Proposed changes that would restrict prisoners 'insurers' access to the federal backstop for terrorist insurance losses would "seriously undermine" the stability provided by the Terrorism Risk Insurance Act, captive insurance associations said in a statement on Tuesday.
Their response followed a statement from the US Department of the Treasury issued on November 10, 2020, requesting public comment on proposed new rules under the latest version of the Terrorism Risk Insurance Program.
In a letter Monday to the U.S. Department of Treasury, the Captive Insurance Companies Association, the Vermont Captive Insurance Association and the Captive Insurance Council of the District of Columbia wrote that captive insurance companies have played a "critical role" in providing the market stability that TRIA was intended to provide. to make sure.
This applies "especially with regard to coverage for properties and activities in high-risk areas and for nuclear, biological, chemical and radiological risks," capti ve insurance associations said in the letter.
Questions asked by the Ministry of Finance in the announcement include whether insurers in capture is likely to receive larger payments under the current structure of TRIP in a large loss event compared to traditional insurers taking similar risk exposures.
"It is not surprising that captive insurers would account for a significant amount of claims in the modeled the scenarios, especially in the scenario involving an NBCR component, as they provide significant capacity not available from other insurers, "the associations said in their response.
They also noted that the allocation of parental income to captured insurance companies for TRIP deductions calculation purposes could make terror insurance provided by a prison insurance company is unaffordable for many insured persons, which reduces capacity. for the disclosure of sensitive information would be detrimental to TRIP and contrary to t he intent of TRIA, they said.
"Many of our members from all of our associations rely on captive insurers to obtain coverage for terrorist risks and are concerned about these proposals," said Rich Smith, VCIA President, in a joint statement from the three associations. in captivity. [1
The Terrorism Risk Insurance Program was re-approved in 2019 and the Treasury Department is seeking information on various aspects of the program, including whether changes are required in the time frame and process for which the Treasury certifies an incident.
It is also questionable whether there should be TRIA coverage for non-US cyber-related terrorist incidents that cause harm in the United States. The public comment period closed on 11 January.