Witness warns TRIA payouts disproportionately benefit large corporations through captives; committee hears calls for data transparency
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Summary
An independent analyst told the House subcommittee that corporate 'captive' insurers capture the bulk of TRIA benefits while paying a small share of post‑event recoupment, and called for greater data transparency and statutory fixes.
At the House Financial Services subcommittee hearing on TRIA reauthorization, Jason Shoop, founder of Centers for Better Insurance LLC, testified that Treasury data show captive insurers — subsidiaries owned by large corporations — receive a large share of potential post‑event payments under TRIA while paying relatively little in statutory surcharges.
"Up to 96¢ out of every dollar that would be paid out under the program would go to large corporations through their captive insurance subsidiaries," Shoop said, citing Treasury reports compiled under the law. Shoop gave public examples in the hearing record: he said the New York Times negotiated a captive terrorism policy with about $1.3 billion in coverage on a roughly $10 million premium that would leave the federal backstop exposed for up to $1 billion after a token deductible. He also cited Amazon as another large captive purchaser in Treasury's data.
Shoop and other witnesses described how statutory recoupment is structured: Treasury is required by statute to recoup roughly 140% of program payments through surcharges on property and casualty policyholders. Shoop argued Treasury data show an imbalance where captive owners receive billions in benefits but their policyholders would pay far less in recoupment; outside insurers and small‑business policyholders would face proportionally higher surcharges for the same program outlays.
Both industry and regulator witnesses acknowledged the issue of opaque captive data. Barrett Weibel of the Congressional Research Service and Elizabeth Heck (testifying on behalf of NAMIC) recommended greater data collection and transparency so Treasury can identify owners of captives and better assess program distributional impacts. "There are solutions," Shoop said, and he urged Congress to consider statutory changes to limit or adjust the way captives interact with the federal backstop.
Lawmakers asked follow‑up questions about state secrecy laws and the limits of Treasury's current reporting authority. Several members signaled interest in requiring more detailed reporting from captives and non‑U.S. insurance entities to prevent perceived subsidies and to ensure the recoupment mechanism treats policyholders equitably.