August 13, 2004 

Dear Mr. V: 

This letter responds to your request for an interpretation concerning the 

application of the Terrorism Risk Insurance Act of 2002 (the “Act”)1

 and Treasury’s 

regulations implementing the Act.2

 The CCC is a captive insurance company licensed 

under the laws of the State of Vermont and, therefore is an “insurer” under the Act.3

 

CCC provides direct workers’ compensation insurance coverage to other subsidiaries of 

its parent under a qualified self-insured workers’ compensation plan. Workers’ 

compensation insurance is a commercial line of property and casualty insurance included 

in the Terrorism Risk Insurance Program.4

 

The inclusion of this insurance in the Program does not change because 

Vermont’s captive insurance law deems this type of insurance to be reinsurance.5

 The 

Act does exclude reinsurance from Federal backstop protection6

; but for purposes of the 

Program, the insurance CCC provides is not reinsurance. As we have explained, an 

insurance arrangement between a self-insured and an insurer is more like direct primary 

(or in some cases excess) property and casualty insurance rather than traditional 

reinsurance where an insurer reinsures another insurer.7

 Workers’ compensation 

insurance provided by a captive insurer directly to employers under a qualified selfinsured workers’ compensation plan is “property and casualty insurance” and is not 

“reinsurance” for purposes of the Program. 

Please note that for purposes of calculating its insurer deductible under the 

Program, CCC will need to include the direct earned premiums received from the 

insurance provided to employers under the qualified self-insured workers’ compensation 

plan regardless of how the premiums are reported on CCC’s Annual Report filed with the 

State of Vermont. 

 1

 Public Law 107-297, 116 Stat. 2322, 15 U.S.C. §6701, note. 

2

 31 C.F.R. Part 50. This response is being issued pursuant to 31 C.F.R. §50.9, which sets forth a 

procedure whereby persons actually or potentially affected by the Act or regulations may request an 

interpretation. 

3

 P.L. 107-297 §102(6); 30 C.F.R. §50.5(f)(1)(i)(A). 

4

 P.L. 107-297 §102(12); 30 C.F.R. §50.5(l) 

5

 8 V.S.A. §6011(d) (“For all purposes of this chapter, insurance by a captive insurance company 

of any workers’ compensation qualified self-insured plan of its parent and affiliates shall be deemed to be 

reinsurance.”). We also note that by its terms, the Vermont law is limited to the purposes of “this chapter” 

of Vermont law. 

6

 P.L. 107-297 §102(12)(B)(vii); 31 C.F.R. § 50.5(l)(2)(vii). 

7 See 68 Fed. Reg. 59,715, 59,717-18 (Oct. 17, 2003) 
Thank you for your inquiry. For additional information or if you have any 

specific questions, please CCC the Program office at 202-622-6770. 

* * * 

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 the requestor may not rely on 

the 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. 

TERRORISM RISK INSURANCE PROGRAM

___________________________________ 

Jeffrey S. Bragg 

Executive Director 

2