392 

§ 34.803 31 CFR Subtitle A (7–1–17 Edition) 

contract unless this certification remains true and accurate. 

(f) I certify that a conflict of interest 

policy is in effect and covering each activity funded under this Agreement. 

(g) I make each of these certifications based on my personal knowledge and belief after reasonable and 

diligent inquiry, and I affirm that this 

recipient maintains written documentation sufficient to support each 

certification made above, and that this 

recipient’s compliance with each of 

these certifications is a condition of 

this recipient’s initial and continuing 

receipt and use of the funds provided 

under this Agreement. 

§ 34.803 Conditions. 

At a minimum, each grant agreement 

under subparts D, E, F, G, and H of this 

part must contain the following conditions: 

(a) The recipient must immediately 

report any indication of fraud, waste, 

abuse, or potentially criminal activity 

pertaining to grant funds to Treasury 

and the Treasury Inspector General. 

(b) The recipient must maintain detailed records sufficient to account for 

the receipt, obligation, and expenditure of grant funds. The recipient must 

track program income. 

(c) Prior to disbursing funds to a subrecipient, the recipient must execute a 

legally binding written agreement with 

the entity receiving the subaward. The 

written agreement will extend all the 

applicable program requirements to 

the subrecipient. 

(d) The recipient must use the funds 

only for the purposes identified in the 

agreement. 

(e) The recipient must report at the 

conclusion of the grant period, or other 

period specified by the Federal agency 

administering the grant, on the use of 

funds pursuant to the agreement. 

(f) Trust Fund amounts may only be 

used to acquire land or interests in 

land by purchase, exchange, or donation from a willing seller. 

(g) None of the Trust Fund amounts 

may be used to acquire land in fee title 

by the Federal Government unless the 

land is acquired by exchange or donation or the acquisition is necessary for 

the restoration and protection of the 

natural resources, ecosystems, fisheries, marine and wildlife habitats, 

beaches, and coastal wetlands of the 

Gulf Coast Region and has the concurrence of the Governor of the state in 

which the acquisition will take place. 

§ 34.804 Noncompliance. 

(a) If Treasury determines that a 

Gulf Coast State, coastal political subdivision, or coastal zone parish has expended funds received under the Direct 

Component, Comprehensive Plan Component, or Spill Impact Component on 

an ineligible activity, Treasury will 

make no additional funds available to 

that recipient from any part of the 

Trust Fund until the recipient has deposited in the Trust Fund an amount 

equal to the amount expended for an 

ineligible activity, or Treasury has authorized the recipient to expend an 

equal amount from the recipient’s own 

funds for an activity that meets the requirements of the Act. 

(b) If Treasury determines that a 

Gulf Coast State, coastal political subdivision, or coastal zone parish has materially violated a grant agreement 

under the Direct Component, Comprehensive Plan Component, or Spill 

Impact Component, Treasury will 

make no additional funds available to 

that recipient from any part of the 

Trust Fund until the recipient corrects 

the violation. 

(c) As a condition of receiving funds, 

recipients and subrecipients shall 

make available their records and personnel to Treasury in order to carry 

out the purposes of this section. 

§ 34.805 Treasury Inspector General. 

In addition to other authorities 

available under the Act, the Office of 

the Inspector General of the Department of the Treasury is authorized to 

conduct, supervise, and coordinate audits and investigations of activities 

funded through grants under the Act. 

PART 50—TERRORISM RISK 

INSURANCE PROGRAM 

Subpart A—General Provisions 

Sec. 

50.1 Authority, purpose, and scope. 

50.2 Responsible office. 

50.3 Mandatory participation in program. 

50.4 Definitions. 


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Office of the Secretary of the Treasury § 50.1 

50.5 Rule of construction for dates. 

50.6 Special rules for Interim Guidance safe 

harbors. 

50.7 Procedure for requesting determinations of controlling influence. 

50.8 Procedure for requesting general interpretations of statute. 

Subpart B—Disclosures as Conditions for 

Federal Payment 

50.10 General disclosure requirements. 

50.11 Definition. 

50.12 Clear and conspicuous disclosure. 

50.13 Offer and renewal. 

50.14 Separate line item. 

50.15 Cap disclosure. 

50.16 Use of model forms. 

50.17 General disclosure requirements for 

State residual market insurance entities 

and State workers’ compensation funds. 

Subpart C—Mandatory Availability 

50.20 General mandatory availability requirements. 

50.21 Make available. 

50.22 No material difference from other coverage. 

50.23 Applicability of State law requirements. 

Subpart D—State Residual Market Insurance Entities; Workers’ Compensation 

Funds 

50.30 General participation requirements. 

50.31 Entities that do not share profits and 

losses with private sector insurers. 

50.32 Entities that share profits and losses 

with private sector insurers. 

50.33 Allocation of premium income associated with entities that do share profits 

and losses with private sector insurers. 

Subpart E [Reserved] 

Subpart F—Data Collection 

50.50 General. 

50.51 Annual data reporting. 

50.52 Small insurer data. 

50.53 Collection of claims data. 

50.54 Handling of data. 

Subpart G—Certification 

50.60 Certification. 

50.61 Public communication. 

50.62 Certification data collection. 

50.63 Notification of certification determination. 

Subpart H—Claims Procedures 

50.70 Federal share of compensation. 

50.71 Adjustments to the Federal share of 

compensation. 

50.72 Notice of deductible erosion. 

50.73 Loss certifications. 

50.74 Payment of Federal share of compensation. 

50.75 Determination of affiliations. 

50.76 Final netting. 

Subpart I—Audit and Investigative 

Procedures 

50.80 Audit authority. 

50.81 Recordkeeping. 

50.82 Civil penalties. 

50.83 Adjustment of civil monetary penalty 

amount. 

Subpart J—Recoupment and Surcharge 

Procedures 

50.90 Mandatory and discretionary 

recoupment. 

50.91 Determination of recoupment 

amounts. 

50.92 Establishment of Federal terrorism 

policy surcharge. 

50.93 Notification of recoupment. 

50.94 Collecting the surcharge. 

50.95 Remitting the surcharge. 

50.96 Insurer responsibility. 

Subpart K—Federal Cause of Action; 

Approval of Settlements 

50.100 Federal cause of action and remedy. 

50.101 State causes of action preempted. 

50.102 Advance approval of settlements. 

50.103 Procedure for requesting approval of 

proposed settlements. 

50.104 Subrogation. 

Subpart L—Cap on Annual Liability 

50.110 Cap on annual liability. 

50.111 Notice to Congress. 

50.112 Determination of pro rata share. 

50.113 Application of pro rata share. 

50.114 Data call authority. 

50.115 Final amount. 

AUTHORITY: 5 U.S.C. 301; 31 U.S.C. 321; Title 

I, Pub. L. 107–297, 116 Stat. 2322, as amended 

by Pub. L. 109–144, 119 Stat. 2660, Pub. L. 110– 

160, 121 Stat. 1839 and Pub. L. 114–1, 129 Stat. 

3 (15 U.S.C. 6701 note); Pub. L. 114–74, 129 

Stat. 601, Title VII (28 U.S.C. 2461 note). 

SOURCE: 81 FR 93765, Dec. 21, 2016, unless 

otherwise noted. 

Subpart A—General Provisions 

§ 50.1 Authority, purpose, and scope. 

(a) Authority. This part is issued pursuant to authority in Title I of the Terrorism Risk Insurance Act of 2002, Public Law 107–297, 116 Stat. 2322, as 


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§ 50.2 31 CFR Subtitle A (7–1–17 Edition) 

amended by the Terrorism Risk Insurance Extension Act of 2005, Public Law 

109–144, 119 Stat. 2660, the Terrorism 

Risk Insurance Program Reauthorization Act of 2007, Public Law 110–160, 121 

Stat. 1839, and the Terrorism Risk Insurance Program Reauthorization Act 

of 2015, Public Law 114–1, 129 Stat. 3. 

(b) Purpose. This part contains rules 

prescribed by the Department of the 

Treasury to implement and administer 

the Terrorism Risk Insurance Program. 

(c) Scope. This part applies to insurers subject to the Act and their policyholders and claimants. 

§ 50.2 Responsible office. 

The office responsible for the administration of the Terrorism Risk Insurance Act in the Department of the 

Treasury is the Terrorism Risk Insurance Program Office within the Federal Insurance Office. The Treasury Assistant Secretary for Financial Institutions prescribes the regulations under 

the Act. 

§ 50.3 Mandatory participation in program. 

Any entity that meets the definition 

of an insurer under the Act is required 

to participate in the Program. 

§ 50.4 Definitions. 

For purposes of this part: 

(a) Act means the Terrorism Risk Insurance Act of 2002 (as amended). 

(b) Act of terrorism—(1) In general. The 

term act of terrorism means any act 

that is certified by the Secretary, in 

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

(i) To be an act of terrorism; 

(ii) To be a violent act or an act that 

is dangerous to human life, property, 

or infrastructure; 

(iii) To have resulted in damage 

within the United States, or outside of 

the United States in the case of: 

(A) An air carrier (as defined in 49 

U.S.C. 40102) or a United States flag 

vessel (or a vessel based principally in 

the United States, on which United 

States income tax is paid and whose insurance coverage is subject to regulation in the United States); or 

(B) The premises of a United States 

mission; and 

(iv) To have been committed by an 

individual or individuals as part of an 

effort to coerce the civilian population 

of the United States or to influence the 

policy or affect the conduct of the 

United States Government by coercion. 

(2) Limitations. The Secretary is not 

authorized to certify an act as an act 

of terrorism if: 

(i) The act is committed as part of 

the course of a war declared by the 

Congress (except with respect to any 

coverage for workers’ compensation); 

or 

(ii) Property and casualty insurance 

losses resulting from the act, in the aggregate, do not exceed $5,000,000. 

(3) Judicial review precluded. The Secretary’s certification of an act of terrorism, or determination not to certify 

an act as an act of terrorism, is final 

and is not subject to judicial review. 

(c)(1) Affiliate means, with respect to 

an insurer, any entity that controls, is 

controlled by, or is under common control with the insurer. An affiliate must 

itself meet the definition of insurer to 

participate in the Program. 

(2)(i) For purposes of paragraph (c)(1) 

of this section, an insurer has control 

over another insurer for purposes of 

the Program if: 

(A) The insurer directly or indirectly 

or acting through one or more other 

persons owns, controls, or has power to 

vote 25 percent or more of any class of 

voting securities of the other insurer; 

(B) The insurer controls in any manner the election of a majority of the directors or trustees of the other insurer; 

or 

(C) The Secretary determines, after 

notice and opportunity for hearing, 

that an insurer directly or indirectly 

exercises a controlling influence over 

the management or policies of the 

other insurer, even if there is no control as defined in paragraph (c)(2)(i)(A) 

or (c)(2)(i)(B) of this section. 

(ii) An entity, including any affiliate 

thereof, does not have control or exercise controlling influence over a reciprocal insurer under this section if, as of 

January 12, 2015, the entity, including 

any affiliate thereof, was acting as an 

attorney-in-fact for the reciprocal insurer, provided that the entity does 


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Office of the Secretary of the Treasury § 50.4 

not, for reasons other than activities it 

may perform under the attorney-infact relationship, have control over the 

reciprocal insurer as otherwise defined 

under this section. 

(3) An insurer described in paragraph 

(c)(2)(i)(A) or (B) of this section is conclusively deemed to have control. 

(4) For purposes of a determination of 

controlling influence under paragraph 

(c)(2)(i)(C) of this section, if an insurer 

is not described in paragraph 

(c)(2)(i)(A) or (B) of this section, the 

following rebuttable presumptions will 

apply: 

(i) If an insurer controls another insurer under the laws of a state, and at 

least one of the factors listed in paragraph (c)(4)(iv) of this section applies, 

there is a rebuttable presumption that 

the insurer that has control under 

state law exercises a controlling influence over the management or policies 

of the other insurer for purposes of 

paragraph (c)(2)(i)(C) of this section. 

(ii) If an insurer provides 25 percent 

or more of another insurer’s capital (in 

the case of a stock insurer), policyholder surplus (in the case of a mutual 

insurer), or corporate capital (in the 

case of other entities that qualify as 

insurers), and at least one of the factors listed in paragraph (c)(4)(iv) of 

this section applies, there is a rebuttable presumption that the insurer providing such capital, policyholder surplus, or corporate capital exercises a 

controlling influence over the management or policies of the receiving insurer for purposes of paragraph 

(c)(2)(i)(C) of this section. 

(iii) If an insurer, at any time during 

a calendar year, supplies 25 percent or 

more of the underwriting capacity for 

that year to an insurer that is a syndicate consisting of one or more incorporated or individual unincorporated 

underwriters, and at least one of the 

factors in paragraph (c)(4)(iv) of this 

section applies, there is a rebuttable 

presumption that the insurer exercises 

a controlling influence over the syndicate for purposes of paragraph 

(c)(2)(i)(C) of this section. 

(iv) If paragraphs (c)(4)(i) through 

(iii) of this section are not applicable, 

but two or more of the following factors apply to an insurer, with respect 

to another insurer, there is a rebuttable presumption that the insurer exercises a controlling influence over the 

management or policies of the other 

insurer for purposes of paragraph 

(c)(2)(i)(C) of this section: 

(A) The insurer is one of the two 

largest shareholders of any class of 

voting stock; 

(B) The insurer holds more than 35 

percent of the combined debt securities 

and equity of the other insurer; 

(C) The insurer is party to an agreement pursuant to which the insurer 

possesses a material economic stake in 

the other insurer resulting from a profit-sharing arrangement, use of common 

names, facilities or personnel, or the 

provision of essential services to the 

other insurer; 

(D) The insurer is party to an agreement that enables the insurer to influence a material aspect of the management or policies of the other insurer; 

(E) The insurer would have the ability, other than through the holding of 

revocable proxies, to direct the votes of 

more than 25 percent of the other insurer’s voting stock in the future upon 

the occurrence of an event; 

(F) The insurer has the power to direct the disposition of more than 25 

percent of a class of voting stock of the 

other insurer in a manner other than a 

widely dispersed or public offering; 

(G) The insurer and/or the insurer’s 

representative or nominee constitute 

more than one member of the other insurer’s board of directors; or 

(H) The insurer or its nominee or an 

officer of the insurer serves as the 

chairman of the board, chairman of the 

executive committee, chief executive 

officer, chief operating officer, chief financial officer or in any position with 

similar policymaking authority in the 

other insurer. 

(5) An insurer that is not described in 

paragraph (c)(2)(i) or (ii) of this section 

may request a hearing in which the insurer may rebut a presumption of controlling influence under paragraph 

(c)(4)(i) through (iv) of this section or 

otherwise request a determination of 

controlling influence by presenting and 

supporting its position through written 

submissions to Treasury, and in Treasury’s discretion, through informal oral 

presentations, in accordance with the 

procedure in §50.7. 


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§ 50.4 31 CFR Subtitle A (7–1–17 Edition) 

(6) An insurer’s affiliates for a calendar year, for purposes of subpart H of 

this part, shall be determined in accordance with the timing requirements 

laid out in §50.75 of this part. 

(d) Aggregate Federal share of compensation means the aggregate amount 

paid by Treasury for the Federal share 

of compensation for insured losses in a 

calendar year. 

(e) Assessment period means a period, 

established by Treasury, during which 

policyholders of property and casualty 

insurance policies must pay, and insurers must collect, the Federal terrorism 

policy surcharge for remittance to 

Treasury. 

(f) Attorney-in-fact means a person or 

entity appointed by the subscribers or 

members of a reciprocal insurer to act 

for and bind the reciprocal insurer 

under relevant state law for the benefit 

of its subscribers or members. 

(g) Captive insurer means an insurer 

licensed under the captive insurance 

laws or regulations of any state. 

(h) Direct earned premium means direct earned premium for all property 

and casualty insurance issued by any 

insurer for insurance against all losses, 

including losses from an act of terrorism, occurring at the locations described in section 102(5)(A) and (B) of 

the Act. 

(1) State-licensed or admitted insurers. 

For a state licensed or admitted insurer that reports to the NAIC, direct 

earned premium is the premium information for property and casualty insurance reported by the insurer on column 2 of the Exhibit of Premiums and 

Losses of the NAIC Annual Statement 

(commonly known as Statutory Page 

14). 

(i) Premium information as reported 

to state regulators through the NAIC 

should be included in the calculation of 

direct earned premiums for purposes of 

the Program only to the extent it reflects premiums for property and casualty insurance issued by the insurer 

against losses occurring at the locations described in section 102(5)(A) and 

(B) of the Act. 

(ii) Premiums for personal property 

and casualty lines of insurance (insurance primarily designed to cover personal, family or household risk exposures, with the exception of insurance 

written to insure 1 to 4 family rental 

dwellings owned for the business purpose of generating income for the property owner), or premiums for any other 

insurance coverage that does not meet 

the definition of property and casualty 

insurance, should be excluded in the 

calculation of direct earned premiums 

for purposes of the Program. 

(iii) Personal property and casualty 

lines of insurance coverage that includes incidental coverage for commercial purposes are primarily personal 

coverage, and therefore premiums may 

be fully excluded by an insurer from 

the calculation of direct earned premium. For purposes of this section, 

commercial coverage is incidental if 

less than 25 percent of the total direct 

earned premium is attributable to 

commercial coverage. Property and 

casualty insurance against losses occurring at locations other than the locations described in section 102(5)(A) 

and (B) of the Act, or other insurance 

coverage that does not meet the definition of property and casualty insurance, but that includes incidental coverage for commercial risk exposures at 

such locations, is primarily not commercial, and therefore premiums for 

such insurance may also be fully excluded by an insurer from the calculation of direct earned premium. For purposes of this section, property and casualty insurance for losses occurring at 

the locations described in section 

102(5)(A) and (B) of the Act is incidental if less than 25 percent of the 

total direct earned premium for the insurance policy is attributable to coverage at such locations. Also for purposes of this section, coverage for commercial risk exposures is incidental if 

it is combined with coverages that otherwise do not meet the definition of 

property and casualty insurance and 

less than 25 percent of the total direct 

earned premium for the insurance policy is attributable to the coverage for 

commercial risk exposures. 

(iv) If an insurance policy covers 

both commercial and personal property 

and casualty exposures, insurers may 

allocate the premiums in accordance 

with the proportion of risk between 

commercial and personal components 

in order to ascertain direct earned premium. If a policy includes insurance 


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Office of the Secretary of the Treasury § 50.4 

coverage that meets the definition of 

property and casualty insurance for 

losses occurring at the locations described in section 102(5)(A) and (B) of 

the Act, but also includes other coverage, insurers may allocate the premiums in accordance with the proportion of risk attributable to the components in order to ascertain direct 

earned premium. 

(2) Insurers that do not report to NAIC. 

An insurer that does not report to the 

NAIC, but that is licensed or admitted 

by any state (such as certain farm or 

county mutual insurers), should use 

the guidance provided in paragraph 

(h)(1) of this section to assist in 

ascertaining its direct earned premium. 

(i) Direct earned premium may be 

ascertained by adjusting data maintained by such insurer or reported by 

such insurer to its state regulator to 

reflect a breakdown of premiums for 

commercial and personal property and 

casualty exposure risk as described in 

paragraph (h)(1) of this section and, if 

necessary, re-stated to reflect the accrual method of determining direct 

earned premium versus direct premium. 

(ii) Such an insurer should consider 

other types of payments that compensate the insurer for risk of loss 

(contributions, assessments, etc.) as 

part of its direct earned premium. 

(3) Certain eligible surplus line carrier 

insurers. An eligible surplus line carrier 

insurer listed on the NAIC Quarterly 

Listing of Alien Insurers must ascertain its direct earned premium by pricing separately its premium for insurance that meets the definition of property and casualty insurance for losses 

occurring at the locations described in 

section 102(5)(A) and (B) of the Act. 

(4) Federally approved insurers. A federally approved insurer, defined under 

section 102(6)(A)(iii) of the Act, should 

use a methodology similar to that 

specified for eligible surplus line carrier insurers in paragraph (h)(3) of this 

section to calculate its direct earned 

premium. Such calculation should be 

adjusted to reflect the limitations on 

scope of insurance coverage under the 

Program (i.e., to the extent of Federal 

approval of property and casualty insurance in connection with maritime, 

energy or aviation activities). 

(i) Direct written premium means the 

premium information for property and 

casualty insurance that is included by 

an insurer in column 1 of the Exhibit of 

Premiums and Losses of the NAIC Annual Statement or in an equivalent reporting requirement. The Federal terrorism policy surcharge is not included 

in amounts reported as direct written 

premium. 

(j) Discretionary recoupment amount 

means such amount of the aggregate 

Federal share of compensation in excess of the mandatory recoupment 

amount that the Secretary has determined will be recouped pursuant to section 103(e)(7)(D) of the Act. 

(k) Federal Insurance Office means the 

Federal Insurance Office within the 

U.S. Department of the Treasury. 

(l) Federal terrorism policy surcharge 

means the amount established by 

Treasury under subpart J of this part 

that is imposed as a policy surcharge 

on property and casualty insurance 

policies, expressed as a percentage of 

the written premium. 

(m) Insurance marketplace aggregate 

retention amount means an amount for 

a calendar year as calculated under 

section 103(e)(6) of the Act. 

(1) For calendar years beginning with 

2015 through 2019, such amount is the 

lesser of the aggregate amount, for all 

insurers, of insured losses once there 

has been a Program Trigger Event during the calendar year and: 

(i) For calendar year 2015: 

$29,500,000,000; 

(ii) For calendar year 2016: 

$31,500,000,000; 

(iii) For calendar year 2017: 

$33,500,000,000; 

(iv) For calendar year 2018: 

$35,500,000,000; and 

(v) For calendar year 2019: 

$37,500,000,000. 

(2) For calendar years beginning with 

2020 and any calendar year thereafter 

as may be necessary, such amount is 

the lesser of the aggregate amount, for 

all insurers, of insured losses once 

there has been a Program Trigger 

Event during the calendar year and the 

annual average of the sum of insurer 

deductibles for all insurers for the 


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§ 50.4 31 CFR Subtitle A (7–1–17 Edition) 

prior 3 years, to be calculated by taking 

(i) the total amount of direct earned 

premium reported by insurers to Treasury pursuant to section 50.51 for the 

three calendar years prior to the calendar year in question, and then dividing that figure by three; and 

(ii) Multiplying the resulting threeyear average figure by 20%. 

(3) Beginning in 2020, Treasury shall 

publish in the FEDERAL REGISTER the 

insurance marketplace aggregate retention amount for that calendar year 

no later than April 30, 2020, and by 

every April 30 thereafter for any subsequent calendar years as necessary. To 

the extent the Secretary certifies an 

act as an act of terrorism prior to April 

30 of any calendar year after 2019, 

Treasury will publish the relevant insurance marketplace aggregate retention amount as soon as practicable 

thereafter. 

(n) Insured loss. (1) The term insured 

loss means any loss resulting from an 

act of terrorism (including an act of 

war, in the case of workers’ compensation) that is covered by primary or excess property and casualty insurance 

issued by an insurer if the loss: 

(i) Occurs within the United States; 

(ii) Occurs to an air carrier (as defined in 49 U.S.C. 40102), or to a United 

States flag vessel (or a vessel based 

principally in the United States, on 

which United States income tax is paid 

and whose insurance coverage is subject to regulation in the United 

States), regardless of where the loss occurs; however, to the extent a loss occurs to such an air carrier or vessel 

outside the United States, the insured 

loss does not include losses covered by 

third party insurance contracts that 

are separate from the insurance coverage provided to the air carrier or vessel; or 

(iii) Occurs at the premises of any 

United States mission. 

(2) The term insured loss includes 

reasonable loss adjustment expenses, 

incurred by an insurer in connection 

with insured losses, that are allocated 

and identified by claim file in insurer 

records, including expenses incurred in 

the investigation, adjustment, and defense of claims, but excluding staff salaries, overhead, and other insurer expenses that would have been incurred 

notwithstanding the insured loss. 

(3) The term insured loss does not include: 

(i) Punitive or exemplary damages 

awarded or paid in connection with the 

Federal cause of action specified in section 107(a)(1) of the Act. The term ‘‘punitive or exemplary damages’’ means 

damages that are not compensatory 

but are an award of money made to a 

claimant solely to punish or deter; or 

(ii) Extra-contractual damages 

awarded against, or paid by, an insurer; 

or 

(iii) Payments by an insurer in excess 

of policy limits. 

(o) Insurer means any entity, including any affiliate of the entity, that 

meets the following requirements: 

(1)(i) The entity must fall within at 

least one of the following categories: 

(A) It is licensed or admitted to engage in the business of providing primary or excess insurance in any state 

(including, but not limited to, state licensed captive insurance companies, 

state licensed or admitted risk retention groups, and state licensed or admitted farm and county mutuals) and, 

if a joint underwriting association, 

pooling arrangement, or other similar 

entity, then the entity must: 

(1) Have gone through a process of 

being licensed or admitted to engage in 

the business of providing primary or 

excess insurance that is administered 

by the state’s insurance regulator, 

which process generally applies to insurance companies or is similar in 

scope and content to the process applicable to insurance companies; 

(2) Be generally subject to State insurance regulation, including financial 

reporting requirements, applicable to 

insurance companies within the State; 

and 

(3) Be managed independently from 

other insurers participating in the program; 

(B) It is not licensed or admitted to 

engage in the business of providing primary or excess insurance in any state, 

but is an eligible surplus line carrier 

listed on the NAIC Quarterly Listing of 

Alien Insurers; 

(C) It is approved or accepted for the 

purpose of offering property and casualty insurance by a Federal agency in 


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Office of the Secretary of the Treasury § 50.4 

connection with maritime, energy, or 

aviation activity, but only to the extent of such Federal approval of property and casualty insurance coverage 

offered by the insurer in connection 

with maritime, energy, or aviation activity; 

(D) It is a state residual market insurance entity or state workers’ compensation fund; or 

(E) As determined by the Secretary, 

it falls within any of the classes or 

types of captive insurers or other selfinsurance arrangements by municipalities and other entities. 

(ii) If an entity falls within more 

than one category described in paragraph (o)(1)(i) of this section, the entity is considered to fall within the first 

category within which it falls for purposes of the program. 

(2) The entity must receive direct 

earned premium, except in the case of: 

(i) State residual market insurance 

entities and state workers’ compensation funds, to the extent provided in 

subpart D of this part; and 

(ii) Other classes or types of captive 

insurers and other self-insurance arrangements by municipalities and 

other entities to the extent provided 

for in subpart E of this part. 

(3) The entity must meet any other 

criteria as prescribed by Treasury. 

(p) Insurer deductible means: 

(1) For an insurer that has had a full 

year of operations during the calendar 

year immediately preceding the applicable calendar year, the value of an insurer’s direct earned premiums during 

the immediately preceding calendar 

year, multiplied by 20 percent; and 

(2) For an insurer that has not had a 

full year of operations during the immediately preceding calendar year, the 

insurer deductible will be based on data 

for direct earned premiums for the applicable calendar year multiplied by 20 

percent. If the insurer does not have a 

full year of operations during the applicable calendar year, the direct earned 

premiums for the applicable calendar 

year will be annualized to determine 

the insurer deductible. 

(q) Mandatory recoupment amount 

means the difference between the insurance marketplace aggregate retention amount for a calendar year and 

the uncompensated insured losses during such calendar year. 

(r) NAIC means the National Association of Insurance Commissioners. 

(s) Person means any individual, business or nonprofit entity (including 

those organized in the form of a partnership, limited liability company, corporation, or association), trust or estate, or a State or political subdivision 

of a state or other governmental unit. 

(t) Professional liability insurance 

means insurance coverage for liability 

arising out of the performance of professional or business duties related to a 

specific occupation, with coverage 

being tailored to the needs of the specific occupation. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real 

estate agents, stockbrokers, and veterinarians. For purposes of this definition, professional liability insurance 

does not include directors and officers 

liability insurance. 

(u) Program means the Terrorism 

Risk Insurance Program established by 

the Act. 

(v) Program Trigger Event means a 

certified act of terrorism within a calendar year that results in aggregate industry insured losses, either on its own 

or in combination with any other certified act(s) of terrorism having previously taken place in the same calendar year, exceeding: 

(1) $100,000,000 with respect to calendar year 2015 insured losses; 

(2) $120,000,000 with respect to calendar year 2016 insured losses; 

(3) $140,000,000 with respect to calendar year 2017 insured losses; 

(4) $160,000,000 with respect to calendar year 2018 insured losses; 

(5) $180,000,000 with respect to calendar year 2019 insured losses; or 

(6) $200,000,000 with respect to calendar year 2020 insured losses and with 

respect to any calendar year thereafter. 

(w) Property and casualty insurance 

means commercial lines of property 

and casualty insurance, including excess insurance, workers’ compensation 

insurance, and directors and officers liability insurance, and: 

(1) Means commercial lines within 

only the following lines of insurance 


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§ 50.4 31 CFR Subtitle A (7–1–17 Edition) 

from the NAIC’s Exhibit of Premiums 

and Losses (commonly known as Statutory Page 14): Line 1—Fire; Line 2.1— 

Allied Lines; Line 5.1—Commercial 

Multiple Peril (non-liability portion); 

Line 5.2—Commercial Multiple Peril 

(liability portion); Line 8—Ocean Marine; Line 9—Inland Marine; Line 16— 

Workers’ Compensation; Line 17—Other 

Liability; Line 18—Products Liability; 

Line 22—Aircraft (all perils); and Line 

27—Boiler and Machinery; and 

(2) Does not include: 

(i) Federal crop insurance issued or 

reinsured under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.), or 

any other type of crop or livestock insurance that is privately issued or reinsured (including crop insurance reported under either Line 2.1—Allied 

Lines or Line 2.2—Multiple Peril (Crop) 

of the NAIC’s Exhibit of Premiums and 

Losses (commonly known as Statutory 

Page 14); 

(ii) Private mortgage insurance (as 

defined in section 2 of the Homeowners 

Protection Act of 1998) (12 U.S.C. 4901) 

or title insurance; 

(iii) Financial guaranty insurance 

issued by monoline financial guaranty 

insurance corporations; 

(iv) Insurance for medical malpractice; 

(v) Health or life insurance, including 

group life insurance; 

(vi) Flood insurance provided under 

the National Flood Insurance Act of 

1968 (42 U.S.C. 4001 et seq.) or earthquake insurance reported under Line 12 

of the NAIC’s Exhibit of Premiums and 

Losses (commonly known as Statutory 

Page 14); 

(vii) Reinsurance or retrocessional 

reinsurance; 

(viii) Commercial automobile insurance, including insurance reported 

under Lines 19.3 (Commercial Auto NoFault (personal injury protection)), 19.4 

(Other Commercial Auto Liability) and 

21.2 (Commercial Auto Physical Damage) of the NAIC’s Exhibit of Premiums 

and Losses (commonly known as Statutory Page 14); 

(ix) Burglary and theft insurance, including insurance reported under Line 

26 (Burglary and Theft) of the NAIC’s 

Exhibit of Premiums and Losses (commonly known as Statutory Page 14); 

(x) Surety insurance, including insurance reported under Line 24 (Surety) of 

the NAIC’s Exhibit of Premiums and 

Losses (commonly known as Statutory 

Page 14); 

(xi) Professional liability insurance 

as defined in paragraph (t) of this section; or 

(xii) Farm owners multiple peril insurance, including insurance reported 

under Line 3 (Farmowners Multiple 

Peril) of the NAIC’s Exhibit of Premiums and Losses (commonly known 

as Statutory Page 14). 

(x) Reciprocal insurer means an insurer organized under relevant state 

law as a reciprocal or interinsurance 

exchange. 

(y) Secretary means the Secretary of 

the U.S. Department of the Treasury. 

(z) Small insurer means an insurer (or 

an affiliated group of insurers in the 

case of affiliates within the meaning of 

paragraph (c) of this section) whose 

policyholder surplus for the immediately preceding year (as reported on 

its Annual Statement for state regulatory purposes at Page 3, Line 37, Column 1, or as calculated in similar fashion by participating insurers that do 

not file an Annual Statement) is less 

than five times the Program Trigger 

amount for the current year and whose 

direct earned premium for the preceding year is also less than five times 

the Program Trigger amount for the 

current year. An insurer that has not 

had a full year of operations during the 

immediately preceding calendar year is 

a small insurer if its policyholder surplus in the current year is less than 

five times the Program Trigger amount 

for the current year. A captive insurer 

is not a small insurer, regardless of the 

size of its policyholder surplus or direct earned premium. 

(aa) State means any state of the 

United States, the District of Columbia, the Commonwealth of Puerto Rico, 

the Commonwealth of the Northern 

Mariana Islands, American Samoa, 

Guam, each of the United States Virgin 

Islands, and any territory or possession 

of the United States. 

(bb) Surcharge means the Federal terrorism policy surcharge as defined in 

paragraph (l) of this section. 


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Office of the Secretary of the Treasury § 50.7 

(cc) Surcharge effective date means the 

date established by Treasury that begins the assessment period. 

(dd) Treasury means the U.S. Department of the Treasury. 

(ee) Uncompensated insured losses 

means the aggregate amount of insured 

losses of all insurers in a calendar year, 

once there has been a Program Trigger 

Event, that is not compensated by the 

Federal Government because such 

losses: 

(1) Are within the insurer deductibles 

of insurers, or 

(2) Are within the portions of losses 

in excess of insurer deductibles that 

are not compensated through payments 

made as a result of claims for the Federal share of compensation. 

(ff) United States means the several 

states, and includes the territorial sea 

and the continental shelf of the United 

States, as those terms are defined in 

the Violent Crime Control and Law Enforcement Act of 1994 (18 U.S.C. 2280 

and 2281). 

§ 50.5 Rule of construction for dates. 

Unless otherwise expressly provided 

in the regulation, any date in these 

regulations is intended to be applied so 

that the day begins at 12:01 a.m. and 

ends at midnight on that date. 

§ 50.6 Special rules for Interim Guidance safe harbors. 

(a) An insurer will be deemed to be in 

compliance with the requirements of 

the Act to the extent the insurer reasonably relied on Interim Guidance 

prior to the effective date of applicable 

regulations. 

(b) For purposes of this section, Interim Guidance means the following 

documents, which are available from 

Treasury at https://www.treasury .gov/resource-center/fin- mkts/Pages/program.aspx: 

(1) Interim Guidance I issued by 

Treasury on December 3, 2002; 

(2) Interim Guidance II issued by 

Treasury on December 18, 2002; 

(3) Interim Guidance III issued by 

Treasury on January 22, 2003; 

(4) Interim Guidance IV issued by 

Treasury on December 29, 2005; 

(5) Interim Guidance V issued by 

Treasury on December 31, 2007; and 

(6) Interim Guidance VI issued by 

Treasury on February 4, 2015. 

§ 50.7 Procedure for requesting determinations of controlling influence. 

(a) An insurer or insurers not having 

control over another insurer under 

§50.4(c)(2)(i) or (ii) may make a written 

submission to Treasury to rebut a presumption of controlling influence 

under §50.4(c)(4)(i) through (iv) or otherwise to request a determination of 

controlling influence. Such submissions shall be made to the Terrorism 

Risk Insurance Program Office, Department of the Treasury, Room 1410, 

1500 Pennsylvania Ave. NW., Washington, DC 20220. The submission 

should be entitled, ‘‘Controlling Influence Submission,’’ and should provide 

the full name and address of the submitting insurer(s) and the name, title, 

address and telephone number of the 

designated contact person(s) for such 

insurer(s). 

(b) Treasury will review submissions 

and determine whether Treasury needs 

additional written or orally presented 

information. In its discretion, Treasury 

may schedule a date, time, and place 

for an oral presentation by the insurer(s). 

(c) An insurer or insurers must provide all relevant facts and circumstances concerning the relationship(s) between or among the affected 

insurers and the control factors in 

§50.4(c)(4)(i) through (iv); and must explain in detail any basis for why the insurer believes that no controlling influence exists (if a presumption is being 

rebutted) in light of the particular 

facts and circumstances, as well as the 

Act’s language, structure and purpose. 

Any confidential business or trade secret information submitted to Treasury should be clearly marked. Treasury 

will handle any subsequent request for 

information designated by an insurer 

as confidential business or trade secret 

information in accordance with Treasury’s Freedom of Information Act regulations at 31 CFR part 1. 

(d) Treasury will review and consider 

the insurer submission and other relevant facts and circumstances. Unless 

otherwise extended by Treasury, within 60 days after receipt of a complete 

submission, including any additional 


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§ 50.8 31 CFR Subtitle A (7–1–17 Edition) 

information requested by Treasury, 

and including any oral presentation, 

Treasury will issue a final determination of whether one insurer has a controlling influence over another insurer 

for purposes of the Program. The determination shall set forth Treasury’s 

basis for its determination. 

(Approved by the Office of Management & 

Budget under control number 1505–0190) 

§ 50.8 Procedure for requesting general interpretations of statute. 

Persons actually or potentially affected by the Act or regulations in this 

Part may request an interpretation of 

the Act or regulations by writing to 

the Terrorism Risk Insurance Program 

Office, Room 1410, Department of the 

Treasury, 1500 Pennsylvania Ave. NW., 

Washington, DC 20220, giving a detailed 

explanation of the facts and circumstances and the reason why an interpretation is needed. A requester 

should segregate and mark any confidential business or trade secret information clearly. Treasury in its discretion will provide written responses to 

requests for interpretation. Treasury 

reserves the right to decline to provide 

a response in any case. Except in the 

case of any confidential business or 

trade secret information, Treasury will 

make written requests for interpretations and responses publicly available 

at the Treasury Department Library, 

on the Treasury Web site, or through 

other means as soon as practicable 

after the response has been provided. 

Treasury will handle any subsequent 

request for information that had been 

designated by a requester as confidential business or trade secret information in accordance with Treasury’s 

Freedom of Information Act regulations at 31 CFR part 1. 

Subpart B—Disclosures as 

Conditions for Federal Payment 

§ 50.10 General disclosure requirements. 

(a) Content of disclosure. As a condition for Federal payments under section 103(b) of the Act, the Act requires 

that an insurer provide clear and conspicuous disclosure to the policyholder 

of: 

(1) The premium charged for insured 

losses covered by the Program; and 

(2) The Federal share of compensation for insured losses under the Program. 

(b) Form and timing of disclosure. The 

disclosure required by the Act must be 

made on a separate line item in the 

policy, at the time of offer and of renewal of the policy. 

§ 50.11 Definition. 

For purposes of this Subpart, unless 

the context indicates otherwise, the 

term ‘‘disclosure’’ or ‘‘disclosures’’ refers to the disclosure described in section 103(b)(2) of the Act and §50.10. The 

term ‘‘cap disclosure’’ refers to the disclosure required by section 103(b)(3) of 

the Act and §50.15. 

§ 50.12 Clear and conspicuous disclosure. 

(a) General. Whether a disclosure is 

clear and conspicuous depends on the 

totality of the facts and circumstances 

of the disclosure. See §50.16 for model 

forms. 

(b) Description of premium. An insurer 

may describe the premium charged for 

insured losses covered by the Program 

as a portion or percentage of a policy 

premium, if consistent with standard 

business practice and provided that the 

amount of policy premium or the 

method of determining the policy premium is also stated. An insurer may 

not describe the premium in a manner 

that is misleading in the context of the 

Program, such as by characterizing the 

premium as a ‘‘surcharge.’’ 

(c) Method of disclosure. Subject to 

§50.10(b), an insurer may provide disclosures using normal business practices, including forms and methods of 

communication used to communicate 

similar policyholder information to 

policyholders. 

(d) Use of producer. If an insurer normally communicates with a policyholder through an insurance producer 

or other intermediary, an insurer may 

provide disclosures through such producer or other intermediary. If an insurer elects to make the disclosures 

through an insurance producer or other 

intermediary, the insurer remains responsible for ensuring that the disclosures are provided by the insurance 


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Office of the Secretary of the Treasury § 50.16 

producer or other intermediary to policyholders in accordance with the Act. 

(e) Demonstration of compliance. An insurer may demonstrate that it has satisfied the requirement to provide clear 

and conspicuous disclosure as described 

in §50.10 through use of appropriate 

systems and normal business practices 

that demonstrate a practice of compliance. 

(f) Certification of compliance. An insurer must certify that it has complied 

with the requirement to provide disclosure to the policyholder on all policies 

that form the basis for any claim that 

is submitted by an insurer for Federal 

payment under the Program. 

§ 50.13 Offer and renewal. 

An insurer is deemed to be in compliance with the requirement of providing 

disclosure ‘‘at the time of offer and of 

renewal of the policy’’ under §50.10(b) if 

the insurer makes the disclosure no 

later than the time the insurer first 

formally offers to provide insurance 

coverage or renew a policy for a current policyholder. 

§ 50.14 Separate line item. 

An insurer is deemed to be in compliance with the requirement of providing 

disclosure on a ‘‘separate line item in 

the policy’’ under §50.10(b) if the insurer makes the disclosure: 

(a) On the declarations page of the 

policy; 

(b) Elsewhere within the policy itself; 

or 

(c) In any rider or endorsement, or 

other document that is made a part of 

the policy. 

§ 50.15 Cap disclosure. 

(a) General. Under section 103(e)(2) of 

the Act, if the aggregate insured losses 

exceed $100,000,000,000 during any calendar year, the Secretary shall not 

make any payment for any portion of 

the amount of such losses that exceeds 

$100,000,000,000, and no insurer that has 

met its insurer deductible shall be liable for the payment of any portion of 

the amount of such losses that exceeds 

$100,000,000,000. 

(b) Other requirements. As a condition 

for Federal payments under section 

103(b) of the Act, an insurer must provide clear and conspicuous disclosure 

to the policyholder of the existence of 

the $100,000,000,000 cap under section 

103(e)(2). The cap disclosure must be 

made at the time of offer, purchase, 

and renewal of the policy. 

(c) Offer, purchase, and renewal. An 

insurer is deemed to be in compliance 

with the requirement of providing disclosure ‘‘at the time of offer, purchase, 

and renewal of the policy’’ under 

§50.15(b) if the insurer: 

(1) Makes the disclosure no later 

than the time the insurer first formally offers to provide insurance coverage or renew a policy for a current 

policyholder; and 

(2) If terrorism risk coverage is purchased, the insurer makes clear and 

conspicuous reference back to that disclosure, as well as the final terms of 

terrorism insurance coverage, at the 

time the transaction is completed. 

(d) Other applicable rules. The cap disclosure is covered by the rules in 

§50.12(a), (c), (d), (e), and (f) (relating to 

clear and conspicuous disclosure). 

§ 50.16 Use of model forms. 

(a) General. An insurer that is required to make the disclosure under 

§50.10(b) or §50.15(b) is deemed to be in 

compliance with the disclosure requirements if the insurer uses NAIC Model 

Disclosure Form No. 1 or NAIC Model 

Disclosure Form No. 2, as appropriate. 

(b) Not exclusive means of compliance. 

An insurer is not required to use NAIC 

Model Disclosure Form No. 1 or NAIC 

Model Disclosure Form No. 2 to satisfy 

the disclosure requirements. An insurer may use other means to comply 

with the disclosure requirements, as 

long as the disclosures comport with 

the requirements of the Act. 

(c) Definitions. For purposes of this 

section, references to NAIC Model Disclosure Form No. 1 and NAIC Model 

Disclosure Form No. 2 refer to such 

forms as revised in January 2015, or as 

subsequently modified by the NAIC, 

provided Treasury has stated that 

usage by insurers of the subsequently 

modified forms is deemed to satisfy the 

disclosure requirements of the Act and 

the insurer uses the most current 

forms, so approved by Treasury, that 

are available at the time of disclosure. 

These forms may be found on the 

Treasury Web site at https:// 


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§ 50.17 31 CFR Subtitle A (7–1–17 Edition) 

www.treasury .gov/resource-center/finmkts/Pages/program.aspx. 

§ 50.17 General disclosure requirements for State residual market insurance entities and State workers’ 

compensation funds. 

(a) Residual market mechanism disclosure. A state residual market insurance 

entity or state workers’ compensation 

fund may provide the disclosures required by this subpart B to policyholders using normal business practices, including forms and methods of 

communication used to communicate 

similar information to policyholders. 

The disclosures may be made by the 

state residual market insurance entity 

or state workers’ compensation fund 

itself, the individual insurers that participate in the state residual market 

insurance entity or state workers’ 

compensation fund, or its servicing 

carriers. The ultimate responsibility 

for ensuring that the disclosure requirements have been met rests with 

the insurer filing a claim under the 

Program. 

(b) Other requirements. Except as provided in this section, all other disclosure requirements set out in this subpart B apply to state residual insurance market entities and state workers’ compensation funds. 

Subpart C—Mandatory 

Availability 

§ 50.20 General mandatory availability 

requirements. 

(a) General requirements. Under section 103(c) of the Act, an insurer must: 

(1) Make available, in all of its property and casualty insurance policies, 

coverage for insured losses; and 

(2) Make available property and casualty insurance coverage for insured 

losses that does not differ materially 

from the terms, amounts, and other 

coverage limitations applicable to 

losses arising from events other than 

acts of terrorism. 

(b) Compliance through 2020. Under 

section 108(a) of the Act, an insurer 

must comply with paragraphs (a)(1) 

and (2) of this section through calendar 

year 2020. 

(c) Beyond 2020. Notwithstanding 

paragraph (a)(2) of this section and 

§50.22(a), property and casualty insurance coverage for insured losses does 

not have to be made available beyond 

December 31, 2020, even if the policy period of insurance coverage for losses 

from events other than acts of terrorism extends beyond that date. 

§ 50.21 Make available. 

(a) General. The requirement to make 

available coverage as provided in §50.20 

applies at the time an insurer makes 

the initial offer of coverage as well as 

at the time an insurer makes an initial 

offer of renewal of an existing policy. 

(b) Offer consistent with definition of 

act of terrorism. An insurer must make 

available coverage for insured losses in 

a policy of property and casualty insurance consistent with the definition of 

an act of terrorism as defined in 

§50.4(b). 

(c) Changes negotiated subsequent to 

initial offer. If an insurer satisfies the 

requirement to make available coverage as described in §50.20 by first 

making an offer with coverage for insured losses that does not differ materially from the terms, amounts, and 

other coverage limitations applicable 

to losses arising from events other 

than acts of terrorism, which the policyholder or prospective policyholder 

declines, the insurer may negotiate 

with the policyholder or prospective 

policyholder an option of partial coverage for insured losses at a lower 

amount of coverage if permitted by any 

applicable state law. An insurer is not 

required by the Act to offer partial 

coverage if the policyholder or prospective policyholder declines full coverage. See §50.23. 

(d) Demonstrations of compliance. If an 

insurer makes an offer of insurance but 

no contract of insurance is concluded, 

the insurer may demonstrate that it 

has satisfied the requirement to make 

available coverage as described in 

§50.20 through use of appropriate systems and normal business practices 

that demonstrate a practice of compliance. 

§ 50.22 No material difference from 

other coverage. 

(a) Terms, amounts, and other coverage 

limitations. As provided in §50.20(a)(2), 


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Office of the Secretary of the Treasury § 50.32 

an insurer must offer coverage for insured losses arising from an act of terrorism that does not differ materially 

from the terms, amounts, and other 

coverage limitations (including 

deductibles) applicable to losses arising 

from events other than acts of terrorism. For purposes of this requirement, ‘‘terms’’ excludes price. 

(b) Limitations on types of risk. An insurer is not required to cover risks 

that it typically excludes or does not 

write to satisfy the requirement to 

make available coverage for losses resulting from an act of terrorism that 

does not differ materially from the 

terms, amounts, and other coverage 

limitations applicable to losses arising 

from events other than acts of terrorism. For example, if an insurer does 

not cover all types of risks, either because the insurer is outside of direct 

state regulatory oversight, or because 

a state permits certain exclusions for 

certain types of losses, such as nuclear, 

biological, or chemical events, then the 

insurer is not required to make such 

coverage available. 

§ 50.23 Applicability of State law requirements. 

(a) General. After satisfying the requirement to make available coverage 

for insured losses that does not differ 

materially from the terms, amounts, 

and other coverage limitations applicable to losses arising from events other 

than acts of terrorism, if coverage is 

rejected an insurer may then offer coverage that is on different terms, 

amounts, or coverage limitations, as 

long as such an offer does not violate 

any applicable state law requirements. 

(b) Examples. (1) If an insurer subject 

to state regulation first makes available coverage in accordance with §50.20 

and the state has a requirement that 

an insurer offer full coverage without 

any exclusion, then the requirement 

would continue to apply and the insurer may not subsequently offer less 

than full coverage or coverage with exclusions. 

(2) If an insurer subject to state regulation first makes available coverage 

in accordance with §50.20 and the state 

permits certain exclusions or allows for 

other limitations, or an insurance policy is not governed by state law requirements, then the insurer may subsequently offer limited coverage or 

coverage with exclusions. 

Subpart D—State Residual Market 

Insurance Entities; State Workers’ Compensation Funds 

§ 50.30 General participation requirements. 

(a) Insurers. As defined in §50.4(o), all 

state residual market insurance entities and state workers’ compensation 

funds are insurers under the Program 

even if such entities do not receive direct earned premiums. 

(b) Mandatory participation. State residual market insurance entities and 

State workers’ compensation funds are 

mandatory participants in the Program subject to the rules issued in this 

Subpart. 

(c) Identification. Treasury maintains 

a list of state residual market insurance entities and state workers’ compensation funds at https://www.treasury 

.gov/resource-center/fin-mkts/Pages/program.aspx. Procedures for providing 

comments and updates to that list are 

posted with the list. 

§ 50.31 Entities that do not share profits and losses with private sector insurers. 

(a) Treatment. A state residual market insurance entity or a state workers’ compensation fund that does not 

share profits and losses with a private 

sector insurer is deemed to be a separate insurer under the Program. 

(b) Premium calculation. A state residual market insurance entity or a state 

workers’ compensation fund that is 

deemed to be a separate insurer should 

follow the guidelines specified in 

§50.4(h)(1) or (2) for the purposes of calculating the appropriate measure of direct earned premium. 

§ 50.32 Entities that share profits and 

losses with private sector insurers. 

(a) Treatment. A State residual market insurance entity or a State workers’ compensation fund that shares 

profits and losses with a private sector 

insurer is deemed not to be a separate 

insurer under the Program. 

(b) Premium and loss calculation. A 

state residual market insurance entity 


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§ 50.33 31 CFR Subtitle A (7–1–17 Edition) 

or a State workers’ compensation fund 

that is deemed not to be a separate insurer should continue to report, in accordance with normal business practices, to each participant insurer its 

share of premium income and insured 

losses, which shall then be included respectively in the participant insurer’s 

direct earned premium or insured loss 

calculations. 

§ 50.33 Allocation of premium income 

associated with entities that do 

share profits and losses with private sector insurers. 

(a) Servicing carriers. For purposes of 

this subpart, a servicing carrier is an 

insurer that enters into an agreement 

to place and service insurance contracts for a state residual market insurance entity or a state workers’ compensation fund and to cede premiums 

associated with such insurance contracts to the State residual market insurance entity or State workers’ compensation fund. Premiums written by a 

servicing carrier on behalf of a state 

residual market insurance entity or 

State workers’ compensation fund that 

are ceded to such an entity or fund 

shall not be included as direct earned 

premium (as described in §50.4(h)(1) or 

(2)) of the servicing carrier. 

(b) Participant insurers. For purposes 

of this Subpart, a participant insurer is 

an insurer that shares in the profits 

and losses of a state residual market 

insurance entity or a state workers’ 

compensation fund. Premium income 

that is distributed to or assumed by 

participant insurers in a state residual 

market insurance entity or state workers’ compensation fund (whether directly or as quota share insurers of 

risks written by servicing carriers), 

shall be included in direct earned premium (as described in §50.4(h)(1) or (2)) 

of the participant insurer. 

Subpart E [Reserved] 

Subpart F—Data Collection 

§ 50.50 General. 

Treasury may request from insurers 

such data and information as may be 

reasonably required in support of 

Treasury’s administration of the Program. 

§ 50.51 Annual data reporting. 

(a) General. No later than May 15 of 

each calendar year, all insurers shall 

provide specified data and information 

respecting their Program participation. 

(b) Scope. Except as otherwise provided by Treasury, the information to 

be provided shall address: the lines of 

property and casualty insurance subject to the Program, the premiums 

earned for terrorism risk insurance 

within those lines and for those lines 

generally, the geographical location of 

exposures covered under terrorism risk 

insurance, the pricing of terrorism risk 

insurance, the take-up rate for terrorism risk insurance, the amount of 

private reinsurance obtained by participating insurers in connection with 

such policies, and other matters concerning the Program as may be identified by Treasury. 

(c) Method of reporting. (1) Treasury 

will promulgate forms defining the specific data and information that each 

insurer must submit and make these 

forms available on its Web site. Treasury may adopt different data reporting 

forms for different types of insurers 

that participate in the Program, which 

modify the requested information by 

each different category of participating 

insurer based upon the manner and 

scope of the participation of those insurers in the Program. Each insurer 

shall submit the required data and information by electronic submission 

through the forms and data portal(s) 

identified on Treasury’s Web site. All 

data and information provided as part 

of such electronic submission shall be 

certified by the insurer as a full and 

true statement of the information provided to the best of its knowledge, information and belief. 

(2) The data and information required 

to be provided under this subsection 

may be modified annually by Treasury. 

Any modification shall be made during 

the prior calendar year, and Treasury 

shall provide insurers at least 90 days 

before requiring collection of any 

newly specified data or information. 

(d) Supplemental requests. Treasury 

may issue supplemental requests, to 

some or all participating insurers, in 

connection with the annual data request provided for under this section, 


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Office of the Secretary of the Treasury § 50.53 

to the extent Treasury determines that 

it requires additional or clarifying information in order to analyze the effectiveness of the Program. Insurers shall 

respond to any such supplemental requests as may be made within the 

timeframe and in the manner specified 

by Treasury. 

(e) Small insurer exception. The Secretary may exempt a small insurer 

that meets the definition in §50.4(z) 

from any or all data calls under this 

section, or may modify the requests as 

applicable to such small insurer. 

§ 50.52 Small insurer data. 

(a) General. The Secretary may collect information relating to small insurers, as defined in §50.4(z), in order to 

conduct a study of small insurers participating in the Program, and identify 

any competitive challenges small insurers face in the terrorism risk insurance marketplace. 

(b) Scope. Information collected concerning small insurers may include information necessary for Treasury to 

identify: 

(1) Changes to the market share, premium volume, and policyholder surplus 

of small insurers relative to large insurers; 

(2) How the property and casualty insurance market for terrorism risk differs between small and large insurers, 

and whether such a difference exists 

within other perils; 

(3) The impact on small insurers of 

the Program’s mandatory availability 

requirement under section 103(c) of the 

Act; 

(4) The effect on small insurers of increasing the trigger amount for the 

Program under section 103(e)(1)(B) of 

the Act; 

(5) The availability and cost of private reinsurance for small insurers; 

and 

(6) The impact that state workers 

compensation laws have on small insurers and workers compensation carriers in the terrorism risk insurance 

marketplace. 

§ 50.53 Collection of claims data. 

(a) General. Subsequent to any certification by the Secretary of an act of 

terrorism, insurers shall report to 

Treasury information respecting insured losses arising from the act of terrorism. 

(b) Contents of periodic reporting. Reporting under this subsection shall be 

by a form prescribed by Treasury and 

made available on the Treasury Web 

site, which provides basic information 

about each claim established by an insurer that involves or potentially involves an insured loss. Information to 

be reported for any claims by or 

against a policyholder shall identify 

paid and reserved amounts associated 

with the claim. In the case of an affiliated group of insurers, the form required by this subsection shall be submitted by a single insurer designated 

within the affiliated group, which shall 

report on a consolidated basis. Data 

and information reported under this 

subsection will include: 

(1) A listing of each claim by name of 

insured, catastrophe code, line of business, and in the case of an affiliated 

group of insurers, the particular insurer or insurers within the group associated with each claim; 

(2) Amounts paid, both loss and loss 

adjustment expenses, in connection 

with the claim as of the effective date 

of the report; and 

(3) Amounts reserved, both loss and 

loss adjustment expenses, in connection with the claim as of the effective 

date of the report. 

(c) Timing of reporting. To the extent 

that an insurer has established one or 

more claims that it believes involve insured losses arising from an act of terrorism, the insurer shall submit its 

first report within 60 days of establishing the first of such claims. An updated report shall be submitted each 

month thereafter, reporting data as of 

the prior month, until all claims arising from the act of terrorism have been 

resolved. 

(d) Interrelationship with other reporting requirements. The reporting requirements under this subsection are independent of the Initial Notice of Deductible Erosion, Initial Certification of 

Loss, and Supplementary Certifications of Loss requirements in subpart H. 

(e) Other sources of information. Subsequent to any certification of an act of 

terrorism, Treasury may also seek information respecting loss estimates 


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§ 50.54 31 CFR Subtitle A (7–1–17 Edition) 

and projections from one or more organizations that are not participants in 

the Program, such as state insurance 

regulators, insurance modeling organizations, rating agencies, insurance brokers and producers, and insurance data 

aggregators. A data request may also 

be directed to insurers identified in 

connection with such inquiries. An insurer subject to such a data call shall 

respond to this request within the time 

frame specified in the request. 

§ 50.54 Handling of data. 

(a) General. All nonpublic information submitted to the Secretary under 

subparts F and G of this part shall be 

considered proprietary information and 

shall: 

(1) Be handled and stored by Treasury in an appropriately secure manner; 

(2) Be considered, where appropriate, 

to be trade secrets or commercial or financial information obtained from a 

person and privileged or confidential; 

and 

(3) Not be publicly released in any 

unaggregated form in which a consumer, policyholder, or insurer is identifiable. 

(b) Use of insurance statistical 

aggregator. To the extent Treasury utilizes an insurance statistical 

aggregator in connection with any data 

collection under subparts F and G, 

such insurance statistical aggregator 

shall keep any nonpublic information 

that it collects confidential, consistent 

with the requirements of this section. 

(c) Confidentiality. (1) The submission 

of any non-publicly available data and 

information to the Secretary under 

subparts F and G of this part, and the 

sharing of any non-publicly available 

data with or by the Secretary among 

other Federal agencies, the state insurance regulatory authorities, or any 

other entities shall not constitute a 

waiver of, or otherwise affect, any 

privilege or immunity arising under 

Federal or state law (including the 

rules of any Federal or state court) to 

which the data or information is otherwise subject. 

(2) Any requirement under Federal or 

state law to the extent otherwise applicable, or any requirement pursuant to 

a written agreement in effect between 

the original source of any non-publicly 

available data or information and the 

source of such data or information to 

the Secretary, regarding privacy or 

confidentiality of any data or information in the possession of the source to 

the Secretary, shall continue to apply 

to such data or information after the 

data or information has been provided 

pursuant to this subpart. 

(3) Any data or information obtained 

by the Secretary under subparts F or G 

of this part may be made available to 

state insurance regulatory authorities, 

individually or collectively through an 

information-sharing agreement that: 

(i) Shall comply with applicable Federal law; and 

(ii) Shall not constitute a waiver of, 

or otherwise affect, any privilege or 

immunity under Federal or state law 

(including any privilege referred to in 

paragraph (b)(1) of this section and the 

rules of any Federal or State court) to 

which the data or information is otherwise subject. 

(4) Section 552 of title 5, United 

States Code, including any exceptions 

thereunder, shall apply to any data or 

information submitted under this Subpart by an insurer or affiliate of an insurer. 

Subpart G—Certification 

§ 50.60 Certification. 

(a) Certification decision. The Secretary, in consultation with the Attorney General of the United States and 

the Secretary of Homeland Security, is 

responsible for determining whether to 

certify an act as an act of terrorism. 

(b) Timeline for eligibility. An act is eligible for certification as an act of terrorism at the end of the following 

timeline: 

(1) The Secretary commences review 

of whether an act satisfies the definition in §50.4(b); 

(2) Within 30 days of the Secretary 

commencing review, Treasury publishes the notice required by §50.61(a). 

During such review, the schedule of 

public notifications in §50.61(b) shall 

apply, as appropriate; 

(3) The Secretary’s review finds that 

the act satisfies the elements for certification under §50.4(b)(1)(i) through 


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Office of the Secretary of the Treasury § 50.62 

(iv), and that it is not otherwise precluded from certification by §50.4(b)(2); 

and 

(4) Within 30 days or as soon as otherwise practicable after the review identified in paragraph (b)(3) of this section 

concludes that the act satisfies the 

necessary criteria, the Secretary 

consults with the Attorney General of 

the United States and the Secretary of 

Homeland Security pursuant to section 

102(1)(A) of the Act. 

(c) Other consultation. Nothing in this 

section shall prevent the Secretary 

from consulting and coordinating with 

the Attorney General of the United 

States, the Secretary of Homeland Security, or any other government official prior to the consultation identified 

in paragraph (b)(4) of this section. 

(d) Finality. Any decision by the Secretary to certify, or determination not 

to certify, an act as an act of terrorism 

under this subpart shall be final, and 

shall not be subject to judicial review. 

(e) Nondelegation. The Secretary may 

not delegate or designate to any other 

officer, employee, or person, the determination of whether to certify an act 

as an act of terrorism. 

§ 50.61 Public communication. 

(a) Initial notification. After the Secretary commences review of whether 

an act may satisfy the definition in 

§50.4(b), Treasury shall publish a notice 

in the FEDERAL REGISTER within 30 

days of the Secretary commencing review notifying the public that the act 

is under review for certification as an 

act of terrorism. Treasury may also announce that an act is not under review 

for certification. 

(b) Update notification. Not later than 

30 days following the publication of a 

notice under paragraph (a) of this section that an act is under review for certification, and not later than every 60 

days thereafter until the Secretary determines whether to certify an act as 

an act of terrorism, Treasury shall 

publish a notice in the FEDERAL REGISTER notifying the public whether the 

act is still under review for certification as an act of terrorism. 

(c) Contents of notification. Nothing in 

this section shall require Treasury to 

provide any information other than 

whether the act is under review for certification as an act of terrorism (or is 

no longer under such review) or shall 

limit Treasury from providing further 

information of relevance. 

(d) Rules of construction. Nothing in 

this section shall be construed to preclude the Secretary from certifying or 

determining not to certify an act as an 

act of terrorism before notifying the 

public that the act is under review for 

certification. If, in the discretion of 

the Secretary, circumstances relating 

to an act render timely notification 

under this section by Treasury impracticable, Treasury shall provide the notification as soon as practicable, in a 

manner the Secretary determines is appropriate. 

(e) Nonbinding decision. A notification 

made under this section shall not be 

construed to be a final determination 

by the Secretary of whether to certify 

an act as an act of terrorism. 

§ 50.62 Certification data collection. 

(a) General. (1) The Secretary, when 

evaluating an act for certification as 

an act of terrorism, may at any time 

direct one or more insurers to submit 

information regarding projected and 

actual losses in connection with an act 

and any other information the Secretary determines appropriate. The information sought by the Secretary 

shall be specified in the data request, 

and any insurer subject to the data request shall respond to the request 

within the time frame specified by the 

Secretary at the time of the request. 

The data requested may include actual 

loss reserves established by insurers in 

connection with the act under consideration, loss estimates generated by insurers in connection with the act under 

consideration which have not yet been 

established as actual loss reserves, and 

information respecting an insurer’s 

property and casualty exposures in a 

particular geographic area associated 

with the act under consideration. 

(2) An insurer not required by Treasury to submit information under paragraph (a)(1) of this section may voluntarily submit information to the Secretary as specified in public notifications issued by Treasury. 

(b) Other sources of information. The 

Secretary may request information 


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§ 50.63 31 CFR Subtitle A (7–1–17 Edition) 

with respect to loss estimates and likely affected insurers from organizations, 

including state insurance regulators, 

insurance modeling organizations, rating agencies, insurance brokers and 

producers, and insurance data 

aggregators. 

§ 50.63 Notification of certification determination. 

(a) Public notification. Not later than 

5 business days after the Secretary determines whether to certify an act as 

an act of terrorism, Treasury shall 

publish a statement and submit a notice to the FEDERAL REGISTER notifying the public of the Secretary’s decision. 

(b) Insurance supervisor notification. 

Not later than 5 business days after the 

Secretary determines whether to certify an act as an act of terrorism, 

Treasury shall notify in writing any 

relevant supervisory officials of the 

Secretary’s decision. 

(c) Congressional notification. Not 

later than 5 business days after the 

Secretary determines whether to certify an act as an act of terrorism, 

Treasury shall notify in writing the 

President of the U.S. Senate and the 

Speaker of the U.S. House of Representatives of the Secretary’s decision. 

(d) Rule of construction. If, in the discretion of the Secretary, circumstances 

relating to an act render timely notification by Treasury under this section 

impracticable, Treasury shall provide 

the notification as soon as practicable, 

in a manner the Secretary determines 

is appropriate. 

Subpart H—Claims Procedures 

§ 50.70 Federal share of compensation. 

(a) General. (1) Treasury will pay the 

Federal share of compensation for insured losses as provided in section 103 

of the Act once a Certification of Loss 

required by §50.73 is deemed sufficient. 

The Federal share of compensation 

under the Program shall be: 

(i) 85 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2015; 

(ii) 84 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2016; 

(iii) 83 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2017; 

(iv) 82 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2018; 

(v) 81 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2019; and 

(vi) 80 percent of that portion of the 

insurer’s aggregate insured losses that 

exceeds its insurer deductible during 

calendar year 2020 and any calendar 

year thereafter. 

(2) The percentages in paragraph 

(a)(1) of this section are subject to any 

adjustments described in §50.71 and to 

the cap of $100 billion as provided in 

section 103(e)(2) of the Act. 

(b) Program Trigger amounts. Notwithstanding paragraph (a) of this section 

or anything in this subpart to the contrary, Federal compensation will not 

be paid by Treasury unless the aggregate industry insured losses resulting 

from one or more certified acts of terrorism exceed the following amounts: 

(1) For insured losses resulting from 

acts of terrorism taking place in calendar year 2015: $100 million; 

(2) For insured losses resulting from 

acts of terrorism taking place in calendar year 2016: $120 million; 

(3) For insured losses resulting from 

acts of terrorism taking place in calendar year 2017: $140 million; 

(4) For insured losses resulting from 

acts of terrorism taking place in calendar year 2018: $160 million; 

(5) For insured losses resulting from 

acts of terrorism taking place in calendar year 2019: $180 million; 

(6) For insured losses resulting from 

acts of terrorism taking place in calendar year 2020 and any calendar year 

thereafter: $200 million. 

(c) Conditions for payment of Federal 

share. Subject to paragraph (d) of this 

section, Treasury shall pay the appropriate amount of the Federal share of 

compensation for an insured loss to an 

insurer upon a determination that: 


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Office of the Secretary of the Treasury § 50.71 

(1) The insurer is an entity, including 

an affiliate thereof, that meets the requirements of §50.4(o); 

(2) The insurer’s insured losses, as defined in §50.4(n) and limited by paragraph (d) of this section (including the 

allocated dollar value of the insurer’s 

proportionate share of insured losses 

from a state residual market insurance 

entity or a state workers’ compensation fund as described in §50.33), have 

exceeded its insurer deductible as defined in §50.4(p); 

(3) The insurer has paid or is prepared to pay an insured loss, based on 

a filed claim for the insured loss; 

(4) Neither the insurer’s claim for 

Federal payment nor any underlying 

claim for an insured loss is fraudulent, 

collusive, made in bad faith, dishonest 

or otherwise designed to circumvent 

the purposes of the Act and regulations; 

(5) The insurer has provided a clear 

and conspicuous disclosure as required 

by §§50.10 through 50.14 and a cap disclosure as required by §50.15; 

(6) The insurer offered coverage for 

insured losses and the offer was accepted by the insured prior to the act 

which results in the insured loss; 

(7) The insurer took all steps reasonably necessary to properly and carefully investigate the insured loss and 

otherwise processed the insured loss 

using practices appropriate for the 

business of insurance; 

(8) The insured loss is within the 

scope of coverage issued by the insurer 

under the terms and conditions of one 

or more policies for commercial property and casualty insurance as defined 

in §50.4(w); and 

(9) The procedures specified in this 

Subpart have been followed and all 

conditions for payment have been met. 

(d) Adjustments. Treasury may subsequently adjust, including requiring repayment of, any payment made under 

paragraph (c) of this section in accordance with its authority under the Act. 

(e) Suspension of payment for other insured losses. Upon a determination by 

Treasury that an insurer has failed to 

meet any of the requirements for payment specified in paragraph (c) of this 

section for a particular insured loss, 

Treasury may suspend payment of the 

Federal share of compensation for all 

other insured losses of the insurer 

pending investigation and audit of the 

insurer’s insured losses. 

(f) Aggregate industry losses. Treasury 

will determine the amount of aggregate industry insured losses resulting 

from a certified act of terrorism. If aggregate industry insured losses in a 

calendar year resulting from one or 

more certified acts of terrorism exceed 

the applicable Program Trigger 

amounts specified in paragraph (b) of 

this section, Treasury will publish a 

document in the FEDERAL REGISTER of 

a Program Trigger Event. 

§ 50.71 Adjustments to the Federal 

share of compensation. 

(a) Aggregate amount of insured losses. 

The aggregate amount of insured losses 

of an insurer in a calendar year used to 

calculate the Federal share of compensation shall be reduced by any 

amounts recovered by the insurer as 

salvage or subrogation for its insured 

losses in the calendar year. 

(b) Amount of Federal share of compensation. The Federal share of compensation shall be adjusted as follows: 

(1) No excess recoveries. For any calendar year, the sum of the Federal 

share of compensation paid by Treasury to an insurer and the insurer’s recoveries for insured losses from other 

sources shall not be greater than the 

insurer’s aggregate amount of insured 

losses for acts of terrorism in that calendar year. Amounts recovered for insured losses in excess of an insurer’s 

aggregate amount of insured losses for 

acts of terrorism in a calendar year 

shall be repaid to Treasury within 45 

days after the end of the month in 

which total recoveries of the insurer, 

from all sources, become excess. For 

purposes of this paragraph, amounts 

recovered from a reinsurer pursuant to 

an agreement whereby the reinsurer’s 

right to any excess recovery has priority over the rights of Treasury shall 

not be considered a recovery subject to 

repayment to Treasury. 

(2) Reduction of amount payable. The 

Federal share of compensation for insured losses under the Program shall 

be reduced by the amount of other 

compensation provided by other Federal programs to an insured or a third 


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§ 50.72 31 CFR Subtitle A (7–1–17 Edition) 

party to the extent such other compensation duplicates the insurance indemnification for those insured losses. 

(i) Other Federal program compensation. For purposes of this section, compensation provided by other Federal 

programs for insured losses means 

compensation that is provided by Federal programs established for the purpose of compensating persons for losses 

in the event of emergencies, disasters, 

acts of terrorism, or similar events. 

Compensation provided by Federal programs for insured losses excludes benefit or entitlement payments, such as 

those made under the Social Security 

Act, under laws administered by the 

Secretary of Veteran Affairs, railroad 

retirement benefit payments, and other 

similar types of benefit payments. 

(ii) Insurer due diligence. With respect 

to any underlying claim for insured 

losses, each insurer shall inquire of all 

involved policyholders, insureds, and 

claimants whether the person receiving 

insurance proceeds for an insured loss 

has received, expects to receive, or is 

entitled to receive compensation from 

another Federal program for the insured loss, and if so, the source and the 

amount of the compensation received 

or expected. The response, source, and 

such amounts shall be reported with 

each underlying claim on the form 

specified in §50.73(b)(1). 

§ 50.72 Notice of deductible erosion. 

Each insurer shall submit to Treasury a Notice on a form prescribed by 

Treasury whenever the insurer’s aggregate insured losses (including reserves 

for ‘‘incurred but not reported’’ losses) 

within a calendar year exceed an 

amount equal to 50 percent of the insurer’s deductible as specified in 

§50.4(p). Insurers are advised that the 

form for the Notice of Deductible Erosion will include an initial estimate of 

aggregate insured losses for the calendar year, the amount of the insurer 

deductible, and an estimate of the Federal share of compensation for the insurer’s aggregate insured losses. In the 

case of an affiliated group of insurers, 

the Notice will include the name and 

address of a single designated insurer 

within the affiliated group that will 

serve as the single point of contact for 

the purpose of providing loss and compliance certifications as required in 

§50.73 and for receiving, disbursing, and 

distributing payments of the Federal 

share of compensation in accordance 

with §50.74. An insurer, at its option, 

may elect to include with its Notice of 

Deductible Erosion the certification of 

direct earned premium required by 

§50.73(b)(3). 

§ 50.73 Loss certifications. 

(a) General. When an insurer has paid 

aggregate insured losses that exceed its 

insurer deductible for a calendar year, 

the insurer may make claim upon 

Treasury for the payment of the Federal share of compensation for its insured losses. The insurer shall file an 

Initial Certification of Loss, on a form 

prescribed by Treasury, and thereafter 

such Supplementary Certifications of 

Loss, on a form prescribed by Treasury, 

as may be necessary to receive payment for the Federal share of compensation for its insured losses. 

(b) Initial certification of loss. An insurer shall use its best efforts to file 

with the Program the Initial Certification of Loss within 45 days following 

the last calendar day of the month 

when an insurer has paid aggregate insured losses that exceed its insurer deductible. The Initial Certification of 

Loss will include the following: 

(1) Basic information, on a form prescribed by Treasury, about each insured loss paid (or to be paid pursuant 

to §50.73(b)(2)(i)) by the insurer. The 

form will include: 

(i) A listing of each insured loss paid 

(or to be paid pursuant to 

§50.73(b)(2)(i)) by the insurer by catastrophe code and line of business; 

(ii) The total amount of reinsurance 

recovered from other sources; 

(iii) A calculation of the aggregate 

insured losses sustained by the insurer 

above its insurer deductible for the calendar year; and 

(iv) The amount the insurer claims as 

the Federal share of compensation for 

its aggregate insured losses. 

(2) A certification that the insurer is 

in compliance with the provisions of 

section 103(b) of the Act and this part, 

including certifications that: 

(i) The underlying insured losses reported pursuant to §50.73(b)(1) either: 

Have been paid by the insurer; or will 


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Office of the Secretary of the Treasury § 50.74 

be paid by the insurer upon receipt of 

an advance payment of the Federal 

share of compensation as soon as possible, consistent with the insurer’s normal business practices, but not longer 

than five business days after receipt of 

the Federal share of compensation; 

(ii) The underlying claims for insured 

losses were filed by persons who suffered an insured loss, or by persons acting on behalf of such persons; 

(iii) The underlying claims for insured losses were processed in accordance with appropriate business practices and the procedures specified in 

this subpart; 

(iv) The insurer has complied with 

the disclosure requirements of §§50.10 

through 50.14, and the cap disclosure 

requirement of §50.15, for each underlying insured loss that is included in 

the amount of the insurer’s aggregate 

insured losses; and 

(v) The insurer has complied with the 

mandatory availability requirements 

of subpart C of this part. 

(3) A certification of the amount of 

the insurer’s direct earned premium, 

together with the calculation of its insurer deductible (provided this certification was not submitted previously 

with the Notice of Deductible Erosion). 

(4) A certification that the insurer 

will disburse payment of the Federal 

share of compensation in accordance 

with this Subpart. 

(5) A certification that if Treasury 

has determined a Pro Rata Loss Percentage (PRLP) (see §50.112), the insurer has complied with applying the 

PRLP to insured loss payments, where 

required. 

(c) Supplementary certifications of loss. 

If the total amount of the Federal 

share of compensation due an insurer 

for insured losses under the Act has not 

been determined at the time an Initial 

Certification of Loss has been filed, the 

insurer shall file monthly, or on a 

schedule otherwise determined by 

Treasury, Supplementary Certifications of Loss updating the amount of 

the Federal share of compensation due 

for the insurer’s insured losses. Supplementary Certifications of Loss will include the following: 

(1) A form as described in §50.73(b)(1); 

and 

(2) A certification as described in 

§50.73(b)(2). 

(d) Supplementary information. In addition to the information required in 

paragraphs (b) and (c) of this section, 

Treasury may require such additional 

supporting documentation as required 

to ascertain the Federal share of compensation for the insured losses of any 

insurer. 

(e) State Residual Market Insurance 

Entities and State Workers’ Compensation 

Funds. A state residual market insurance entity or a state workers’ compensation fund described in §50.32 shall 

provide the Certifications of Loss described in §50.73(b) and (c) for all of its 

insured losses to each participating insurer at the time it provides the allocated dollar value of the participating 

insurer’s proportionate share of insured losses. In addition, at such time 

the state residual market insurance entity or state workers’ compensation 

fund shall provide the certification described in §50.73(b)(2) to Treasury. Participating insurers shall treat the allocated dollar value of their proportionate share of insured losses from a 

state residual market insurance entity 

or state workers’ compensation fund as 

an insured loss for the purpose of their 

own reporting to Treasury in seeking 

the Federal share of compensation. 

§ 50.74 Payment of Federal share of 

compensation. 

(a) Timing. Treasury will promptly 

pay to an insurer the Federal share of 

compensation due the insurer for its 

insured losses. Payment shall be made 

in such installments and on such conditions as determined by the Treasury to 

be appropriate. Any overpayments by 

Treasury of the Federal share of compensation will be offset from future 

payments to the insurer or returned to 

Treasury within 45 days. 

(b) Payment process. Payment of the 

Federal share of compensation for insured losses will be made to the insurer 

designated on the Notice of Deductible 

Erosion required by §50.72. An insurer 

that requests payment of the Federal 

share of compensation for insured 

losses must receive payment through 

electronic funds transfer. The insurer 

must establish either an account for 


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§ 50.75 31 CFR Subtitle A (7–1–17 Edition) 

reimbursement as described in paragraph (c) of this section (if the insurer 

only seeks reimbursement) or a segregated account as described in paragraph (d) of this section (if the insurer 

seeks advance payments or a combination of advance payments and reimbursement). Applicable procedures will 

be posted at https://www.treasury .gov/ 

resource-center/fin-mkts/Pages/program.aspx or otherwise will be made 

publicly available. 

(c) Account for reimbursement. An insurer shall designate an account for 

the receipt of reimbursement of the 

Federal share of compensation at an 

institution eligible to receive payments through the Automated Clearing 

House (ACH) network. 

(d) Segregated account for advance payments. An insurer that seeks advance 

payments of the Federal share of compensation as certified according to 

§50.73(b)(2)(i) shall establish a segregated account into which Treasury 

will make advance payments as well as 

reimbursements to the insurer. 

(1) Definition of segregated account. 

For purposes of this section, a segregated account is an interest-bearing 

separate account established by an insurer at a financial institution eligible 

to receive payments through the ACH 

network. Such an account is limited to 

the purposes of: 

(i) Receiving payments of the Federal 

share of compensation; 

(ii) Disbursing payments to insureds 

and claimants; and 

(iii) Transferring payments to the insurer or affiliated insurers for insured 

losses reported as already paid. 

(2) Remittance of interest. All interest 

earned on advance payments in the 

segregated account must be remitted 

at least quarterly to Treasury’s Bureau 

of the Fiscal Service or as otherwise 

prescribed in applicable procedures. 

(e) Denial or withholding of advance 

payment. Treasury may deny or withhold advance payments of the Federal 

share of compensation to an insurer if 

Treasury determines that the insurer 

has not properly disbursed previous advances of the Federal share of compensation or otherwise has not complied with the requirements for advance payment as provided in this Subpart. 

(f) Affiliated group. In the case of an 

affiliated group of insurers, Treasury 

will make payment of the Federal 

share of compensation for the insured 

losses of the affiliated group to the insurer designated in the Notice of Deductible Erosion to receive payment on 

behalf of the affiliated group. The designated insurer receiving payment 

from Treasury must distribute payment to affiliated insurers in a manner 

that ensures that each insurer in the 

affiliated group is compensated for its 

share of insured losses, taking into account a reasonable and fair allocation 

of the group deductible among affiliated insurers. Upon payment of the 

Federal share of compensation to the 

designated insurer, Treasury’s payment obligation to the insurers in the 

affiliated group with respect to any insured losses covered is discharged to 

the extent of the payment. 

§ 50.75 Determination of affiliations. 

For the purposes of this subpart, an 

insurer’s affiliates for any calendar 

year shall be determined by the circumstances existing on the date of the 

act which is the Program Trigger 

Event for that calendar year. 

§ 50.76 Final netting. 

(a) General. Pursuant to section 

103(e)(4) of the Act, the Secretary shall 

have sole discretion to determine the 

time at which claims relating to any 

insured loss or act of terrorism shall 

become final. 

(b) Final Netting Date. The Secretary 

may determine a Final Netting Date 

for a calendar year, which for purposes 

of this part is the date on or before 

which an insurer must report to Treasury on the insurer’s Certifications of 

Loss (both Initial Certification of Loss 

and any Supplemental Certifications of 

Loss) all insured losses that have been 

reported by its policyholders for the 

calendar year. 

(1) Criteria for Final Netting Date. The 

establishment of a Final Netting Date 

will be based on factors and considerations including: 

(i) Amounts of case reserves reported 

by insurers to Treasury for open underlying insured losses; 


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Office of the Secretary of the Treasury § 50.76 

(ii) The rate at which claims for the 

Federal share of compensation for insured losses are being made by insurers 

to Treasury; 

(iii) The rate at which new underlying insured losses are being added by 

insurers to their Supplementary Certifications of Loss and reported; 

(iv) The predominant lines of business for which underlying insured 

losses are being reported; 

(v) Tort and contract statutes of limitations relevant to insured losses and 

the manner in which they are being applied by the Federal courts; 

(vi) Common business practices; 

(vii) Issues that are delaying final 

resolution of insured losses; 

(viii) The application of the liability 

limitations and procedures under the 

Support Anti-terrorism by Fostering 

Effective Technologies Act of 2002 (6 

U.S.C. 441 et seq.) that may affect final 

resolution of insured losses; 

(ix) Issues related to the cap on annual liability for insurer losses, including whether a projection that the cap 

on annual liability will be reached in 

connection with any calendar year indicates that no Final Netting Date 

should be set for that calendar year; 

(x) Treasury’s claims administration 

costs; and 

(xi) [Reserved] 

(xii) Such other factors as the Secretary considers appropriate to take 

into account. 

(2) Notice of Final Netting Date. Treasury shall announce and publish in the 

FEDERAL REGISTER notice of a proposed 

Final Netting Date and its application 

to a specific calendar year, and will solicit comments from the public regarding the appropriateness of the proposed 

Final Netting Date. After receipt and 

evaluation of comments respecting its 

proposed Final Netting Date, Treasury 

will publish in the FEDERAL REGISTER a 

Final Netting Date, which is at least 

180 days after the date of publication. 

The Secretary’s determination of a 

Final Netting Date is final and not subject to judicial review. 

(c) Post-Final Netting Date claims. 

After the Final Netting Date, insurers 

may only make further claims for the 

Federal share of compensation for insured losses by submission of Supplemental Certifications of Loss with updated information on underlying insured losses previously reported to 

Treasury. Such updated information 

may reflect a decision by a court of 

competent jurisdiction concerning a 

limitation of liability under the Support Anti-terrorism by Fostering Effective Technologies Act of 2002. In the 

case of workers’ compensation losses, 

the insurer may provide updated information based on the number of workers’ compensation claimants previously reported. An insurer may not 

report any new underlying insured 

losses, or increased workers’ compensation loss amounts based on an increase 

in the number of workers’ compensation claimants, to Treasury after a 

Final Netting Date, except as provided 

in this section. 

(d) Commutation. A commutation is 

the payment by Treasury of a lump 

sum present value of future payments 

to an insurer in lieu of making payments in the future, as provided in this 

section. 

(1) In lieu of continued submission of 

Supplemental Certifications of Loss 

after the Final Netting Date as provided in paragraph (c) of this section, 

Treasury may require, or consider an 

insurer’s request for, a commutation of 

an insurer’s future claims for the Federal share of compensation based on estimates for the underlying insured 

losses reported to Treasury on or before the Final Netting Date. The payment by Treasury of a final commuted 

amount to an insurer will discharge 

Treasury from all future liabilities to 

the insurer for the Federal share of 

compensation for insured losses for the 

applicable calendar year. In the case of 

an affiliated group of insurers, the requirements of §50.74(f) apply, and payment of the final commuted amount to 

the designated insurer of the affiliated 

group discharges Treasury’s payment 

obligation to the insurers in the affiliated group for insured losses for the applicable calendar year. 

(2) If future claims are to be commuted, Treasury may require additional information from the insurer, 

including an insurer’s justification for 

a final payment amount with necessary 

actuarial factors and methodology, and 

pertinent information regarding the insurer’s business relationships and other 


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§ 50.80 31 CFR Subtitle A (7–1–17 Edition) 

reinsurance recoverables. Insurers will 

be required to justify discount and 

other factors from which final payment 

amounts are derived. If Treasury notifies an insurer of a requirement to submit additional information to inform 

its commutation decision, the insurer 

will be provided (depending upon the 

complexity of the material sought) no 

less than 90 days from the date of notification to submit material required in 

the notice. If the insurer fails to provide the requested information, it will 

forfeit the right to future payments 

from Treasury. Treasury will evaluate 

such information in order to determine 

a final payment amount or (if applicable) an amount to be repaid to Treasury. Treasury may determine that it 

will not consider commutation until it 

has completed an audit of an insurer’s 

insured losses pursuant to the authority set forth in subpart I of these regulations. 

(3) Payments of commuted amounts 

are not considered to be advance payments requiring a segregated account 

as described in §50.74(d). 

(4) Notwithstanding §50.70(d), a payment by Treasury of a final commuted 

amount to an insurer is final unless: 

(i) Treasury is put on notice that an 

insurer’s claim was fraudulent or that 

other conditions for Federal payment 

were not met, in which case the insurer 

will be required to repay amounts that 

were not due; or 

(ii) The exception in paragraph (e) of 

this section applies, in which case 

Treasury may make additional payments for insured losses, but only 

under the conditions described in paragraph (e). 

(e) Exception. If within one year after 

the Final Netting Date, and regardless 

of commutation, an insurer has additional underlying reported insured 

losses that, in the absence of a Final 

Netting Date, would result in an increase of the Federal share of compensation to that insurer by 20% of the 

total amount already paid to that insurer, the insurer may request Treasury to allow those underlying insured 

losses to be submitted as part of a certification of loss. Under such circumstances and provided that all other 

conditions for payment have been met, 

Treasury may reopen or extend the insurer’s claim for the Federal share of 

compensation for insured losses for the 

pertinent calendar year. 

Subpart I—Audit and Investigative 

Procedures 

§ 50.80 Audit authority. 

The Secretary of the Treasury, or an 

authorized representative, shall have, 

upon reasonable notice, access to all 

books, documents, papers and records 

of an insurer that are pertinent to 

amounts paid to the insurer as the Federal share of compensation for insured 

losses, or pertinent to any Federal terrorism policy surcharge that is imposed pursuant to subpart J of this 

part, for the purposes of investigation, 

confirmation, audit, and examination. 

§ 50.81 Recordkeeping. 

(a) Each insurer that seeks payment 

of a Federal share of compensation 

under subpart H of this part shall retain such records as are necessary to 

fully disclose all material matters pertinent to insured losses and the Federal share of compensation sought 

under the Program, including, but not 

limited to, records regarding premiums 

and insured losses for all commercial 

property and casualty insurance issued 

by the insurer and information relating 

to any adjustment in the amount of 

the Federal share of compensation payable. Insurers shall maintain detailed 

records for not less than five (5) years 

from the termination dates of all reinsurance agreements involving property 

and casualty insurance subject to the 

Act. Records relating to premiums 

shall be retained and available for review for not less than three (3) years 

following the conclusion of the policy 

year. Records relating to underlying 

claims shall be retained for not less 

than five (5) years following the final 

adjustment of the claim. 

(b) Each insurer that collects a Federal terrorism policy surcharge as required by subpart J of this part shall 

retain records related to such surcharge, including records of the property and casualty insurance premiums 

subject to the surcharge, the amount of 

the surcharge imposed on each policy, 


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Office of the Secretary of the Treasury § 50.90 

aggregate Federal terrorism policy surcharges collected, and aggregate Federal terrorism policy surcharges remitted to Treasury during each assessment period. Such records shall be retained and kept available for review for 

not less than three (3) years following 

the conclusion of the assessment period 

or settlement of accounts with Treasury, whichever is later. 

§ 50.82 Civil penalties. 

(a) General. The Secretary may assess 

a civil monetary penalty, in an amount 

not exceeding the amount specified 

under §50.83, against any insurer that 

the Secretary determines, on the 

record after opportunity for a hearing: 

(1) Has failed to charge, collect, or 

remit the Federal terrorism policy surcharge under subpart J; 

(2) Has intentionally provided to 

Treasury erroneous information regarding premium or loss amounts; 

(3) Submits to Treasury fraudulent 

claims under the Program for insured 

losses; 

(4) Has failed to provide any disclosures or other information required by 

Treasury; or 

(5) Has otherwise failed to comply 

with provisions of the Act or these regulations. 

(b) Recovery of amount in dispute. A 

penalty under this section for any failure to pay, charge, collect, or remit 

amounts in accordance with the Act or 

under these regulations shall be in addition to any such amounts recovered 

by Treasury. 

(c) Procedure. Treasury shall notify in 

writing any insurer that it believes has 

committed one or more of the acts 

identified in paragraph (a) of this section. In that notification, Treasury 

shall identify the act or acts that it believes has been violated, and its basis 

for that belief, and shall set a schedule 

for further proceedings which shall include: 

(1) The opportunity for a written submission by the insurer that provides all 

relevant facts and circumstances concerning the alleged conduct, including 

any information that the insurer wishes Treasury to consider in connection 

with the alleged conduct; and 

(2) A hearing on the record, unless 

waived by the insurer, during which 

Treasury and the insurer may present 

further information respecting the conduct in question. 

(d) Other remedies preserved. Treasury’s assessment and collection of a 

civil monetary penalty under this section shall be in addition and without 

prejudice to any other civil remedies or 

criminal penalties that may arise on 

account of the conduct in question 

under any other laws or regulations of 

the United States. 

§ 50.83 Adjustment of civil monetary 

penalty amount. 

(a) Inflation adjustment. Any penalty 

under the Act and these regulations 

may not exceed the greater of $1,333,312 

and, in the case of any failure to pay, 

charge, collect or remit amounts in accordance with the Act or these regulations such amount in dispute. 

(b) Annual adjustment. The maximum 

penalty amount that may be assessed 

under this section will be adjusted in 

accordance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, 28 U.S.C. 2461 

note, by January 15 of each year and 

the updated amount will be posted in 

the FEDERAL REGISTER and on the 

Treasury Web site at https:// 

www.treasury .gov/resource-center/finmkts/Pages/program.aspx. 

[81 FR 93765, Dec. 21, 2016, as amended at 82 

FR 10435, Feb. 10, 2017] 

Subpart J—Recoupment and 

Surcharge Procedures 

§ 50.90 Mandatory and discretionary 

recoupment. 

(a) Pursuant to section 103(e) of the 

Act, the Secretary shall impose, and 

insurers shall collect, such Federal terrorism policy surcharges as needed to 

recover 140 percent of the mandatory 

recoupment amount for any calendar 

year. 

(b) In the Secretary’s discretion, the 

Secretary may recover any portion of 

the aggregate Federal share of compensation that exceeds the mandatory 

recoupment amount through a Federal 

terrorism policy surcharge based on 

the factors set forth in section 

103(e)(7)(D) of the Act. 

(c) If the Secretary imposes a Federal 

terrorism policy surcharge as provided 


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§ 50.91 31 CFR Subtitle A (7–1–17 Edition) 

in paragraph (a) of this section, then 

the required amounts, based on the extent to which payments for the Federal 

share of compensation have been made 

by the collection deadlines in section 

103(e)(7)(E) of the Act, shall be collected in accordance with such deadlines: 

(1) For any act of terrorism that occurs on or before December 31, 2017, the 

Secretary shall collect all required 

amounts by September 30, 2019; 

(2) For any act of terrorism that occurs between January 1 and December 

31, 2018, the Secretary shall collect 35 

percent of any required amounts by 

September 30, 2019, and the remainder 

by September 30, 2024; and 

(3) For any act of terrorism that occurs on or after January 1, 2019, the 

Secretary shall collect all required 

amounts by September 30, 2024. 

§ 50.91 Determination of recoupment 

amounts. 

(a) If payments for the Federal share 

of compensation have been made for a 

calendar year, and Treasury determines that insured loss information is 

sufficiently developed and credible to 

serve as a basis for calculating 

recoupment amounts, Treasury will 

make an initial determination of any 

mandatory or discretionary 

recoupment amounts for that calendar 

year. 

(b)(1) Within 90 days after certification of an act of terrorism, the Secretary shall publish in the FEDERAL

REGISTER an estimate of aggregate insured losses which shall be used as the 

basis for initially determining whether 

mandatory recoupment will be required. 

(2) If at any time Treasury projects 

that payments for the Federal share of 

compensation will be made for a calendar year, and that in order to meet 

the collection timing requirements of 

section 103(e)(7)(E) of the Act it is necessary to use an estimate of such payments as a basis for calculating 

recoupment amounts, Treasury will 

make an initial determination of any 

mandatory recoupment amounts for 

that calendar year. 

(c) Following the initial determination of recoupment amounts for a calendar year, Treasury will recalculate 

any mandatory or discretionary 

recoupment amount as necessary and 

appropriate, and at least annually, 

until a final recoupment amount for 

the calendar year is determined. Treasury will compare any recalculated 

recoupment amount to amounts already remitted and/or to be remitted to 

Treasury for a Federal terrorism policy 

surcharge previously established to determine whether any additional 

amount will be recouped by Treasury. 

(d) For the purpose of determining 

initial or recalculated recoupment 

amounts, Treasury may issue a data 

call to insurers for insurer deductible 

and insured loss information by calendar year. Treasury’s determination 

of the aggregate amount of insured 

losses from Program Trigger Events of 

all insurers for a calendar year will be 

based on the amounts reported in response to a data call and any other information Treasury in its discretion 

considers appropriate. Submission of 

data in response to a data call shall be 

on a form promulgated by Treasury. 

§ 50.92 Establishment of Federal terrorism policy surcharge. 

(a) Treasury will establish the Federal terrorism policy surcharge based 

on the following factors and considerations: 

(1) In the case of a mandatory 

recoupment amount, the requirement 

to collect 140 percent of that amount; 

(2) The total dollar amount to be recouped as a percentage of the latest 

available annual aggregate industry direct written premium information; 

(3) The adjustment factors for terrorism loss risk-spreading premiums 

described in section 103(e)(8)(D) of the 

Act; 

(4) The annual 3 percent limitation 

on terrorism loss risk-spreading premiums collected on a discretionary 

basis as provided in section 103(e)(8)(C) 

of the Act; 

(5) A preferred minimum initial assessment period of one full year and 

subsequent extension periods in full 

year increments; 

(6) The collection timing requirements of section 103(e)(8)(E) of the Act; 

(7) The likelihood that the amount of 

the Federal terrorism policy surcharge 


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Office of the Secretary of the Treasury § 50.94 

may result in the collection of an aggregate recoupment amount in excess 

of the planned recoupment amount; 

and 

(8) Such other factors as the Secretary considers appropriate to take 

into account. 

(b) The Federal terrorism policy surcharge shall be the obligation of the 

policyholder and is payable to the insurer with the premium for a property 

and casualty insurance policy in effect 

during the assessment period established by Treasury. See §50.94(c). 

§ 50.93 Notification of recoupment. 

(a) Treasury will provide notifications of recoupment through publication of notices in the FEDERAL REGISTER or in another manner Treasury 

deems appropriate, based upon the circumstances of the certified act(s) of 

terrorism under consideration. 

(b) Treasury will provide reasonable 

advance notice to insurers of any initial Federal terrorism policy surcharge 

effective date. This effective date shall 

be January 1 of the calendar year following publication of the notice, unless 

such date would not provide for sufficient notice of implementation while 

meeting the collection timing requirements of section 103(e)(8)(E) of the Act. 

(c) Treasury will provide reasonable 

advance notice to insurers of any modification or cessation of the Federal terrorism policy surcharge. 

(d) Treasury will provide notification 

to insurers annually as to the continuation of the Federal terrorism policy 

surcharge. 

§ 50.94 Collecting the surcharge. 

(a) Insurers shall collect a Federal 

terrorism policy surcharge from policyholders as required by Treasury. 

(b) Policies subject to the Federal 

terrorism policy surcharge are those 

for which direct written premium is reported on commercial lines of business 

on the NAIC’s Exhibit of Premiums and 

Losses of the NAIC Annual Statement 

(commonly known as Statutory Page 

14) as provided in §50.4(w)(1), or equivalently reported. 

(c) For policies subject to the Federal 

terrorism policy surcharge, the surcharge shall be imposed and collected 

on a written premium basis for policies 

that become effective or renew during 

the assessment period. All new, renewal, mid-term, and audit premiums 

for a policy term are subject to the surcharge in effect on the policy term effective date. Notwithstanding this 

paragraph, if the premium for a policy 

term that would otherwise be subject 

to the surcharge is revised after the 

end of the reporting period described in 

§50.95(e), then any additional premium 

attributable to such revision is not 

subject to the Surcharge. For purposes 

of this subpart: 

(1) Written premium basis means the 

premium amount charged a policyholder by an insurer for property and 

casualty insurance, including all premiums, policy expense constants and 

fees defined as premium pursuant to 

the Statements of Statutory Accounting Principles established by the NAIC, 

as adopted by the state for which the 

premium will be reported. 

(2) In the case of a policy providing 

multiple insurance coverages, if an insurer cannot identify the premium 

amount charged a policyholder specifically for property and casualty insurance under the policy, then: 

(i) If the insurer estimates that the 

portion of the premium amount 

charged for coverage other than property and casualty insurance is de minimis to the total premium for the policy, 

the insurer may impose and collect 

from the policyholder a surcharge 

amount based on the total premium for 

the policy, but 

(ii) If the insurer estimates that the 

portion of the premium amount 

charged for coverage other than property and casualty insurance is not de 

minimis, the insurer shall impose and 

collect from the policyholder a Surcharge amount based on a reasonable 

estimate of the premium amount for 

the property and casualty insurance 

coverage under the policy. 

(3) The Federal terrorism policy surcharge is not considered premium. 

(d) A policyholder must pay the applicable Federal terrorism policy surcharge when due. The insurer shall 

have such rights and remedies to enforce the collection of the surcharge 

that are the equivalent to those that 

exist under applicable state or other 

law for nonpayment of premium. 


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§ 50.95 31 CFR Subtitle A (7–1–17 Edition) 

(e) When an insurer returns an unearned premium, or otherwise refunds 

premium to a policyholder, it shall 

also return any Federal terrorism policy surcharge collected that is attributable to the refunded unearned premium. Notwithstanding this paragraph, if the written premium for a 

policy is revised and refunded after the 

end of the reporting period described in 

§50.95(e), then the insurer is not required to refund any Surcharge that is 

attributable to the refunded premium. 

(f) Notwithstanding paragraphs (a), 

(b), and (c) of this section, if the expense of collecting the Federal terrorism policy surcharge from all policyholders of an insurer during an assessment period exceeds the amount of 

the Surcharges anticipated to be collected, such insurer may satisfy its obligation to collect by omitting actual 

collection and instead remitting to 

Treasury the amount otherwise due. 

(g) The Federal terrorism policy surcharge is repayment of Federal financial assistance in an amount required 

by law. No fee or commission shall be 

charged on the Federal terrorism policy surcharge. 

§ 50.95 Remitting the surcharge. 

(a) Each insurer shall report direct 

written premium and Federal terrorism policy surcharges to Treasury 

on a monthly and annual basis during 

the assessment period. Reporting will 

be on a form prescribed by Treasury 

and will be due according to the following schedule: 

(1) Monthly: From the beginning of 

the assessment period through November, on the last business day of the calendar month following the month for 

which premium is reported, and 

(2) Annually: March 1 for the prior 

calendar year. 

(b) The monthly statements provided 

to Treasury will include the following: 

(1) Cumulative calendar year direct 

written premium adjusted for premium 

not subject to the Federal terrorism 

policy surcharge, summarized by policy 

year. 

(2) The aggregate Federal terrorism 

policy surcharge amount calculated by 

applying the established surcharge percentage to the insurer’s adjusted direct 

written premium by policy year. 

(3) Insurer certification of the submission. 

(c) The annual statements to be provided to Treasury will include the following: 

(1) Direct written premium, adjusted 

for premium not subject to the Federal 

terrorism policy surcharge, summarized by policy year and by commercial 

line of insurance as specified in 

§50.4(w). 

(2) The aggregate Federal terrorism 

policy surcharge amount calculated by 

applying the established surcharge percentage to the insurer’s adjusted direct 

written premium by policy year. 

(3) In the case of an insurer that has 

chosen not to collect the Federal terrorism policy surcharge from its policyholders as provided in §50.94(f), a 

certification that the expense of collecting the Surcharge during the assessment period would have exceeded 

the amount of the surcharges collected 

over the assessment period. 

(4) Insurer certification of the submission. 

(d) The calculated aggregate Federal 

terrorism policy surcharge amount, as 

described in paragraphs (b)(2) and (c)(2) 

of this section, shall be remitted to 

Treasury upon submission of each 

monthly and annual statement. 

Through its submitted statements, an 

insurer obtains credit for a refund of 

any Federal terrorism policy surcharge 

previously remitted to Treasury that 

was subsequently returned by the insurer to a policyholder as attributable 

to refunded premium under §50.94(e). A 

negative calculated amount in a 

monthly or annual statement indicates 

payment from Treasury is due to the 

insurer. 

(e) Reporting shall continue for the 

one-year period following the end of 

the assessment period established by 

Treasury, unless otherwise permitted 

by Treasury. 

§ 50.96 Insurer responsibility. 

Notwithstanding §50.4(o), for purposes of the collection, reporting and 

remittance of Federal terrorism policy 

surcharges to Treasury, the definition 

of insurer shall not include any affiliate of the insurer. 


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Office of the Secretary of the Treasury § 50.102 

Subpart K—Federal Cause of 

Action; Approval of Settlements 

§ 50.100 Federal cause of action and 

remedy. 

(a) General. If the Secretary certifies 

an act as an act of terrorism pursuant 

to subpart G of this part, there shall 

exist a Federal cause of action for 

property damage, personal injury, or 

death arising out of or resulting from 

such act of terrorism, pursuant to section 107 of the Act, which shall be the 

exclusive cause of action and remedy 

for claims for property damage, personal injury, or death arising out of or 

relating to such act of terrorism, except as provided in paragraph (d) of 

this section. 

(b) Jurisdiction. For each determination described in paragraph (a) of this 

section, not later than 90 days after the 

Secretary certifies an act as an act of 

terrorism, the Judicial Panel on Multidistrict Litigation shall designate a 

single district court or, if necessary, 

multiple district courts of the United 

States that shall have original and exclusive jurisdiction over all actions for 

any claim (including any claim for loss 

of property, personal injury, or death) 

relating to or arising out of an act of 

terrorism subject to section 107 of the 

Act. 

(c) Effective period. The exclusive Federal cause of action and remedy described in paragraph (a) of this section 

shall exist only for causes of action for 

property damage, personal injury, or 

death that arise out of or result from 

acts of terrorism during the effective 

period of the Program. 

(d) Rights not affected. Nothing in section 107 of the Act or this subpart shall 

in any way: 

(1) Limit the liability of any government, organization, or person who 

knowingly participates in, conspires to 

commit, aids and abets, or commits 

any act of terrorism; 

(2) Affect any party’s contractual 

right to arbitrate a dispute; or 

(3) Affect any provision of the Air 

Transportation Safety and System Stabilization Act (Pub. L. 107–42; 49 U.S.C. 

40101 note). 

§ 50.101 State causes of action preempted. 

All State causes of action of any kind 

for property damage, personal injury, 

or death arising out of or resulting 

from an act of terrorism that are otherwise available under state law are 

preempted, except that, pursuant to 

section 107(b) of the Act, nothing in 

this section shall limit in any way the 

liability of any government, organization, or person who knowingly participates in, conspires to commit, aids and 

abets, or commits the act of terrorism 

certified by the Secretary. 

§ 50.102 Advance approval of settlements. 

(a) Mandatory submission of settlements 

for advance approval. Pursuant to section 107(a)(6) of the Act, an insurer 

shall submit to Treasury for advance 

approval any proposed agreement to 

settle or compromise any Federal 

cause of action for property damage, 

personal injury, or death, asserted by a 

third-party or parties against an insured, involving an insured loss, all or 

part of the payment of which the insurer intends to include in its aggregate insured losses for purposes of calculating the insurer deductible or the 

Federal share of compensation of its 

insured losses under the Program, 

when: 

(1) Any portion of the proposed settlement amount that is attributable to 

an insured loss or losses involving personal injury or death in the aggregate 

is $2 million or more per third-party 

claimant, regardless of the number of 

causes of action or insured losses being 

settled; or 

(2) Any portion of the proposed settlement amount that is attributable to 

an insured loss or losses involving 

property damage (including loss of use) 

in the aggregate is $10 million or more 

per third-party claimant, regardless of 

the number of causes of action or insured losses being settled. 

(b) Discretionary review of other settlements. Notwithstanding paragraph (a) 

of this section, Treasury may require 

that an insurer submit for review and 

advance approval any proposed agreement to settle or compromise any Federal cause of action for property damage, personal injury, or death, asserted 


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§ 50.103 31 CFR Subtitle A (7–1–17 Edition) 

by a third-party or parties against an 

insured, involving an insured loss, all 

or part of the payment of which the insurer intends to include in its aggregate insured losses for purposes of calculating the insurer deductible or the 

Federal share of compensation of its 

insured losses where the settlement 

amounts are below the applicable monetary thresholds identified in paragraphs (a)(1) and (2) of this section. 

(c) Factors. In determining whether 

to approve a proposed settlement, 

Treasury will consider the nature of 

the loss, the facts and circumstances 

surrounding the loss, and other factors 

such as whether: 

(1) The proposed settlement compensates for a third-party’s loss, the liability for which is an insured loss 

under the terms and conditions of the 

underlying commercial property and 

casualty insurance policy, as certified 

by the insurer pursuant to §50.103(d)(2); 

(2) Any amount of the proposed settlement is attributable to punitive or 

exemplary damages intended to punish 

or deter (whether or not specifically so 

described as such damages); 

(3) The settlement amount offsets 

amounts received from the United 

States pursuant to any other Federal 

program; 

(4) The settlement amount does not 

include any items such as fees and expenses of attorneys, experts, and other 

professionals that have caused the insured losses under the underlying commercial property and casualty insurance policy to be overstated; and 

(5) Any other criteria that Treasury 

may consider appropriate, depending 

on the facts and circumstances surrounding the settlement, including the 

information contained in §50.103. 

(d) Settlement without seeking advance 

approval or despite disapproval. If an insurer settles a cause of action or agrees 

to the settlement of a cause of action 

without submitting the proposed settlement for Treasury’s advance approval in accordance with paragraph 

(a) or (b) of this section, and in accordance with §50.103 or despite Treasury’s 

disapproval of the proposed settlement, 

the insurer will not be entitled to include the paid settlement amount (or 

portion of the settlement amount, to 

the extent partially disapproved) in its 

aggregate insured losses for purposes of 

calculating the Federal share of compensation of its insured losses, unless 

the insurer can demonstrate, to the 

satisfaction of Treasury, extenuating 

circumstances. 

§ 50.103 Procedure for requesting approval of proposed settlements. 

(a) Submission of notice. Insurers must 

request advance approval of a proposed 

settlement by submitting a notice of 

the proposed settlement and other required information in writing to the 

Terrorism Risk Insurance Program Office or its designated representative. 

The address where notices are to be 

submitted will be available at https:// 

www.treasury .gov/resource-center/finmkts/Pages/program.aspx following any 

certification of an act of terrorism pursuant to section 102(1) of the Act. 

(b) Complete notice. Treasury will review requests for advance approval and 

determine whether additional information is needed to complete the notice. 

(c) Treasury response or deemed approval. Within 30 days after Treasury’s 

receipt of a complete notice, or as extended in writing by Treasury, Treasury may issue a written response and 

indicate its partial or full approval or 

rejection of the proposed settlement. If 

Treasury does not issue a response 

within 30 days after Treasury’s receipt 

of a complete notice, unless extended 

in writing by Treasury, the request for 

advance approval is deemed approved 

by Treasury. Any settlement is still 

subject to review under the claim procedures pursuant to §50.80. 

(d) Notice format. A notice of a proposed settlement should be entitled, 

‘‘Notice of Proposed Settlement—Request for Approval,’’ and should provide the full name and address of the 

submitting insurer and the name, title, 

address, and telephone number of the 

designated contact person. An insurer 

must provide all relevant information, 

including the following, as applicable: 

(1) A brief description of the claim 

against the insured, the amount of the 

claim, the operative policy terms, and 

defenses to coverage; 

(2) A certification by the insurer that 

the settlement is for a third-party’s 


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Office of the Secretary of the Treasury § 50.111 

loss, the liability for which is an insured loss under the terms and conditions of the underlying commercial 

property and casualty insurance policy; 

(3) A brief description of all damages 

allegedly sustained and an itemized 

statement of all damages by category 

(i.e., actual, economic and non-economic loss, punitive damages, etc.); 

(4) A statement from the insurer or 

its attorney in support of the settlement; 

(5) The total dollar amount of the 

proposed settlement and the amount of 

the proposed settlement which is an insured loss; 

(6) Indication as to whether the settlement was negotiated by counsel; 

(7) The amount to be paid that will 

compensate for any items such as fees 

and expenses of attorneys, experts, and 

other professionals for their services 

and expenses related to the insured loss 

and/or settlement and the net amount 

to be received by the third-party after 

such payment; 

(8) The amount(s) received from the 

United States pursuant to any other 

Federal program(s) for compensation of 

insured losses related to an act of terrorism; 

(9) The proposed terms of the written 

settlement agreement, including release language and subrogation terms; 

(10) Other relevant agreements, including: 

(i) Admissions of liability or insurance coverage; 

(ii) Determinations of the number of 

occurrences under a commercial property and casualty insurance policy; 

(iii) The allocation of paid amounts 

or amounts to be paid to certain policies, or to a specific policy, coverage 

and/or aggregate limits; 

(iv) Any other agreement that may 

affect the payment or amount of the 

Federal share of compensation to be 

paid to the insurer; and 

(v) Any other relevant agreement requested by Treasury. 

(11) A statement indicating whether 

the proposed settlement has been approved by the Federal court or is subject to such approval and whether such 

approval is expected or likely; and 

(12) Such other information that is 

related to the insured loss as may be 

requested by Treasury that it deems 

necessary to evaluate the proposed settlement. 

§ 50.104 Subrogation. 

An insurer shall not waive its rights 

of subrogation under its property and 

casualty insurance policy with respect 

to any losses the payment of which the 

insurer intends to include in its insurer 

deductible or the aggregate insured 

losses for purposes of calculating the 

Federal share of compensation of its 

insured losses and shall, unless upon 

request the United States agrees in 

writing to forbear from exercising such 

right, preserve the subrogation right of 

the United States as provided by section 107(c) of the Act by not taking any 

action that would prejudice the subrogation right of the United States. 

Subpart L—Cap on Annual 

Liability 

§ 50.110 Cap on annual liability. 

Pursuant to section 103 of the Act, if 

the aggregate insured losses exceed 

$100,000,000,000 during a calendar year: 

(a) The Secretary shall not make any 

payment for any portion of the amount 

of such losses that exceeds 

$100,000,000,000; 

(b) An insurer that has met its insurer deductible shall not be liable for 

the payment of any portion of the 

amount of such losses that exceeds 

$100,000,000,000; and 

(c) The Secretary shall determine the 

pro rata share of insured losses to be 

paid by each insurer that incurs insured losses under the Program. 

§ 50.111 Notice to Congress. 

Pursuant to section 103(e)(3) of the 

Act, the Secretary shall provide an initial notice to Congress within 15 days 

of the certification of an act of terrorism, stating whether the Secretary 

estimates that aggregate insured losses 

will exceed $100,000,000,000 for the calendar year in which the event occurs. 

Such initial estimate may be based on 

insured loss amounts as compiled by 

insurance industry statistical organizations, data previously collected by 


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§ 50.112 31 CFR Subtitle A (7–1–17 Edition) 

the Secretary, and any other information the Secretary in his or her discretion considers appropriate. The Secretary shall also notify Congress if estimated or actual aggregate insured 

losses exceed $100,000,000,000 during any 

calendar year. 

§ 50.112 Determination of pro rata 

share. 

(a) Pro rata loss percentage (PRLP) is 

the percentage determined by the Secretary to be applied by an insurer 

against the amount that would otherwise be paid by the insurer under the 

terms and conditions of an insurance 

policy providing property and casualty 

insurance under the Program if there 

were no cap on annual liability under 

section 103(e)(2)(A) of the Act. 

(b) Except as provided in paragraph 

(e) of this section, if Treasury estimates that aggregate insured losses 

may exceed the cap on annual liability 

for a calendar year, then Treasury will 

determine a PRLP. The PRLP applies 

to insured loss payments by insurers 

for insured losses incurred in the subject calendar year, as specified in 

§50.113, from the effective date of the 

PRLP, as established by Treasury, 

until such time as Treasury provides 

notice that the PRLP is revised. Treasury will determine the PRLP based on 

the following considerations: 

(1) Estimates of insured losses from 

insurance industry statistical organizations; 

(2) Any data calls issued by Treasury 

(see §50.114); 

(3) Expected reliability and accuracy 

of insured loss estimates and likelihood that insured loss estimates could 

increase; 

(4) Estimates of insured losses and 

expenses not included in available statistical reporting; 

(5) Such other factors as the Secretary considers important. 

(c) Treasury shall provide notice of 

the determination of the PRLP 

through publication in the FEDERAL

REGISTER, or in another manner Treasury deems appropriate, based upon the 

circumstances of the act of terrorism 

under consideration. 

(d) As appropriate, Treasury will determine any revision to a PRLP based 

on the same considerations listed in 

paragraph (b) of this section, and will 

provide notice for its application to insured loss payments. 

(e) If Treasury estimates based on an 

initial act of terrorism or subsequent 

act of terrorism within a calendar year 

that aggregate insured losses may exceed the cap on annual liability, but an 

appropriate PRLP cannot yet be determined, Treasury will provide notification advising insurers of this circumstance and, after consulting with 

the relevant state authorities, may initiate the action described in either 

paragraph (e)(1) or (2) of this section. 

(1) Hiatus in payments. Call a hiatus 

in insurer loss payments for insured 

losses of up to two weeks. In such a circumstance, Treasury will determine a 

PRLP as quickly as possible. The 

PRLP, as later determined, will be effective retroactively as of the start of 

the hiatus. Any insured losses submitted in support of an insurer’s claim 

for the Federal share of compensation 

will be reviewed for the insurer’s compliance with pro rata payments in accordance with the effective date of the 

PRLP. 

(2) Determine an interim PRLP. (i) An 

interim PRLP is an amount determined without the availability of information necessary for consideration 

of all factors listed in §50.112(b). It is a 

conservatively low percentage amount 

determined in order to facilitate initial 

partial claim payments by insurers 

after an act of terrorism and prior to 

the time that information becomes 

available to determine a PRLP based 

on consideration of the factors listed in 

§50.112(b). 

(ii) In such a circumstance, Treasury 

will determine a PRLP to replace the 

interim PRLP as quickly as possible. 

The PRLP, as later determined, will be 

effective retroactively as of the effective date of the interim PRLP. Any insured losses submitted in support of an 

insurer’s claim for the Federal share of 

compensation will be reviewed for the 

insurer’s compliance with pro rata payments in accordance with the effective 

date of the interim PRLP, or as later 

replaced by the PRLP as appropriate. 


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Office of the Secretary of the Treasury § 50.115 

§ 50.113 Application of pro rata share. 

An insurer shall apply the PRLP to 

determine the pro rata share of each insured loss to be paid by the insurer on 

all insured losses in the absence of an 

agreement on a complete and final settlement as evidenced by a signed settlement agreement or other means reviewable by a third party as of the effective date established by Treasury. 

Payments based on the application of 

the PRLP and determination of the pro 

rata share satisfy the insurer’s liability 

for payment under the Program. Application of the PRLP and the determination of the pro rata share are the exclusive means for calculating the amount 

of insured losses for Program purposes. 

The pro rata share is subject to the following: 

(a) The pro rata share is determined 

based on the estimated or actual final 

claim settlement amount that would 

otherwise be paid. 

(b) All policies. If partial payments 

have already been made as of the effective date of the PRLP, then the pro 

rata share for that loss is the greater of 

the amount already paid as of the effective date of the PRLP or the 

amount computed by applying the 

PRLP to the estimated or actual final 

claim settlement amount that would 

otherwise be paid. 

(c) Certain workers’ compensation insurance policies. If an insurer’s payments under a workers’ compensation 

policy cumulatively exceed the amount 

computed by applying the PRLP to the 

estimated or actual final claim settlement amount that would otherwise be 

paid because such estimated or actual 

final settlement amount is reduced 

from a previous estimate, then the insurer may request a review and adjustment by Treasury in the calculation of 

the Federal share of compensation. In 

requesting such a review, the insurer 

must submit information to supplement its Certification of Loss demonstrating a reasonable estimate invalidated by unexpected conditions differing from prior assumptions including, but not limited to, an explanation 

and the basis for the prior assumptions. 

(d) If an insurer has not yet made 

payments in excess of its insurer deductible, the rules in this paragraph 

apply. 

(1) If the insurer estimates that it 

will exceed its insurer deductible making payments based on the application 

of the PRLP to its insured losses, then 

the insurer shall apply the PRLP as of 

the effective date specified in 

§50.112(b). 

(2)(i) If the insurer estimates that it 

will not exceed its insurer deductible 

making payments based on the application of the PRLP to its insured losses, 

then the insurer may make payments 

on the same basis as prior to the effective date of the PRLP. The insurer 

may also make payments on the basis 

of applying some other pro rata amount 

it determines that is greater than the 

PRLP, where the insurer estimates 

that application of such other pro rata 

amount will result in it not exceeding 

its insurer deductible. The insurer remains liable for losses in accordance 

with §50.115(c). 

(ii) If an insurer estimates that it 

will not exceed its insurer deductible 

and has made payments on the basis 

provided in paragraph (d)(2)(i) of this 

section, but thereafter reaches its insurer deductible, then the insurer shall 

apply the PRLP to any remaining insured losses. When such an insurer submits a claim for the Federal share of 

compensation, the amount of the insurer’s losses will be deemed to be the 

amount it would have paid if it had applied the PRLP as of the effective date, 

and the Federal share of compensation 

will be calculated on that amount. 

However, an insurer may request an exception if it can demonstrate that its 

estimate was invalidated as a result of 

insured losses from a subsequent act of 

terrorism. 

§ 50.114 Data call authority. 

For the purpose of determining initial or recalculated PRLPs, Treasury 

may issue a data call to insurers for insured loss information, seeking information in addition to any information 

provided to Treasury under subparts F 

and H of this part. 

§ 50.115 Final amount. 

(a) Treasury shall determine if, as a 

final proration, remaining insured loss 

payments, as well as adjustments to 


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§ 50.115 31 CFR Subtitle A (7–1–17 Edition) 

previous insured loss payments, can be 

made by insurers based on an adjusted 

PLRP, and aggregate insured losses 

still remain within the cap on annual 

liability. In such a circumstance, 

Treasury will notify insurers as to the 

final PRLP and its application to insured losses. 

(b) If paragraph (a) of this section applies, Treasury may require, as part of 

the insurer submission for the Federal 

share of compensation for insured 

losses, a supplementary explanation regarding how additional payments will 

be provided on previously settled insured losses. 

(c) An insurer that has prorated its 

insured losses, but that has not met its 

insurer deductible, remains liable for 

loss payments that in the aggregate 

bring the insurer’s total insured loss 

payments up to an amount equal to the 

lesser of its insured losses without proration or its insurer deductible. 


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