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Captives prepared for terrorism data call: Best

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Many captives will likely have to respond to the U.S. Treasury Department’s first mandatory terrorism data call by the May 15th deadline, but should have little trouble doing so, according to a briefing by A.M. Best Co.

The data call was required under Section 111 of the Terrorism Risk Insurance Program Reauthorization Act of 2015, which directs the department to collect data on the terrorism risk insurance market and report its findings to Congress. The data call is expected to be used by Congress to evaluate the program and determine if it is meeting its goals and objectives.

Some captives were hoping that small companies would be exempted from participating in the data call, but participation is mandatory for insurers that participate in the program although small insurers have a more streamlined document to complete.

For rated single-parent captives “this request should be straightforward as they have extremely high-quality data and are part of much larger organizations with extensive resources,” the Oldwick, New Jersey-based ratings agency said in its briefing on Tuesday. “These insurers also utilize some of the larger captive risk managers, which know the captive’s risks as intimately as the insurer itself. For rated captives that use fronting relationships, data gathering should be relatively easy since the data being requested is their own proprietary data that is being reinsured by the captive.”

Captive managers and risk managers with U.S. domiciled captives affected by the data call are likely aware of its requirements, either through communications from the U.S. Treasury Department or their state captive associations, said Daniel Ryan, senior director, North American Property/Casualty, based in Oldwick.

“It’s a relatively benign event because all they’re doing is requesting information that they probably should have been requesting many years ago when the plan was put in place the first time,” he said.

While A.M. Best believes that the rated captives are well-equipped to handle this data request, it remains to be seen how the Treasury will respond to the data collected while potential changes in the government’s role if TRIPRA is extended beyond December 2020 are another concern, according to the agency.