These comments respond to Treasury’s Notice appearing at 87 FR 18473 (March 30, 2022) seeking comments in advance of its 2022 Report on the Effectiveness of the Terrorism Risk Insurance Program with a focus on the risk of nuclear, biological, chemical, and radiological terrorism (NBCR) events. There is strong evidence that the Program has advanced its statutory objectives with respect to the risk of loss from conventional terrorism events, but little in Treasury’s prior assessments of the Program to suggest widespread availability, affordability, or capacity with respect to risk of loss from NBCR terrorism events. While small and medium businesses, nonprofits, and local governments are generally unable to benefit from the Program with respect to their NBCR risks (other than for workers compensation), many hundreds of large U.S. and foreign corporations use captive insurance companies to leverage the Program to protect themselves with hundred and even billions of dollars in NBCR coverage at ultra-low cost to those corporations but at extraordinarily high cost to the taxpayers financially backing the Program. For these reasons, Treasury should use the 2022 TRIP Effectiveness Report to advise the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that the Program is ineffective with respect to the risk of loss from NBCR terrorism events.

1. 1
2022 TRIP Effectiveness Report
NBCR Terrorism Risks
Submission of the Centers for Better Insurance
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These comments respond to Treasury’s Notice appearing at 87 FR 18473 (March 30, 2022)
seeking comments in advance of its 2022 Report on the Effectiveness of the Terrorism Risk
Insurance Program with a focus on the risk of nuclear, biological, chemical, and radiological
terrorism (NBCR) events.
Executive Summary
There is strong evidence that the Program has advanced its statutory objectives with respect to
the risk of loss from conventional terrorism events, but little in Treasury’s prior assessments of
the Program to suggest widespread availability, affordability, or capacity with respect to risk of
loss from NBCR terrorism events.
While small and medium businesses, nonprofits, and local governments are generally unable to
benefit from the Program with respect to their NBCR risks (other than for workers
compensation), many hundreds of large U.S. and foreign corporations use captive insurance
companies to leverage the Program to protect themselves with hundred and even billions of
dollars in NBCR coverage at ultra-low cost to those corporations but at extraordinarily high cost
to the taxpayers financially backing the Program.
For these reasons, Treasury should use the 2022 TRIP Effectiveness Report to advise the
Committee on Financial Services of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate that the Program is ineffective with respect to the risk
of loss from NBCR terrorism events.
NBCR Coverage for Small and Medium Businesses, Nonprofits, and Local Governments
Question 4 of the Request for Comment inquires as to the availability of terrorism risk insurance
coverage for losses arising from nuclear, biological, chemical, or radiological (NBCR) exposures.

2. 2
In its 2020 Effectiveness Report, Treasury provided data comparing available reinsurance
capacity across different catastrophe types. This information is summarized as follows for non-
small insurers (representing 80% of the commercial property and casualty insurance market
subject to TRIA):1
Reinsurance Market Capacity (in billions) 2018 2019
Natural Catastrophes2 $61.1 $60.8
Conventional Terrorism3 $47.1 $44.2
NBCR4 $1.7 $2.7
In very broad terms, it is reasonable to conclude from this data that in a vibrant catastrophe
reinsurance market non-small insurers would place around $60 billion in aggregate limits with
private reinsurers. Non-small insurers are placing only $45 billion in private insurance for
conventional terrorism risks suggesting meaningful capacity restriction in the convention
terrorism market.5 By comparison, the engagement of a nominal $2-$3 billion in NBCR
reinsurance capacity for non-workers compensation exposures strongly signals a non-functioning
market for NBCR terrorism reinsurance.
The data provided by Treasury reveals a partial explanation for the lack of capacity in the NBCR
terrorism reinsurance market for commercial property and liability insurance (i.e., other than
workers compensation):6
Reinsurance Market Capacity (in billions) 2018 2019
Other than Workers Compensation NBCR $1.7 $2.7
Workers Compensation NBCR $4.3 $5.8
The total amount of NBCR reinsurance capacity available to non-small insurers remains very small
even when including workers compensation. Nevertheless, this data shows that non-small
insurers are directing available NBCR reinsurance capacity toward workers compensation
exposures - a line of business for which many catastrophe risk management tools (such as
exclusions, limitations, and pricing) are virtually non-existent.7
1
2020 Effectiveness Report at 11.
2
2020 Effectiveness Report at 45 (presumably reflects only commercial property insurance).
3
2020 Effectiveness Report at 44 (includes workers compensation insurance).
4
2020 Effectiveness Report at 48 (excludes workers compensation insurance).
5
By definition, non-small insurers have substantial deductibles under the Program. For this group of it is less likely
the Program has pushed out private market capacity. In fact, the right to excess program recoveries enjoyed by
reinsurers may have the effect of seeming to increase reinsurance capacity. 31 CFR §50.71(b)(1).
6
2020 Effectiveness Report at 48.
7
State law generally does not permit the permit workers compensation insurance to exclude or limit compensable
nuclear, biological, chemical, and radiological injuries or disease. Likewise, workers compensation pricing is highly
controlled compared to other lines.

3. 3
Viewing the reinsurance market as a proxy for the direct market, it is no surprise that NBCR
coverage is largely unavailable from traditional insurers.8 To the extent NBCR coverage is
available to small and medium businesses, nonprofits, and local governments, the limits on offer
are modest with pricing largely unaffordable.
The exception is workers compensation where insurers are generally required by state law to
assume the NBCR risk without limit. If an insurer cannot access adequate reinsurance for its
workers compensation NBCR exposures, its only practical risk management tool is to decline to
write the entire workers compensation policy. In that way, traditional insurers are directing
available NBCR capacity toward sustaining a viable overall workers compensation insurance
market. Accordingly, even if private NBCR capacity somehow doubled or tripled, relatively little
of that additional capacity is likely to find its way to support the property and liability NBCR
terrorism markets. Instead, this data suggests any additional NBCR terrorism capacity would be
readily absorbed in the workers compensation market.
NBCR Coverage for Large US and Foreign Corporations
Question 9 of the Request for Comments inquires as to the manner in which captive insurers
access TRIP, including the extent to which coverage is provided on a standalone versus embedded
basis, or for NBCR risks only, and the reasons behind such choices.
A captive insurer is a special insurance company formed to insure the risks of its owner.9 While
there are different types of captive arrangements, pure (single owner) captives are most likely to
participate in the Program. 90% of the Fortune 500 and S&P 500 are reported to have established
captive insurance subsidiaries.10 It is therefore safe to conclude that nearly all of the captives
participating in the Program are owned by the world’s largest corporations.
Captive insurers account for an extremely low proportion (4%) of commercial property and
casualty premium subject to the Program:11
Insurer Type Share of Assessable Premium
Non-Small Insurers 80%
Small Insurers 11%
Alien Insurers 5%
Captive Insurers 4%
8
Treasury’s annual data call does not collect data on take-up rates for NBCR terrorism coverage.
9
2020 Effectiveness Report at 11.
10
Captives by numbers, Captive International (March 2, 2021).
11
2020 Effectiveness Report at 11.

4. 4
Yet, the data assembled by Treasury shows a consistent pattern in which captive insurance
companies are poised to collect a disproportionate share of taxpayer-funded payouts from the
Terrorism Risk Insurance Program:
Scenario
Captive Insurers
Share of Industry Loss Share of Backstop Payouts
New York City 20% 32%
Chicago 25% 95%
San Francisco – Conv. 5% 34%
San Francisco – NBCR 49% 86%
Dallas 3% 45%
This disconnect is particularly pronounced in the case of an NBCR loss event. Under the San
Francisco NBCR modeled loss scenario, captive insurance companies would receive 86¢ of every
Program dollar paid out.12 Small and medium businesses, nonprofits, and local governments
(representing 96% of the market) that cannot afford or are not sophisticated enough to set up
their own personal insurance companies are left with the crumbs – a mere 14% of Program
dollars.
While small businesses, nonprofits, and local governments are effectively excluded from the
NBCR terrorism market, the data Treasury has collected demonstrates that the Program provides
massive amounts of NBCR protection to large US and foreign corporations through their captives.
A few examples show how:
Credit Suisse - After TRIA was enacted, Credit Suisse formed Terminus Insurance, Inc. in
New York and hired Aon to manage its new captive subsidiary.13 Terminus issues to Credit
Suisse a terrorism insurance policy (covering both conventional and NBCR terrorism) with
a $1.5 billion limit. Terminus privately reinsurers 100% of its Program deductible and co-
share for conventional terrorism losses. Accordingly, Terminus is only at risk for its
Program deductible and co-share for NBCR events. Terminus charges about $1.6 million
for the insurance it provides to its parent. With a 20% Program deductible, Terminus is
responsible for the first $320,000 of an NBCR terrorism event. After that, the Program
pays 80¢ of every dollar of loss. Accordingly, a maximum loss under the Credit Suisse
policy would cost the Program $1,199,744,000.14
12
According to Treasury, a “significant majority” of captives participating in the Program comply with mandatory
data calls. While there are some 3133 captives potentially eligible to participate in the Program, Treasury has
received data from 540. It is therefore possible captives would receive an even higher proportion of Program
benefits.
13
Report on Examination of Terminus Insurance, Inc. as of Dec. 31, 2018.
14
Terminus only has $1 million of capital and surplus. Presumably, Credit Suisse would recapitalize its captive so
that it could pay its claims and thereby tap into $4 federal dollars for every $1 invested into Terminus.

5. 5
Amazon.com – Amazon formed Day One Insurance, Inc. in Arizona in 2016 and hired
Marsh to manage its new captive subsidiary. Among other policies, Day One provides
conventional and NBCR terrorism insurance to Amazon with a limit of $1.75 billion.15 Day
One has a Program backstop deductible of about $100 million. Accordingly, a maximum
loss under the Amazon terrorism policy would cost the Program $1,320,000,000.
Starbucks – Starbucks formed Olympic Casualty Insurance Company in Vermont in 2006
and hired Marsh to manage its new captive subsidiary.16 Among other policies, Olympic
provides NBCR coverage to Starbucks with a limit of $350 million. Olympic has a Program
deductible of about $80,000. Accordingly, a maximum loss under the Starbucks
terrorism policy would cost the Program $279,936,000.
As these examples show, large profitable US and foreign corporations with strong balance sheets
leverage the Program to offer themselves NBCR terrorism insurance coverage terms, limits, and
pricing that are unconstrained by market forces and wholly unattainable by small and medium
businesses, nonprofits, and local governments.
Conclusion
The statutory purpose of the Program is twofold:17
1. Ensure the continued widespread availability and affordability of property and casualty
insurance for terrorism risk; and
2. Build capacity to absorb any future losses.
The data Treasury has collected and analyzed over the life of the Program demonstrates a
pronounced difference between:
• The availability, affordability, and capacity in the private market to insure (a)
conventional terrorism risks; and (b) NBCR terrorism risks; and
• Access to the program by (a) large, well-financed, multinational corporations; and (b)
small and medium businesses, nonprofits, and local governments.
As currently formulated, the Program makes no distinction between (a) acts of conventional and
NBCR terrorism; or (b) captive and traditional insurance companies. As a result of the Program’s
one-size fits all approach, the insurance market for the risk of traditional terrorism has
strengthened over time, while the market for NBCR terrorism is broken. Further, the Program
has promoted the inequitable availability of terrorism coverage limits and affordability as
between captive owners and everyone else. For these reasons, the Program is ineffective.
15
Day One Insurance, Inc. Annual Financial Statement (Dec. 31, 2020).
16
Olympic Casualty Financial Statement (Sept. 27, 2020).
17
Sec. 101(b).