March 17, 2004 

Dear Mr. F: 

Thank you for your letter requesting an interpretation of the Terrorism Risk 

Insurance Act1

 (TRIA) and Treasury’s implementing regulations to two types of stop loss 

insurance policies (Stop Loss Policies) issued by the CCC Insurance Company (CCC). 

As you know, TRIA provides federal compensation for insured losses arising from acts of 

terrorism but limits such compensation to losses involving “property and casualty 

insurance.” TRIA defines “property and casualty insurance” to mean commercial lines of 

property and casualty insurance, including excess insurance, but specifically excluding 

health insurance.2

 You request Treasury’s confirmation about whether the term “property 

and casualty insurance” contained in TRIA and Treasury’s implementing regulations 

includes Stop Loss Policies. 

You describe CCC’s Stop Loss Policies as follows: 

“(1) traditional stop loss policies issues to employers to cover the 

employers’ excess losses under their ERISA self-funded employee 

health benefit plans, and (2) policies which provide excess 

protection for medical expenses incurred by institutional or 

professional health care providers when they contract with 

managed care organizations (MCOs) to provide professional 

services to members of the MCOs.”3

Although the CCC policies are titled “excess” insurance, you believe the two Stop Loss 

Policies are akin to health insurance (and in many respects reinsurance) and therefore fall 

beyond the scope of TRIA. Some states regulate Stop Loss Policies as a property and 

casualty coverage, and you express concern that this creates uncertainty about the 

treatment of such Polices under TRIA. 

As explained in the preamble to Treasury’s final rule on the definition of 

“property and casualty insurance”, Treasury found “no uniform or consistent definition of 

‘commercial property and casualty insurance’ among the States that could provide 

guidance or be used for purposes of the Program.”4

 In general, Treasury determined to 

use the information reported on Statutory Page 14 of the NAIC Annual Statement as a 

reference point for this TRIA definition. 

 

1

 Public Law 107-297, 116 Stat. 2322, 15 USCS § 6701. 

2

 Section 102(12)(A) and (B)(v),(vii) of the Act; 31 C.F.R. §50.5(l)(2)(v), (vii). 3

 At Treasury’s request you provided copies of the CCC policies. 

4 See 68 Fed. Reg. 41,250, 41,256 (Jul. 11, 2003)(as amended at 68 Fed. Reg. 48,280 (Aug. 13, 2003). 
 As described in the final rule, Treasury considered TRIA’s definition of 

commercial property and casualty insurance in the context of the Program’s structure and 

what would be necessary to effectively administer the Program. “Treasury’s approach is 

to maintain a close correlation between the lines of commercial property and casualty 

insurance eligible for the Federal payment under the Program, and the amount of 

premiums for those coverages”5

 as reported on the insurer’s NAIC Annual Statement. 

Following this approach, if an insurer reports premium attributable to a particular

coverage on one of the commercial lines in the NAIC Annual Statement, then as a 

general rule, Treasury will consider the coverage to fall within the definition of 

commercial property and casualty insurance for purposes of TRIA and will share in the 

insured losses paid by the insurer under the coverage. However, if a specific coverage or 

type of insurance is expressly excluded from the definition of commercial property and 

casualty insurance in TRIA, then no Federal share of compensation will be paid for losses 

arising from the coverage.6

 

In the case of the first Stop Loss Policy you describe (excess loss coverage for 

ERISA self-funded employee health benefit plans), you indicated the premium for such 

Policy is reported by CCC either on line 13 of the NAIC Annual Statement as “Group 

accident and health” or on line 15.6 as “All other A & H”, depending on particular state 

insurance department requirements. Neither of these lines of business is included in the 

definition “property and casualty insurance” under our regulations [31 C.F.R. § 

50.5(l)(2)] and health insurance is explicitly excluded from the definition of commercial 

property and casualty insurance in section 102(12)(B)(v) of TRIA. Therefore, the first 

Stop Loss Policy is not commercial “property and casualty insurance” for purposes of 

TRIA. 

In the case of the second Stop Loss Policy you describe (healthcare provider stoploss insurance), states vary in how they require premiums to be reported. While New 

York requires premiums to be reported as health insurance,7

 New Jersey considers this 

second type of Stop Loss Policy to be “commercial lines property/liability coverage”.8

 

However, New Jersey specifically requires that insurers writing healthcare provider stop 

loss insurance report the premium for this coverage “separately from ‘other liability’ in 

the underwriting and investment exhibits on a ‘write-in’ line.”9

 Premiums on this line of 

the NAIC Annual Statement (Line 33 – Aggregate write-ins for other lines of business) 

are not considered “property and casualty insurance” for purposes of the TRIA 

Program.

10 Therefore, the second Stop Loss Policy you describe (healthcare provider 

stop-loss) also is not “property and casualty insurance” within the meaning of TRIA in

the States of New York, New Jersey and all states with similar reporting requirements as 

these two states. To the extent a state takes a different view and requires the reporting of 

 

5

 68 FR at 41256. 6

 One example of this is the exclusion of privately issued crop insurance from the scope of TRIA even

though premium for such coverage may be reported in the insurer’s NAIC Annual Statement under Allied

Lines. 

7 New York Insurance Dept Circular Letter 1997-9 (April 4, 1997). 8

 New Jersey Insurance Bulletin 95-05 (March 9, 1995). 9

 Id. 10 See 31 C.F.R. 50.5(l)(1). 

2
the premiums for this second Stop Loss Policy on one of the commercial lines listed in 

our regulations, we would reach a different result. In such event, the second Stop Loss 

Policy would be considered “property and casualty insurance” under our regulation 

implementing TRIA. 

This response addresses the application of the Act and regulations to the specific 

situation set forth in your request, as you have represented the facts to Treasury. If there 

is a change in any of the facts or assumptions presented, and such facts or assumptions 

are material to a conclusion presented in this response, then you may not rely on that 

conclusion generally or as support for any proposed or subsequent activity. This 

response is provided by the Terrorism Risk Insurance Program as a means of stating its 

current interpretation of the Act and regulations. The Program may revise or revoke this 

interpretation upon its own initiative or upon the enactment of amendments to the Act or 

regulations. 

Sincerely, 

Jeffrey Bragg 

Executive Director 

Terrorism Risk Insurance Program

3