Federal Register / Vol. 86, No. 109 / Wednesday, June 9, 2021 / Rules and Regulations 30537 

1Public Law 107–297, 116 Stat. 2322, codified at 

15 U.S.C. 6701 note. Because the provisions of 

TRIA (as amended) appear in a note instead of 

particular sections of the U.S. Code, the provisions 

of TRIA are identified by the sections of the law. 

2TRIA sec. 101(b). 

3See Terrorism Risk Insurance Extension Act of 

2005, Public Law 109–144, 119 Stat. 2660; 

Terrorism Risk Insurance Program Reauthorization 

Act of 2007, Public Law 110–160, 121 Stat. 1839; 

Terrorism Risk Insurance Program Reauthorization 

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

Terrorism Risk Insurance Program Reauthorization 

Act of 2019, Public Law 116–94, 133 Stat. 2534. 

4 31 U.S.C. 313(c)(1)(D). 

5See 31 CFR part 50. Treasury summarized the 

history of prior rulemakings in connection with the 

Program in a 2016 proposed rulemaking proposing 

rule changes to implement the 2015 

Reauthorization Act. See 81 FR 18950, 18950–91 

(Apr. 1, 2016), https://www.federalregister.gov/ 

documents/2016/04/01/2016-06920/terrorism-riskinsurance-program. 

6 Guidance Concerning Stand-Alone Cyber 

Liability Insurance Policies Under the Terrorism 

Risk Insurance Program, 81 FR 95312 (Dec. 27, 

2016), https://www.federalregister.gov/documents/ 

2016/12/27/2016-31244/guidance-concerningstand-alone-cyber-liability-insurance-policiesunder-the-terrorism-risk. 

7Terrorism Risk Insurance Program; Updated 

Regulations in Light of the Terrorism Risk 

Insurance Program Reauthorization Act of 2019, 

and for Other Purposes, 85 FR 71588 (Nov. 10, 

2020), https://www.federalregister.gov/documents/ 

2020/11/10/2020-24522/terrorism-risk-insuranceprogram-updated-regulations-in-light-of-theterrorism-risk-insurance. 

8 GAO, Terrorism Risk Insurance: Program 

Changes Have Reduced Federal Fiscal Exposure 

(GAO–20–348) (Apr. 2020), https://www.gao.gov/ 

assets/710/706243.pdf. 

9 Id. at 18–19. 

10 Id. at 19. 

UAE government boycott law or policy 

that would give rise to a presumption 

that the request was boycott-related. 

U.S. persons are reminded that 

requests that are on their face boycottrelated or that are for action obviously 

in furtherance or support of an 

unsanctioned foreign boycott are subject 

to this part of the EAR, irrespective of 

the country of origination. For example, 

requests containing references to 

‘‘blacklisted companies,’’ ‘‘Israel boycott 

list,’’ ‘‘non-Israeli goods,’’ or other 

phrases or words indicating a boycott 

purpose would be subject to the 

appropriate provisions of the 

Department’s antiboycott regulations in 

this part. 

Matthew S. Borman, 

Deputy Assistant Secretary for Export 

Administration. 

[FR Doc. 2021–12125 Filed 6–7–21; 4:15 pm] 

BILLING CODE 3510–33–P 

DEPARTMENT OF THE TREASURY 

31 CFR Part 50 

Terrorism Risk Insurance Program; 

Updated Regulations in Light of the 

Terrorism Risk Insurance Program 

Reauthorization Act of 2019, and for 

Other Purposes 

AGENCY: Departmental Offices, 

Department of the Treasury. 

ACTION: Final rule. 

SUMMARY: The Department of the 

Treasury (Treasury) is issuing this final 

rule to implement technical changes to 

the Terrorism Risk Insurance Program 

(TRIP or Program) rules in response to 

the Terrorism Risk Insurance Program 

Reauthorization Act of 2019. In 

addition, Treasury is issuing this final 

rule to: Clarify the manner in which 

Treasury will calculate ‘‘property and 

casualty insurance losses’’ for purposes 

of considering certification of an act of 

terrorism, and ‘‘insured losses’’ when 

administering the financial sharing 

mechanisms under the Program, 

including the Program Trigger and 

Program Cap; incorporate into the 

Program rules the prior guidance 

provided by Treasury in connection 

with stand-alone cyber insurance under 

the Program; and provide updated links 

to additional information found on the 

Program’s website relating to 

administration of the Program. The 

changes were published in proposed 

form for public comment by Treasury on 

November 10, 2020. 

DATES: This rule is effective July 12, 

2021. 

FOR FURTHER INFORMATION CONTACT: 

Richard Ifft, Senior Insurance 

Regulatory Policy Analyst, Federal 

Insurance Office, 202–622–2922, 

Lindsey Baldwin, Senior Insurance 

Regulatory Policy Analyst, Federal 

Insurance Office, 202–622–3220, or 

Daniel McKnight, Policy Analyst, 202– 

622–7009. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Terrorism Risk Insurance Act of 

2002 (as amended, the Act or TRIA) 1

was enacted on November 26, 2002, 

following the attacks of September 11, 

2001, to address disruptions in the 

market for terrorism risk insurance, help 

ensure the continued availability and 

affordability of commercial property 

and casualty insurance for terrorism 

risk, and allow for the private markets 

to stabilize and build insurance capacity 

to absorb any future losses for terrorism 

events.2 TRIA requires insurers to 

‘‘make available’’ terrorism risk 

insurance for commercial property and 

casualty losses resulting from certified 

acts of terrorism (termed ‘‘insured 

losses’’ under TRIA), and provides for 

shared public and private compensation 

for such insured losses. The Program 

has been reauthorized four times, most 

recently by the Terrorism Risk 

Insurance Program Reauthorization Act 

of 2019 (2019 Reauthorization Act).3

The Secretary of the Treasury 

(Secretary) administers the Program, 

with the assistance of the Federal 

Insurance Office (FIO).4 To assist 

insurers, policyholders, and other 

interested parties in understanding and 

complying with the requirements of the 

Act, Treasury has issued regulations 

implementing the Program (the Program 

Rules).5 In some instances, Treasury has 

also issued interim guidance that may 

be relied upon by insurers until 

superseded by any regulations. Of 

relevance to this final rule, in December 

2016, Treasury issued interim guidance 

confirming that certain stand-alone 

cyber coverage written in a TRIP-eligible 

line of insurance was within the scope 

of the Program, such that insurers were 

obligated to adhere to the ‘‘make 

available’’ and disclosure requirements 

under TRIA for such coverage (Cyber 

Guidance).6

Treasury proposed the changes in this 

final rule in a November 2020 notice of 

proposed rulemaking (the November 

2020 NPRM).7 In response to the 

reauthorization of the Program for an 

additional seven years under the 2019 

Reauthorization Act, Treasury proposed 

certain technical changes to align the 

Program Rules to the new dates for 

expiration of the Program and schedule 

for recoupment of any payments. 

Treasury also proposed in the November 

2020 NPRM certain definitional changes 

to confirm and clarify the guidance on 

cyber coverage in this area that Treasury 

provided in its December 2016 Cyber 

Guidance. In addition, Treasury 

proposed in the November 2020 NPRM 

several changes, in part in response to 

a report by the Government 

Accountability Office (GAO), addressing 

certain sources of risk and uncertainty 

related to the Program.8 In its report, 

GAO indicated that, based upon its 

engagement with stakeholders during 

the preparation of the report, some 

uncertainty may exist about how 

Treasury would apply policyholder 

retention amounts in calculating 

‘‘property and casualty insurance 

losses’’ versus ‘‘insured losses’’ to 

determine the Program certification 

threshold, Program Trigger, and 

Program Cap.9 GAO recommended that 

Treasury provide further clarification to 

‘‘prevent uncertainty in the insurance 

market and potential litigation following 

a terrorist event that that could delay 

insurance payments and economic 

recovery.’’ 10 Treasury proposed certain 


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11 In addition to seeking comments concerning 

the proposed rule, the November 2020 NPRM 

sought comments from the public concerning a 

number of other matters under the Program 

concerning the certification process and the 

participation of captive insurers in the Program. 

Treasury received a number of comments 

addressing these issues, which it is continuing to 

review in connection with potential future 

proposed rules, reports, or other actions involving 

the Program. 

12See generally November 2020 NPRM, 85 FR at 

71589–90. 

13See Comment from Centers for Better 

Insurance, LLC (Dec. 3, 2020) (CBI Comments); 

Comment from Lloyd’s of London (Jan. 8, 2021) 

(Lloyd’s Comments); Comment from National 

Association of Mutual Insurance Companies (Jan. 

11, 2021) (NAMIC Comments); Comment from 

American Property Casualty Insurance Association 

(Jan. 11, 2021) (APCIA Comments); and Comment 

from the Coalition to Insure Against Terrorism and 

the Council of Insurance Agents and Brokers (Jan. 

11, 2021) (CIAT/CIAB Comments), all available at 

https://www.regulations.gov/document/TREASTRIP-2020-0022-0001/comment. As noted above, 

Treasury solicited and received additional 

comments concerning certification and captive 

insurer issues, which Treasury will not address in 

this final rule. 

14See Lloyd’s Comments at 1 (‘‘Lloyd’s is grateful 

to FIO for issuing its guidance relating to cyber 

liability lines in 2016, and for now codifying that 

guidance in the proposed rule.’’); APCIA Comments 

at 3 (‘‘The NPRM proposes to codify Treasury’s 

previous guidance on cyber stand-alone policies. In 

the NPRM, Treasury confirmed APCIA’s 

understanding of the intent of that previous 

guidance, i.e., to make clear that any cyber risk 

reported on Line 17—Other Liability on insurers’ 

annual state statutory financial statements is 

considered to be covered by TRIA unless the risk 

is statutorily excluded. Therefore, APCIA supports 

Treasury’s proposed rulemaking in this regard.’’); 

NAMIC Comments at 2 (‘‘The NPRM proposes to 

codify Treasury’s previous guidance on stand-alone 

cyber insurance policies to make clear that any 

cyber risk reported on Line 17—Other Liability on 

insurers’ annual state statutory financial reporting 

statements is considered covered by TRIA unless 

the risk is statutorily excluded. NAMIC believes 

this is an appropriate interpretation and has no 

issue in this regard.’’); and CIAT/CIAB Comments 

at 3 (‘‘In December 2016, Treasury issued guidance 

relating to whether certain standalone cyber 

coverage written in a TRIP-eligible line of insurance 

was within the scope of the TRIA program, such 

that insurers were obligated to adhere to the ‘make 

available’ and disclosure requirements under TRIA 

for such coverage. 81 FR 95312. We thank FIO for 

codifying this previously issued guidance in the 

current NPRM, as greater clarity on the relationship 

between cyberterrorism and TRIA is always 

appreciated, and welcome future clarifying 

guidance related to cyber insurance, particularly as 

it relates to the certification of cyber events.’’). 

15November 2020 NPRM, 85 FR at 71589–90. 

16 Id. For example, the Program Cap of $100 

billion limits ‘‘insured losses’’ payable by Treasury 

and insurers that have met their Program deductible 

to no more than $100 billion in any single annual 

period. See TRIA sec. 103(e)(2); 31 CFR Subpart L 

(Cap on Annual Liability). If amounts paid by 

policyholders were included within this 

calculation, insurers could be excused from 

payment by the Program on account of amounts 

paid or absorbed by their policyholders, as 

distinguished from the combined amount of their 

own payments and Treasury reimbursement of 

insurer payments. In an extreme case, if 

policyholders sustained $100 billion in losses 

associated with certified ‘‘acts of terrorism’’ in a 

given year because of their retained obligations, 

insurers could be excused of any payments under 

their policies if those policyholder payments 

operated to exhaust the $100 billion Program Cap 

of ‘‘insured losses.’’ Such a result is not consistent 

with the statutory language of TRIA or the 

Congressional intent underlying the Program. 

17See APCIA Comments at 1. 

rule changes in the November 2020 

NPRM designed to clarify how Treasury 

will apply these terms to effectuate the 

intent and goals of the Program. Finally, 

Treasury proposed updating certain 

references to the TRIP website in the 

Program Rules to the current website 

URLs. 

II. The Proposed Rule 

The November 2020 NPRM proposed 

various technical changes to the 

Program Rules to account for the 

extension of the Program to December 

31, 2027 as provided for in the 2019 

Reauthorization Act.11 In addition, the 

November 2020 NPRM proposed 

additional substantive changes to the 

Program Rules by (1) incorporating, 

through certain definitional changes, 

Treasury’s prior guidance respecting the 

inclusion of stand-alone cyber liability 

within the Program; and (2) making 

certain revisions to definitional 

language concerning ‘‘property and 

casualty insurance losses’’ (for purposes 

of certification of an ‘‘act of terrorism’’) 

and ‘‘insured loss’’ under the Program, 

which governs various financial 

mechanics under the Program, 

including calculation of an insurer’s 

claim for the Federal Share of 

Compensation, the Program Trigger and 

the Program Cap. In general terms, the 

proposed changes in the November 2020 

NPRM involving ‘‘property and casualty 

insurance losses’’ and ‘‘insured loss’’ 

were intended to specify that amounts 

for which the policyholder is 

responsible (whether on account of 

policy exclusions or deductible or 

retention amounts) will be included 

within ‘‘property and casualty insurance 

losses,’’ but excluded from ‘‘insured 

loss’’ for purposes of calculating 

payment amounts under the Program, as 

well as for determining whether the 

Program Trigger and Program Cap have 

been satisfied.12 The November 2020 

NPRM also updates various URL links 

to the Program website, which contains 

further explanatory information 

concerning the Program. 

III. Summary of Comments and Final 

Rule 

Treasury received five comments 

addressing the proposed rule changes 

identified in the November 2020 

NPRM.13 None of the comments 

received objected to the proposed 

technical rule changes in response to 

the 2019 Reauthorization Act. In 

addition, none of the comments 

objected to Treasury’s proposed 

codification of its December 2016 Cyber 

Guidance or the provisions updating 

Treasury’s website references.14 Those 

proposed rules, accordingly, are being 

finalized as proposed. 

Some commenters addressed 

Treasury’s proposed rule changes 

regarding the interpretation of the terms 

‘‘property and casualty insurance 

losses’’ for purposes of the certification 

process, and ‘‘insured loss’’ for purposes 

of the sharing mechanisms under the 

Program. Treasury’s proposed rules 

clarified that ‘‘property and casualty 

insurance losses,’’ for certification 

purposes, would include loss amounts 

ultimately sustained by the policyholder 

(on account of deductibles, retentions, 

or other mechanisms); however, an 

‘‘insured loss’’ (a term used in relation 

to payments under the Program rather 

than the certification process) would not 

include such amounts, because 

payments in connection with the 

Program are limited to loss amounts that 

are actually paid (or in some cases to be 

paid) by insurers.15 Treasury explained 

that the certification analysis looks to 

the size of the event in question, so it 

is appropriate to consider all amounts 

associated with TRIP-eligible policies in 

connection with that inquiry to 

determine whether the event is of 

sufficient size to warrant potential 

consideration for certification purposes. 

By contrast, since the term ‘‘insured 

loss’’ measures amounts payable under 

the Program, and payments under the 

Program are made only to insurers, 

Treasury observed that ‘‘insured loss’’ 

cannot include losses not paid by 

insurers to ensure that the financial 

mechanisms underlying the Program 

operate as intended.16

One commenter, while not expressing 

a preference for the elements to be 

included within the two terms 

(‘‘property and casualty insurance 

losses’’ and ‘‘insured loss’’), did suggest 

that these terms should have the same 

interpretation for reasons of 

administrative efficiency.17 This 

commenter also noted that it might be 

difficult in some cases to determine the 

amount of policyholder obligations in 

connection with a certification inquiry. 

Another commenter echoed the 

preference for equating the meaning of 

the two terms and suggested that 

policyholder losses should be included 

in both calculations, as they are 

commonly considered to be part of 


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Federal Register / Vol. 86, No. 109 / Wednesday, June 9, 2021 / Rules and Regulations 30539 

18See NAMIC Comments at 1–2. 19See CBI Comments, 3, 6. 20 Id. To the extent the Secretary does not certify 

an event as an act of terrorism under TRIA, policy 

exclusions for certified acts of terrorism that can be 

(and typically are) included in a policy where the 

policyholder fails to accept the mandatory offer 

under TRIA would not apply, and the policyholder 

would be entitled to coverage for associated losses 

assuming all other policy terms and conditions 

were met. 

21Treasury has also considered the additional 

wording issues identified by this commenter 

concerning the clarifications proposed to ‘‘property 

and casualty insurance losses’’ for certification 

purposes (CBI Comments at 3–4) and finds that they 

do not warrant revisions to the proposed rule. No 

new concepts are introduced by Treasury in 

connection with the Program by referencing 

terrorism risk insurance. Second, a first-party 

policyholder remains ‘‘responsible for the 

payment’’ of losses within an assumed deductible 

amount, even where it elects not to repair the 

property at all. 

22See TRIA sec. 102(1); 31 CFR 50.4(b). 

23See CBI Comments at 5 (‘‘The insurer could 

issue a policy that simply waives collection of any 

deductible in the event of a certified act of 

terrorism.’’). 

24 Id. 

25See, e.g., Interpretative Letter, TRIA-Only 

Captives/TRIA Section 102(6)(c)/31 CFR 50.5(d) 

(Mar. 2, 2004) (‘‘We believe that an entity 

considering forming a captive insurer for standalone, single risk terrorism insurance should be 

strongly cautioned and advised against undertaking 

such proposed action if it is doing so in order to 

avoid the Act’s deductible requirements.’’), https:// 

home.treasury.gov/system/files/311/redactedv.pdf. 

26TRIA sec. 104(a)(1); 31 CFR Subpart I (Audit 

and Investigative Procedures). In addition, 

significant civil penalty provisions apply under 

TRIA where a participating insurer ‘‘[s]ubmits to 

Treasury fraudulent claims under the Program for 

insured losses.’’ TRIA sec. 104(e)(1)(C); 31 CFR 

50.82(a)(3). 

‘‘insured loss’’ in the insurance 

industry.18 Although Treasury values 

administrative efficiency in the 

operation of the Program, the two terms 

are different and address different 

(although related) matters. ‘‘Property 

and casualty insurance losses’’ measures 

the size of the event in question, which 

logically means any insurance-related 

loss associated with the event. By 

contrast, ‘‘insured loss’’ in the context of 

the Program must be limited to the 

actual losses of participating insurers, 

when calculating Federal Share of 

Compensation payments to participating 

insurers in the event that payments 

under the Program are triggered, or 

when determining the cap on total 

payments by participating insurers. 

Accordingly, Treasury will not apply 

the same definition where Congress 

chose not to do so. Furthermore, and for 

the reasons explained above, including 

policyholder obligations within the 

meaning of ‘‘insured loss’’ would 

potentially permit recoveries by insurers 

for amounts not paid by such insurers, 

and excuse insurer payments to some 

extent on account of policyholder 

payments through operation of the 

Program Cap. Treasury therefore 

declines to interpret ‘‘insured loss’’ in 

this fashion. 

A third commenter offered alternative 

language to clarify the terms ‘‘property 

and casualty insurance losses’’ and 

‘‘insured loss.’’ 19 Specifically, the 

commenter suggested that the ‘‘property 

and casualty insurance losses’’ should 

only include losses ‘‘after the 

hypothetical application of any 

terrorism exclusions,’’ reasoning that 

such an approach would be more 

favorable to a policyholder that chose 

not to take up its insurer’s mandatory 

offer of terrorism risk insurance under 

TRIA.20 Treasury declines to adopt the 

approach proposed by this commenter, 

which would result in Treasury 

adopting a definition that would 

facilitate the provision of coverage to 

policyholders that consciously declined 

to purchase it. As Treasury explained in 

the November 2020 NPRM, the purpose 

of the certification analysis is to 

‘‘accurately assess the size of an event’’ 

and it therefore focuses on the total 

economic loss of an event involving 

TRIP-eligible lines of insurance. When 

the Secretary is making a certification 

decision under the Program, it is 

important for Treasury to be in a 

position to identify the relevant size of 

a particular event that might be 

considered for certification.21 In 

Treasury’s view, Congress did not 

intend to limit the Secretary’s ability to 

certify an event as an act of terrorism in 

the manner proposed by this 

commenter. Moreover, the concern 

identified by this commenter is 

addressed by the fact that it is within 

the Secretary’s discretion to consider 

factors, such as policyholder take-up 

rates, when determining whether to 

certify any particular event as an act of 

terrorism.22

Regarding the proposed modification 

to the ‘‘insured loss’’ definition, the 

same commenter generally approved of 

the concept behind Treasury’s proposed 

rule (i.e., that amounts paid or absorbed 

by the policyholder are not an ‘‘insured 

loss’’ under the Program). However, this 

commenter suggested that the 

‘‘proposed rule could be gamed’’ by 

insurers and policyholders by not going 

far enough in protecting against abuses 

intended to augment insurer recoveries 

to the benefit of both participating 

insurers and their policyholders.23

However, the commenter recognized 

that attempting to anticipate ‘‘the full 

range of sophistication, complexity, and 

ingenuity’’ that might be deployed to 

obtain an unfair advantage under the 

Program may not be possible.24

As Treasury has advised from the 

outset of the Program, efforts to avoid 

the requirements of TRIA so as to 

artificially increase recoveries under the 

Program are impermissible and will 

have adverse consequences when 

Treasury evaluates claims for the 

Federal Share of Compensation in the 

event of a certified act of terrorism.25

Policy structures and arrangements 

providing for special treatment where 

an ‘‘act of terrorism’’ is involved, with 

the goal of increasing claims for the 

Federal Share of Compensation, will be 

subject to significant scrutiny by 

Treasury in both the claim approval 

process and any subsequent audit 

process as contemplated under TRIA.26

Accordingly, Treasury is also 

adopting without change in this final 

rule the interpretation of ‘‘property and 

casualty insurance losses’’ and ‘‘insured 

loss’’ proposed in the November 2020 

NPRM. 

IV. Procedural Requirements 

Executive Order 12866, ‘‘Regulatory 

Planning and Review.’’ This final rule is 

not a significant regulatory action for 

purposes of Executive Order 12866, 

‘‘Regulatory Planning and Review,’’ and 

thus has not been reviewed by the 

Office of Management and Budget 

(OMB). 

Regulatory Flexibility Act. Under the 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq., Treasury must consider whether 

this rule will have a ‘‘significant 

economic impact on a substantial 

number of small entities.’’ 5 U.S.C. 

605(b). In this case, Treasury certifies 

that this final rule will not have a 

significant economic impact on a 

substantial number of small entities, 

because the changes it implements are 

largely ministerial and are not expected 

to impact small entities more than the 

existing Program regulations. 

Paperwork Reduction Act. No 

collection of information is addressed in 

this final rule. Treasury continues to 

submit to OMB for review under the 

requirements of the Paperwork 

Reduction Act, 44 U.S.C. 3507(d), 

material changes to existing collection 

requirements. 

List of Subjects in 31 CFR Part 50 

Insurance, Terrorism. 

For the reasons stated in the 

preamble, 31 CFR part 50 is amended as 

follows: 

PART 50—TERRORISM RISK 

INSURANCE PROGRAM 

■ 1. The authority citation for part 50 

continues to read as follows: 


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30540 Federal Register / Vol. 86, No. 109 / Wednesday, June 9, 2021 / Rules and Regulations 

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, Pub. L. 114– 

1, 129 Stat. 3, Pub. L. 116–94, 133 Stat. 2534 

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

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

■ 2. Amend § 50.1 by revising paragraph 

(a) as follows: 

§ 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 

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, the Terrorism 

Risk Insurance Program Reauthorization 

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

3, and the Terrorism Risk Insurance 

Program Reauthorization Act of 2019, 

Public Law 116–94, 133 Stat. 2534. 

* * * * * 

■ 3. Amend § 50.4 by revising 

paragraphs (b)(2)(ii) and (n)(3)(iii), 

adding paragraph (n)(3)(iv) and revising 

(w)(1) and (2) to read as follows: 

§ 50.4 Definitions. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) Property and casualty insurance 

losses resulting from the act, in the 

aggregate, do not exceed $5,000,000. For 

these purposes, property and casualty 

insurance losses include any amounts 

subject to payment under a property and 

casualty insurance policy, even if the 

policyholder declined to obtain 

terrorism risk insurance under the 

policy or is otherwise ultimately 

responsible for the payment. 

* * * * * 

(n) * * * 

(3) * * * 

(iii) Payments by an insurer in excess 

of policy limits; or 

(iv) Amounts paid by a policyholder 

as required under the terms and 

conditions of property and casualty 

insurance issued by an insurer. 

* * * * * 

(w) * * * 

(1) Means commercial lines within 

only the following lines of insurance 

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; a stand-alone cyber 

liability policy falling within Line 17— 

Other Liability, is property and casualty 

insurance, so long as it is not otherwise 

identified for state reporting purposes as 

a policy that is not property and 

casualty insurance, such as professional 

liability insurance. 

(2) Property and casualty insurance 

does not include: 

* * * * * 

■ 4. Amend § 50.6 by revising paragraph 

(b) as follows: 

§ 50.6 Special rules for Interim Guidance 

safe harbors. 

* * * * * 

(b) For purposes of this section, any 

Interim Guidance will be posted by 

Treasury at https://home.treasury.gov/ 

policy-issues/financial-marketsfinancial-institutions-and-fiscal-service/ 

federal-insurance-office/terrorism-riskinsurance-program. 

■ 5. Amend § 50.16 by revising 

paragraph (c) to read as follows: 

§ 50.16 Use of model forms. 

* * * * * 

(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 March 2020, 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 website at https://

home.treasury.gov/policy-issues/ 

financial-markets-financial-institutionsand-fiscal-service/federal-insuranceoffice/terrorism-risk-insurance-program. 

* * * * * 

■ 6. Amend § 50.20 by revising 

paragraphs (b) and (c) to read as follows: 

§ 50.20 General mandatory availability 

requirements. 

* * * * * 

(b) Compliance through 2027. Under 

section 108(a) of the Act, an insurer 

must comply with paragraphs (a)(1) and 

(2) of this section through calendar year 

2027. 

(c) Beyond 2027. 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, 2027, even if the 

policy period of insurance coverage for 

losses from events other than acts of 

terrorism extends beyond that date. 

■ 7. Amend § 50.30 by revising 

paragraph (c) to read as follows: 

§ 50.30 General participation 

requirements. 

* * * * * 

(c) Identification. Treasury maintains 

a list of state residual market insurance 

entities and state workers’ 

compensation funds at https://

home.treasury.gov/policy-issues/ 

financial-markets-financial-institutionsand-fiscal-service/federal-insuranceoffice/terrorism-risk-insurance-program. 

Procedures for providing comments and 

updates to that list are posted with the 

list. 

■ 8. Amend § 50.74 by revising 

paragraph (b) as to read as follows: 

§ 50.74 Payment of Federal Share of 

Compensation. 

* * * * * 

(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 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://

home.treasury.gov/policy-issues/ 

financial-markets-financial-institutionsand-fiscal-service/federal-insuranceoffice/terrorism-risk-insurance-program 

or otherwise will be made publicly 

available. 

* * * * * 

■ 9. Amend § 50.83 by revising 

paragraph (b) to read as follows: 

§ 50.83 Adjustment of civil monetary 

penalty amount. 

* * * * * 

(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 website at https:// 


lotter on DSK11XQN23PROD with RULES1
Federal Register / Vol. 86, No. 109 / Wednesday, June 9, 2021 / Rules and Regulations 30541 

home.treasury.gov/policy-issues/ 

financial-markets-financial-institutionsand-fiscal-service/federal-insuranceoffice/terrorism-risk-insurance-program. 

* * * * * 

■ 10. Amend § 50.90 by revising 

paragraph (c) to read as follows: 

§ 50.90 Mandatory and discretionary 

recoupment. 

* * * * * 

(c) If the Secretary imposes a federal 

terrorism policy surcharge as provided 

in paragraph (a) of this section, then the 

required amounts, based upon 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, 2022, the 

Secretary shall collect all required 

amounts by September 30, 2024; 

(2) For any act of terrorism that occurs 

between January 1, 2023 and December 

31, 2023, the Secretary shall collect 35% 

of any required amounts by September 

30, 2024, and the remainder by 

September 30, 2029; and 

(3) For any act of terrorism that occurs 

on or after January 1, 2024, the Secretary 

shall collect all required amounts by 

September 30, 2029. 

■ 11. Amend § 50.103 by revising 

paragraph (a) as to read as follows: 

§ 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://

home.treasury.gov/policy-issues/ 

financial-markets-financial-institutionsand-fiscal-service/federal-insuranceoffice/terrorism-risk-insurance-program 

following any certification of an act of 

terrorism pursuant to section 102(1) of 

the Act. 

* * * * * 

Dated: June 3, 2021. 

Steven E. Seitz, 

Director, Federal Insurance Office, 

performing the Delegable Duties of the 

Assistant Secretary for Financial Institutions. 

[FR Doc. 2021–12014 Filed 6–8–21; 8:45 am] 

BILLING CODE 4810–25–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 9 

RIN 2900–AR24 

Extension of Veterans’ Group Life 

Insurance (VGLI) Application Periods 

in Response to the COVID–19 Public 

Health Emergency 

AGENCY: Department of Veterans Affairs. 

ACTION: Interim final rule. 

SUMMARY: The Department of Veterans 

Affairs (VA) is issuing this interim final 

rule to extend the deadline for former 

members insured under 

Servicemembers’ Group Life Insurance 

(SGLI) to apply for VGLI coverage 

following separation from service in 

order to address the inability of former 

members directly or indirectly affected 

by the 2019 Novel Coronavirus (COVID– 

19) public health emergency to purchase 

VGLI. This rule will be in effect until 

December 11, 2021. 

DATES: This interim final rule is 

effective June 9, 2021. 

Comment date: Comments must be 

received on or before July 9, 2021. 

ADDRESSES: Comments may be 

submitted through www.Regulations.gov 

or mailed to Director, VA Insurance 

Service (29), 5000 Wissahickon Avenue, 

Philadelphia, PA 19144. Please note that 

due to circumstances associated with 

the COVID–19 pandemic, VA 

discourages the submission of 

comments by mail. Comments should 

indicate that they are submitted in 

response to ‘‘RIN 2900–AR24 Interim 

Final Rule—Extension of VGLI 

Application Periods in Response to the 

COVID–19 Public Health Emergency.’’ 

Comments received will be available at 

regulations.gov for public viewing, 

inspection or copies. 

FOR FURTHER INFORMATION CONTACT: Paul 

Weaver, Department of Veterans Affairs 

Insurance Service (310/290B), 5000 

Wissahickon Avenue, Philadelphia, PA 

19144, (215) 842–2000, ext. 4263. (This 

is not a toll-free number.) 

SUPPLEMENTARY INFORMATION: Section 

1977 of title 38, United States Code, 

authorizes the VGLI program, which 

provides former members separating 

from service with the option of 

converting existing SGLI coverage into 

renewable, 5-year term group life 

insurance coverage in amounts ranging 

from $10,000 to $400,000 based upon 

the amount of SGLI coverage. See 38 

U.S.C. 1967(a), 1968(b)(1)(A), 1977(a), 

(b). Section 9.2 of title 38, Code of 

Federal Regulations, provides the 

effective dates of VGLI coverage and 

application requirements. VGLI 

coverage may be granted if an 

application, the initial premium, and 

evidence of insurability are received 

within 1 year and 120 days following 

termination of duty. 38 CFR 9.2(c). 

Evidence of insurability is not required 

during the initial 240 days following 

termination of duty. Id. 

On October 7, 2020, VA published a 

final rule in the Federal Register (85 FR 

63208) that amended 38 CFR 9.2 by 

adding new paragraph (f)(1) to extend 

by 90 days the time periods under 38 

CFR 9.2(c) during which former 

members may apply for VGLI. Thus, 

former members who submit a VGLI 

application and the initial premium 

within 330 days following separation 

from service will not be required to 

submit evidence of insurability. Former 

members who do not apply for VGLI 

within 330 days following separation 

from service may still receive VGLI 

coverage if they apply for the coverage 

within 1 year and 210 days following 

separation from service and submit the 

initial premium and evidence of 

insurability. The 90-day extensions for 

former members to apply for VGLI are 

in effect from June 11, 2020, through 

June 11, 2021. Between June 11, 2020 

and March 31, 2021, 14,855 former 

members utilized these 90-day 

extensions to purchase VGLI coverage. 

The rationale for applying the rule for 

one year was that VA is obligated to 

manage VGLI according to sound and 

accepted actuarial principles (see 38 

U.S.C. 1977(c), (f), (g)), and that VA 

would be able to utilize this one-year 

time period to gather and analyze data 

on VGLI claims experience to determine 

if it would be actuarially sound to 

further extend the applicability date. 

VGLI is funded by premiums from 

insured Veterans, and VA has 

determined that current premium 

amounts that insured Veterans pay for 

VGLI coverage are sufficient to absorb 

the cost of any additional VGLI claims 

that would be paid due to VA extending 

that application deadline period for an 

additional six months. Considering the 

continuing challenges involved with 

obtaining necessary medical records 

brought about by the COVID–19 

pandemic, and that VA has determined 

that it would be actuarially sound to 

extend VGLI application deadlines, VA 

will be extending the deadline for VGLI 

applications received between June 12, 

2021 and December 11, 2021. This 

interim final rulemaking will continue 

to provide separating service members 

an additional 90 days to apply for VGLI 

during the COVID–19 pandemic and is 

intended to ease some of the financial 

consequences of the COVID–19 


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