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HR 3210 IH
H. R. 3210
To ensure the continued financial capacity of insurers to provide coverage for risks from terrorism.
IN THE HOUSE OF REPRESENTATIVES
November 1, 2001
Mr. OXLEY (for himself, Mr. BAKER, Mrs. ROUKEMA, Mr. BACHUS, Mrs. KELLY, Mr. BENTSEN, Mr. ROYCE, Mr. MALONEY of Connecticut, Mr. LUCAS of Oklahoma, Mr. POMEROY, Mr. NEY, Mr. BARR of Georgia, Mr. GILLMOR, Mr. WELDON of Florida, Mr. RYUN of Kansas, Mr. RILEY, Mr. JONES of North Carolina, Mr. OSE, Mrs. BIGGERT, Mr. GREEN of Wisconsin, Mr. SHAYS, Mr. SHADEGG, Mr. FOSSELLA, Mr. GARY G. MILLER of California, Mr. CANTOR, Mr. GRUCCI, Mr. FERGUSON, Mr. ROGERS of Michigan, Mr. TIBERI, Mr. FOLEY, and Mr. ISSA) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
To ensure the continued financial capacity of insurers to provide coverage for risks from terrorism.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE- This Act may be cited as the `Terrorism Risk Protection Act'.
(b) TABLE OF CONTENTS- The table of contents for this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Designation of Administrators.
Sec. 4. Submission of premium information to Administrator.
Sec. 5. Triggering determination and covered period.
Sec. 6. Federal cost-sharing for commercial insurers.
Sec. 7. Assessments.
Sec. 8. Terrorism loss repayment surcharge.
Sec. 9. Administration of assessments and surcharges.
Sec. 10. Reserve for terrorism coverage under commercial lines of business.
Sec. 11. State preemption.
Sec. 12. Consistent State guidelines for coverage for acts of terrorism.
Sec. 13. Consultation with State insurance regulators and NAIC.
Sec. 14. Sovereign immunity protections.
Sec. 15. Study of potential effects of terrorism on life insurance industry.
Sec. 16. Definitions.
Sec. 17. Extension of program.
Sec. 18. Regulations.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) the terrorist attacks on the World Trade Center and the Pentagon of September 11, 2001, resulted in a large number of deaths and injuries, the destruction and damage to buildings, and interruption of business operations;
(2) the attacks have inflicted possibly the largest losses ever incurred by insurers and reinsurers;
(3) while the insurance and reinsurance industries have committed to pay the losses arising from the September 11 attacks, the resulting disruption has created widespread market uncertainties with regard to the risk of losses arising from possible future terrorist attacks;
(4) such uncertainty threatens the continued availability of United States commercial property casualty insurance for terrorism risk at meaningful coverage levels;
(5) the unavailability of affordable commercial property and casualty insurance for terrorist acts threatens the growth and stability of the United States economy, including impeding the ability of financial services providers to finance commercial property acquisitions and new construction;
(6) in the past, the private insurance markets have shown a remarkable resiliency in adapting to changed circumstances;
(7) given time, the private markets will diversify and develop risk spreading mechanisms to increase capacity and guard against possible future losses incurred by terrorist attacks;
(8) it is necessary to create a temporary industry risk sharing loan program to ensure the continued availability of commercial property and casualty insurance and reinsurance for terrorism-related risks;
(9) such action is necessary to limit immediate market disruptions, encourage economic stabilization, and facilitate a transition to a viable market for private terrorism risk insurance; and
(10) in addition, it is necessary to repeal portions of the tax law which prohibit the insurance market from developing the necessary reserves to handle possible future losses due to acts of terrorism.
SEC. 3. DESIGNATION OF ADMINISTRATORS.
(a) IN GENERAL- Not later than December 1, 2001, the President shall designate a Federal officer or officers to act as the Administrator or Administrators responsible for carrying out this Act and the responsibilities under this Act to be carried out by each such officer.
(b) SENSE OF CONGRESS- It is the sense of the Congress that in determining the Administrator responsible for making any determinations, for purposes of this Act, as to whether a loss was caused by an act of terrorism and whether such loss was caused by one or multiple such events, pursuant to section 5(b), the President should consider the appropriate role of the Assistant to the President for Homeland Security.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO ADMINISTRATOR.
To the extent such information is not otherwise available to the Administrators, the appropriate Administrator may require each insurer to submit, to the appropriate Administrator or to the NAIC, a statement specifying the aggregate premium amount of coverage written by such insurer for properties and persons in the United States under each line of commercial property and casualty insurance sold by such insurer during such periods as the appropriate Administrator may provide.
SEC. 5. TRIGGERING DETERMINATION AND COVERED PERIOD.
(a) IN GENERAL- For purposes of this Act, a `triggering determination' is a determination by the appropriate Administrator that the insured losses resulting from the event of an act of terrorism occurring during the covered period (as such term is defined in subsection (b)), or the aggregate insured losses resulting from multiple events of acts of terrorism all occurring during the covered period, meet the requirements under either of the following paragraphs:
(1) INDUSTRY-WIDE LOSS TEST- Such industry-wide losses exceed $1,000,000,000.
(2) CAPITAL SURPLUS AND INDUSTRY AGGREGATE TEST- Such industry-wide losses exceed $100,000,000 and some portion of such losses for any single commercial insurer exceed--
(A) 10 percent of the capital surplus of such commercial insurer (as such term is defined by the appropriate Administrator); and
(B) 10 percent of the commercial property and casualty premiums written by such commercial insurer;
except that this paragraph shall not apply to any commercial insurer that has been making commercial property and casualty insurance coverage available for less than 4 years as of the date of the determination under this subsection.
(b) COVERED PERIOD- For purposes of this Act, the `covered period' is the period beginning on the date of the enactment of this Act and ending on January 1, 2003.
(c) DETERMINATIONS REGARDING EVENTS- For purposes of subsection (a), the appropriate Administrator shall have the sole authority for determining whether--
(1) an occurrence or event was caused by an act of terrorism;
(2) insured losses from acts of terrorism were caused by one or multiple events or occurrences; and
(3) whether an act of terrorism occurred during the covered period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSURERS.
(a) IN GENERAL- Pursuant to a triggering determination, the appropriate Administrator shall provide financial assistance to commercial insurers in accordance with this section to cover insured losses resulting from acts of terrorism, which shall be repaid in accordance with subsection (e).
(b) AMOUNT- Subject to subsection (c), with respect to a triggering determination, the amount of financial assistance made available under this section to each commercial insurer shall be equal to 90 percent of the amount of the insured losses of the insurer as a result of the triggering event involved.
(c) AGGREGATE LIMITATION- The aggregate amount of financial assistance provided pursuant to this section may not exceed $100,000,000,000.
(d) LIMITATIONS- The appropriate Administrator may establish such limitations as may be necessary to ensure that payments under this section in connection with a triggering determination are made only to commercial insurers that are not in default of any obligation under section 7 to pay assessments or under section 8 to collect surcharges.
(e) REPAYMENT- Financial assistance made available under this section shall be repaid through assessments under section 7 collected by the appropriate Administrator and surcharges remitted to the appropriate Administrator under section 8. Any such amounts collected or remitted shall be deposited into the general fund of the Treasury.
(f) EMERGENCY DESIGNATION- Congress designates the amount of new budget authority and outlays in all fiscal years resulting from this section as an emergency requirement pursuant to section 252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 901(e)). Such amount shall be available only to the extent that a request, that includes designation of such amount as an emergency requirement as defined in such Act, is transmitted by the President to Congress.
SEC. 7. ASSESSMENTS.
(a) IN GENERAL- In the case of a triggering determination, each commercial insurer shall be subject to assessments under this section for the purpose of repaying financial assistance made available under section 6 in connection with such determination.
(b) AGGREGATE ASSESSMENT- Pursuant to a triggering determination, the appropriate Administrator shall determine the aggregate amount to be assessed among all commercial insurers, which shall be equal to 90 percent of the lesser of--
(1) the amount of industry-wide losses resulting from the triggering event involved; and
(c) ALLOCATION OF ASSESSMENT-
(1) IN GENERAL- The appropriate Administrator shall allocate the aggregate assessment amount determined under subsection (b) among all commercial insurers. The portion of the aggregate assessment amount that is allocated as an assessment on each commercial insurer shall be based on the percentage, written by that insurer, of the aggregate written premium, for all commercial insurers, for the calendar year preceding the assessment.
(2) PAYMENT REQUIREMENT- Upon notification by the appropriate Administrator of an assessment under this section, each commercial insurer shall be required to pay to the appropriate Administrator, in the manner provided under section 9 by the appropriate Administrator, the amount equal to the assessment on such commercial insurer (subject to the limitation under paragraph (3)).
(3) ANNUAL LIMITATION ON AMOUNT ALLOCATED TO EACH COMMERCIAL INSURER-
(A) IN GENERAL- Of any assessments under this section on a commercial insurer, the portion required to be paid by any commercial insurer during a calendar year shall not exceed the amount that is equal to 3 percent of the aggregate written premium for such insurer for the preceding calendar year.
(B) MULTIPLE PAYMENTS- If any amounts required to be repaid under this section for a calendar year are limited by operation of subparagraph (A), the appropriate Administrator shall provide that all such remaining amounts shall be reallocated among all commercial insurers (in the manner provided in paragraph (1)) over such immediately succeeding calendar years, and repaid over such years, as may be necessary to provide for full payment of such remaining amounts, except that the limitation under subparagraph (A) shall apply to the amounts paid in any such successive calendar years.
(C) ADMINISTRATIVE FLEXIBILITY-
(i) TIMING OF ASSESSMENTS- Assessments under this section in connection with a triggering demonstration shall be made, to the extent that the appropriate Administrator considers practicable and appropriate, at the beginning of the calendar year immediately following the triggering determination.
(ii) ESTIMATES AND CORRECTIONS- If the appropriate Administrator makes an assessment at a time other than provided under clause (i), the appropriate Administrator may--
(I) require commercial insurers to estimate their aggregate written premiums for the year in which the assessment is made; and
(II) make a subsequent refund or require additional payments to correct such estimation at the end of the calendar year.
(4) DEFERRAL OF CONTRIBUTIONS- The appropriate Administrator may defer the payment of part or all of the assessment required under paragraph (2) to be paid by a commercial insurer, but only to the extent that the appropriate Administrator determines that such deferral is necessary to avoid the likely insolvency of the commercial insurer.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) IMPOSITION AND COLLECTION- If, pursuant to a triggering determination, the appropriate Administrator determines that the aggregate amount of industry-wide losses resulting from the triggering event involved exceeds $20,000,000,000, the appropriate Administrator shall--
(1) establish and impose a policyholder premium surcharge, as provided under this section, on commercial property and casualty insurance written after such determination, for the purpose of repaying financial assistance made available under section 6 in connection with such triggering determination; and
(2) provide for commercial insurers to collect such surcharge and remit amounts collected to the appropriate Administrator.
(b) AMOUNT AND DURATION- The surcharge under this section shall be established in such amount, and shall apply to commercial property and casualty insurance written during such period, as the appropriate Administrator determines is necessary to recover the aggregate amount of financial assistance provided under section 6 to cover insured losses resulting from the triggering event that exceed $20,000,000,000.
(c) OTHER TERMS- The surcharge under this section shall--
(1) be based on a percentage of the amount of commercial property and casualty insurance coverage that a policy provides; and
(2) be imposed with respect to all commercial property and casualty insurance coverage written during the period referred to in subsection (b).
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) MANNER AND METHOD- The appropriate Administrator shall provide for the manner and method of carrying out assessments under section 7 and surcharges under section 8, including the timing and procedures of making assessments and surcharges, notifying commercial insurers of assessments or surcharge requirements, collecting payments from and surcharges through commercial insurers, and refunding of any excess amounts paid or crediting such amounts against future assessments.
(b) TIMING OF COVERAGES AND ASSESSMENTS- The appropriate Administrator may adjust the timing of coverages and assessments provided under this Act to provide for equivalent application of the provisions of this Act to commercial insurers and policies that are not based on a calendar year.
(c) APPLICATION TO SELF-INSURANCE ARRANGEMENTS- The appropriate Administrator may, in consultation with the NAIC, apply the provisions of this Act, as appropriate, to self-insurance arrangements by municipalities and other entities, but only if such application is determined before the occurrence of a triggering event and all of the provisions of this Act are applied uniformly to such entities.
(d) ADJUSTMENT- The appropriate Administrator may adjust the assessments charged under section 7 or the percentage imposed under the surcharge under section 8 at any time, as the appropriate Administrator considers appropriate to protect the national interest, which may include avoiding unreasonable economic disruption or excessive market instability.
SEC. 10. RESERVE FOR TERRORISM COVERAGE UNDER COMMERCIAL LINES OF BUSINESS.
(a) IN GENERAL- Section 832 of the Internal Revenue Code of 1986 (relating to insurance company taxable income) is amended by adding at the end the following new subsection:
`(h) TERRORISM RESERVE FOR COMMERCIAL LINES OF BUSINESS- In the case of an insurance company subject to tax under section 831(a)--
`(1) INCLUSION FOR DECREASES, AND DEDUCTION FOR INCREASES, IN BALANCE OF RESERVE-
`(A) DECREASE TREATED AS GROSS INCOME- If for any taxable year--
`(i) the opening balance for the terrorism commercial business reserve exceeds
`(ii) the closing balance for such reserve,
such excess shall be included in gross income under subsection (b)(1)(F).
`(B) INCREASE TREATED AS DEDUCTION- If for any taxable year--
`(i) the closing balance for the terrorism commercial business reserve exceeds
`(ii) the opening balance for such reserve,
such excess shall be taken into account as a deduction under subsection (c)(14).
`(2) TERRORISM COMMERCIAL BUSINESS RESERVE- For purposes of this section, the term `terrorism commercial business reserve' means amounts held in a segregated account (or other separately identifiable arrangement or account) which are set aside exclusively--
`(A) to mature or liquidate, either by payment or reinsurance, future unaccrued claims arising from declared terrorism losses under commercial lines of business, and
`(B) if so directed by the insurance commissioner of any State, to pay other claims as part of a plan of the company to avoid insolvency.
`(3) LIMITATION ON AMOUNT OF RESERVE-
`(A) IN GENERAL- If the closing balance of any terrorism commercial business reserve for any taxable year exceeds such reserve's limit for such year--
`(i) such excess shall be included in gross income under subsection (b)(1)(F) for the following taxable year, and
`(ii) if such excess is distributed during such following taxable year, the opening balance of such reserve for such following taxable year shall be determined without regard to such excess.
`(B) RESERVE LIMIT-
`(i) IN GENERAL- For purposes of subparagraph (A), a reserve's limit for any taxable year is such reserve's allocable share of the national limit for the calendar year in which such taxable year begins.
`(ii) NATIONAL LIMIT- The national limit is $40,000,000,000 ($13,340,000,000 for 2002).
`(iii) ALLOCATION OF LIMIT-
`(I) IN GENERAL- A reserve's allocable share of the national limit for any calendar year is the amount which bears the same ratio to the national limit for such year as the company's net written premiums for commercial lines of business bears to such net written premiums for all companies for commercial line of business.
`(II) EXCLUSION OF PREMIUMS FOR INSURANCE NOT COVERING DECLARED TERRORISM LOSSES AND FOR REINSURANCE- Subclause (I) shall be applied without regard to premiums for insurance which does not cover declared terrorism losses and premiums for reinsurance.
`(III) DETERMINATION OF NET WRITTEN PREMIUMS- Except as otherwise provided in this section, all determinations under this subsection shall be made on the basis of the amounts required to be set forth on the annual statement approved by the National Association of Insurance Commissioners.
`(iv) INFLATION ADJUSTMENT OF LIMIT- In the case of any calendar year after 2002, the $40,000,000,000 amount in clause (ii) shall be increased by an amount equal to the product of--
`(I) such dollar amount, and
`(II) the cost-of-living adjustment determined under subsection (f)(3) for such calendar year, determined by substituting `calendar year 2001' for `calendar year 1992' in subparagraph (B) thereof.
If any amount after adjustment under the preceding sentence is not a multiple of $1,000,000, such amount shall be rounded to the nearest multiple of $1,000,000.
`(4) DECLARED TERRORISM LOSSES- For purposes of this subsection--
`(A) IN GENERAL- The term `declared terrorism losses' means, with respect to a taxable year--
`(i) the amount of losses and loss adjustment expenses incurred in commercial lines of business that are attributable to 1 or more declared terrorism events, plus
`(ii) any nonrecoverable assessments, surcharges, or other liabilities that are borne by the company and are attributable to such events.
`(B) DECLARED TERRORISM EVENT- The term `declared terrorism event' means any event declared by the President to be an act of terrorism against the United States for purposes of this section.
`(5) REGULATIONS- The Secretary shall prescribe such regulations as may be appropriate to carry out this subsection, and shall prescribe such regulations after consultation with the National Association of Insurance Commissioners.'
(b) CONFORMING AMENDMENTS-
(1) Paragraph (1) of section 832(b) of such Code is amended by striking `and' at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting in lieu thereof `, and', and by adding at the end the following new subparagraph:
`(F) each net decrease in reserves which is required by paragraph (1) or (3) of subsection (h) to be taken into account under this subparagraph.'
(2) Subsection (c) of section 832 of such Code is amended by striking `and' at the end of paragraph (12), by striking the period at the end of paragraph (13) and inserting in lieu thereof `; and', and by adding at the end the following new paragraph:
`(14) each net increase in reserves which is required by subsection (h)(1) to be taken into account under this paragraph.'
(c) EFFECTIVE DATE- The amendments made by this subsection shall apply to taxable years beginning after December 31, 2001.
SEC. 11. STATE PREEMPTION.
(a) COVERED PERILS- A commercial insurer shall be considered to have complied with any State law that requires or regulates the provision of insurance coverage for acts of terrorism if the insurer provides coverage in accordance with the definitions regarding acts of terrorism under the regulations issued by the Administrators.
(b) RATE LAWS- If any provision of any State law prevents an insurer from increasing its premium rates in an amount necessary to recover any assessments pursuant to section 7, such provision is preempted only to the extent necessary to provide for such insurer to recover such losses.
(c) FILE AND USE- With respect only to commercial property and casualty insurance covering acts of terrorism, any provision of State law that requires, as a condition precedent to the effectiveness of rates or policies for such insurance that is made available by an insurer licensed to transact such business in the State, any action (including prior approval by the State insurance regulator for such State) other than filing of such rates and policies and related information with such State insurance regulator is preempted to the extent such law requires such additional actions for such insurance coverage. This subsection shall not be considered to preempt a provision of State law solely because the law provides that rates and policies for such insurance coverage are, upon such filing, subject to subsequent review and action, which may include actions to disapprove or discontinue use of such rates or policies, by the State insurance regulator.
SEC. 12. CONSISTENT STATE GUIDELINES FOR COVERAGE FOR ACTS OF TERRORISM.
(a) SENSE OF CONGRESS REGARDING COVERED PERILS- It is the sense of the Congress that--
(1) the NAIC, in consultation with the appropriate Administrator, should develop appropriate definitions for acts of terrorism and appropriate standards for making determinations regarding events or occurrences of acts of terrorism;
(2) each State should adopt the definitions and standards developed by the NAIC for purposes of regulating insurance coverage made available in that State;
(3) in consulting with the NAIC, the appropriate Administrator should advocate and promote the development of definitions and standards that are appropriate for purposes of this Act; and
(4) after consultation with the NAIC, the appropriate Administrator should adopt definitions for acts of terrorism and standards for determinations that are appropriate for this Act.
(b) INSURANCE RESERVE GUIDELINES-
(1) SENSE OF CONGRESS REGARDING ADOPTION BY STATES- It is the sense of the Congress that--
(A) the NAIC should develop appropriate guidelines for commercial insurers and pools regarding maintenance of reserves against the risks of acts of terrorism; and
(B) each State should adopt such guidelines for purposes of regulating commercial insurers doing business in that State.
(2) CONSIDERATION OF ADOPTION OF NATIONAL GUIDELINES- Upon the expiration of the 6-month period beginning on the date of the enactment of this Act, the appropriate Administrator shall make a determination of whether the guidelines referred to in paragraph (1) have, by such time, been developed and adopted by nearly all States in a uniform manner. If the appropriate Administrator determines that such guidelines have not been so developed and adopted, the appropriate Administrator shall consider adopting, and may adopt, such guidelines on a national basis in a manner that would supercede any State law regarding maintenance of reserves against such risks.
(c) GUIDELINES REGARDING DISCLOSURE OF PRICING AND TERMS OF COVERAGE-
(1) SENSE OF CONGRESS- It is the sense of the Congress that the States should require, by laws or regulations governing the provision of commercial property and casualty insurance that includes coverage for acts of terrorism, that the price of any such terrorism coverage, including the costs of any terrorism related assessments or surcharges under this Act, be separately disclosed.
(2) ADOPTION OF NATIONAL GUIDELINES- If the appropriate Administrator determines that the States have not enacted laws or adopted regulations adequately providing for the disclosures described in paragraph (1) within a reasonable period of time after the date of the enactment of this Act, the appropriate Administrator shall, after consultation with the NAIC, adopt guidelines on a national basis requiring such disclosure in a manner that supercedes any State law regarding such disclosure.
SEC. 13. CONSULTATION WITH STATE INSURANCE REGULATORS AND NAIC.
The Administrators shall consult with the State insurance regulators and the NAIC in carrying out this Act. The Administrators may take such actions, including entering into such agreements and providing such technical and organizational assistance to insurers and State insurance regulators, as may be necessary to provide for the distribution of financial assistance under section 6 and the collection of assessments under section 7 and surcharges under section 8.
SEC. 14. SOVEREIGN IMMUNITY PROTECTIONS.
(a) FEDERAL CAUSE OF ACTION FOR DAMAGES FROM TERRORIST ACTS RESULTING IN TRIGGERING DETERMINATION-
(1) IN GENERAL- If a triggering determination occurs requiring an assessment under section 7 or a surcharge under section 8, there shall exist a Federal cause of action, which shall be the exclusive remedy, for damages claimed pursuant to, or in connection with, any acts of terrorism that caused the insured losses resulting in such triggering determination.
(2) SUBSTANTIVE LAW- The substantive law for decision in any such action shall be derived from the law, including choice of law principles, of the State in which such act of terrorism occurred, unless such law is inconsistent with or preempted by Federal law.
(3) JURISDICTION- Pursuant to each triggering determination, the Judicial Panel on Multidistrict Litigation shall designate one or more district courts of the United States which shall have original and exclusive jurisdiction over all actions brought pursuant to this subsection that arise out of the triggering event involved.
(4) OFFSET FOR RELIEF PAYMENTS- Any recovery by a plaintiff in an action under this subsection shall be offset by the amount, if any, received by the plaintiff from the United States pursuant to any emergency or disaster relief program, or from any other collateral source, for compensation of losses related to the act of terrorism involved.
(b) DAMAGES IN ACTIONS REGARDING INSURANCE CLAIMS- In an action brought under this section for damages claimed by an insured pursuant to, or in connection with, any commercial property and casualty insurance providing coverage for acts of terrorism that resulted in a triggering determination:
(1) PROHIBITION OF PUNITIVE DAMAGES- No punitive damages intended to punish or deter may be awarded.
(2) NONECONOMIC DAMAGES-
(A) IN GENERAL- Each defendant in such an action shall be liable only for the amount of noneconomic damages allocated to the defendant in direct proportion to the percentage of responsibility of the defendant for the harm to the claimant.
(B) DEFINITION- For purposes of subparagraph (A), the term `noneconomic damages' means damages for losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium, hedonic damages, injury to reputation, and any other nonpecuniary losses of any kind or nature.
(c) RIGHT OF SUBROGATION- The United States shall have the right of subrogation with respect to any claim paid by the United States under this Act.
(d) PROTECTIVE ORDERS- The United States or any appropriate Administrator carrying out responsibilities under this Act may seek protective orders or assert privileges ordinarily available to the United States to protect against the disclosure of classified information, including the invocation of the military and State secrets privilege
SEC. 15. STUDY OF POTENTIAL EFFECTS OF TERRORISM ON LIFE INSURANCE INDUSTRY.
(a) ESTABLISHMENT- Not later than 30 days after the date of enactment of this Act, the President shall establish a commission (in this section referred to as the `Commission') to study and report on the potential effects of an act or acts of terrorism on the life insurance industry in the United States and the markets served by such industry.
(b) MEMBERSHIP AND OPERATIONS-
(1) APPOINTMENT- The Commission shall consist of 5 members, as follows:
(A) The appropriate Administrator, as designated by the President.
(C) 4 members appointed by the President, who shall be--
(i) a representative of direct underwriters of life insurance within the United States;
(ii) a representative of reinsurers of life insurance within the United States;
(iii) an officer of the NAIC; and
(iv) a representative of insurance agents for life underwriters.
(2) OPERATIONS- The chairperson of the Commission shall determine the manner in which the Commission shall operate, including funding, staffing, and coordination with other governmental entities.
(c) STUDY- The Commission shall conduct a study of the life insurance industry in the United States, which shall identify and make recommendations regarding--
(1) possible actions to encourage, facilitate, and sustain provision by the life insurance industry in the United States of coverage for losses due to death or disability resulting from an act or acts of terrorism, including in the face of threats of such acts; and
(2) possible actions or mechanisms to sustain or supplement the ability of the life insurance industry in the United States to cover losses due to death or disability resulting from an act or acts of terrorism in the event that--
(A) such acts significantly affect mortality experience of the population of the United States over any period of time;
(B) such loses jeopardize the capital and surplus of the life insurance industry in the United States as a whole; or
(C) other consequences from such acts occur, as determined by the Commission, that may significantly affect the ability of the life insurance industry in the United States to independently cover such losses.
(d) RECOMMENDATIONS- The Commission may make a recommendation pursuant to subsection (c) only upon the concurrence of a majority of the members of the Commission.
(e) REPORT- Not later than 120 days after the date of enactment of this Act, the Commission shall submit to the House of Representatives and the Senate a report describing the results of the study and any recommendations developed under subsection (c).
(f) TERMINATION- The Commission shall terminate 60 days after submission of the report as provided for in subsection (e).
SEC. 16. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) ACT OF TERRORISM-
(A) IN GENERAL- The term `act of terrorism' means any act that the appropriate Administrator determines meets the requirements under subparagraph (B), as such requirements are further defined and specified by the appropriate Administrator in consultation with the NAIC.
(B) REQUIREMENTS- An act meets the requirements of this subparagraph if the act--
(i) is unlawful;
(ii) causes harm to a person, property, or entity, in the United States;
(iii) is committed by a group of persons or associations who--
(I) are not a government of a foreign country or the de facto government of a foreign country; and
(II) are recognized by the Department of State or the appropriate Administrator as a terrorist group or have conspired with such a group or the group's agents or surrogates; and
(iv) has as its purpose to overthrow or destabilize the government of any country or to influence the policy or affect the conduct of the government of the United States by coercion.
(2) APPROPRIATE ADMINISTRATORS- The term `appropriate Administrator' means, with respect to any function or responsibility of the Federal Government under this Act, the Federal officer designated by the President pursuant to section 3 as responsible for carrying out such function or responsibility.
(3) AFFILIATE- The term `affiliate' means, with respect to an insurer, any company that controls, is controlled by, or is under common control with the insurer.
(4) AGGREGATE WRITTEN PREMIUM- The term `aggregate written premium' means, with respect to a year, the aggregate premium amount of all commercial property and casualty insurance coverage written during such year for persons or properties in the United States under all lines of commercial property and casualty insurance.
(5) COMMERCIAL INSURANCE- The term `commercial insurance' means property and casualty insurance that is not insurance for homeowners, tenants, private passenger nonfleet automobiles, mobile homes, or other insurance for personal, family, or household needs.
(6) COMMERCIAL INSURER- The term `commercial insurer' means any corporation, association, society, order, firm, company, mutual, partnership, individual, aggregation of individuals, or any other legal entity that is engaged in the business of providing commercial property and casualty insurance for persons or properties in the United States. Such term includes any affiliates of a commercial insurer.
(7) COMMERCIAL PROPERTY AND CASUALTY INSURANCE- The term `commercial property and casualty insurance' means property and casualty insurance that is commercial insurance.
(8) CONTROL- A company has control over another company if--
(A) the company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 percent or more of any class of voting securities of the other company;
(B) the company controls in any manner the election of a majority of the directors or trustees of the other company; or
(C) the appropriate Administrator determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the other company.
(9) COVERED PERIOD- The term `covered period' has the meaning given such term in section 5(b).
(10) INDUSTRY-WIDE LOSSES- The term `industry-wide losses' means the aggregate insured losses sustained by all insurers, from coverage written for persons or properties in the United States, under all lines of commercial property and casualty insurance.
(11) INSURED LOSS- The term `insured loss' means any loss in the United States covered by commercial property and casualty insurance.
(12) INSURER- The term `insurer' means any corporation, association, society, order, firm, company, mutual, partnership, individual, aggregation of individuals, or any other legal entity that is engaged in the business of providing property and casualty insurance for persons or properties in the United States. Such term includes any affiliates of an insurer.
(13) NAIC- The term `NAIC' means the National Association of Insurance Commissioners.
(14) PROPERTY AND CASUALTY INSURANCE- The term `property and casualty insurance' means insurance against--
(A) loss of or damage to property;
(B) loss of income or extra expense incurred because of loss of or damage to property; and
(C) third party liability claims caused by negligence or imposed by statute or contract.
Such term does not include health or life insurance.
(15) STATE- The term `State' means the States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, and any other territory or possession of the United States.
(16) STATE INSURANCE REGULATOR- The term `State insurance regulator' means, with respect to a State, the principal insurance regulatory authority of the State.
(17) TRIGGERING DETERMINATION- The term `triggering determination' has the meaning given such term in section 5(a).
(18) TRIGGERING EVENT- The term `triggering event' means, with respect to a triggering determination, the event of an act of terrorism, or the events of such acts, that caused the insured losses resulting in such triggering determination.
(19) UNITED STATES- The term `United States' means, collectively, the States (as such term is defined in this section).
SEC. 17. EXTENSION OF PROGRAM.
(a) AUTHORITY- If the appropriate Administrator determines that action under this section is necessary to ensure the adequate availability in the United States of commercial property and casualty insurance coverage for acts of terrorism, the appropriate Administrator may provide that the provisions of this Act shall continue to apply with respect to a period or periods, as established by the Administrator, that begin after the expiration of the covered period specified in section 5(b) and end before January 1, 2005.
(b) COVERED PERIOD- If the appropriate Administrator exercises the authority under subsection (a), notwithstanding section 5(b) and section 16(9), the period or periods established by the appropriate Administrator shall be considered to be the covered period for purposes of this Act.
SEC. 18. REGULATIONS.
The appropriate Administrators shall issue any regulations necessary to carry out this Act.
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