6 March 2017Analysis

Captives not likely to be exempt from US Treasury terrorism data call

The US Department of Treasury’s first terrorism data call is approaching, requiring numerous captive insurance companies to submit their terrorism data by no later than May 15.

However, these captive insurers will not likely fall under a small company exemption and would have to submit their data as usual.

The data call is mandated under Section 111 of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) 2015, which directs the Treasury to collect data on the terrorism risk insurance market and report to Congress on its findings.

AM Best suggested this request should be straightforward for rated captives, such as the single parent types, as they have “extremely high quality data and are part of much larger organisations with extensive resources.”

Furthermore, these insurers will also utilise some of the larger captive risk managers, which know the captive’s risks as intimately as the insurer itself.

Several changes to the TRIPRA are expected to affect captives in 2017, such as the raising of the programme’s trigger and increasing the insurer’s quota share, according to Marsh.

Under the act, the federal government will only provide reinsurance for losses that exceed the programme’s trigger.

For example, a captive would be fully responsible for any terrorism loss below $140 million for 2017.

Although it remains to be seen how Treasury will respond to the data, AM Best believes the rated are well-equipped to handle the request.

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