[Federal Register Volume 86, Number 109 (Wednesday, June 9, 2021)]
[Rules and Regulations]
[Pages 30537-30541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12014]


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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.

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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\
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    \1\ Public 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.
    \2\ TRIA sec. 101(b).
    \3\ See 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.
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    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\
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    \4\ 31 U.S.C. 313(c)(1)(D).
    \5\ See 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-risk-insurance-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-concerning-stand-alone-cyber-liability-insurance-policies-under-the-terrorism-risk.
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    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

[[Page 30538]]

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.
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    \7\ Terrorism 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-insurance-program-updated-regulations-in-light-of-the-terrorism-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.
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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.
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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.
    \12\ See generally November 2020 NPRM, 85 FR at 71589-90.
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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.
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    \13\ See 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/TREAS-TRIP-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.
    \14\ See 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.'').
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    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\
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    \15\ November 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.
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    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

[[Page 30539]]

``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.
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    \17\ See APCIA Comments at 1.
    \18\ See NAMIC Comments at 1-2.
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    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\
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    \19\ See 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.
    \21\ Treasury 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.
    \22\ See TRIA sec. 102(1); 31 CFR 50.4(b).
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    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\
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    \23\ See 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.
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    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\
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    \25\ See, 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 stand-alone, 
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.
    \26\ TRIA 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).
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    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

0
1. The authority citation for part 50 continues to read as follows:


[[Page 30540]]


    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).


0
2. Amend Sec.  50.1 by revising paragraph (a) as follows:


Sec.  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.
* * * * *

0
3. Amend Sec.  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:


Sec.  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:
* * * * *

0
4. Amend Sec.  50.6 by revising paragraph (b) as follows:


Sec.  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-markets-financial-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program.

0
5. Amend Sec.  50.16 by revising paragraph (c) to read as follows:


Sec.  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-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program.
* * * * *

0
6. Amend Sec.  50.20 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  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 Sec.  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.

0
7. Amend Sec.  50.30 by revising paragraph (c) to read as follows:


Sec.  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-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program. Procedures for providing comments and updates 
to that list are posted with the list.

0
8. Amend Sec.  50.74 by revising paragraph (b) as to read as follows:


Sec.  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 Sec.  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-institutions-and-fiscal-service/federal-insurance-office/terrorism-risk-insurance-program or otherwise will be made publicly available.
* * * * *

0
9. Amend Sec.  50.83 by revising paragraph (b) to read as follows:


Sec.  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://

[[Page 30541]]

home.treasury.gov/policy-issues/financial-markets-financial-
institutions-and-fiscal-service/federal-insurance-office/terrorism-
risk-insurance-program.
* * * * *

0
10. Amend Sec.  50.90 by revising paragraph (c) to read as follows:


Sec.  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.

0
11. Amend Sec.  50.103 by revising paragraph (a) as to read as follows:


Sec.  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-institutions-and-fiscal-service/federal-insurance-office/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