88 FR 242 pgs. 87843-87844 - IMARA Calculation for Calendar Year 2024 Under the Terrorism Risk Insurance Program
Type: NOTICEVolume: 88Number: 242Pages: 87843 - 87844
Pages: 87843, 87844FR document: [FR Doc. 2023-27839 Filed 12-18-23; 8:45 am]
Agency: Treasury Department
Official PDF Version: PDF Version
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DEPARTMENT OF THE TREASURY
RIN 1505-AC62
IMARA Calculation for Calendar Year 2024 Under the Terrorism Risk Insurance Program
AGENCY:
Departmental Offices, Department of the Treasury.
ACTION:
Notice.
SUMMARY:
The Department of the Treasury (Treasury) is providing notice to the public of the insurance marketplace aggregate retention amount (IMARA) for calendar year 2024 for purposes of the Terrorism Risk Insurance Program (TRIP or the Program) under the Terrorism Risk Insurance Act, as amended (TRIA or the Act). As explained below, Treasury has determined that the IMARA for calendar year 2024 is $48,537,421,582.
DATES:
The IMARA for calendar year 2024 is applicable January 1, 2024, through December 31, 2024.
FOR FURTHER INFORMATION CONTACT:
Richard Ifft, Lead Management and Senior Regulatory Policy Analyst, Terrorism Risk Insurance Program, Federal Insurance Office, 202-622-2922 or Theodore Newman, Senior Insurance Regulatory Policy Analyst, Federal Insurance Office, 202-622-7009.
SUPPLEMENTARY INFORMATION:
I. Background
TRIA-which established TRIP-was signed into law on November 26, 2002, following the attacks of September 11, 2001, to address disruptions in the market for terrorism risk insurance, to help ensure the continued availability and affordability of commercial property and casualty insurance for terrorism risk, and to allow for the private markets to stabilize and build insurance capacity to absorb any future losses for terrorism events. 1 TRIA requires insurers to "make available" terrorism risk insurance for commercial property and casualty losses resulting from certified acts of terrorism, 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. 2 The Secretary of the Treasury (Secretary) administers the Program, with assistance from the Federal Insurance Office (FIO). 3
Footnotes:
1 ?Public Law 107-297, sec. 101(b), 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 ?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 (2015 Reauthorization Act); Terrorism Risk Insurance Program Reauthorization Act of 2019, Public Law 116-94, 133 Stat. 2534.
3 ?31 U.S.C. 313(c)(1)(D).
[top] TRIA provides for an "industry marketplace aggregate retention
Footnotes:
4 ? See TRIA, sec. 103(e)(7); see also 31 CFR part 50 subpart J (Recoupment and Surcharge Procedures).
TRIA provides for a schedule of defined IMARA values from calendar year 2015 through calendar year 2019. 5 For calendar year 2020 and beyond, TRIA states that the IMARA "shall be revised to be the amount equal to the annual average of the sum of insurer deductibles for all insurers participating in the Program for the prior 3 calendar years," as such sum is determined pursuant to final rules issued by the Secretary. 6
Footnotes:
5 ?In 2015, the IMARA was $29.5 billion; it increased to $31.5 billion in 2016, $33.5 billion in 2017, $35.5 billion in 2018, and $37.5 billion in 2019. See TRIA, sec. 103(e)(6)(B).
6 ?TRIA, sec. 103(e)(6)(B)(ii) and (e)(6)(C). An insurer's deductible under the Program for any particular year is 20 percent of its direct earned premium subject to the Program during the preceding year. TRIA, sec. 102(7). For example, an insurer's calendar year 2023 Program deductible is 20 percent of its calendar year 2022 direct earned premium.
On November 15, 2019, Treasury issued a final rule for calculation of the IMARA. 7 This rule, which is codified at 31 CFR 50.4(m)(2), provides that the IMARA will be calculated by averaging the annual industry aggregate deductibles over the prior three calendar years, based upon the direct earned premiums (DEP) reported to Treasury by insurers in Treasury's annual data calls. Insurer deductibles under the Program are based upon the DEP of individual insurers reported to Treasury in the prior year ( e.g., 2022 DEP for 2023 calendar year program deductibles).
Footnotes:
7 ? See 84 FR/62450 (November 15, 2019) (Final Rule).
Accordingly, for purposes of determining the IMARA for calendar 2024, Treasury has averaged the aggregate insurer deductibles for calendar years 2023, 2022, and 2021 (as reported to Treasury in each of these years), which are based on the reported DEP for calendar years 2022, 2021, and 2020, respectively.
For purposes of the 2024 IMARA calculation, those figures are as follows:
Footnotes:
8 ?The figures from the 2022 and 2021 TRIP data calls were previously reported in the IMARA calculation for calendar year 2023. See 87 FR 78202 (December 21, 2022). The figures from the 2023 TRIP data call were previously reported in FIO's June 2023 Study on the Competitiveness of Small Insurers in the Terrorism Risk Insurance Marketplace (June 2023), 16 (Figure 1), https://home.treasury.gov/system/files/311/2023%20TRIP%20Small%20Insurer%20Report%20FINAL.pdf, and have been updated to include data received by FIO after the reporting deadline. Some figures may not add up on account of rounding.
| 2021 TRIP data call | 2020 DEP in TRIP-eligible lines | % of total | 2022 TRIP data call | 2021 DEP in TRIP-eligible lines | % of total | 2023 TRIP data call | 2022 DEP in TRIP-eligible lines | % of total | |
|---|---|---|---|---|---|---|---|---|---|
| Alien Surplus Lines Ins. | $11,043,111,847 | 5 | $12,107,214,064 | 5 | $ 16,954,356,655 | 6 | |||
| Captive Insurers | 10,534,614,720 | 5 | 14,359,289,661 | 6 | 11,992,422,807 | 4 | |||
| Non-Small Insurers | 175,272,463,804 | 80 | 186,901,545,992 | 78 | 209,307,242,717 | 78 | |||
| Small Insurers | 22,156,599,520 | 10 | 26,226,080,899 | 11 | 31,206,381,036 | 12 | |||
| Total | 219,006,789,891 | 100 | 239,594,130,617 | 100 | 269,460,403,215 | 100 | |||
| Source: 2021-2023 TRIP Data Calls. | |||||||||
Treasury has used these reported premiums to calculate the IMARA for calendar year 2024. The average annual DEP figure for the combined period of 2020, 2021, and 2022 is $242,687,107,903 [($219,006,789,891 + $239,594,130,617 + $269,460,403,215)/3 = $242,687,107,908]. The average aggregate deductible for the prior three years is 20 percent of $242,687,107,908, which equals $48,537,421,582. 9 Accordingly, the IMARA for purposes of calendar year 2024 is $48,537,421,582.
Footnotes:
9 ? See note 7.
Dated: December 13, 2023.
Steven E. Seitz,
Director, Federal Insurance Office.
[FR Doc. 2023-27839 Filed 12-18-23; 8:45 am]
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