The Captive Insurance Companies Association (CICA), the Vermont Captive Insurance Association (VCIA) and the Captive Insurance Council of the District of Columbia (CICDC) have urged the US Treasury Department to maintain captives’ access to the Terrorism Risk Insurance Program (TRIP).
The Treasury had requested public comment regarding the participation of captive insurers in TRIP, established under the Terrorism Risk Insurance Act (TRIA). In particular, it sought feedback on a number of proposals that would limit the access of captive insurers to the programme.
CICA, VCIA and CICDC noted that modeling of insured terrorism losses by the Federal Insurance Office shows captive participation in TRIP has helped to ensure the programme’s effectiveness. This is especially true with respect to nuclear, biological and chemical risks (NBCR), where coverage from other insurers is often entirely unavailable, they said.
They stressed that the insufficiency of terrorism coverage is not limited to certain high profile properties, but extends to a variety of higher-risk geographical areas. These include urban centers and areas in proximity to nuclear facilities or other high-risk facilities, public venues, industrial sites and other important locations.
“Captive insurers play a critical role in providing coverage for all of these risks,” the associations said.
They argued that limiting the access of captive insurers to TRIP would seriously undermine the stability TRIA provides and be directly contrary to Congress’s purposes in enacting and reauthorising the Act.
Attributing captive parent revenues to captive insurers for TRIP deductible calculation purpose could make terrorism insurance provided by a captive insurer unaffordable for many insureds, they said. This would reduce capacity for terrorism insurance and threaten the stability of the market, they warned.
They urged the Treasury not to single out captive insurers for the disclosure of sensitive information, which they argued would be detrimental to TRIP and contrary to the purposes of TRIA.
Richard Smith, president of the VCIA, said: “Many of our members from all of our associations rely on captive insurers to obtain coverage for terrorism risks and are concerned about these proposals,” said Rich Smith, president of VCIA.
Dan Towle, president of CICA, added: “Captive insurers have played a critical role in achieving the market stability TRIP was designed to ensure by providing insurance for terrorism risks for which coverage from other insurers is insufficient or unavailable.”
Joe Holahan, president of CICDC, said: “Requiring public disclosure of sensitive information should not be a condition of participating in TRIP.”
Captive Insurance Companies Association, CICA, Vermont Captive Insurance Association, VCIA, CICDC, Rich Smith, Dan Towle, TRIP, TRIA