Changes under consideration could limit access to captive insurance, increase market instability.
MINNEAPOLIS ─ JAN. 12, 2021 ─ The Captive Insurance Companies Association (CICA), the Vermont Captive Insurance Association (VCIA) and the Captive Insurance Council of the District of Columbia (CIC-DC) announced they have submitted comments to the Treasury Department in response to a request for public comment regarding the participation of captive insurers in the Terrorism Risk Insurance Program (TRIP) established under the Terrorism Risk Insurance Act (TRIA).
“We were pleased to partner with VCIA and CIC-DC and other leading industry experts on a collective captive industry response. 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,” CICA President Dan Towle said.
Treasury requested comment on a number of proposals that would limit the access of captive insurers to TRIP.
“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, VCIA president.
The response included information on:
- Modeling of insured terrorism losses done by the FIO has shown that the coverage provided by captive insurers participating in TRIP is important to ensuring the effectiveness of the Program, especially with respect to nuclear, biological and chemical risks.
- Limiting the access of captive insurers to TRIP would seriously undermine the stability provided by TRIA and be directly contrary to Congress’s purposes in enacting and reauthorizing TRIA.
- 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, thereby reducing capacity for terrorism insurance and threatening the stability of the market.
- Singling out captive insurers for the disclosure of sensitive information would be detrimental to TRIP and contrary to the purposes of TRIA.
“We are concerned about a number of proposals identified by Treasury, including requiring captives to disclose confidential information,” said Joe Holahan, CIC-DC president. “Requiring public disclosure of sensitive information should not be a condition of participating in TRIP,” Holahan explained.