31 C.F.R. Subpart F—Claims Procedures
Title 31 - Money and Finance: Treasury
(a) General. (1) The Treasury will pay the Federal share of compensation for insured losses as provided in section 103 of the Act once a Certification of Loss required by §50.53 is deemed sufficient. The Federal share of compensation under the Program shall be: (i) 90 percent of that portion of the insurer's aggregate insured losses that exceed its insurer deductible during each Program Year through Program Year 4, and (ii) 85 percent of that portion of the insurer's aggregate insured losses that exceed its insurer deductible during Program Year 5. (2) The percentages in paragraphs (a)(1)(i) and (ii) are both subject to any adjustments in §50.51 and the cap of $100 billion as provided in section 103(e)(2) of the Act. (b) Program Trigger amounts. Notwithstanding paragraph (a) or anything in this Subpart to the contrary, no Federal share of compensation will be paid by Treasury unless the aggregate industry insured losses resulting from a certified act of terrorism occurring after March 31, 2006 exceed the following amounts: (1) For a certified act of terrorism occurring after March 31, 2006 and before January 1, 2007: $50 million; (2) For a certified act of terrorism occurring in calendar year 2007: $100 million. (c) Insured losses after March 31, 2006. For all purposes of subpart F, insured loss or insured losses or aggregate insured losses resulting from acts of terrorism after March 31, 2006 shall be limited to those insured losses resulting from Program Trigger events. (d) Conditions for payment of Federal share. Subject to paragraph (e) of this section, Treasury shall pay the appropriate amount of the Federal share of compensation to an insurer upon a determination that: (1) The insurer is an entity, including an affiliate thereof, that meets the requirements of §50.5(f); (2) The insurer's insured losses, as defined in §50.5(e) and limited by §50.50(c) (including the allocated dollar value of the insurer's proportionate share of insured losses from a State residual market insurance entity or State workers' compensation fund as described in §50.35), have exceeded its insurer deductible as defined in §50.5(g); (3) The insurer has paid or is prepared to pay an underlying insured loss, based on a filed claim for the insured loss; (4) Neither the insurer's claim for Federal payment nor any underlying claim for an insured loss is fraudulent, collusive, made in bad faith, dishonest or otherwise designed to circumvent the purposes of the Act and regulations; (5) The insurer had provided a clear and conspicuous disclosure as required by §§50.10 through 50.19; (6) The insurer offered coverage for insured losses and the offer was accepted by the insured prior to the occurrence of the loss; (7) The insurer took all steps reasonably necessary to properly and carefully investigate the underlying insured loss and otherwise processed the underlying insured loss using appropriate insurance business practices; (8) The insured losses submitted for payment are within the scope of coverage issued by the insurer under the terms and conditions of the policies for commercial property and casualty insurance as defined in §50.5(n); and (9) The procedures specified in this Subpart have been followed and all conditions for payment have been met. (e) Adjustments. Treasury may subsequently adjust, including requiring repayment of, any payment made under paragraph (d) of this section in accordance with its authority under the Act. (f) Suspension of payment for other insured losses. Upon a determination by Treasury that an insurer has failed to meet any of the requirements for payment specified in paragraph (d) of this section for a particular insured loss, Treasury may suspend payment of the Federal share of compensation for all other insured losses of the insurer pending investigation and audit of the insurer's insured losses. (g) Aggregate industry losses. Treasury will determine the amount of aggregate industry insured losses resulting from a certified act of terrorism. If such aggregate industry insured losses exceed the applicable Program Trigger amounts specified in paragraph (b) of this section, Treasury will publish notice in the [71 FR 27571, May 11, 2006] (a) Aggregate amount of insured losses. The aggregate amount of insured losses of an insurer in a Program Year used to calculate the Federal share of compensation shall be reduced by any amounts recovered by the insurer as salvage or subrogation for its insured losses in the Program Year. (b) Amount of Federal share of compensation. The Federal share of compensation shall be adjusted as follows: (1) No excess recoveries. For any Program Year, the sum of the Federal share of compensation paid by Treasury to an insurer and the insurer's recoveries for insured losses from other sources shall not be greater than the insurer's aggregate amount of insured losses for acts of terrorism in that Program Year. Amounts recovered for insured losses in excess of an insurer's aggregate amount of insured losses in a Program Year shall be repaid to Treasury within 45 days after the end of the month in which total recoveries of the insurer, from all sources, become excess. For purposes of this paragraph, amounts recovered from a reinsurer pursuant to an agreement whereby the reinsurer's right to any excess recovery has priority over the rights of Treasury shall not be considered a recovery subject to repayment to Treasury. (2) Reduction of amount payable. The Federal share of compensation for insured losses under the Program shall be reduced by the amount of other compensation provided by other Federal programs to an insured or a third party to the extent such other compensation duplicates the insurance indemnification for those insured losses. (i) Other Federal program compensation. For purposes of this section, compensation provided by other Federal programs for insured losses means compensation that is provided by Federal programs established for the purpose of compensating persons for losses in the event of emergencies, disasters, acts of terrorism, or similar events. Compensation provided by Federal programs for insured losses excludes benefit or entitlement payments, such as those made under the Social Security Act, under laws administered by the Secretary of Veteran Affairs, railroad retirement benefit payments, and other similar types of benefit payments. (ii) Insurer due diligence. Each insurer shall inquire of each of its policyholders, insureds, and claimants whether the person receiving insurance proceeds for an insured loss has received, expects to receive, or is entitled to receive compensation from another Federal program for the insured loss, and if so, the source and the amount of the compensation received or expected. The response, source, and such amounts shall be reported with each underlying claim on the bordereau specified in §50.53(b)(1). Each insurer shall submit to Treasury an Initial Notice of Insured Loss, on a form prescribed by Treasury, whenever the insurer's aggregate insured losses (including reserves for “incurred but not reported” losses) within a Program Year exceed an amount equal to 50 percent of the insurer's deductible as specified in §50.5(g). Insurers are advised the form for the Initial Notice of Insured Loss will include an initial estimate of aggregate losses for the Program Year, the amount of the insurer deductible and an estimate of the Federal share of compensation for the insurer's aggregate insured losses. In the case of an affiliated group of insurers, the form for the Initial Notice of Insured Loss will include the name and address of a single designated insurer within the affiliated group that will serve as the single point of contact for the purpose of providing loss and compliance certifications as required in §50.53 and for receiving, disbursing, and distributing payments of the Federal share of compensation in accordance with §50.54. An insurer, at its option, may elect to include with its Initial Notice of Insured Loss the certification of direct earned premium required by §50.53(b)(3). (a) General. When an insurer has paid aggregate insured losses that exceed its insurer deductible, the insurer may make claim upon Treasury for the payment of the Federal share of compensation for its insured losses. The insurer shall file an Initial Certification of Loss, on a form prescribed by Treasury, and thereafter such Supplementary Certifications of Loss, on a form prescribed by Treasury, as may be necessary to receive payment for the Federal share of compensation for its insured losses. (b) Initial Certification of Loss. An insurer shall use its best efforts to file with the Program the Initial Certification of Loss within 45 days following the last calendar day of the month when an insurer has paid aggregate insured losses that exceed its insurer deductible. The Initial Certification of Loss will include the following: (1) A bordereau, on a form prescribed by Treasury, that includes basic information about each underlying insured loss. For purposes of this section, a “bordereau” is a report of basic information about an insurer's underlying claims that, in the aggregate, constitute the insured losses of the insurer. The bordereau will include, but may not be limited to: (i) A listing of each underlying insured loss by catastrophe code and line of business; (ii) The total amount of reinsurance recovered from other sources; (iii) A calculation of the aggregate insured losses sustained by the insurer above its insurer deductible for the Program Year; and (iv) The amount the insurer claims as the Federal share of compensation for its aggregate insured losses. (2) A certification that the insurer is in compliance with the provisions of section 103(b) of the Act and this part, including certifications that: (i) The underlying insured losses listed on the bordereau filed pursuant to §50.53(b)(1) either: Have been paid by the insurer; or will be paid by the insurer upon receipt of an advance payment of the Federal share of compensation as soon as possible, consistent with the insurer's normal business practices, but not longer than five business days after receipt of the Federal share of compensation; (ii) The underlying claims for insured losses were filed by persons who suffered an insured loss, or by persons acting on behalf of such persons; (iii) The underlying claims for insured losses were processed in accordance with appropriate business practices and the procedures specified in this subpart; (iv) The insurer has complied with the disclosure requirements of §§50.10 through 50.19 for each underlying insured loss that is included in the amount of the insurer's aggregate insured losses; and (v) The insurer has complied with the mandatory availability requirements of §§50.20 through 50.24. (3) A certification of the amount of the insurer's “direct earned premium” as defined in §50.5(d), together with the calculation of its “insurer deductible” as defined in §50.5(g) (provided this certification was not submitted previously with the Initial Notice of Insured Loss specified in §50.52). (4) A certification that the insurer will disburse payment of the Federal share of compensation in accordance with this subpart. (c) Supplementary Certification of Loss. If the total amount of the Federal share of compensation due an insurer for insured losses under the Act has not been determined at the time an Initial Certification of Loss has been filed, the insurer shall file monthly, or on a schedule otherwise determined by Treasury, Supplementary Certifications of Loss updating the amount of the Federal share of compensation owed for the insurer's insured losses. Supplementary Certifications of Loss will include the following: (1) A bordereau described in §50.53(b)(1); and (2) A certification as described in §50.53(b)(2). (d) Supplementary information. In addition to the information required in paragraphs (b) and (c) of this section, Treasury may require such additional supporting documentation as required to ascertain the Federal share of compensation for the insured losses of any insurer. (e) State Residual Market Insurance Entities and State Workers' Compensation Funds. A State residual market insurance entity or State workers' compensation fund described in §50.35 shall provide the Certifications of Loss described in §§50.53(b) and 50.53(c) for all its insured losses to each participating insurer at the time it provides the allocated dollar value of the participating insurer's proportionate share of insured losses. In addition, at such time the State residual market insurance entity or State workers' compensation fund shall provide the certification described in §50.53(b)(2) to Treasury. Participating insurers shall treat the allocated dollar value of their proportionate share of insured losses from a State residual market insurance entity or State workers' compensation fund as an insured loss for the purpose of their own reporting to Treasury in seeking the Federal share of compensation. (a) Timing. Treasury will promptly pay to an insurer the Federal share of compensation due the insurer for its insured losses. Payment shall be made in such installments and on such conditions as determined by the Treasury to be appropriate. Any overpayments by Treasury of the Federal share of compensation will be offset from future payments to the insurer or returned to Treasury within 45 days. (b) Payment process. Payment of the Federal share of compensation for insured losses will be made to the insurer designated on the Initial Notice of Loss required by §50.52. An insurer that requests payment of the Federal share of compensation for insured losses must receive payment through electronic funds transfer. The insurer must establish either an account for reimbursement as described in paragraph (c) of this section (if the insurer only seeks reimbursement) or a segregated account as described in paragraph (d) of this section (if the insurer seeks advance payments or a combination of advance payments and reimbursement). Applicable procedures will be posted at www.treasury.gov/trip or otherwise will be made publicly available. (c) Account for reimbursement. An insurer shall designate an account for the receipt of reimbursement of the Federal share of compensation at an institution eligible to receive payments through the Automated Clearing House (ACH) network. (d) Segregated account for advance payments. An insurer that seeks advance payments of the Federal share of compensation as certified according to §50.53(b)(2)(i)(B) shall establish an interest-bearing segregated account into which Treasury will make advance payments as well as reimbursements to the insurer. (1) Definition of segregated account. For purposes of this section, a segregated account is an interest-bearing separate account established by an insurer at a financial institution eligible to receive payments through the ACH network. Such an account is limited to the purposes of: (i) Receiving payments of the Federal share of compensation; (ii) Disbursing payments to insureds and claimants; and (iii) Transferring payments to the insurer or affiliated insurers for insured losses reported on the bordereau as already paid. (2) Remittance of interest. All interest earned on advance payments in the segregated account must be remitted at least quarterly to Treasury's Office of Financial Management or as otherwise prescribed in applicable procedures. (e) Denial or withholding of advance payment. Treasury may deny or withhold advance payments of the Federal share of compensation to an insurer if Treasury determines that the insurer has not properly disbursed previous advances of the Federal share of compensation or otherwise has not complied with the requirements for advance payment as provided in this subpart. (f) Affiliated group. In the case of an affiliated group of insurers, Treasury will make payment of the Federal share of compensation for the insured losses of the affiliated group to the insurer designated in the Initial Notice of Insured Loss to receive payment on behalf of the affiliated group. The designated insurer receiving payment from Treasury must distribute payment to affiliated insurers in a manner that ensures that each insurer in the affiliated group is compensated for its share of insured losses, taking into account a reasonable and fair allocation of the group deductible among affiliated insurers. Upon payment of the Federal share of compensation to the designated insurer, Treasury's payment obligation to the insurers in the affiliated group with respect to any insured losses covered on the applicable bordereau is discharged to the extent of the payment. For the purposes of subpart F, an insurer's affiliates for any Program Year shall be determined by the circumstances existing on the date of occurrence of the act of terrorism that is the first act of terrorism in a Program Year to be certified by the Secretary for that Program Year. Provided, however, if such act of terrorism occurs after March 31, 2006, the act of terrorism must also be a Program Trigger event to determine affiliations as provided in this section. [71 FR 27572, May 11, 2006]
Title 31: Money and Finance: Treasury
PART 50—TERRORISM RISK INSURANCE PROGRAM
Subpart F—Claims Procedures
§ 50.50 Federal share of compensation.
§ 50.51 Adjustments to the Federal share of compensation.
§ 50.52 Initial Notice of Insured Loss.
§ 50.53 Loss certifications.
§ 50.54 Payment of Federal share of compensation.
§ 50.55 Determination of Affiliations.
