TRIP Form 04B End of Year Recoupment Calculation Instructions

TERRORISM RISK INSURANCE PROGRAM

Direct Written Premium and End of Year Calculation

General Instructions

1General Instructions

1.1Filing of Form

This form is required in order to determine and document each individual insurer’s amount to be submitted for the Federal Terrorism Policy Surcharge under the Terrorism Risk Insurance Act (TRIA). Affiliated insurers are not to be grouped together for this purpose. The form must be completed, certified by an officer of the insurer, and submitted to Treasury.

Insurers should maintain all worksheets and other documentation for the purposes of later auditing by the Terrorism Risk Insurance Program (Program). See 31 CFR Part 50 Subpart I for guidance.

1.2Assessment Period and Reporting Schedule

The assessment period means a period established by Treasury, during which policyholders of commercial property and casualty insurance polices must pay, and insurers must collect, the Federal Terrorism Policy Surcharge for remittance to Treasury.

For policies subject to the Federal Terrorism Policy Surcharge, the surcharge shall be imposed and collected on a written premium basis for policies that incept or renew during the assessment period. All new, renewal, mid-term, and audit premium for a policy term are subject to the Surcharge in effect on the policy term effective date. (Note: A policy effective prior to a current assessment period may have no surcharge in effect on the policy term effective date.)

Each insurer shall submit a completed Form 04A Direct Written Premium and Monthly Surcharge Calculation on a monthly basis, starting with the first month within the assessment period through November of the same calendar year, and a Form TRIP 04B Direct Written Premium and End of Year Calculation on an annual basis as of the last month of the calendar year thereafter. Reports are due according to the following schedule:

1. For each month beginning in the first month of the assessment period through November of the same year, reports are due on the last business day of the calendar month following the month for which premium is reported, and

2. Thereafter, annual reports are due on March 1.

1.3Lines of Business Subject to Terrorism Policy Surcharge

1.3.1Commercial property and casualty lines of business subject to the Federal Terrorism Policy Surcharge means only the following lines of business from the NAIC Exhibit of Premiums and Losses (commonly known as Statutory Page 14): Line 1 - Fire; Line 2.1 - Allied Lines; Line 5.1 - Commercial Multiple Peril (non-liability portion); Line 5.2 - Commercial Multiple Peril (liability portion); Line 8 - Ocean Marine; Line 9 - Inland Marine; Line 16 - Workers' Compensation; Line 17 - Other Liability; Line 18 - Products Liability; Line 22 - Aircraft (all perils); and Line 27 - Boiler and Machinery. Insurers that do not report to the NAIC should review section 1.5 of these instructions. Insurance coverage that is written on a dwelling policy form, but for which premium is reported under the above lines of business (e.g., 1-4 family rental dwelling), is still included in the Program.

1.3.2Other lines of business from Statutory Page 14 are not subject to the Federal Terrorism Policy Surcharge. Insurance coverages specifically not subject to the surcharge are: Federal crop insurance issued or reinsured under the Federal Crop Insurance Act; any other type of crop or livestock insurance that is privately issued or reinsured (including crop insurance reported on either Line 2.1 - Allied Lines or Line 2.2 - Multiple Peril Crop); Line 3 - Farmowners Multiple Peril; Line 12 - Earthquake; Line 19.3 – Commercial Auto No-Fault (personal injury protection); Line 19.4 – Other Commercial Auto Liability; Line 21.2 –Commercial Auto Physical Damage; Line 24 – Surety; Line 26 – Burglary and Theft; Professional Liability insurance as defined in 31 CFR 50.4(t)¹; private mortgage insurance; title insurance; financial guaranty insurance when issued by a monoline financial guaranty insurance corporation; medical malpractice insurance; health or life insurance, including group life insurance; Federal flood insurance; and reinsurance or retrocessional reinsurance. Workers’ compensation insurance provided directly to qualified self-insureds is not reinsurance for purposes of the Program.

1.4Direct Written Premium

Direct Written Premium means the premium as defined for inclusion in Column 1 of the Exhibit of Premiums and Losses of the NAIC Annual Statement or in an equivalent reporting requirement. The Federal Terrorism Policy Surcharge is not included in amounts reported as Direct Written Premium.

Direct Written Premium to be reported on this form includes premium for all commercial property and casualty lines of insurance listed above in section 1.3.1 issued by any insurer for insurance against all losses. Generally, premium amounts are to be included in the reporting on this form as they would be included in amounts reported to the NAIC or through an equivalent reporting requirement for the applicable surcharge period. Such premium amounts are to be broken out by policy year in order to facilitate surcharge calculations. For months in which premium is not reported to the NAIC or through an equivalent reporting requirement, the same definitions and process for completing this form shall apply.

Some Direct Written Premium for lines of insurance listed under section 1.3.1 above and reported under Step One of the form may not be subject to the Federal Terrorism Policy Surcharge. Step Three will provide for the exclusion of such premium from the calculation of the Federal Terrorism Policy Surcharge amount due to Treasury. Specifically:

1. Premium for personal property and casualty insurance coverage (coverage primarily designed to cover personal, family, or household risk exposures) is not subject to the Federal Terrorism Policy Surcharge, even if reported under a line of business otherwise included in the definition of property casualty insurance under TRIA.

2. Premium for any other insurance coverage that does not meet the definition of commercial property and casualty insurance is subject to the Federal Terrorism Policy Surcharge. Such types of insurance are listed in 1.3.2 and are not subject to the Federal Terrorism Policy Surcharge, even if reported under a line of business otherwise included in the definition of property and casualty insurance under TRIA.

3. In the cases of policies providing multiple insurance coverages where an insurer cannot identify the premium amount charged specifically for property and casualty insurance under the policy:

   1. If an insurer has estimated that the portion of the premium amount charged for coverages other than commercial property and casualty insurance is de minimis to the total premium for the policy, by Treasury regulation [31 CFR 50.94(c)(2)(i)] the insurer may impose and collect from the policyholder a surcharge amount based on the total Direct Written Premium for the policy. As such, no adjustment is necessary to the Direct Written Premium reported under Step One.

   2. If an insurer has estimated that the portion of the premium amount charged for coverages other than commercial property and casualty insurance is not de minimis to the total premium for the policy, by Treasury regulation [31 CFR 50.94(c)(2)(ii)) the insurer shall impose and collect from the policyholder a surcharge amount based on a reasonable estimate of the premium amount for the property and casualty insurance coverage under the policy. Therefore the portion of the premium charged for coverages other than commercial property and casualty insurance should be subtracted in Step Three.

1.5Insurers that do not Report to the NAIC via Statutory Page 14.

An insurer that does not report to the NAIC via Statutory Page 14 should only report Direct Written Premium in Step One or Step Two for classes or lines of business that include, at a minimum, the equivalent of one or more lines of business specified in section 1.3.1.  Thus, regardless of the description of the premium on another reporting form, all premium in Step One or Step Two must include the functional equivalent of a line of business as specified in section 1.3.1. Insurers that may be required to extract Direct Written Premium information from other reporting forms for the purpose of this Program filing include alien surplus lines insurers, farm mutual insurers, county mutual insurers, captive insurers, and federally-approved insurers.

2Step-by-Step Calculations

2.1Step One

2.1.1Step One A

In Column 1A enter the sum of Direct Written Premium for all lines of business listed in section 1.3.1. If the assessment period does not encompass the entire calendar year, then in Column 1B enter the sum of the Direct Written Premium for the same calendar year prior to the start of the assessment period. Otherwise this column should be zero.

Include premium for all lines not reported via Statutory Page 14, but reported on a separate state form as discussed in section 1.5.

Include all premium reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

Include all surplus lines premium written and reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

2.1.2Step One B

Columns 2 through 5 are to be used to report the premium by policy year that comprise the amount reported in Column 1C. The sum of Columns 2 through 5 should equal the premium in Column 1C. However, if necessary, additional columns (and sheets) may be added to complete the breakout of premium by policy year and to account fully for the entry in Column 1C.

List premium for all lines not reported via Statutory Page 14, but reported on a separate state form as discussed in section 1.5.

Include all premium reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

Include all surplus lines premium written and reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

2.2 Step Two

Enter the amount of Direct Written Premium included in Column 1C of Step One B that are for insurance coverage not to be included for the purposes of calculating the Federal Terrorism Policy Surcharge due Treasury. See section 1.4 for guidance. Columns 2 through 5 are to be used to report the premium by policy year that comprise the amount reported in Column 1C. The sum of Columns 2 through 5 should equal premium in Column 1C. However, if necessary, additional columns (and sheets) may be added to complete the breakout of premium by Policy Year and to account fully for the entry in Column 1C.

Include premium for all lines not reported via Statutory Page 14, but reported on a separate state form as discussed in section 1.5.

Include all premium reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

Include all surplus lines premium written and reported for any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the U.S. Virgin Islands, and any other territory or possession of the United States.

2.3 Step Three

Enter the Step One B premium totals and then subtract the Step Two premium totals to determine the insurer’s cumulative Direct Written Premium for the applicable period subject to the Federal Terrorism Policy Surcharge.

2.4 Step Four

Enter the Step Three totals and multiply by the applicable individual year surcharge percentage(s) to determine the amount of Federal Terrorism Policy Surcharge for the applicable period. Note that Column 1C of Step Four is not computed, as different surcharge percentages may be applicable to the Direct Written Premium being reported for individual policy years. Add together the totals in Columns 2 through 5 to determine the amount of Federal Terrorism Policy Surcharge for the applicable period.

2.5 Step Five

Enter the Federal Terrorism Policy Surcharge from Step Four and subtract any amounts which have already been remitted to Treasury. The total is the amount of surcharge to be remitted to Treasury for the applicable period.

1 Professional liability insurance means insurance coverage for liability arising out of the performance of professional or business duties related to a specific occupation, with coverage being tailored to the needs of the specific occupation. Examples include abstracters, accountants, insurance adjusters, architects, engineers, insurance agents and brokers, lawyers, real estate agents, stockbrokers and veterinarians. For purposes of this definition, professional liability insurance does not include directors and officers liability insurance.

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TRIP 04B Instructions