The U.S. Treasury Department and state regulators are working together to collect terrorism risk insurance data, a collaboration that the commercial insurance industry has long pushed for.
In the past, insurers have been subject to two separate calls for much of the same data, a process the industry has seen as redundant and frustrating. In 2018, they will use data reporting templates that apply to federal and state calls alike — a sign that Treasury and its Federal Insurance Office may be more willing to work with state regulators and the National Association of Insurance Commissioners.
Treasury announced the proposal for consolidated data collection Nov. 28. The change will be effective in 2018.
Treasury collects data about the effectiveness of the Terrorism Risk Insurance Program to use in its reports to Congress. State regulators use the data call to monitor the affordability and availability of terrorism risk coverage and to measure insurers' financial exposure to terrorism.
The 2018 data call will also exclude small insurers that had less than $10 million in TRIP-eligible premiums in 2017. Insurers above that threshold, however, will need to report more information on stand-alone terrorism policies and on stand-alone cyber insurance. Companies will also have to identify by ZIP code the largest estimated loss at a single location, according to Treasury's announcement of the changes.
Insurance industry groups have expressed concern about a proliferation of data calls, which they say have raised compliance costs and sapped time and resources. State regulators have also questioned how the data is being used, according to minutes from the August meeting of the NAIC's terrorism working group.
Among the groups pushing for the collaborative approach is the National Association of Mutual Insurance Companies. Jonathan Bergner, the trade group's assistant vice president of federal policy, said the more efficient process will lower costs for insurers of all sizes.
"We are grateful to see that our call has been heard, and that insurers below the $10 million threshold — whose terrorism risk exposure is likely minimal — will be exempted from the reporting requirements," Bergner said in an email.
Stef Zielezienski, general counsel for the property-casualty insurance trade organization American Insurance Association, applauded the new collection method but said the AIA would argue that providing property lines information at the ZIP code level is unnecessary.
The Treasury deadline for providing comments on the proposed consolidated approach and 2018 data collection templates is Jan. 29, 2018. Data will be due to both Treasury and state insurance regulators by May 15, 2018. The NAIC is collecting its own comments through Jan. 27, according to a notice on its website.