FROM THE OFFICE OF PUBLIC AFFAIRS

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The Treasury Department today announced the first round of regulations under the Terrorism Risk Insurance Act of 2002, which was signed into law by President Bush on November 26, 2002. 

Today’s regulation addresses definitions under the Terrorism Risk Insurance Act.  The regulation builds upon previously issued interim guidance that was designed to assist insurers in determining how they may comply with certain immediately applicable provisions of the Terrorism Risk Insurance Act prior to the issuance of regulations by the Treasury.  Insurers and other interested parties will have the opportunity to submit formal comments on the regulation, and the comment period will last for 30 days from the date of the regulation’s publication in the Federal Register. 

 “As promised when we issued interim guidance, regulations on the issues addressed in interim guidance are now being promulgated, and interested parties will have the opportunity to submit comments on the new regulations,” said Treasury Assistant Secretary Wayne Abernathy, who oversees the Terrorism Risk Insurance Program. “We anticipate continuing to benefit from thoughtful input as we move forward.”  This first interim final regulation on the Terrorism Risk Insurance Act sets forth the key definitions that lay the groundwork for implementation of the Act.  Subsequent regulations will follow in the coming weeks on other issues that were addressed in interim guidance, such as the disclosure requirements and the “make available” requirement, and on the treatment of State residual market entities and State workers’ compensation funds.

Today’s interim final regulation codifies and provides further clarification of the definitions in the Terrorism Risk Insurance Act.  Key definitions of the Act that are addressed in the interim final regulation include:  act of terrorism; affiliate; control; insurer; insured loss; property and casualty insurance; and insurer deductible.  While previously issued interim guidance formed the basis for much of the regulation, important clarifications are made in a number of areas, such as making it clear that personal insurance is not part of the Program.  In addition, the interim final regulation addresses the definition of control and related issues under the Act.  Determining control under the Act is important as affiliate insurers must be consolidated with the parent company for purposes of calculating an insurer’s deductible.  The control provisions of the regulation strike a balance between the requirements of the Act, state regulatory authority, and the need to maintain the integrity of the Program and treat insurers comparably. 

Treasury is also soliciting comments in several areas, including comments on how the Program should treat multiple controlling owners of an insurer and how Treasury might prevent evasion of insurer deductible and other Program requirements by certain newly formed insurance companies.  This interim final regulation, previously issued interim guidance notices, and other information related to the Terrorism Risk Insurance Program can be found at www.treasury.gov/trip. 

Related Documents:

• Interim Final Rule
• Notice of Proposed Rulemaking