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Terrorism Risk Insurance Program Jeffrey S. Bragg Executive Director Terrorism Risk Insurance Program Purpose Address Insurance Market Disruptions Ensure Availability and Affordability of Commercial P&C Terrorism Coverage Provide Transition Period

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terrorism risk insurance program

Terrorism Risk Insurance Program

Jeffrey S. Bragg

Executive Director

terrorism risk insurance program purpose
Terrorism Risk Insurance Program Purpose
  • Address Insurance Market Disruptions
  • Ensure Availability and Affordability of Commercial P&C Terrorism Coverage
  • Provide Transition Period
  • Stabilize and Build Capacity in Private Market
  • Strengthen Overall Economy
terrorism risk insurance program overview

Secretary of


Secretary of




Terrorism Risk Insurance ProgramOverview

Certifies Act of Foreign Terrorism

Resulting in Damage > 5M


United States

U.S. Missions

U.S. Air Carriers

U.S. Vessels


Commercial Lines P & C

Workers Compensation

terrorism risk insurance program restrictions
Terrorism Risk Insurance Program Restrictions
  • Temporary Program

Expires 2005

  • Company Deductible

2005 15% + 10% Insured Loss

  • $100 Billion Annual Cap on Insured Losses
terrorism risk insurance program goals
Terrorism Risk Insurance Program Goals
  • Continued availability/affordability of insurance from Certified Acts of Terrorism
  • Transitional period for private markets to stabilize, build capacity
  • Preserving state insurance regulations
  • Equitable distribution of shared costs of recovery
terrorism risk insurance program core values
Terrorism Risk Insurance ProgramCore Values
  • Sense of Urgency and Purpose
  • Open and Transparent Operations
  • Efficient, Fair and Accurate Service
  • Fiscal Responsibility
  • Accountability
terrorism risk insurance program regulations
Terrorism Risk Insurance Program Regulations
  • 1st Final Rule

- Provides key definitions, such as “Act of Terrorism,” “Insurer,” and “Affiliate”

- Identifies lines of Commercial Property & Casualty Insurance included in the Program

  • 2nd Final Rule

- Make available requirements

- Disclosure requirements

  • 3rd Final Rule

- State residual market mechanisms

terrorism risk insurance program claims rule
Terrorism Risk Insurance ProgramClaims Rule
  • Speed with which TRIP will act on a request for reimbursement.
  • Payment of allocated loss adjustment expenses.
  • Level of documentation required to support a claim.
  • Unique data elements required in reporting.
  • Partial payments.
terrorism risk insurance program advance payments
Terrorism Risk Insurance ProgramAdvance Payments

TRIP Claims


  • Company Submits Certification of Loss with Bordereau

2. Reviews COL for Accuracy Recommends Payment

4. TRIP Office

Approves Payment

Insurance Co.

Request ASAP System

5. Treasury

Issues Funds

3. Co.





terrorism risk insurance program claims forms
Terrorism Risk Insurance ProgramClaims Forms
  • Initial Notice of loss
  • Certification of loss
  • Schedule A – DEP & Insurer deductible
  • Schedule B – Certification of Compliance
  • Schedule C - Bordereau
terrorism risk insurance program bordereau formats
Terrorism Risk Insurance ProgramBordereau Formats
  • Excel
  • Comma delimited text file
  • Pipe delimited text file
  • Online manual Completion
terrorism risk insurance program claims process
Terrorism Risk Insurance ProgramClaims Process
  • www.treas.gov/trip

- Links to:

  • TRIP Claims Manager
  • ASAP
terrorism risk insurance program trip service contractors
Terrorism Risk Insurance ProgramTRIP Service Contractors
  • Paragon Claims Processing & Management
  • ISO Statistical Reporting
  • Deloitte Claims Auditing
terrorism risk insurance program contracting process
Terrorism Risk Insurance Program Contracting Process
  • Develop initial statement of work
  • Analyze requirements
  • Acquisition Office/TRIP Office development of Procurement Plan
  • Conduct market research-receive comments
  • Coordination of technical issues, e.g., systems, financial, accounting
  • Issue request for comments (optional)-receive and analyze comments
  • TRIP Office redraft of statement of work-develop independent cost estimate
  • Acquisition announce planned RFP release date on
  • TRIP/Acquisition development selection plan
  • Acquisition Office preparation and clearance of RFP
  • Release of RFP-Announce RFP FEDBIZOPPS.GOV
  • Receive and answer questions
  • Conduct pre-proposal conference
  • Amend solicitation (as required)
  • Receive and evaluate proposals
  • Establish a competitive range, obtain clarifications on conduction negotiations; obtain “Best and Final Offers” (as required)
  • Preparation of Report/Recommendation; Source Selection Authority decision
  • Acquisition Office prepare, clear and award contract
terrorism risk insurance program litigation management rule
Terrorism Risk Insurance Program Litigation Management Rule
  • Follows Requirements of Act
    • Exclusive Federal cause of action
    • Preempts state causes of action (Not workers comp)
    • Preserves government subrogation rights
    • Federal funds not used to pay punitive damages
  • Presidential Memorandum
    • Advance approval of Secretary of Treasury for proposed settlements of Federal causes of action

> $ 2M personal injury or death

> $ 10M property damage

terrorism risk insurance program 6 th rule affiliation determination
Terrorism Risk Insurance Program 6th Rule Affiliation Determination
  • Final 30 to 60 Days
  • Timing Affiliation Determination
terrorism risk insurance program recoupment example
Terrorism Risk Insurance Program Recoupment Example

$20 B Insured Loss 100 Insurers Impacted

DEP 100 Insures = $20 B

$15 B 3rd Year 15% deductible = $3 B

Trip Industry Aggregate Retention

Pays $15.3 B 10% quota share = $1.7 B

100 Companies Pay $4.7 B

$4.7 B Paid by 100 companies



$5 B



$10.3 B

terrorism risk insurance program 7 th proposed rule recoupment
Terrorism Risk Insurance Program 7th Proposed Rule - Recoupment
  • Published 30 – 60 Days
  • Standards for Treasury Notification (6 Months Notice)
  • Establishes Electronic Payment System
  • Assessments in Full Year Increments (Minimum 1 Year)
  • Annual Reconciliation/Audit
terrorism risk insurance program rule making process
Terrorism Risk Insurance Program Rule Making Process
  • Preliminary determination of regulatory content (vs. business procedures)
  • Develop draft regs
  • TRIP Review draft regs
  • Reinsurer site visit
  • Determine reg vs business process division and incorporate changes to draft reg

6. Departmental review and possible meeting with OMB

7. OMB review

8. Publish in Federal Register (proposed rule)

9. Formal public comment

10. Paperwork Reduction Review - concurrent with public comment period

  • Review comments
  • Revise regs

13. Departmental review

14. OMB review

15. Publish final regs in Federal Register

terrorism risk insurance program program issues
Terrorism Risk Insurance Program Program Issues
  • State Exemptions (NBC)
  • Losses in Excess $100B
  • Foreign -vs- Domestic Terrorism
  • Program Extension
terrorism risk insurance program treasury offices
Terrorism Risk Insurance Program Treasury Offices

Financial Institutions Office of Economic Policy

TRIP Studies

Implementation Group Life

Program Management Make Available

Program Operations Program Alternatives


Claims Management/Processing

Financial Integrity

Operational Efficiency

terrorism risk insurance program market corrections
Terrorism Risk Insurance Program Market Corrections
  • Property Insurance take up % rate

2003 1st Quarter 2004 3rd Quarter

24% 57%

  • Cost of coverage - % of premium

2003 1st Quarter 2004 3rd Quarter

10% - 50% 4.2%