The process carriers follow to collect data required under the U.S. federal terrorism reinsurance program are moving toward a more streamlined approach in 2018.
Previously, U.S. Department of Treasury and state insurance regulators have collected separate data regarding terrorism risk insurance. But the separate state and federal collection requirements area headed toward consolidation into single rules for both.
For 2018, Treasury, state insurance regulators and the National Association of Insurance Commissioners have developed a proposed consolidated approach where companies required to submit separate data to both federal and state regulators could submit the same information to both.
There is a catch. According to the Treasury Department, this would be “subject to certain additional information that will be solely submitted to state insurance regulators.”
Treasury’s posting on the matter said that data collection in 2018 would also become mandatory for participating insurance, according to Treasury’s regulations. Treasury is seeking comments on the proposed changes, which are due by Jan. 29, 2018.
All of this falls under the Terrorism Risk Reinsurance Act of 2002, which was passed in the wake of the Sept. 11, 2001 terrorist attacks in New York and Washington. It created a source of reinsurance for commercial property/casualty customers struggling to find coverage to absorb future losses for terrorism events. The coverage has been renewed several times since, most recently as part of the Terrorism Risk Insurance Program Reauthorization Act of 2015
Bob Woody, vice president, policy for the Property Casualty Insurers Association of America, said the consolidated data collection approach is long overdue.
“PCI and others in the industry have been dismayed over the last few years that the states and federal government were conducting dual terrorism data calls that were different in some ways and duplicative in others,” Woody told Carrier Management via email. “The competing data calls imposed significant and unnecessary burdens and costs on insurers.”
Woody said PCI is supportive of efforts by Treasury’s Federal Insurance Office, along with state regulators, for their work in creating a consolidated approach.
But there is a concern over the proposal’s allowance for the state to collect some additional data. He said that PCI is troubled that”states are proposing to adopt a supplemental reporting template not requested by FIO, on which they would collect ZIP code level data on property coverages.”
Woody said this move is not necessarily needed and the extra data may not be useful.
“We … look forward to a continuing dialogue with state regulators on how they can best meet their terrorism needs,” Woody said.
Source: U.S. Department of Treasury, Federal Information Office, PCI