Government would not share in the losses of relatively small-scale acts of terrorism. 

TRIA prohibits the Program from making Federal payments until the aggregate industry 

insured losses resulting from a certified act of terrorism exceed the “Program Trigger,” 

which was first set at $50 million in 2006 and increased to $100 million in 2007, where it 

is set to remain for the duration of the Program. Acts of terrorism above $5 million in 

aggregate insured losses remain eligible for certification under the Program, and any 

certification will trigger coverage under terrorism risk insurance policies. However, the 

Federal Government does not share in any losses until the Program Trigger is reached. 

The Program Trigger, therefore, serves as a floor on Federal payments under the 

Program. Below that floor, the private sector retains all of the losses. 

 

25 Pub. L. 109-144, 119 Stat. 2660. 

90%

10%

2003 - 2006

85%

15%

2007 - 2014

Insurer and Federal Share Losses 

Above Insurer Deductible

Federal Government

Insurer
12 

4. Annual Cap on Public and Private Payment under the Program

Another limitation on payments involves what is referred to as the Program’s “cap” on 

annual liability. Under TRIA, neither the Federal Government, nor private insurers who 

have paid losses at least up to their insurer deductible, will be liable for any amount 

exceeding an annual cap of $100 billion in aggregate insured losses.26 TRIA provides 

that Treasury must notify Congress that the cap has been reached. This cap has not been 

increased since the Program was enacted.

5. Recoupment of the Federal Share of Insured Losses and the Marketplace 

Aggregate Retention 

TRIA does not require participating insurers to pay premiums up front, rather, it is postloss funded. TRIA provides authority for Treasury to recoup its Federal payments via

surcharges on commercial insurance policyholders. A certain amount of recoupment is 

mandatory, based on insurance marketplace aggregate annual retention amounts specified 

in TRIA. In other situations, however, TRIA authorizes discretionary recoupment. 

The recoupment requirement ensures that the private sector, on an aggregate basis, retains 

at least a minimum amount of the insured losses. As shown in the figure below, the 

insurance marketplace aggregate retention amount began at $10 billion in 2003 and 

gradually increased to $12.5 billion (2004); $15 billion (2005), $25 billion (2006); and 

$27.5 billion (2007). When the Program was extended in 2007, the marketplace retention 

was left at the 2007 level through 2014. 

Source: TRIA 

 

26 15 U.S.C. §6701, TRIA Section 103(e)(2).

0

10

20

30

40

50

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ Billions

Insurance Marketplace Aggregate 

Retention Amount
13 

TRIA and the Market

The parameters of the TRIA Program, including the insurer deductible; insurer share of 

losses; Program Trigger; cap; and the marketplace aggregate retention, define and limit 

the exposure to losses within which the insurance market currently operates. The 

Program allows insurers to manage exposure within the defined parameters of the insurer 

deductible and the insurers’ 15 percent share of the losses.27 The Program provides an 

exposure limit, as illustrated below:

Loss Experience

To date, no certified acts of terrorism have occurred under the Program; commercial 

insurance policyholders have suffered no losses; and insurers have incurred no claims. 

As a result, there have been no Federal payments under the Program and no policyholder 

surcharges (either mandatory or discretionary) have been assessed.

 

27 Comments by the Liberty Mutual Group to the PWG (2010).

Exposure Limit under TRIA

$ 5 Million

$ 100 Million

$ 100 Billion

Federal Share

Insurer Share

Insurer Deductible

No Federal Payment

Non -Certified

85% Share 

of Losses

15% Share 

of Losses

Attachment Point: 

20% DEP

Program Trigger

Cap
14 

Although there have been no Federal payments under the Program, there have been 

administrative costs. In addition, TRIA creates an unfunded contingent liability of the 

Federal Government and, as such, the Program increases the Federal budget deficit.

28 The 

Federal budget outlay represents a subsidy estimate: the expected cost borne by Federal 

taxpayers due to the program. 

Policyholder Surplus Has Increased

The availability of terrorism risk insurance is affected by insurer capital. Insurance 

company capital is measured by net worth (assets less liabilities), referred to as 

policyholder surplus, and is the amount of risk capital available to underwrite and assume 

risk. Policyholder surplus is a measure of underwriting capacity because it reflects the 

financial resources that stand behind every insurance policy written.29 The amount of 

capital maintained dictates the amount of insurance an insurer is able to issue, including 

terrorism or other perils. Accordingly, capacity to underwrite terrorism risk insurance, or 

the amount allocated to that risk, is partly a function of the available capital of the 

property and casualty industry as a whole, and of insurance companies individually. 

The chart below shows policyholder surplus for the property and casualty industry over 

the last decade. According to NAIC data, after September 11, 2001, combined 

policyholder surplus of property and casualty insurers dropped to an estimated $302 

billion by the end of 2002. Between 2002 and 2006, industry surplus steadily climbed, 

reaching $508 billion in 2006, reflecting recovery from the effects of the September 11

attacks as well as a rebound in the stock market (among other things).30 The recovery of 

the industry was seen as a favorable development toward facilitating the long-term 

availability and affordability of terrorism risk insurance going forward. 

Policyholder surplus continued to rise to $551 billion in 2007, but dipped to $493 billion 

in 2008, most likely attributable to the decrease in earnings and valuation of insurers’ 

assets from the global economic crisis; however, surplus rebounded and reached $556 

billion in 2009.31 Overall, this surplus should facilitate the provision of terrorism 

coverage.

 

28 Office of Management and Budget (OMB), Budget of the U.S. Government, Fiscal Year 2010; 

Congressional Budget Office (CBO), Federal Reinsurance for Terrorism Risks: Issues in Reauthorization 

(Aug. 2007).

29 Insurance Information Institute, Financial Market Conditions (May 2010). 30 2006 Report at 31-33. 31 A.M. Best estimated policyholder surplus at $532 billion among the top 100 property and casualty 

insurers. A.M. Best, Best’s Statistical Study, U.S. Property/Casualty 2009 Policyholder Surplus (Nov. 15, 

2010).
15 

Source: NAIC32

Insurers Appear Willing to Provide More Terrorism Risk Insurance; Capacity Has 

Increased

In insurance parlance, capacity refers to the total amount of exposure to loss that an 

insurance or reinsurance company is willing to assume from a peril. One measure used 

for estimating market capacity is to aggregate the maximum amount of coverage an 

insurer is willing to provide to any one insured (called “per risk” capacity). Such an 

analysis presents a theoretical maximum of available capacity. The theoretical maximum 

represents the total available capacity if terrorism risk insurance were purchased from all 

available insurers at the maximum level each insurer is willing to underwrite. 

Commercial insurance policyholders, however, do not purchase at these maximum levels; 

policy limits are well below the theoretical maximum. Nevertheless, the theoretical 

maximum is a useful metric of market capacity.

There have been several reports of increased availability and capacity of terrorism risk 

insurance, including: 

• The Aon Corporation, a large insurance and reinsurance broker, reports significant 

increases in terrorism risk coverage under “all risk”,33 or all perils, property insurance 

policies.

34 A theoretical maximum of $13.5 billion per risk is currently available, up 

from a maximum of about $8 billion reported in 2005.35

 

32 NAIC, Statistical Compilation of Annual Statement Information for Property/Casualty Insurance 

Companies in 2009 (2010).

33 An “all risk” commercial property insurance policy usually provides coverage against all risks of 

physical loss or damage to the property insured except to the extent a particular risk is excluded from the 

policy coverage through exclusions in the policy.

34 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 35 Ibid. 

345

312 302

351

427 445

508

551

493

556

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$ Billions

Property Casualty Policyholder Surplus Levels
16 

• A significant increase in capacity is also reported in the standalone market.36 Aon 

reports a remarkable 67 percent increase in standalone capacity from 2006 to 2010. 

Available capacity aggregated from standalone insurers grew from approximately 

$1.5 billion in 2006 to over $2.5 billion, with a potential upper bound of $3.8 billion 

in 2010.37 

• Marsh, another large insurance broker, reports that standalone capacity has increased 

by approximately 65 percent since 2006. Standalone capacity in the fourth quarter of 

2006, on an aggregate basis, was between approximately $1.1 billion to $2.3 billion.38 

In the first quarter 2007, capacity increased to between approximately $1.3 billion to 

$2.5 billion.39 By the first quarter 2009, capacity climbed to $3.1 billion40, and by the 

second quarter, $3.76 billion.41 Marsh reports that capacity is now at approximately 

$3.8 billion.42 

• Marsh attributes the increase in capacity since 2007 to an increase in insurer 

willingness to underwrite more standalone coverage and additional capacity from new 

entrants to the market, even in a competitive price environment. Aon also reports that 

standalone capacity has emerged from existing market participants allocating more 

capacity, as well as from new market entrants, including new and expanded capacity 

from Lloyd’s of London syndicates.43 Lloyd’s reports that favorable loss experience 

(i.e., no terrorism claims), combined with the enhanced ability to manage and model 

exposure with reinsurance support, has attracted new capacity.44 

• Capacity depends on risk and location. Marsh reports that, generally, capacity 

increases significantly outside of commercial business districts. Approximately $750 

million to $2 billion, per risk, in standalone terrorism insurance capacity is available

for companies that do not have sizeable exposure in locations where insurers face 

aggregation challenges. Capacity in excess of $2 billion is available but at higher 

premiums. For others, in locations where standalone insurers have aggregate 

exposure concentrations, estimated capacity is at approximately $850 million to $1 

billion.45 

 

36 Standalone terrorism insurance policies, as their name implies, cover terrorism risk alone, and are an 

alternative to obtaining terrorism risk insurance coverage as part of an insured’s “all risk” policy. 

Standalone polices compete on price and terms. Standalone coverage can also provide excess coverage 

above “all risk” coverage limits or can fill “gaps” in coverage, such as by covering losses as a result of noncertified acts of terrorism or at non-US locations (i.e., non-TRIA coverage). Standalone insurers also 

assume reinsurance of captive insurers’ TRIA deductibles.

37 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 38 Marsh, Marketwatch: Terrorism Insurance 2006, The Standalone Terrorism Market (Dec. 2006).

39 Marsh, Marketwatch: Terrorism Insurance 2007, The Standalone Terrorism Market (April 2007). 40 Marsh, Marketwatch: Terrorism Insurance 2009, The Standalone Terrorism Market (1Q 2009). 41 Marsh, Marketwatch: Terrorism Insurance 2010, The Standalone Terrorism Market (2Q 2010); The 

Marsh Report: Terrorism Risk Insurance 2010. 42 Marsh, The Marsh Report: Terrorism Risk Insurance 2010 (2010). 43 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 44 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). 45 Marsh, Marketwatch: Terrorism Insurance 2010, The Standalone Terrorism Market (2Q 2010).
17 

• While overall capacity has increased, there remain challenges in some markets. 

Capacity is restricted for certain iconic buildings, sports stadiums, entertainment 

theme parks and transportation hubs.46 Aon reports that capacity is restricted in 

Chicago, New York City, and San Francisco.47 Some corporate insurance 

policyholders in high-risk urban areas still have difficulty obtaining coverage with 

sufficient limits.48 Lloyd’s confirms that capacity is constrained for large property 

exposures and in certain locations, such as Manhattan.49

Capacity, the amount of available risk capital that an insurance company may be willing 

to allocate to a particular risk or location, is tied to its ability to measure and manage 

accumulations or concentrations of risk to determine its maximum loss under different 

scenarios. The increases in capacity reported above have occurred with reports of 

improvement in models used by insurers. 

Modeling and Insurer Management of Aggregate Exposure 

The 2006 Report explained that insurers were developing modeling techniques to manage 

risk exposure and make decisions as to allocated capacity and price.50 Models were 

being developed and used to measure an insurer’s aggregate loss exposure by estimating 

the damage from a predetermined event of a certain magnitude and at a specific location 

as measured against the number of policies and limits written in the target area. 

Probabilistic models were being developed to predict frequency and severity. The 2006 

Report explained that improvements in industry data collection and modeling would 

improve insurer management of aggregate exposure and lead to increased capacity for 

terrorism risk insurance.51 The American Academy of Actuaries claim that modeling to 

measure an insurer’s aggregate loss exposure based on predetermined attack scenarios 

has improved since 2006.52 

Lloyd’s explains there have been significant advances within the insurance industry as 

data collection has been standardized improving the quality, consistency, and accuracy of 

information.53 Aon confirms that there have been substantial improvements since 2006 

in terms of the ability of insurers and reinsurers to assess and manage aggregate terrorism 

accumulation exposures.54 The Hartford reports that its ability to measure and manage 

accumulations for terrorism risk has improved through the use of internal and external 

models that have improved over time.55

 

46 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).

 Much has been learned in nine years of 

managing and assessing terrorism risk, and tools have been developed. The standalone 

market has become specialized and has the most experience in managing terrorism 

aggregate exposures. Improved risk management has led to a nominal increase in 

47 Ibid. 48 Comments by the American Bankers Insurance Association (Aug. 2, 2010).

49 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). 50 Insurers use modeling to match risk to price and to determine how much aggregate to assume. Insurance 

Information Institute, Financial Market Conditions (May 2010).

51 2006 Report at 23. 52 Comments by the American Academy of Actuaries to the PWG (Aug. 2, 2010). 53 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). 54 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 55 Comments by The Hartford to the PWG dated 2010.
18 

capacity.56 While capacity remains constrained in dense urban centers with large 

commercial insurance concentrations (e.g., Manhattan, Washington, D.C., Los Angeles, 

and San Francisco), improvements in aggregate monitoring technology have reportedly 

increased capacity in these areas.57

Since 2006, the improved ability of insurers to measure aggregate exposure has led rating 

agencies to consider terrorism exposure in assessing the capital adequacy of insurers. 

The views of rating companies can be influential on the amount of capacity insurers 

decide to allocate to terrorism risk insurance.58 The 2006 Report discussed A.M. Best’s 

Supplemental Rating Questionnaire (SRQ) in which risk accumulations/concentrations 

and aggregate exposure were surveyed. In 2008, A.M. Best added a new Terror Probable 

Maximum Loss capital charge to the Best’s Capital Adequacy Ratio, as part of its rating 

methodology.59 In 2006, S&P also began surveying insurers60 to assess terrorism 

exposure as part of a company’s enterprise risk management.61 Although these are 

noteworthy developments in the marketplace, it may be difficult to assess the impact 

rating company methodologies may have on insurer capacity decisions as many factors 

affect a company’s rating. 

Despite the reported improvements in modeling to measure an insurer’s aggregate loss 

exposure, the industry remains uncertain about the reliability of probabilistic models to 

predict frequency and severity of terrorist attacks. According to Aon, the ability to 

accurately model terrorism risk in terms of frequency and severity is a key factor in the 

decision by insurers and reinsurers as to how much capacity to allocate to the risk.62 

Probabilistic models have been updated with new research and information to improve 

the estimation of frequency and severity.63 Yet, probabilistic models are viewed as 

having limited value in predicting frequency and severity of conventional and CNBR 

terrorist acts and are limited in addressing attacks on multiple targets in multiple 

locations (“swarm attacks”).64 The American Insurance Association (“AIA”) reports that 

modeling firms have made little progress in predicting frequency over the last 9 years.65 

Aon states that there appears to have been little improvement in frequency assessment.66

 

56 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 57 Ibid. 58 GAO, Terrorism Insurance, Status of Efforts by Policyholders to Obtain Coverage (GAO-08-1057, Sept. 

2008).

59 A.M. Best, The Treatment of Terrorism Risk in the Rating Evaluation (Sept. 2, 2009); A.M. Best, 

Understanding BCAR for Property/Casualty. 60 Insurance Journal, S&P Alters Approach to Gauging Insurers’ Terrorism Exposure (June 8, 2006). 61 See generally, Standard & Poors, Expanded Definition of Adequate Classification in Enterprise Risk 

Management Scores (2010).

62 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 63 Comments by the American Academy of Actuaries to the PWG (Aug. 2, 2010). 64 Comments by The Hartford to the PWG dated 2010. 65 Comments by the American Insurance Association to the PWG (Aug. 2, 2010). 66 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).
19 

Reinsurer Capital Has Increased

Reinsurance continues to play an important role in the availability of terrorism risk 

insurance. The transfer of terrorism risk from insurer to reinsurer frees up capital, which 

becomes available to underwrite more insurance. Insurer capacity increases as 

reinsurance capacity increases and is purchased.

Similar to primary insurance, capacity to reinsure risk is affected by the available capital 

of reinsurers. The available capital of major U.S. property and casualty reinsurers 

generally has increased since 2001. As shown on the chart below, reinsurers’ surplus was 

approximately $83 billion at the end of 2009. 

Source: RAA67

Reinsurers Are Not Allocating More Capital; Capacity Has Remained Stable or 

Increased Slightly

Although it is difficult to measure available reinsurance capacity, there does not seem to 

have been a measurable increase in recent years. In 2006, a Reinsurance Association of 

America (“RAA”) survey indicated that reinsurance capacity available in the U.S. for 

terrorism risk was between $6 and $8 billion in aggregate, up from $4 to $6 billion in 

2005.68 Based on the RAA’s most recent survey of reinsurance brokers and underwriters, 

“the global reinsurance capacity available in the United States for terrorism risk has 

increased only slightly since 2006 and likely remains in the $6-8 billion range.” Marsh 

commented that it does not believe that reinsurers are allocating any more capacity to

terrorism risk insurance than they did in 2006.69 The AIA and others agree.70 Aon states 

that it does not believe reinsurance capacity exceeds $8 to $10 billion.71

 

67 RAA, Reinsurance Underwriting Review, A Financial Review of U.S. Reinsurers, 2009 Industry Results 

(2010).

68 2006 Report at 26. 69 Comments by Marsh to the PWG (Aug. 2, 2010). 70 Comments by the American Insurance Association to the PWG (Aug. 2, 2010); Comments by the 

Financial Services Roundtable to the PWG (Aug. 2, 2010). 71 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).

52

42 47

62 64 70 77 80

69

83

0

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

$ Billions

Reinsurers' Policyholder Surplus Levels
20 

One large insurance company commented that terrorism risk reinsurance has developed 

modestly but that it remains insufficient to serve the market’s current risk exposure in the 

absence of the Program given that it is only a small fraction of reinsurance industry 

capital.72 As a whole, insurers are retaining roughly 80 percent of the risk although 

individual insurance company retention and reinsurance levels vary. 

RAA explains that reinsurers have grown slightly more comfortable with terrorism 

reinsurance and the slight increase in capacity along with technological advances in 

modeling aggregate exposure have driven prices down. Marsh also explains that 

reinsurers better understand the risk and are using models in pricing reinsurance, 

although models are viewed as being limited in predicting frequency of attacks.

73 Still, 

the RAA points out that the inability to assign frequencies to occurrence affects demand 

for coverage. 

Reinsurance Capacity from Other Sources Has Not Developed

The 2006 Report suggested that capital market sources might provide additional terrorism 

reinsurance.74 However, the AIA explains that despite some growth in the market for 

catastrophe (“cat”) bonds for natural catastrophe risks, such vehicles have not been used 

to transfer terrorism risk to the capital markets.

75 A large insurance company confirms 

that there is no active securitization market for terrorism risk and the likelihood that such 

will develop is remote given the limitations in modeling frequency and severity, and thus 

in the rating of the bonds.76 

Insurers Are Not Purchasing More Reinsurance, Even at Lower Prices

The 2006 Report pointed out that the amount of reinsurance capacity allocated to 

terrorism risk also depends to some degree on the willingness of insurers to purchase 

reinsurance.77 Insurers generally make decisions to purchase reinsurance based on 

perception of risk, price, and comfort with the retention of risk exposures. The RAA 

recently described this market behavior:

Typical insurance and reinsurance cycles involve temporary increases in 

pricing, followed by new market participants, leading to increased 

competition and price moderation. Reinsurance is a sophisticated business 

decision for insurers and their reinsurance costs are impacted by how 

much and at what layers they buy it, if at all, within their financial model 

for handling risk.78

 

72 Comments by The Hartford to the PWG (2010). 73 Comments by Marsh to the PWG (Aug. 2, 2010); Higher prices might attract more capacity, Lloyd’s 

explains, but capital allocation is impeded by the inability to calculate event probability. See Comments by 

Lloyd’s of London to the PWG dated August 2, 2010.

74 2006 Report at 26-27. 75 Comments by the American Insurance Association to the PWG dated August 2, 2010. 76 Comments by The Hartford to the PWG (2010); Comments by the American Academy of Actuaries to 

the PWG (Aug. 2, 2010).

77 2006 Report at pp. 27-31. 78 RAA, State of the Reinsurance Market 2009.
21 

In 2006, it appeared that insurers were not willing to purchase available reinsurance,79 

and that appears to remain true today. There have been a number of reports that insurers 

are not purchasing reinsurance despite lower reported pricing. These include:

• In June 2010, Marsh released a report, Terrorism – Reinsurers Standing By, stating 

that global and U.S. reinsurance purchase and pricing levels have generally fallen 

from the peak period following September 11 (2002-2004).80 This market behavior is 

consistent with that seen with other low frequency, high severity risks following the 

passage of time without a large loss event. However, as prices have fallen, insurers 

are not purchasing available reinsurance. As Marsh observes: “[o]n the surface, it 

would seem that lower pricing over time would increase activity [purchase] levels, 

but interestingly we see simultaneous lower prices and lower activity levels.” In the 

U.S. market, “activity levels are clearly down.” 

• According to a cited survey of reinsurance underwriters by Guy Carpenter & 

Company, LLC (a Marsh affiliate), 83 percent of reinsurers are actively seeking new 

or expanded terrorism reinsurance business. Standalone treaty business has decreased 

over time, particularly in the U.S. market.81 Reinsurers are even more willing to 

provide CNBR reinsurance coverage and capacity has increased, although price for 

CNBR coverage is still a factor. 

• The RAA reports that reinsurance capacity exceeds demand in the standalone 

reinsurance market.82 Pricing for terrorism reinsurance decreased in 2007-2008 by 

about 50 percent. CNBR reinsurance capacity exists but on a very limited basis and 

at a significant premium. (According to Swiss Re, reinsurance for CNBR events is 

estimated at only $1 to $2 billion).83

• Aon also reports that supply exceeds demand in the standalone terrorism reinsurance 

market. Increased capacity and advances in modeling have driven prices down. Still, 

the inability to predict probability and frequency affects buyer (insurer) perception of 

terrorism risk and decisions to forego purchasing reinsurance.84

• Aon reports that standalone reinsurance purchased on an aggregate, all lines basis, has 

fallen 50 percent in the last 18 to 24 months, from high-teen percentage rates on line 

(ROL) to high-single digit percentage ROL for the coverage, including for CNBR.85

• Lloyd’s underwriters report that standalone reinsurance capacity from the Lloyd’s of 

London market has grown since 2006.86

 

79 2006 Report at 27.

 This has been due to improvements in risk 

80 MMC, Terrorism – Reinsurers Standing By (June 2010); see also Marsh Comments to the PWG (2010). 81 Reinsurance contracts take the form of either standalone or multi-peril treaties with reinsurers preferring 

standalone terrorism risk contracts. 

82 Comments by the Reinsurance Association of America to the PWG (July 29, 2010). 83 Comments by Swiss Re to the PWG (Aug. 2, 2010). 84 Comments by Aon to the PWG (Aug. 2, 2010). 85 Rate on line (ROL) refers to the price of reinsurance as a percentage applied against the loss or policy 

limits offered by the contract or policy.
22 

mapping, accumulation management, and in measuring potential severity of losses. 

However, probabilistic modeling of the frequency and severity of a terrorist attack 

remains a challenge.87

• Lloyd’s reports that the price of reinsurance has fallen due to the increase in capacity 

in the market in general and at Lloyd’s, and the lack of recent terrorism losses in the 

U.S. Insurers are willing to pay the current market price for terrorism risk insurance 

but underwriters believe that the price has fallen to a level below the true economic 

value of the risk and therefore further growth in capacity is unlikely. At current price 

levels, Lloyd’s expects capacity to retract in coming years. 

• According to the RAA, aggregate reinsurance limits, on an all lines basis, is available 

in the $300 to $400 million range, inclusive of coverage for CNBR. Excluding 

CNBR, limits are available perhaps as much as $1 billion, but are not often purchased 

at such levels. According to Aon, up to $1 billion in coverage is available per risk in 

non-metropolitan areas (exclusive of CNBR cover), and up to $400 million in 

metropolitan areas. If CNBR coverage is included, available per risk capacity drops 

to $100 million. Per risk capacity has increased in the last 24 months. Capacity has 

increased due to expanded entry into this market from insurers otherwise writing 

direct standalone coverage. According to Aon, reinsurance on an aggregate, all lines 

basis is available up to $350 to $400 million including CNBR and up to $1 billion 

excluding CNBR.88 

• Marsh believes that capacity is available in the range of $700 million depending on 

location and other factors. Marsh estimates that $700 million is available on a peroccurrence basis, up to $1 billion.89 More than $1 billion of workers’ compensation 

reinsurance may be available.90

• In terms of pricing, Marsh reports that the cost of terrorism reinsurance is driven 

primarily by the location of the risks being reinsured. Standalone terrorism 

reinsurance is available at a cost roughly equal to 1 to 4 percent of the reinsurance 

limit in less-risky locations. In targeted cities and densely populated commercial 

areas, the cost can be as much as 10 to 20 percent of the limit purchased. 

Reinsurance for workers’ compensation is more available and at a lower cost than 

property risks, even in high-risk areas.91 

 86 Capacity in both property reinsurance treaties, and workers’ compensation (and employers’ liability) 

contracts, has generally not changed since 2006. 

87 Comments by Lloyd’s of London to the PWG dated August 2, 2010. 88 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).

89 Comments by Marsh to the PWG (Aug. 2, 2010).

90 MMC, Terrorism – Reinsurers Standing By (June 2010). 91 Comments by Marsh to the PWG (Aug. 2, 2010).
23 

Take-Up Rate of Terrorism Risk Insurance Has Leveled

TRIA requires that insurers “make available” coverage for acts of terrorism on the same 

terms and conditions as other types of coverage offered as part of their commercial 

property and casualty insurance policies. TRIA does not mandate the purchase of 

terrorism risk insurance. The decision by policyholders to accept or reject the offer and 

to insure or retain terrorism risk remains generally voluntary.92

The general trend observed in 2006 was that of year-to-year increases in the number of 

policyholders purchasing terrorism risk insurance.93 Since 2006, the number of 

policyholders purchasing terrorism risk insurance appears to have steadied, even as prices 

for those purchasing coverage have continued to fall. Commercial insurance agents and 

brokers report that policyholder demand seems to have reached a plateau in recent 

years.94

A number of studies and reports have presented information on policyholder take-up 

rates. For example, Marsh reports that, since the enactment of TRIA, property take-up 

rates, in general, increased from 30 to 60 percent with the rate remaining around 60 

percent between 2006 and 2009.95 

Source: Marsh96

 

92 State law may mandate purchase. For example, most States require most employers purchase workers’ 

compensation insurance, which covers acts of terrorism. The market may compel purchase decisions, such 

as by lenders as a condition of financing.

93 2006 Report at 42.

94 Comments by the Council of Insurance Agents and Brokers to the PWG (Aug. 2, 2010).

95 In its 2010 Marketwatch report, Marsh states that approximately 90 percent of its clients purchased 

terrorism risk insurance as part of their property policies rather than as standalone policies.

96 The Marsh Report: Terrorism Risk Insurance 2010.

27

49 58 59 59 57 61

73

51 42 41 41 43 39

0

20

40

60

80

100

2003 2004 2005 2006 2007 2008 2009

Percentage

Property Take Up Rate 

Purchasing Not Purchasing
24 

According to data from Aon, take-up rates for all types of terrorism coverage (standalone 

and part of property policies) increased from 58.3 percent in 200697 to just under 65 

percent in 2009 and 2010 (see chart) .98

Source: Aon

Take-up rates have also been tracked by region, size of company (by insured value), and 

commercial insurance policyholder sector. Reports and studies have presented the 

following: 

• Regionally, as tracked by Marsh, take-up rates have historically been highest in the 

Northeast – currently 73 percent, up from 66 percent in 2006. Take-up has decreased 

slightly in the Midwest from 63 percent in 2006 to 60 percent in 2009, while it has 

increased in the South from 50 percent to 58 percent. Take-up in the West dropped 

from 56 percent in 2006 to 47 percent in 2009. 

Source: Marsh99

 

97 Aon data provided to the PWG in 2006.

98 Aon data provided to the PWG in 2010. 99 The Marsh Report: Terrorism Risk Insurance 2010; Marketwatch: Terrorism Insurance – 2006 Market 

Conditions and Analysis.

58.3%

41.7%

2006

(12 months ending July 2006)

64.38%

35.62%

2009

(12 months ending June 2009)

Purchase

Non-Purchase

62.53%

37.46%

2010

(12 months ending June 2010)

Take Up

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009

Percentage

Regional Take-Up Rates

Midwest Northeast South West
25 

• Marsh also tracks take-up rates by company size, as measured by the company’s total 

insured value (TIV). As shown in the chart below, take up rates generally increase 

somewhat with company size: In 2009, smaller companies with TIV below $100 

million had the lowest take up rate at 55 percent, while larger companies had take up 

rates in the range of 62 to 64 percent. The largest companies, those with TIV over $1 

billion had the highest take up rate (64 percent), and were more likely to use captive 

insurers to manage terrorism risk. 

Source: Marsh100

• In the second quarter of 2010, take-up of Aon’s large property clients was at 61 

percent, down slightly from 63 percent in 2009.101

• Take-up rates by sector are shown in the table below. According to Marsh, the real 

estate, health care, transportation, financial institutions, and media sectors had take-up 

rates above 70 percent in 2009. From 2006 to 2009, take-up has been steady, except 

for increases in the public and transportation sectors, and drops in financial 

institutions and education, as shown in the chart below (peak take-up in red). 

Sector 2003

%

2004

%

2005

%

2006

%

2007

%

2008

%

2009

%

Percentage 

Change 06-09

Utility 27 42 65 77 81 73 80 3.90

Real Estate 30 60 79 77 80 73 76 -1.30

Health Care 31 60 76 76 71 75 76 0.00

Transportation 30 41 66 51 62 64 75 47.06

Financial Institutions 27 65 79 81 73 68 74 -8.64

Media 35 58 74 68 64 71 71 4.41

Hospitality 32 48 69 66 69 67 68 3.03

Education 22 54 65 76 71 69 65 -14.47

Technology/Telecom 43 43 61 59 63 61 61 3.39

Public Entity 26 42 56 55 61 55 61 10.91

Retail 20 48 51 59 58 54 60 1.69

Construction -- 23 43 45 47 49 52 15.56

Manufacturing 18 38 43 43 45 43 47 9.30

Food & Beverage 35 39 64 57 51 53 42 -26.32

Energy 41 36 45 57 66 62 40 -29.82

Source: Marsh102

 

100 The Marsh Report: Terrorism Risk Insurance 2010; Marketwatch: Terrorism Insurance – 2006 Market 

Conditions and Analysis.

 

101 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009

Percentage

Take-Up by Company Size

<$100m $100-500m $500m-$1b >$1b
26 

Aon has also tracked take-up by the way terrorism risk insurance coverage is purchased. 

Terrorism risk insurance falls into 4 categories: (1) “TRIA only,” which refers to U.S. 

locations and certified act coverage as backstopped by the Program, and as part of an “all 

risk” property insurance policy; (2) “TRIA and Non-Certified,” which refers to both 

certified and non-certified (U.S. and non-U.S. locations) coverage as part of a property 

policy; (3) “standalone,” which refers to a standalone policy not part of property coverage 

which covers U.S. and non-U.S. locations and TRIA and non-TRIA events103; and (4) 

“TRIA and Standalone,” which refers to a combination of coverage through property 

policies and standalone policies. 

Take Up by 

Coverage Type 

2006 (12 mos. 

ending April 

2006)104

2009 (12 mos. 

ending June 

2009)105

2010 (12 mos. 

ending March 

2010)106

Not Purchased 40.5 35.31 38.5

Standalone 4.5 6.87 8.42

TRIA & Non-certified 43.6 47.33 37.10

TRIA & Standalone 3.7 2.1 2.15

TRIA only 7.6 8.4 13.8

• According to the table shown above, take-up rates appear to have leveled off with 40 percent 

of commercial businesses electing to remain uninsured. The decline of “TRIA & Noncertified” and increase of “TRIA only” coverage corresponds to the 2007 inclusion of 

domestic terrorism in the Program.

Captives Continue to Provide Coverage 

Another manner in which businesses secure terrorism risk insurance is through captive 

insurers. A single-parent captive is a limited-purpose, wholly owned subsidiary that can 

be used to insure the captive’s parent or affiliates. Captives are expected to have smaller 

insurer deductibles as compared to traditional insurers since DEP in TRIA lines is likely 

to be small.107 Captives, with low insurer deductibles, can be a less expensive and 

attractive alternative for large or high-risk policyholders.108

 102 The Marsh Report: Terrorism Risk Insurance 2010; Marketwatch: Terrorism Insurance – 2006 Market 

Conditions and Analysis; Marketwatch: Terrorism Insurance 2005, Focus: Private Equity and Mergers and 

Acquisitions.

103 Standalone policies are generally purchased by clients with sizable target exposures not met by the all 

risk property market. 104 Aon 2006 Property Report, A Tale of Two Markets (2006). 105 Aon data presented to PWG in 2010. 106 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 107 Marsh, Captives, TRIA, and Standalone Terrorism Reinsurance Solutions (March 2007). In 2007, the 

Program was changed with a Program Trigger which prohibits the Federal Government from sharing in any 

losses unless the aggregate industry insured losses resulting for a certified act of terrorism exceed $100 

million. As a result, captives may require additional capital or reinsurance protection increasing the cost of 

coverage.

108 Comments by the American Insurance Association to the PWG (Aug. 2, 2010).
27 

Marsh reports that more companies are securing coverage through captives and 

purchasing reinsurance to cover their insurer retentions under the Program.109 

Commercial insurance policyholders report that, in addition to providing lower-cost 

alternatives to insurance from traditional insurers, captives provide excess insurance; as 

well as primary coverage not provided by traditional insurers, such as losses from CNBR 

events and cyber-attacks.110 Captives are providing CNBR coverage in large 

metropolitan areas, such as New York City, Chicago, San Francisco, Boston, and 

Washington, D.C.111 An association of captive insurers estimates that there are now 

more than 100 terrorism-specific captives and many more that provide terrorism coverage 

along with other lines of insurance (e.g., property, workers’ compensation, and general

liability).112

Policyholders Appear to Be Purchasing Higher Amounts of Coverage 

Among those commercial insurance policyholders taking up terrorism risk insurance, 

there is some indication that more coverage, as measured by policy limits, may be being 

purchased. 

Median Policy Limits by Coverage Type (Millions of Dollars)

Coverage Type 2005 2009-2010

Standalone $50 $250 

TRIA & Non-certified $225 $258 

TRIA & Standalone $400 $577 

TRIA only $100 $200 Source: Aon

According to data reported by Aon, median policy limits have increased since 2005 

across all types of terrorism coverage. Commercial insurance policyholders purchasing 

insurance covering TRIA certified acts and non-certified acts in 2009-2010 purchased 

median limits of $258 million,

113 up from median limits of $225 million in 2005.114 

Median policy limits among those purchasing TRIA only coverage rose from $100 

million in 2005 to $200 million in 2009-2010, while median limits among those 

purchasing a combination of coverage through property policies and standalone policies 

reportedly rose from $400 million in 2005 to $577 million in 2009-2010.115 For 

standalone coverage only, median limits among Aon clients reportedly rose fivefold, 

from $50 million in 2005 to $250 million in 2009-2010. 

 

109 Comments by Marsh to the PWG (Aug. 2, 2010). 110 Comments by the Coalition to Insure Against Terrorism to the PWG (Aug. 2, 2010). 111 Comments by the Captive Insurance Companies Association to the PWG (July 30, 2010). 112 Comments by the Vermont Captive Insurance Association to the PWG (Aug. 2, 2010). Vermont is a 

leading captive insurer domicile.

113 Aon data submitted to the PWG; for averages, see Comments by the Aon Corporation to the PWG (Aug. 

2, 2010).

114 Aon, Property Terrorism Update, TRIA in the Balance (2005). 115 Comments by the Aon Corporation to the PWG (Aug. 2, 2010).
28 

Terrorism Risk Insurance Premiums Have Declined

Data reported in 2006 demonstrated general declines or stability in terrorism risk 

insurance pricing. Since then, prices have reportedly continued to decline. Aon reports a 

progressive downward trend in terrorism risk insurance pricing – both for U.S. and nonU.S. risks.116 Aon reports that overall, pricing has declined 30 percent (plus) from 2006 

to the first quarter 2010, continuing a downward trend that began in 2003.117 Aon 

expects rates overall to decrease 10 percent through 2010. Marsh reports that the cost of 

terrorism risk insurance has fallen gradually year-to-year, with a more significant drop in 

2009.118 The Lloyd’s of London market (Lloyd’s) also reports that since 2006 there has 

been a continued downward trend in terrorism risk insurance prices.

119 With no major 

losses, prices continue to decline. The exception is in high-risk locations where price has 

remained more stable.120

Policyholders report experiencing declines in terrorism risk insurance pricing with the 

exception of high-risk areas where capacity is limited and pricing more expensive, such 

as New York City, Chicago, San Francisco, Boston, and Washington, D.C.121 In 

comments to the PWG, one group of commercial insurance policyholders reports general 

declines in pricing for terrorism risk insurance.122 From the policyholder perspective, 

terrorism risk insurance has become more affordable. 

The most common measures used for evaluating pricing trends for terrorism risk 

insurance are based on tracking surveys conducted by insurance agents and brokers. 

Since the inception of the Program, pricing has been surveyed and tracked as (1) a 

percentage of a policyholder’s total insured value (TIV); (2) percentage of overall 

property insurance premium; and (3) percentage of price change quarter-by-quarter. 

Reports indicate that terrorism risk insurance premiums have declined since the 

establishment of the Program as well as since 2006. 

One caveat in interpreting these data on pricing is that we only observe prices on market 

transactions for those who purchase insurance coverage, we do not observe offer prices 

for all commercial insurance policyholders. As a result, we are limited in our ability to 

draw conclusions about demand for terrorism coverage among those not purchasing 

coverage. 

 

116 Ibid. Aon reports that pricing was not affected by the addition of domestic terrorism to the Program in 

2007 and pricing has continued to trend downward.

117 Ibid. 118 Comments by Marsh to the PWG (Aug. 2, 2010).

119 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). Lloyd’s underwriters provide terrorism 

risk insurance as surplus lines insurers. The majority of the terrorism coverage coming from the Lloyd’s 

market is written on a standalone basis.

120 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). 121 Comments by the Risk and Insurance Management Society, Inc., to the PWG (2010). 122 Comments by the Coalition to Insure Against Terrorism to the PWG (Aug. 2, 2010).
29 

Terrorism Premium as Percent of Total Insured Value (TIV)

A number of sources have compiled data indicating that premiums, as measured as a 

percentage of TIV, are declining for terrorism coverage included as part of broader “all 

risk” property policies and when provided on a standalone basis. Examples include: 

• Marsh reports that terrorism insurance premiums overall decreased from $56 per 

million of insured value in 2004 to $47 per million in 2006. Between 2006 and 2009, 

premiums declined 53 percent to $26 per million of insured value. 

Source: Marsh123

• While overall premium rates have declined over the past two years, these declines 

were experienced only by smaller companies; rates for larger companies have 

actually remained stable or increased slightly. For companies with TIV of less than 

$100 million, the premium was $53 per million of insured value in 2009, down 

slightly from $54 per million in 2008. For companies with TIV of between $100 and 

$500 million TIV, premiums fell from a median of $36 per million of insured value in 

2008 to $32 per million in 2009. For those between $500 million and $1 billion, there 

was an increase from $27 per million of insured value in 2008 to $29 per million in 

2009.124

 

 For companies with TIV over $1 billion, premiums remained at $27 per 

million. 

• Marsh found that by industry, median premium rates decreased for 11 of 15 sectors 

between 2008 and 2009. Premiums increased for real estate ($42 to $56 per million); 

hospitality ($54 to $55 per million); and technology/telecommunication ($24 to $29 

per million); and remained steady for retail ($26 per million).125 Rates dropped for 

construction ($76 to $65 per million); utilities ($59 to $51 per million); financial 

institutions ($62 to $47 per million); and transportation ($74 to $46 per million).126

 

123 The Marsh Report: Terrorism Risk Insurance 2010; Marketwatch: Terrorism Insurance – 2006 Market 

Conditions and Analysis; Marketwatch: Terrorism Insurance 2006.

 

124 The Marsh Report: Terrorism Risk Insurance 2010. 125 The Marsh Report: Terrorism Risk Insurance 2010. 126 Ibid.

0

10

20

30

40

50

60

70

2002 2003 2004 2005 2006 2007 2008 2009 2010

Price Per Million Insured

Premium Rate - % of Total Insured Value (TIV)
30 

• According to Marsh, median rates have dropped across all regions between 2006 and 

2009. In the Midwest, rates fell significantly from $38 per million of insured value in 

2006 to $21 in 2009; in the Northeast, from $57 to $36 per million; in the South, $54 

to $38 per million; and in the West, from $54 to $30.127 

• Standalone pricing, as a percent of TIV, has dropped to 0.0096 percent from 2006 

when Aon reported that rates then ranged from 0.025 percent to 1 percent.128

Terrorism Premium as Percentage of Overall Property Premium

Premiums for terrorism risk insurance included as part of “all risk” property insurance 

policies have decreased. Commercial insurance agents and brokers explain that the soft 

market has had some effect on this pricing since competition has driven prices down for 

all types of insurance.129 Aon also notes that terrorism risk insurance pricing is tied to 

the overall property and casualty pricing trends and soft market conditions.130 During the 

last few years, soft market conditions have resulted in general price declines in property 

and casualty insurance overall, not just terrorism risk insurance. Downward pressure on 

pricing has been attributed to excess capacity, increased competition, economic 

conditions facing buyers, and other factors.131

Data leading up to the 2006 Report suggested that terrorism risk insurance premiums 

measured as a percentage of overall premiums decreased following September 11, 

2001.132 This trend has continued. 

• Aon data shows pricing declines as measured both as a percentage of TIV and 

percentage of overall property insurance premium.

Source: Aon

 

127 The Marsh Report: Terrorism Risk Insurance 2010; Marketwatch: Terrorism Insurance – 2006 Market 

Conditions and Analysis.

128 Comments by the Aon Corporation to the PWG (Apr. 21, 2006).

129 Comments by the Council of Insurance Agents and Brokers to the PWG (Aug. 2, 2010). 130 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 131 A.M. Best, Best’s Special Report, U.S. P/C Industry Profits First-Quarter Profit Despite Surge in 

Catastrophes (July 8, 2010); Best’s Special Report, Surplus Lines Drained, Not Dry, From Soft Market 

Economy (Sept. 27, 2010).

132 2006 Report at 36.

0

0.002

0.004

0.006

0.008

0.01

0.00

2.00

4.00

6.00

8.00

Q306Q406

Q107Q207Q307

Q407Q108Q208

Q308Q408Q109

Q209Q309

Q409Q110

PercentagePercentage

Quarter

Median Terrorism Premium as % of Med. 

Property Premium & TIV

% of Property Premium % of TIV Log. ( % of Property Premium) Log. (% of TIV )
31 

• Standalone terrorism risk insurance pricing has also declined.133 The soft market in 

property insurance market leads to expectations of lower price by purchasers of 

standalone policies.134

However, for some commercial insurance policyholders, as a percentage of overall 

premium, terrorism premium is taking a larger share of the insurance budget; for others, 

the percentage remained stable or fell. Reports include: 

• According to Marsh, for companies with TIV of less than $100 million, the terrorism 

premium as a percentage of overall premium rose from 4 percent in 2007 to 22 

percent in 2009. For companies with TIV of between $100 and $500 million, the 

percentage fell from 14 percent in 2007 to 5 percent in 2009. The percentage 

remained relatively stable for companies between $500 million and $1 billion, from 6 

percent in 2007 to 7 percent in 2009. There was an increase from 8 percent to 11 

percent for companies with over $1 billion in TIV.135

• For some industry sectors, terrorism premium is commanding more of the overall 

insurance premium. For financial institutions, the percentage jumped from 14 percent 

in 2008 to 24 percent in 2009, having been at 8 percent in 2006. For the 

transportation sector, the percent rose from 11 percent in 2008 to 17 percent in 2009, 

up from 4 percent in 2006. Real estate increased from 5 percent in 2006 and 6 

percent in 2008 to now 10 percent in 2009. For other sectors, the terrorism premium 

as a percentage of overall premium has remained relatively stable, although 

hospitality saw a drop from 13 percent in 2008 to 4 percent in 2009 and the energy 

and food-and-beverage sectors had modest declines.136

Key Market Trends and Conclusion

 

133 Comments by the Aon Corporation to the PWG (Aug. 2, 2010). 134 Comments by Lloyd’s of London to the PWG (Aug. 2, 2010). 135 The Marsh Report: Terrorism Risk Insurance 2010. 136 Ibid.; Marketwatch: Terrorism Insurance – 2006 Market Conditions and Analysis.

0

10

20

30

40

50

60

70

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009

$ Billions

Percent

Key Market Trends

Surplus (left axis) TRIA Deductible (right axis) Take-Up (right axis) Premium Rate (right axis)
32 

The key factors examined in this Report regarding the long-term availability and 

affordability of terrorism risk insurance centered around indicators of capacity and 

demand for coverage. In summary, since 2006: insurer and reinsurance capacity has 

increased; policyholder take-up has leveled off; purchase of reinsurance has dropped; and 

prices of terrorism risk insurance and reinsurance have generally fallen. A key trend is 

that private sector capacity for terrorism risk insurance has continued to increase, as 

demand, insurers’ retention, and the Federal Government’s role have all held steady.

Overall, a number of positive market conditions appear to have emerged since 2006: 

• Insurers reportedly continue to further improve their ability to manage terrorism risk

and to model the measurement of an insurer’s aggregate loss exposure; 

• The financial condition of the property and casualty insurance and reinsurance 

industry has improved; 

• Terrorism risk insurance capacity has increased significantly, particularly in the 

standalone market; and

• Generally, prices continue to decline for both terrorism risk insurance and 

reinsurance. 

There are other conditions that will also continue to be monitored: 

• The ability to predict the frequency and severity of acts of terrorism is likely to

remain a key challenge long-term;

• Policyholder take-up is at the 60 percent level, without any significant change since 

2006. 

• Buyer demand for coverage seems to have leveled off despite falling prices among 

those who purchase insurance, leaving a good portion of businesses – some 40 

percent – uninsured; 

• Although challenges remain for some (i.e., high value properties, high-risk businesses 

or locations), terrorism risk insurance is available; and

• Insurer retentions have stabilized under the Program. 

Given the nature of terrorism, probabilistic models have limited potential to address the 

uncertainty associated with predicting the frequency and severity of terrorist attacks. 

This may limit further development of reinsurance capacity. 

Some 40 percent of businesses are not purchasing terrorism risk insurance coverage, even 

as prices continue to fall for those purchasing coverage. For this segment of the market, 

this suggests that the demand for terrorism coverage may be less sensitive to price,

137

 

137 One academic scholar points to “major concerns as to whether 4 out of 10 corporations in the U.S. that 

declined TRIA coverage would have the capacity to sustain a large scale terrorist attack if it happened 

tomorrow (they are typically the smaller ones in our sample).” Michel-Kerjan, Erwann, Corporate Demand 

for Terrorism Insurance: An Empirical Analysis (June 2010). Corporate demand for catastrophic 

insurance, such as terrorism risk insurance, is found to be more premium inelastic (i.e., less sensitive to 

price) than for non-catastrophic insurance. Ibid.

or 

that potential buyers may perceive their risk to be lower than that which is priced into 
33 

available terrorism coverage. At any rate, take-up of terrorism coverage appears to have 

leveled off at 60 percent. 

As many commenters point out, the Program provides incentive to property and casualty 

insurers and reinsurers who might not otherwise provide terrorism risk insurance at 

current capacity levels, or at current prices, absent Federal support or State law mandates. 

It does this by providing some degree of certainty of an insurers’ maximum loss 

exposure. However, policymakers should review aspects of the Program in order to 

encourage further development by the private sector.

The PWG will continue to analyze market conditions, as required by TRIA, and report to 

the Congress in 2013. 
34 

APPENDIX
34530 Federal Register / Vol. 75, No. 116 / Thursday, June 17, 2010 / Notices 

1A redacted, executed trackage rights agreement 

between NSR and N&BE was filed with the notice 

of exemption. The unredacted version was 

concurrently filed under seal along with a motion 

for protective order, which will be addressed in a 

separate decision. 

Building Ground Floor, Room W12–140, 

1200 New Jersey Avenue, SE., 

Washington, DC 20590. You may also 

send comments electronically via the 

Internet at http://www.regulations.gov/ 

smses.dot.gov/submit/. All comments 

will become part of this docket and will 

be available for inspection and copying 

at the above address between 10 a.m. 

and 5 p.m., E.T., Monday through 

Friday, except federal holidays. An 

electronic version of this document and 

all documents entered into this docket 

is available on the World Wide Web at 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Joann Spittle, U.S. Department of 

Transportation, Maritime 

Administration, 1200 New Jersey 

Avenue, SE., Room W21–203, 

Washington, DC 20590. Telephone 202– 

366–5979. 

SUPPLEMENTARY INFORMATION: As 

described by the applicant the intended 

service of the vessel CEST LA VIE is: 

Intended Commercial Use of Vessel: 

‘‘Vessel Chartering Operations.’’ 

Geographic Region: ‘‘Intended 

operations will be the west coast of the 

U.S. California, Oregon, and 

Washington.’’ 

Privacy Act 

Anyone is able to search the 

electronic form of all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (Volume 

65, Number 70; Pages 19477–78). 

By Order of the Maritime Administrator. 

Dated: June 11, 2010. 

Julie P. Agarwal, 

Acting Secretary, Maritime Administration. 

[FR Doc. 2010–14688 Filed 6–16–10; 8:45 am] 

BILLING CODE 4910–81–P 

DEPARTMENT OF TRANSPORTATION 

Surface Transportation Board 

[Docket No. FD 35371] 

Nittany & Bald Eagle Railroad 

Company—Temporary Trackage 

Rights Exemption—Norfolk Southern 

Railway Company 

Norfolk Southern Railway Company 

(NSR), pursuant to a written trackage 

rights agreement dated April 13, 2010, 

has agreed to grant nonexclusive 

overhead temporary trackage rights to 

Nittany & Bald Eagle Railroad Company 

(N&BE), between Lock Haven and 

Driftwood, Pa., from milepost BR 194.2 

to milepost BR 139.2, a distance of 

approximately 55 miles.1

The transaction may be consummated 

on or after July 1, 2010, and the 

temporary trackage rights are scheduled 

to expire on December 15, 2010. The 

purpose of the temporary trackage rights 

is to allow N&BE adequate bridge train 

service for temporary, seasonal traffic 

originating on the N&BE for delivery to 

an off-line destination. 

As a condition to this exemption, any 

employees affected by the acquisition of 

the temporary trackage rights will be 

protected by the conditions imposed in 

Norfolk and Western Railway— 

Trackage Rights—Burlington Northern, 

Inc., 354 I.C.C. 605 (1978), as modified 

in Mendocino Coast Railway—Lease 

and Operate—California Western 

Railroad, 360 I.C.C. 653 (1980), and any 

employees affected by the 

discontinuance of those trackage rights 

will be protected by the conditions set 

out in Oregon Short Line Railroad and 

The Union Pacific Railroad Company— 

Abandonment—Portion Goshen Branch 

Between Firth and Ammon, in Bingham 

and Bonneville Counties, Idaho, 360 

I.C.C. 91 (1979). 

This notice is filed under 49 CFR 

1180.2(d)(8). If it contains false or 

misleading information, the exemption 

is void ab initio. Petitions to revoke the 

exemption under 49 U.S.C. 10502(d) 

may be filed at any time. The filing of 

a petition to revoke will not 

automatically stay the transaction. 

Petitions for stay must be filed no later 

than June 24, 2010 (at least 7 days 

before the exemption becomes 

effective). 

An original and 10 copies of all 

pleadings, referring to Docket No. FD 

35371, must be filed with the Surface 

Transportation Board, 395 E Street, SW., 

Washington, DC 20423–0001. In 

addition, a copy of each pleading must 

be served on Richard R. Wilson, 518 N. 

Center Street, Suite 1, Ebensburg, PA 

15931. 

Board decisions and notices are 

available on our Web site at ‘‘http:// 

www.stb.dot.gov.’’ 

Decided: June 14, 2010. 

By the Board, Rachel D. Campbell, 

Director, Office of Proceedings. 

Kulunie L. Cannon, 

Clearance Clerk. 

[FR Doc. 2010–14664 Filed 6–16–10; 8:45 am] 

BILLING CODE 4915–01–P 

DEPARTMENT OF THE TREASURY 

Analysis by the President’s Working 

Group on Financial Markets on the 

Long-Term Availability and 

Affordability of Insurance for Terrorism 

Risk 

AGENCY: Departmental Offices, 

Department of the Treasury. 

ACTION: Notice; request for comments. 

SUMMARY: The Terrorism Risk Insurance 

Act of 2002 (Pub. L. 107–297, 116 Stat. 

2322), as amended by the Terrorism 

Risk Insurance Program Reauthorization 

Act of 2007 (Pub. L. 110–160, 121 Stat. 

1839), requires the President’s Working 

Group on Financial Markets to perform 

an on-going analysis regarding the longterm availability and affordability of 

insurance for terrorism risk. 

The President’s Working Group on 

Financial Markets (established by 

Executive Order 12631) is comprised of 

the Secretary of the Treasury, the 

Chairman of the Board of Governors of 

the Federal Reserve System, the 

Chairman of the Securities and 

Exchange Commission, and the 

Chairman of the Commodity Futures 

Trading Commission (or their 

designees). The Secretary of the 

Treasury, or his designee, is the 

Chairman of the President’s Working 

Group on Financial Markets. As chair of 

the President’s Working Group on 

Financial Markets, Treasury is issuing 

this Notice for public comment to assist 

the President’s Working Group with its 

analysis. 

DATES: Comments must be in writing 

and received by August 2, 2010. 

ADDRESSES: Please submit comments 

electronically through the Federal 

eRulemaking Portal: http:// 

www.regulations.gov, or by mail (if hard 

copy, preferably an original and two 

copies) to Treasury’s Office of Financial 

Institutions Policy, Attention: 

President’s Working Group on Financial 

Markets Public Comment Record, Room 

1417 MT, Department of the Treasury, 

1500 Pennsylvania Avenue, NW., 

Washington, DC 20220. Because postal 

mail may be subject to processing delay, 

it is recommended that comments be 

submitted electronically. All comments 

should be captioned with ‘‘President’s 

Working Group on Financial Markets: 

Terrorism Risk Insurance Analysis.’’ 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 116 / Thursday, June 17, 2010 / Notices 34531 

Please include your name, affiliation, 

address, e-mail address and telephone 

number(s) in your comment. Where 

appropriate, comments should include a 

short Executive Summary (no more than 

five single-spaced pages). 

In general, comments received will be 

posted on http://www.regulations.gov 

without change, including any business 

or personal information provided. 

Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. In 

addition, all comments received will be 

available for public inspection by 

appointment at the Reading Room of the 

Treasury Library. To make 

appointments, please call the number 

below. 

FOR FURTHER INFORMATION CONTACT: C. 

Christopher Ledoux, Acting Director, 

Office of Financial Institutions Policy, 

202–622–2730 (not a toll free number). 

SUPPLEMENTARY INFORMATION: The 

Terrorism Risk Insurance Act of 2002 

(Pub. L. 107–297, 116 Stat. 2322) 

(hereinafter referenced as ‘‘TRIA’’) was 

enacted on November 26, 2002. TRIA’s 

purposes are to address market 

disruptions, to ensure the continued 

widespread availability and 

affordability of commercial property 

and casualty insurance for terrorism 

risk, and to allow for a transition period 

for the private markets to stabilize and 

build capacity while preserving State 

insurance regulation and consumer 

protections. Title I of TRIA established 

a temporary Federal program of shared 

public and private compensation for 

insured commercial property and 

casualty losses resulting from an act of 

terrorism, as defined in the Act. TRIA 

authorized Treasury to administer and 

implement the Terrorism Risk Insurance 

Program (hereinafter referenced as the 

‘‘Program’’), including the issuance of 

regulations and procedures. 

As originally enacted, the Program 

was to end on December 31, 2005; 

however, on December 22, 2005, the 

Terrorism Risk Insurance Extension Act 

of 2005 (Pub. L. 109–144, 119 Stat. 

2660) was enacted, which extended the 

Program through December 31, 2007. On 

December 26, 2007, the Terrorism Risk 

Insurance Program Reauthorization Act 

of 2007 (Pub. L. 110–160, 121 Stat. 

1839) was enacted, which extended the 

Program through December 31, 2014. 

Section 108(e) of TRIA, as amended 

by the Terrorism Risk Insurance 

Extension Act of 2005, required the 

President’s Working Group on Financial 

Markets to perform an analysis and 

report to Congress regarding the longterm availability and affordability of 

insurance for terrorism risk, including 

group life coverage and coverage for 

chemical, nuclear, biological, and 

radiological events. 

In September 2006, the President’s 

Working Group on Financial Markets 

submitted a report to Congress on 

Terrorism Risk Insurance. That report 

can be accessed at http://www.treas.gov/ 

offices/domestic-finance/ 

financial-institution/ 

terrorism-insurance/pdf/report.pdf. The 

report found that the availability and 

affordability of terrorism risk insurance 

had improved since the terrorist attacks 

of September 11, 2001, including that 

pricing for terrorism risk insurance had 

fallen and take-up (purchase) rates had 

risen. The improvement was due to 

several factors including better risk 

measurement and management, 

improved modeling of terrorism risk, 

increased reinsurance capacity, and the 

financial condition of property and 

casualty insurers. Still, the report also 

found that a significant number of 

policyholders were not purchasing 

coverage at that time. The report found 

that group life insurance (which is not 

included in the Program) remained 

generally available, that prices had 

declined, and that there had been 

improvements in the availability of 

catastrophic life reinsurance. The report 

concluded that there appeared to be 

little potential for future market 

development of terrorism risk insurance 

for losses associated with chemical, 

nuclear, biological, and radiological 

attacks. 

In addition to extending the Program 

through 2014, the Terrorism Risk 

Insurance Program Reauthorization Act 

of 2007 amended Section 108 of TRIA 

to require an on-going analysis by the 

President’s Working Group on Financial 

Markets regarding the long-term 

availability and affordability of 

insurance for terrorism risk generally. 

The President’s Working Group on 

Financial Markets is required to submit 

a report to Congress in 2010 (and 

another report again, in 2013). The 

President’s Working Group on Financial 

Markets is to conduct its analysis in 

consultation with the National 

Association of Insurance 

Commissioners, representatives of the 

insurance industry, representatives of 

the securities industry, and 

representatives of policyholders. This 

Notice seeks comment from these and 

any other interested parties as a means 

of satisfying the consultation 

requirement in the most open and 

efficient manner. 

I. General Solicitation for Comments 

About the Long-Term Availability and 

Affordability of Terrorism Risk 

Insurance 

Please comment generally; and please 

include data and other information in 

support of such comments, where 

appropriate and available, regarding the 

long-term availability and affordability 

of insurance for terrorism risk. All 

relevant views and comments are 

invited. 

In addition, please consider providing 

comments in response to the following 

specific questions: 

II. Specific Questions 

Key Factors 

1. What are the key factors that 

determine the availability and 

affordability of terrorism risk insurance 

coverage? How are these factors being 

measured and projected today? What 

factors will determine the availability 

and affordability of terrorism risk 

insurance long-term? The President’s 

Working Group on Financial Markets 

discussed various factors in its 2006 

report, referenced above; how have 

these factors changed or developed 

since then? 

2. What are the key factors that 

determine the amount of private-market 

insurer and reinsurer capacity made 

available for terrorism risk insurance 

coverage? How have these factors 

changed since 2006, when the 

President’s Working Group on Financial 

Markets issued its last report? How will 

such factors evolve in the long-term and 

upon what factors will available 

capacity most depend? 

Economic Factors 

3. How, in general, has the state of the 

financial markets and economy, and the 

financial condition of commercial 

property and casualty insurers, affected 

the availability and affordability of 

terrorism risk insurance; and how does 

that compare with effects on the 

availability and affordability of other 

lines or types of commercial property 

and casualty insurance? Please 

comment on potential entry of new 

capital into, as well as any exits from, 

the terrorism insurance and reinsurance 

markets. 

Underwriting 

4. What changes and improvements 

have taken place in the ability of 

insurers to measure and manage their 

accumulation of terrorism risk 

exposures, and how (as well as to what 

extent) are primary insurers using 

mstockstill on DSKH9S0YB1PROD with NOTICES

34532 Federal Register / Vol. 75, No. 116 / Thursday, June 17, 2010 / Notices 

available methods? Has improved risk 

accumulation management led to more 

availability? Has there been any 

improvement in modeling of frequency 

and terrorist behavior? What has been 

learned from the near-9 years of 

experience in managing and assessing 

terrorism risk since September 11, 2001? 

Overall, how has modeling improved 

and/or continued to develop since 2006, 

when the President’s Working Group on 

Financial Markets issued its last report? 

How is modeling expected to evolve 

further in the long-term? 

5. What role do mitigation and loss 

prevention play in underwriting and 

pricing terrorism risk insurance? How 

has mitigation developed since 2002, 

what improvements have been made 

since 2006, to what effect has the 

availability of terrorism risk insurance 

had on mitigation and vice versa; and, 

how will mitigation evolve in the longterm? 

6. What is the state of information 

sharing between and among the private 

and official sectors related to terrorism 

risk: (a) How much reliance is placed on 

open and private source intelligence; (b) 

how has it affected the availability and 

affordability of terrorism risk insurance; 

and, (c) how will such information 

processes further develop and affect the 

availability and affordability of 

terrorism risk insurance in the longterm? 

Coverage 

7. What changes and improvements 

have taken place with regard to the 

types of terrorism risk insurance 

coverage available in the market? What 

changes and improvements have taken 

place since 2006? Have there been 

improvements and changes in forms, are 

there special terms or conditions? What 

is the state of standalone, ‘‘TRIA-only’’ 

coverage? Is available coverage limited 

to, or broader than that required to be 

made available under TRIA? 

8. What are the differences in 

availability and affordability of 

terrorism risk insurance coverage for 

foreign and domestic terrorist acts? 

9. Did the Terrorism Risk Insurance 

Program Reauthorization Act of 2007’s 

amendment to the definition of ‘‘act of 

terrorism’’ lead to more availability due 

to the requirement that such coverage be 

made available, or was such coverage 

available prior to 2007; conversely, did 

the amendment lead to less coverage 

due to the broadened scope of ‘‘act of 

terrorism’’ exclusions, or were 

exclusions revised to distinguish 

between coverage of foreign and 

domestic terrorist acts? 

10. What are the differences in 

availability and affordability of 

terrorism risk insurance coverage for 

losses at U.S. locations, as compared to 

such coverage for losses at non-U.S. 

locations? What are the differences as 

compared between TRIA-covered 

locations and non-TRIA locations? 

Policyholder Demand 

11. How has the demand for terrorism 

risk insurance changed since 2006, 

when the President’s Working Group on 

Financial Markets issued its last report? 

Please comment on take-up by 

policyholder sector, location, line, and 

other relevant characteristics. How have 

any changes in demand influenced the 

willingness of insurers to allocate 

capital to terrorism risk insurance? Has 

there been any impact on the amount of 

capital allocated to non-terrorism 

coverage or among lines of insurance? 

12. To what extent have businesses 

used captive insurance companies to 

provide terrorism risk insurance, and 

what is the potential for the use of 

captive insurers to insure against such 

risk long-term? How have stand-alone 

terrorism captives developed, and how 

will these evolve long-term, including 

after the expiration of the Program in 

2014? 

13. Have State approaches (such as 

those applicable to mandatory coverage, 

permitted exclusions, and rate 

regulation) made coverage more or less 

available and affordable? Have there 

been any changes in State insurance 

regulation of terrorism risk insurance 

since the Terrorism Risk Insurance 

Program Reauthorization Act of 2007 

was enacted? To what extent has the 

availability and affordability of 

terrorism risk insurance been influenced 

by State insurance regulation, and what 

role is State regulation expected to have 

long-term? Please comment on Stateapproved terrorism related rate loads. 

14. What are the differences in 

availability and affordability of 

terrorism risk insurance between the 

licensed/admitted market and the nonadmitted/surplus lines market, and to 

what degree are those differences 

attributable to the degree and manner in 

which each market is regulated? 

Price of Insurance 

15. What improvements have taken 

place in the ability of insurers to price 

terrorism risk insurance? How are rating 

organizations assisting insurers in 

pricing, and how have rating factors 

developed? 

16. What have been the trends in 

pricing of terrorism risk insurance? 

Please comment on the extent to which 

such coverage is not priced and 

charged-for. How has pricing changed 

since 2006, when the President’s 

Working Group on Financial Markets 

issued its last report? To what do you 

attribute any changes? 

17. How has the recent ‘‘soft market’’ 

impacted the availability of and 

affordability of terrorism risk insurance? 

What would be the impact on the 

availability and affordability of 

terrorism risk insurance should the 

market ‘‘harden’’ in the near future? 

18. How were primary insurers’ 

pricing decisions affected by the 

Terrorism Risk Insurance Program 

Reauthorization Act of 2007, 

particularly as to the requirement to 

make available coverage for acts of 

terrorism being no longer defined as 

limited to those committed on behalf of 

any foreign person or foreign interest? 

Reinsurance 

19. What is the current availability 

and cost of reinsurance to cover 

terrorism risk? Please distinguish by 

line or type of insurance being reinsured 

and on what basis (treaty or facultative). 

How has the terrorism reinsurance 

market changed since 2006, when the 

President’s Working Group on Financial 

Markets issued its last report? To what 

do you attribute any changes? 

20. At what policyholder retention 

levels are insurance programs being 

structured by policyholders to cover 

terrorism risk (e.g., deductibles, selfinsurance, captives); and, with regard to 

insurers, how are reinsurance programs 

being structured and at what attachment 

points? Please comment on the 

availability and affordability of 

reinsurance for terrorism risk. 

21. Are reinsurers allocating more 

capital to terrorism risk insurance, and 

has capacity changed since 2006, when 

the President’s Working Group on 

Financial Markets issued its last report? 

Are insurers willing to pay the cost of 

terrorism risk reinsurance, and is that a 

factor affecting the allocation of capital 

to the risk; how much additional capital 

could be attracted long-term? 

22. How have provisions of the 

Terrorism Risk Insurance Program 

Reauthorization Act of 2007 affected the 

terrorism risk reinsurance market? More 

specifically, how has maintaining and 

not increasing the insurer deductible 

percentage applied against direct earned 

premiums (from Program lines), as well 

as not decreasing the Federal share of 

losses above the insurer deductible, 

affected the provision and development 

of private reinsurance? 

23. To what extent have alternate risk 

transfer methods (e.g., catastrophe 

bonds or other capital market 

instruments) been successfully or 

unsuccessfully used for terrorism risk 

insurance, and what is the potential for 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 116 / Thursday, June 17, 2010 / Notices 34533 

the long-term development of these 

approaches? 

Losses Associated With Chemical, 

Nuclear, Biological, and Radiological 

(CNBR) Acts 

24. What is the current availability 

and affordability of coverage for CNBR 

events? For what perils is coverage 

available, subject to what limits, and 

under what policy terms and 

conditions? Is there a difference in the 

availability and affordability of coverage 

for CNBR events caused by acts of 

terrorism? To what extent have various 

States allowed insurers to exclude 

coverage for CNBR events (Please 

comment on requirements for workers’ 

compensation and fire-following 

coverage.)? How have exclusions 

developed? 

25. Is it the case that some insurers 

appear unwilling to provide coverage 

for CNBR events caused by acts of 

terrorism, despite TRIA limits on an 

insurer’s maximum loss exposure? If so, 

why? 

26. In the long-term, what are the key 

factors that will determine the 

availability and affordability of 

terrorism risk insurance coverage for 

CNBR events? The President’s Working 

Group on Financial Markets previously 

reported that there appeared to be little 

potential for market development. Has 

anything changed since 2006? 

Deductible and Co-Share Levels 

27. Under the Program, an insurer’s 

annual deductible is a percentage of 

certain direct earned premiums (as 

defined by TRIA and regulation). TRIA, 

as originally enacted, graduated the 

percentage applied for each year. The 

Terrorism Risk Insurance Program 

Reauthorization Act of 2007 established 

a set percentage of 20 percent for each 

Program year beginning in 2007. Please 

comment for each year since 2006 as to 

whether direct earned premiums in 

TRIA lines and insurer deductibles have 

increased or decreased? If so, in what 

amounts? Please provide data as 

available. 

28. How might any increases to the 

insurer deductible level or decreases to 

the Federal share above such deductible 

levels, prior to the Program’s expiration 

in 2014, affect the availability and 

affordability of terrorism risk insurance? 

Please comment on the degree, amount 

or increment of any recommended 

increase. 

Expiration of the Program 

29. Describe efforts undertaken by the 

insurance industry and/or policyholders 

since 2006, when the President’s 

Working Group on Financial Markets 

issued its last report, to ensure the 

availability and affordability of 

terrorism risk insurance after 2014 when 

the Program expires, and long-term? 

30. Please comment on any 

anticipated State approaches to ensure 

the continued availability and 

affordability of terrorism risk insurance 

after the Program expires in 2014 (such 

as those approaches taken by the States 

after September 11, 2001 and before 

TRIA was enacted on November 26, 

2002). 

31. Please comment on any other 

developments in markets that might 

affect the continued availability and 

affordability of terrorism risk insurance. 

32. In the absence of the Program, in 

what forms, at what levels, under what 

terms and conditions, and at what price 

might terrorism risk insurance be 

available; and, at what duration (i.e., 

long-term)? Please distinguish from 

State-mandated coverage, such as 

workers’ compensation and fire 

insurance. 

Michael S. Barr, 

Assistant Secretary of the Treasury. 

[FR Doc. 2010–14639 Filed 6–16–10; 8:45 am] 

BILLING CODE 4810–25–P 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

Deposits 

AGENCY: Office of Thrift Supervision 

(OTS), Treasury. 

ACTION: Notice and request for comment. 

SUMMARY: The proposed information 

collection request (ICR) described below 

has been submitted to the Office of 

Management and Budget (OMB) for 

review and approval, as required by the 

Paperwork Reduction Act of 1995. OTS 

is soliciting public comments on the 

proposal. 

DATES: Submit written comments on or 

before July 19, 2010. A copy of this ICR, 

with applicable supporting 

documentation, can be obtained from 

RegInfo.gov at http://www.reginfo.gov/ 

public/do/PRAMain. 

ADDRESSES: Send comments, referring to 

the collection by title of the proposal or 

by OMB approval number, to OMB and 

OTS at these addresses: Office of 

Information and Regulatory Affairs, 

Attention: Desk Officer for OTS, U.S. 

Office of Management and Budget, 725 

17th Street, NW., Room 10235, 

Washington, DC 20503, or by fax to 

(202) 395–6974; and Information 

Collection Comments, Chief Counsel’s 

Office, Office of Thrift Supervision, 

1700 G Street, NW., Washington, DC 

20552, by fax to (202) 906–6518, or by 

e-mail to 

infocollection.comments@ots.treas.gov. 

OTS will post comments and the related 

index on the OTS Internet Site at 

www.ots.treas.gov. In addition, 

interested persons may inspect 

comments at the Public Reading Room, 

1700 G Street, NW., by appointment. To 

make an appointment, call (202) 906– 

5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906– 

7755. 

FOR FURTHER INFORMATION CONTACT: For 

further information or to obtain a copy 

of the submission to OMB, please 

contact Ira L. Mills at 

ira.mills@ots.treas.gov, (202) 906–6531, 

or facsimile number (202) 906–6518, 

Regulations and Legislation Division, 

Chief Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552. 

SUPPLEMENTARY INFORMATION: OTS may 

not conduct or sponsor an information 

collection, and respondents are not 

required to respond to an information 

collection, unless the information 

collection displays a currently valid 

OMB control number. As part of the 

approval process, we invite comments 

on the following information collection. 

Title of Proposal: Deposits. 

OMB Number: 1550–0093. 

Form Number: N/A. 

Regulation requirement: 12 CFR Parts 

557.20, 230.3, 230.4, 230.5 and 230.6. 

Description: Section 557.20 requires 

savings associations to establish and 

maintain deposit documentation 

practices and records. These records 

should include adequate evidence of 

ownership, balances, and all 

transactions involving the account. In 

addition, part 557 relies on the 

disclosure regulations applicable to 

savings associations under Regulation 

DD. Regulation DD implements the 

Truth in Savings Act, part of the Federal 

Deposit Insurance Corporation 

Improvement Act of 1991. 

The regulations assist consumers in 

comparing deposit accounts offered by 

depository institutions. Consumers 

receive disclosures about fees, annual 

percentage yield, interest rate, and other 

account terms whenever a consumer 

requests the information and before the 

consumer opens an account. The 

regulation also requires that savings 

associations provide fees and other 

information on any periodic statement 

the institution sends to the consumer. 

Regulation DD contains rules for 

advertisements of deposit accounts and 

mstockstill on DSKH9S0YB1PROD with NOTICES