Centers for Better Insurance urges Treasury to decline to open the door to a formal petitioning procedure. The U.S. Constitution’s First Amendment already allows any interested person to bring to the Secretary of Treasury’s attention an event the person believes should or should not be subject to certification. Nothing in the Program’s existing rules abridges that right.

1. 2019 TRIA Reauthorization Proposed Rules Comments
Centers for Better Insurance Submission on Request for Comments – Certification Process
The Centers for Better Insurance, LLC (CBI) is an independent organization committed to
enhancing the value the insurance industry delivers to all stakeholders (including policyholders,
employees, and society at large). CBI does so by making available unbiased analysis and insights
about key regulatory issues facing the industry for use by insurance professionals, regulators, and
policymakers. Additional information regarding CBI is available on the web at www.betterins.org
or by email request at info@betterins.org.
This comment letter focuses on the request for comments as to the certification process under
the Terrorism Risk Insurance Program.
CBI is submitting separate comment letters with respect to certain other matters of relevance to
the issues raised in Treasury’s Notice appearing at 85 FR 71588 (November 10, 2020).
Petitioning Procedure
The ACRSM recommended that Treasury establish a petitioning procedure under the Program
rules that would permit third parties to request that Treasury commence a certification process
under its rules. Treasury has requested comments on:
• How such a procedure could be established consistent with TRIA;
• What types of parties should be permitted to make such a petition to Treasury; and
• The information that a prospective petitioner should be required to submit to inform
Treasury that the certification requirements of TRIA have been met, including but not
limited to whether property and casualty insurance losses have met the $5 million
certification threshold.
CBI urges Treasury to decline to open the door to a formal petitioning procedure. The U.S.
Constitution’s First Amendment already allows any interested person to bring to the Secretary of
Treasury’s attention an event the person believes should or should not be subject to certification.
Nothing in the Program’s existing rules abridges that right.
Likewise, no direction from Congress suggests any further right to petition the Secretary is
appropriate. Indeed, Congress has acted to de-clutter and streamline the certification process in
extraordinary ways. Under the Terrorism Risk Insurance Act:1
1
Section 102(1).

2. • The Secretary of Treasury must personally make the decision whether to certify an act of
terrorism with any delegation of the determination expressly prohibited; and
• The decision of the Secretary is not only final as an administrative matter but exempt
from judicial review.
Congress has expressed its clear expectation – indeed, instruction – that the Secretary of Treasury
take personal responsibility for the decision whether to certify and that the Secretary must be
permitted to act unencumbered by the risk of second-guessing through administrative or judicial
procedures.
The ACRSM’s recommendation to layer a formal petitioning process on top of the Secretary’s
otherwise near-absolute discretion is patently inconsistent with the expressed will of Congress.
Moreover, Congress has acted during the life of the Program to further clear the decks for the
Secretary. When the Terrorism Risk Insurance Act was passed in 2002, the Secretary of Treasury
had to seek the “concurrence” of the Secretary of State and Attorney General before certifying
an act of terrorism. In its 2015 reauthorization of the program, Congress reduced the Secretary
of Treasury’s obligation from “concurrence” to “consultation.”2
Adding a formal petitioning process would cut against the clear desire of Congress to empower
the Secretary of Treasury to conduct the certification process with a minimum of cooks in the
kitchen, processes, formalities, and review.
Beyond consideration of the clear will of the Congress to invest the Secretary of Treasury with
the broadest possible freedom and discretion to make a certification decision, it is worth
considering the possible motives behind those that may petition for certification.3 We have some
experience in that regard.
Separate from the Terrorism Risk Insurance Act, Congress enacted the Support Anti-terrorism by
Fostering Effective Technologies Act of 2002 (SAFETY Act). The SAFETY Act provides limitations
of and even immunity from liability with respect to the use of certain anti-terrorism technologies.
This liability shield is triggered by the certification of an act of terrorism by the Secretary of
Homeland Security under criteria different than that for the Terrorism Risk Insurance Act.4 In
contrast to the broad grant of unreviewable authority conferred on the Secretary of Treasury
under TRIA, Congress empowered the Secretary of Homeland Security to certify an act of
terrorism under the SAFETY Act subject to normal administrative procedures and judicial review.
2
At that time, engagement with the Secretary of State was replaced by the Secretary of Homeland Security.
3
The ACRSM does not appear to have recommended a process to petition against certification of an act under the
Program.
4
6 CFR § 25.2.

3. Following a lone gunman’s killing of 58 and wounding of 489 at the Las Vegas Route 91 Harvest
Festival, MGM Resorts International (the operator of the hotel from which the gunman fired on
the crowd below) filed a declaratory judgment action against the victims through which it sought
immunity under the SAFETY Act. As the Baltimore Sun put it:5
The statute puts the determination of whether an attack was terrorism at the feet
of Homeland Security Secretary Kirstjen Nielsen, who has yet to make a decision.
The Department of Homeland Security published the following notice:
Ultimately, MGM settled without the Secretary of Homeland Security acting on certification.
While this experience with certification took place under a different legal regime, it should warn
us that any petition to certify (or not certify) under TRIA does not take place in a vacuum. The
petitioners will have motives and the implications for victims of certification under the SAFETY
Act or TRIA is profound.
It is not difficult to outline the likely motives of potential petitioners for certification under the
Terrorism Risk Insurance Act. Certification of an act of terrorism under TRIA has two immediate
effects:
• The backstop opens to reimburse insurers 80% of payouts under property and casualty
insurance policies (once the monetary thresholds of the program trigger and individual
insurer deductible have been satisfied); and
5
An obscure federal law may give corporations immunity from lawsuits over terrorism, Baltimore Sun (July 27,
2018).

4. • Any terrorism exclusions in property and casualty insurance policies activate thereby
barring or limiting coverage otherwise available to policyholders.
Stated another way, the decision by the Secretary of Treasury opens the spigot of cash from the
$100 billion backstop running into the coffers of insurance companies but slams shut the
entitlement to coverage for the 20%-40% of policyholders that have elected to accept terrorism
exclusions.6 In the same way that the Secretary of Homeland Security was called upon to pick
winners and losers between MGM on the one hand and the families of the 58 murdered and the
489 wounded on the other, TRIA calls upon the Secretary of Treasury to choose between insurers
and their policyholders.
In broad terms, certification of an act of terrorism under the Terrorism Risk Insurance Program:
• Benefits insurance companies by (a) limiting their exposure to insurance payouts by
activating terrorism exclusions; and (b) opening the backstop to reimburse 80% of what
the insurance companies do pay above their individual deductibles; and
• Harms policyholders by activating any terrorism exclusions or limitations in their policies
thereby eliminating or reducing otherwise available insurance recoveries.
There is one group of stakeholders that occupies both the roles of insurer and policyholder.
These are the corporations that have set up captives to serve as their own personal insurance
companies. In general, a large corporation would benefit from the certification of an act of
terrorism because its right to coverage from its captive shifts from standard insurance (with large
deductibles and NBCR exclusions) to government-funded terrorism reinsurance with low
deductibles and no NBCR exclusions.7
For example, Moody’s Corporation established Moody’s Assurance Company, Inc. in 2002 for the
sole purpose of issuing insurance policies to Moody’s and its affiliates. Moody’s Assurance issued
Moody’s Corporation several policies including:8
• Property damage coverage of $100 million per occurrence excess of $300 million; and
• Certified acts of terrorism coverage of $200 million per occurrence excess of $300 million.
6
US Treasury Report on the Effectiveness of the Terrorism Risk Insurance Program at page 29. Reportedly, only
86% of businesses with claims from the Boston Marathon bombing had policies with terrorism exclusions. US
Treasury Has Not Determined Boston Marathon Bombings Were ‘Act of Terrorism’, Boston Globe (September 11,
2014).
7
Remarkably, the Terrorism Risk Insurance Act prohibits the Secretary of Treasury from collecting information on
the financial interests of likely petitioners in the outcome of certification decision. Sec. 104(h). NBCR stands for
nuclear, biological, chemical, and radiological.
8
New York Department of Financial Services Examination Report (Sept. 9, 2015).

5. Suppose Moody’s sustained $500 million of property damage from a truck bomb detonated
outside its U.S. home office:
• If the Secretary of Treasury certifies an act of terrorism, Moody Assurance would pay its
corporate parent $200 million with $160 million reimbursed from the Terrorism Risk
Insurance Program’s backstop.
• If the Secretary of Treasury does not certify an act of terrorism, Moody’s Assurance would
pay its corporate parent only $100 million with none of it reimbursed by the Program.
In sum, certification allows Moody’s as a group to receive $160 million of government funding
while non-certification simply moves $100 million from one corporate pocket to another within
the Moody’s group. Obviously, Moody’s is greatly advantaged by a decision in favor of
certification.
The bodega-owner across the street suffering $50,000 of damage from the truck bomb would
see things very differently. The Secretary’s certification would invoke the terrorism exclusion in
her policy resulting in a denial of her insurance claim. If the Secretary decides not to issue a
certification, the bodega-owner would recover the full $50,000 entitlement from her insurer.
So, on the one side of a petition initiative we would expect insurance companies and large
corporations clamoring for the Secretary to certify while on the other sit the owners of small
businesses who are unlikely to understand the implications until it is too late.9 Even if they do, it
is unlikely small business owners struggling to recover will have the time, resources, or financing
to mount an effective opposition to a corporate-driven petition initiative.
We know from the Boston Marathon Bombings that the potential for certification is top of mind
for insurers even for events that appear unlikely to satisfy the $5 million certification threshold.
Some 6 months after the attack, insurers were reportedly still holding up payments waiting for
Treasury’s decision on certification.10 It seems no claim would be too small to draw formal
petitions for certification.
After a potential act of terrorism, the Secretary of Treasury is likely to be beseeched by corporate
lobbyists exercising their clients’ First Amendment rights. There is no benefit for the Secretary,
the Program, small businesses, or the American people to add petitions from corporate lawyers.
9
After Treasury pays out the $160 million to Moody’s it would mark up the amount by 40% (to $224 million) for
recoupment through policyholder surcharges levied on small businesses, churches, school districts and other
commercial policyholders (even those that had had terrorism exclusions). In that way, the Secretary’s decision to
certify is a “double-whammy” on small businesses: first, may will lose coverage; and second, all will pay
policyholder surcharges to cover 140% of Treasury’s payouts for those with coverage.
10
US Treasury Has Not Determined Boston Marathon Bombings Were ‘Act of Terrorism’, Boston Globe (September
11, 2014).

6. Time Periods
The ACRSM also recommended that Treasury consider whether the existing time periods and
notification requirements under the certification process should be modified. Treasury has
requested comment on:
• How different time periods or notification requirements under the certification process
could affect the administration of the Program and the terrorism risk insurance market;
and; and
• How any modifications to the existing time periods or notification requirements would be
consistent with the flexibility that Treasury has previously indicated it needs for
certification under various circumstances.
CBI urges Treasury not to further entertain changes to existing time periods and notification
requirements. Treasury has committed to transparency,11 which is all that should be expected.
The Secretary of Treasury is clearly aware of the gravity of a certification decision and will
undoubtedly make that decision as expeditiously as prudence permits.
11
31 CFR Part 50, Subpart G.