The U.S. Department of Treasury is moving ahead with plans to combine the collection of data related to terrorism insurance that had long been split between the federal government and the states into a single effort overseen by Treasury’s Federal Insurance Office (FIO).
The move comes at a time when state regulators say that a review of prior terrorism insurance data reveals “concerning” issues regarding the availability of terrorism cover in the U.S.
State and federal officials have agreed on several “joint reporting templates” that private insurers will need to complete for 2018 which are similar to those used by Treasury in prior years along with minor changes, according to documents released by the FIO. The data is then used by Treasury to monitor the terrorism risk insurance market that is backstopped by the federal Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIA).
“Given the similarity of the information sought, and the burden presented to insurers by the existence of dual data calls on the same subject, Treasury and state insurance regulators have sought to create a consolidated data call for 2018 that will satisfy each of their respective objectives,” the FOI document states.
Broad changes in the reporting templates used by the insurance industry include:
- Reporting templates will now include a standalone cyber insurance worksheet.
- A new reinsurance worksheet required for non-small insurers, alien surplus lines insurers, and captive insurers that include a new modeled loss question.
- An exposures worksheet that is required for all insurers will request information concerning policyholder deductibles and retention amounts, in addition to insurer exposure under policies subject to the Program.
- Reporting templates no longer seek premium information on terrorism risk insurance for years prior to the reporting period.
- Separately, there are also a number of changes for specific insurer categories.
States, represented by the National Association of Insurance Commissioners (NAIC), are backing the combined terrorism insurance data effort.
“It is intended that these changes will reduce industry burden while ensuring that data being collected is relevant and accurate, and provides regulators with the information they need to understand the exposure that insurers have to terrorism risk, a risk that is difficult to quantify with limited actuarial and underwriting information,” and NAIC document states.
Despite the combined efforts, states will continue to require additional data regarding terrorism insurance coverage form the private market, including ZIP Code-level data collected on a company basis that “continues to be necessary for property coverages.”
The NAIC points out that level of “granularity” is needed since previous reported data show that terrorism coverage availability is not being spread into the market efficiently.
“Initial analysis of prior data submissions has revealed counter-intuitive, and somewhat concerning, geographic patterns across the country. Some high-risk areas have exceptionally low levels of terrorism coverage,” the document states. “The NAIC and the States will endeavor to further explore these issues as future data is refined and problems with past submissions are corrected.”