99 008
107 th Congress
Report
HOUSE OF REPRESENTATIVES
1st Session
107 304
PROVIDING FOR CONSIDERATION OF H.R. 3210, TERRORISM RISK PROTECTION ACT
November 28, 2001.--Referred to the House Calendar and ordered to be
printed
Mr. Sessions , from the Committee on Rules, submitted the following
R E P O R T
[To accompany H. Res. 297]
The Committee on Rules, having had under consideration House
Resolution 297, by a record vote of 8 to 0, with 3 voting present,
report the same to the House with the recommendation that the resolution
be adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for consideration in the House of H.R. 3210,
the Terrorism Risk Protection Act, under a modified closed rule. The
rule provides one hour of debate equally divided and controlled by the
chairman and ranking minority member of the Committee on Financial
Services. The rule provides that, in lieu of the amendments recommended
by the Committee on Financial Services and the Committee on Ways and
Means now printed in the bill, an amendment in the nature of a
substitute consisting of the text of H.R. 3357 shall be considered as
adopted. The rule waives all points of order against consideration of
the bill as amended.
The rule provides for consideration of the amendment in the nature of
a substitute printed in this report, if offered by Representative
LaFalce or his designee, which shall be considered as read and shall be
separately debatable for one hour equally divided and controlled by the
proponent and an opponent. The rule waives all points of order against
the amendment printed in this report. Finally, the rule provides one
motion to recommit with or without instructions.
The waiver of all points of order includes a waiver of section 303 of
the Congressional Budget Act of 1974 (prohibiting consideration of
legislation, as reported, providing new budget authority, changes in
revenue, or changes in public debt for a fiscal year until the budget
resolution for that year has been agreed to) and section 401 of the
Congressional Budget Act of 1974 (prohibiting consideration of
legislation, as reported, providing new entitlement authority which
becomes effective during the current fiscal year).
The waiver of section 303 is necessary because section 7 of the bill
provides new budget authority for fiscal years 2003 and the budget
resolution for that year has yet to be agreed to. The waiver of section
401 is necessary because section 6 of the bill provides new entitlement
authority for the current fiscal year.
COMMITTEE VOTES
Pursuant to clause 3(b) of House rule XIII the results of each record
vote on an amendment or motion to report, together with the names of
those voting for and against, are printed below:
Rules Committee record vote No. 56
Date: November 28, 2001.
Measure: H.R. 3210.
Motion by: Mr. Hastings (FL).
Summary of motion: To make in order the amendment by Representative
Crowley to include personal lines of property and casualty insurance in
the bill, in addition to commercial lines of property and casualty
insurance.
Results: Defeated 3 to 8.
Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay;
Diaz-Balart--Nay; Hastings (WA)--Nay; Sessions--Nay; Reynolds--Nay;
Hall--Yea; Slaughter--Yea; Hastings (FL)--Yea; Dreier--Nay.
Rules Committee record vote No. 57
Date: November 28, 2001.
Measure: H.R. 3210.
Motion by: Mr. Hastings (FL).
Summary of motion: To make in order the amendment by Representatives
Lee, Gutierrez, Frank, Meeks, Israel, and Sandlin to require any
insurance company wishing to benefit from the provisions in the act to
first agree to, and then provide, information on race, ethnicity, gender
and location of their policyholders to the Federal Reserve, who will
share the information with the Secretary of the Treasury. The amendment
requires the insurance company to agree to comply with the data
disclosure provision either one month after date of enactment or
December 31, 2001, whichever is later, and actually provide the data one
year after date of enactment in order to be eligible for future
benefits. The amendment applies the requirements to commercial property
and casualty and life insurance.
Results: Defeated 3 to 8.
Vote by Members: Goss--Nay; Linder--Nay; Pryce--Nay;
Diaz-Balart--Nay; Hastings (WA)--Nay; Sessions--Nay; Reynolds--Nay;
Hall--Yea; Slaughter--Yea; Hastings (FL)--Yea; Dreier--Nay.
Rules Committee record vote No. 58
Date: November 28, 2001.
Measure: H.R. 3210.
Motion by: Mr. Goss.
Summary of motion: To report the resolution.
Results: Agreed to 8 to 0, with 3 voting present.
Vote by Members: Goss--Yea; Linder--Yea; Pryce--Yea;
Diaz-Balart--Yea; Hastings (WA)--Yea; Sessions--Yea; Reynolds--Yea;
Hall--Present; Slaughter--Present; Hastings (FL)--Present; Dreier--Yea.
SUMMARY OF AMENDMENT MADE IN ORDER UNDER THE RULE
(Summary derived from information provided by sponsors.)
LaFalce--Democratic Substitute. Includes an industry deductible, to
be met by individual company retention and industry-wide assessment, of
$5 billion in Year 1, increasing to $10 billion in Year 2 if no event
occurs in Year 1. Requires each company to meet its deductible before
receiving federal assistance. Requires terrorism coverage as part of
commercial property and casualty insurance, contains no limitation on
tort actions or recoveries, or tax provisions. Requires the Secretary of
the Treasury to provide financial assistance to commercial property and
casualty insurers to cover insured losses resulting from terrorist acts.
Also provides that: individual companies retain losses of up to 7% of
their net premiums, until the immediate industry-wide deductible is met;
federal financial assistance covers 90 percent of losses over the
deductible (no first dollar payment); amounts over the industry
deductible, up to $20 billion, would be repaid by property and casualty
insurers over time; annual repayments would be limited to 3 percent of
insurers' written premiums; financial assistance in amounts over $20
billion may be repaid by a surcharge on policyholders. Requires the
Secretary, in determining whether to establish a surcharge on
policyholders, to consider the cost to the taxpayer, economic
conditions, affordability of insurance, and other factors. Includes
studies on the impact of terrorism on the life insurance industry and on
the advisability of establishing a terrorism reinsurance pool.
TEXT OF AMENDMENT MADE IN ORDER UNDER THE RULE
AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE LAFALCE OF NEW YORK, OR A
DESIGNEE, DEBATABLE FOR 60 MINUTES
Strike all after the enacting clause and insert the following:
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. Authority of Secretary of the Treasury.
Sec. 4. Submission of premium information to Secretary.
Sec. 5. Initial and subsequent triggering determinations.
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. Application to self-insurance arrangements and offshore
insurers and reinsurers.
Sec. 11. Requirement to provide terrorism coverage.
Sec. 12. State preemption.
Sec. 13. Consistent State guidelines for coverage for acts of terrorism.
Sec. 14. Consultation with State insurance regulators and NAIC.
Sec. 15. Study of potential effects of terrorism on life insurance
industry.
Sec. 16. Railroad and trucking insurance study.
Sec. 17. Study of reinsurance pool system for future acts of terrorism.
Sec. 18. Definitions.
Sec. 19. Covered period and extension of program.
Sec. 20. 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 in a single day;
(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 and 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 and reinsurance 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
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) terrorism insurance plays an important role in the efficient
functioning of the economy and the financing of commercial property
acquisitions and new construction and, therefore, the Congress intends
to continue to monitor, review, and evaluate the private terrorism
insurance and reinsurance marketplace to determine whether additional
action is necessary to maintain the long-term stability of the real
estate and capital markets.
SEC. 3. AUTHORITY OF SECRETARY OF THE TREASURY.
The Secretary of the Treasury shall be responsible for carrying out a
program for financial assistance for commercial property and casualty
insurers, as provided in this Act.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO SECRETARY.
To the extent such information is not otherwise available to the
Secretary, the Secretary may require each insurer to submit, to the
Secretary or to the NAIC, a statement specifying the net premium amount
of coverage written by such insurer under each line of commercial
property and casualty insurance sold by such insurer during such periods
as the Secretary may provide.
SEC. 5. INITIAL AND SUBSEQUENT TRIGGERING DETERMINATIONS.
(a) In General.--For purposes of this Act, a ``triggering
determination'' is a determination by the Secretary that--
(1) an act of terrorism has occurred during the covered period; and
(2) the industry-wide losses resulting from such occurrence or from
multiple occurrences of acts of terrorism all occurring during the
covered period, exceed $100,000,000.
(b) Determinations Regarding Occurrences.--The Secretary, after
consultation with the Attorney General of the United States and the
Secretary of State, shall have the sole authority which may not be
delegated or designated to any other officer, employee, or position, for
determining whether--
(1) an occurrence was caused by an act of terrorism; and
(2) 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
Secretary shall provide financial assistance to commercial insurers in
accordance with this section to the extent provided under this section
to cover eligible insured losses resulting from acts of terrorism, which
shall be repaid in accordance with subsection (g).
(b) Industry Obligation Amount.--For purposes of this section, the
industry obligation amount in connection with a triggering determination
is the following amount:
(1) Initial covered period.--In the case of a triggering
determination occurring during the covered period specified in section
19(a), the difference between--
(A) $5,000,000,000; and
(B) the aggregate amount of industry-wide losses resulting from the
triggering events involved in any triggering determinations preceding
such triggering determination.
(2) Extended covered period.--If the Secretary exercises the
authority under section 19(b) to extend the covered period, in the case
of a triggering determination occurring during the portion of the
covered period consisting of such extension, the difference between--
(A) $10,000,000,000; and
(B) the aggregate amount of industry-wide losses resulting from the
triggering events involved in any triggering determinations preceding
such triggering determination.
(c) Eligible Insured Losses.--For purposes of this section, the term
``eligible insured losses'' means, with respect to a triggering
determination, any insured losses resulting from the triggering event
involved that are in excess of the industry obligation amount for such
triggering determination.
(d) Amount of Financial Assistance.--Subject to subsection (e), with
respect to a triggering determination, financial assistance shall be
made available under this section to each commercial insurer in an
amount equal to 90 percent of the amount of the eligible insured losses
of the insurer as a result of the triggering event involved.
(e) Limitations.--
(1) Aggregate limitation.--The aggregate amount of financial
assistance provided pursuant to this section may not exceed
$100,000,000,000.
(2) Notice to congress.--The Secretary shall notify the Congress if
the amount of financial assistance provided pursuant to this section
reaches $100,000,000,000 and the Congress shall determine the procedures
for, and the source of, any additional payments of financial assistance
to cover such additional insured losses.
(3) Default on assessments and surcharges.--The Secretary 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 this section or section 7 to pay assessments or under
section 8 to collect surcharges.
(f) Annual Limit on Individual Insurer Liability.--
(1) Definitions.--For purposes of this subsection, the following
definitions shall apply:
(A) Annual insurer limit.--The term ``annual insurer limit'' means,
with respect to a commercial insurer and a program year, the amount
equal to 7 percent of the aggregate premium amount of all commercial
property and casualty insurance coverage, written by such insurer during
the calendar year preceding such program year, under all lines of
commercial property and casualty insurance.
(B) Limitable losses.--The term ``limitable losses'' means, for any
program year, the industry-wide losses in such program year that do not
exceed the dollar amount specified in subsection (b)(1)(A) or (b)(2)(A),
as applicable to the program year.
(C) Program year.--The term ``program year'' means the period
beginning on the date of the enactment of this Act and ending on January
1, 2003. If the Secretary extends the covered period pursuant to section
20(b), each calendar year (or portion thereof) covered by such extension
shall be a program year for purposes of this subsection.
(2) Triggering of industry assessments.--If, for any program year,
the amount of the limitable losses for such program year that are
incurred by any single commercial insurer exceed the annual insurer
limit for the commercial insurer for such program year, the Secretary
shall apportion the amount of such excess limitable losses pursuant to
assessments under paragraph (3).
(3) Industry assessments to cover losses exceeding loss limit.--For
each program year, the Secretary shall, as soon as practicable,
determine the aggregate amount of excess limitable losses described in
paragraph (2), for all commercial insurers. Subject to paragraph (4),
the Secretary shall assess, to each commercial insurer not described in
paragraph (2), a portion of such aggregate limitable losses based on the
proportion, written by each such commercial insurer, of the aggregate
written premium for the calendar year preceding such program year.
(4) Operation of annual insurer limit to assessments.--The sum of
the amount of limitable losses incurred by a commercial insurer in a
program year and the aggregate amount of an assessment under this
subsection to such insurer may not in any case exceed the annual insurer
limit for the insurer.
(5) Notice.--Upon determining the amount of the assessments under
this subsection for a program year, the Secretary shall, as soon as
practicable, provide written notice to each commercial insurer that is
subject to an assessment of the amount of the assessment and the
deadline pursuant to paragraph (6) for payment of the assessment.
(6) Payment.--Each commercial insurer that is subject to an
assessment under this subsection shall pay to the Secretary the amount
of the assessment not later than 60 days after the Secretary provides
notice of the assessment under paragraph (5).
(7) Distribution of assessment amounts.--Upon receiving payment of
assessments under this subsection, the Secretary shall promptly
distribute all such amounts among commercial insurers described in
paragraph (2), based on limitable losses incurred in excess of the
annual insurer limits for such insurers. The Secretary may take such
actions, including making such adjustments and reimbursements, as may be
necessary to carry out the purposes of this subsection.
(g) Repayment.--Financial assistance made available under this
section shall be repaid through assessments under section 7 collected by
the Secretary and surcharges remitted to the Secretary under section 8.
Any such amounts collected or remitted shall be deposited into the
general fund of the Treasury.
(h) Final Netting.--The Secretary shall have sole discretion to
determine the time at which claims relating to any insured loss or act
of terrorism shall become final.
(i) Finality of Determinations.--Any determination of the Secretary
under this section shall be final, and shall not be subject to judicial
review.
(j) 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 a portion of the financial assistance made
available under section 6 in connection with such determination.
(b) Aggregate Assessment.--Pursuant to a triggering determination,
the Secretary shall determine the aggregate amount (if any) to be
assesseed under this section among all commercial insurers, which shall
be equal to the lesser of--
(1) the difference between--
(A) $20,000,000,000; and
(B) the dollar amount specified in paragraph (1)(A) or (2)(A) of
section 6(b), as applicable for such triggering determination; and
(2) the amount of financial assistance paid under section 6 in
connection with the triggering determination.
(c) Method and Timing.--
(1) In general.--The aggregate assessment amount in connection with
a triggering determination shall be assessed through one or more, as may
be necessary pursuant to paragraph (3), assessments under this section.
(2) Timing.--An assessment under this section in connection with a
triggering determination shall be imposed only upon the expiration of
any 12-month period beginning after such determination during which no
other assessments under this section have been imposed.
(3) Limitation.--The aggregate amount of any assessments imposed
under this section on any single commercial insurer during any 12-month
period shall not exceed the amount that is equal to 3 percent of the net
premium for such insurer for such period.
(d) Allocation.--The portion of the aggregate amount of any
assessment under this section that is allocated to each commercial
insurer shall be based on the ratio that the net premium written by such
commercial insurer during the year during which the assessment is
imposed bears to the aggregate written premium for such year, subject to
section 9 and the limitation under subsection (c)(3) of this section.
(e) Notice and Obligation to Pay.--
(1) Notice.--As soon as practicable after any triggering
determination, the Secretary shall notify each commercial insurer in
writing of an assessment under this section, which notice shall include
the amount of the assessment allocated to such insurer.
(2) Effect of notice.--Upon notice to a commercial insurer, the
commercial insurer shall be obligated to pay to the Secretary, not later
than 60 days after receipt of such notice, the amount of the assessment
on such commercial insurer.
(3) Failure to make timely payment.--If any commercial insurer fails
to pay an assessment under this section before the deadline established
under paragraph (2) for the assessment, the Secretary may take either or
both of the following actions:
(A) Civil monetary penalty.--Assess a civil monetary penalty
pursuant to section 9(d) upon such insurer.
(B) Interest.--Require such insurer to pay interest, at such rate as
the Secretary considers appropriate, on the amount of the assessment
that was not paid before the deadline established under paragraph (2).
(f) Administrative Flexibility.--
(1) Adjustment of assessments.--The Secretary may provide for or
require estimations of amounts under this section and may provide for
subsequent refunds or require additional payments to correct such
estimations, as appropriate.
(2) Deferral of contributions.--The Secretary may defer the payment
of part or all of an assessment required under this section to be paid
by a commercial insurer, but only to the extent that the Secretary
determines that such deferral is necessary to avoid the likely
insolvency of the commercial insurer.
(3) Timing of assessments.--The Secretary shall make adjustments
regarding the timing and imposition of assessments (including the
calculation of net premiums and aggregate written premium) as
appropriate for commercial insurers that provide commercial property and
casualty insurance on a non-calendar year basis.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) Determination of Imposition and Collection.--
(1) In general.--If, pursuant to a triggering determination, the
Secretary determines that the aggregate amount of financial assistance
provided pursuant to section 6 exceeds the amount determined pursuant to
section 7(b)(1), the Secretary shall consider and weigh the factors
under paragraph (2) to determine the extent to which a surcharge under
this section should be established.
(2) Factors.--The factors under this paragraph are--
(A) the ultimate costs to taxpayers if a surcharge under this
section is not established;
(B) the economic conditions in the commercial marketplace;
(C) the affordability of commercial insurance for small- and
medium-sized business; and
(D) such other factors as the Secretary considers appropriate.
(3) Policyholder premium.--Any amount established by the Secretary
as a surcharge under this section shall be established and imposed as a
policyholder premium surcharge 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.
(4) Collection.--The Secretary shall provide for commercial insurers
to collect surcharge amounts established under this section and remit
such amounts collected to the Secretary.
(b) Amount and Duration.--Subject to subsection (c), 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 Secretary determines is necessary to recover the
aggregate amount of financial assistance provided under section 6 in
connection with the triggering determination that exceeds the amount
determined pursuant to section 7(b)(1).
(c) Percentage Limitation.--The surcharge under this section
applicable to commercial property and casualty insurance coverage may
not exceed, on an annual basis, the amount equal to 3 percent of the
premium charged for such coverage.
(d) Other Terms.--The surcharge under this section shall--
(1) be based on a percentage of the premium amount charged for
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).
(e) Exclusions.--For purposes of this section, commercial property
and casualty insurance does not include any reinsurance provided to
primary insurance companies.
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) Manner and Method.--
(1) In general.--Except to the extent specified in such sections,
the Secretary 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 and surcharge requirements,
collecting payments from and surcharges through commercial insurers, and
refunding of any excess amounts paid or crediting such amounts against
future assessments.
(2) Effect of assessments and surcharges on urban and smaller
commercial and rural areas and different lines of insurance.--In
determining the method and manner of imposing assessments under section
7 and surcharges under section 8, including the amount of such
assessments and surcharges, the Secretary shall take into
consideration--
(A) the economic impact of any such assessments and surcharges on
commercial centers of urban areas, including the effect on commercial
rents and commercial insurance premiums, particularly rents and premiums
charged to small businesses, and the availability of lease space and
commercial insurance within urban areas;
(B) the risk factors related to rural areas and smaller commercial
centers, including the potential exposure to loss and the likely
magnitude of such loss, as well as any resulting cross-subsidization
that might result; and
(C) the various exposures to terrorism risk for different lines of
commercial property and casualty insurance.
(b) Timing of Coverages and Assessments.--The Secretary 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) Adjustment.--The Secretary may adjust the assessments charged
under section 7 or the percentage imposed under the surcharge under
section 8 at any time, as the Secretary considers appropriate to protect
the national interest, which may include avoiding unreasonable economic
disruption or excessive market instability and avoiding undue burdens on
small businesses.
(d) Civil Monetary Penalty.--
(1) In general.--The Secretary may assess a civil monetary penalty
in an amount not exceeding the amount under paragraph (2) against any
commercial insurer that the Secretary determines, on the record after
opportunity for a hearing--
(A) has failed to pay an assessment under section 7 in accordance
with the requirements of, or regulations issued, under this Act;
(B) has failed to charge, collect, or remit surcharges under section
8 in accordance with the requirements of, or regulations issued under,
this Act;
(C) has intentionally provided to the Secretary erroneous
information regarding premium or loss amounts; or
(D) has otherwise failed to comply with the provisions of, or the
regulations issued under, this Act.
(2) Amount.--The amount under this paragraph is the greater of
$1,000,000 and, in the case of any failure to pay, charge, collect, or
remit amounts in accordance with this Act or the regulations issued
under this Act, such amount in dispute.
SEC. 10. APPLICATION TO SELF-INSURANCE ARRANGEMENTS AND
OFFSHORE INSURERS AND REINSURERS.
(a) Self-Insurance Arrangements.--The Secretary 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.
(b) Offshore Insurers and Reinsurers.--The Secretary shall ensure
that the provisions of this Act are applied as appropriate to any
offshore or non-admitted entities that provide commercial property and
casualty insurance.
SEC. 11. REQUIREMENT TO PROVIDE TERRORISM COVERAGE.
The Secretary shall require each commercial insurer to include, in
each policy for commercial property and casualty insurance coverage made
available, sold, or otherwise provided by such insurer, coverage for
insured losses resulting from the occurrence of an act of terrorism
that--
(1) does not differ materially from the terms, amounts, and other
coverage limitations applicable to losses arising from events other than
acts of terrorism;
(2) may not be eliminated, waived, or excluded, by mutual agreement,
request or consent of the policyholder, or otherwise; and
(3) that meets any other criteria that the Secretary may reasonably
prescribe.
SEC. 12. 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 this Act or under any regulations issued by the Secretary.
(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.--
(1) In general.--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.
(2) Subsequent review authority.--Paragraph (1) 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.
(3) Treatment of prior review provisions.--Any authority for prior
review and action by a State regulator preempted under paragraph (1)
shall be deemed to be authority to conduct a subsequent review and
action on such filings.
SEC. 13. 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 Secretary, should develop
appropriate definitions for acts of terrorism that are consistent with
this Act and appropriate standards for making determinations regarding
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 Secretary 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 Secretary should adopt
further 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 Secretary 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
Secretary determines that such guidelines have not been so developed and
adopted, the Secretary shall consider adopting, and may adopt, such
guidelines on a national basis in a manner that supercedes 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 Secretary 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 Secretary 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. 14. CONSULTATION WITH STATE INSURANCE REGULATORS AND NAIC.
(a) In General.--The Secretary shall consult with the State insurance
regulators and the NAIC in carrying out this Act.
(b) Financial Assistance, Assessments, and Surcharges.--The Secretary
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.
(c) Investigating and Auditing Claims.--The Secretary may, in
consultation with the State insurance regulators and the NAIC,
investigate and audit claims of insured losses by commercial insurers
and otherwise require verification of amounts of premiums or losses, as
appropriate.
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 7 members, as
follows:
(A) The Secretary of the Treasury or the designee of the Secretary.
(B) The Chairman of the Board of Governors of the Federal Reserve
System or the designee of the Chairman.
(C) The Assistant to the President for Homeland Security.
(D) 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 the
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 losses 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 pursuant to subsection (e).
SEC. 16. RAILROAD AND TRUCKING INSURANCE STUDY.
The Secretary of the Treasury shall conduct a study to determine how
the Federal Government can address a possible crisis in the availability
and affordability of railroad and trucking insurance by making such
insurance for acts of terrorism available on commercially reasonable
terms. Not later than 120 days after the date of the enactment of this
Act the Secretary shall submit to the Congress a report regarding the
results and conclusions of the study.
SEC. 17. STUDY OF REINSURANCE POOL SYSTEM FOR FUTURE ACTS OF TERRORISM.
(a) Study.--The Secretary, the Board of Governors of the Federal
Reserve System, and the Comptroller General of the United States shall
jointly conduct a study on the advisability and effectiveness of
establishing a reinsurance pool system relating to future acts of
terrorism to replace the program provided for under this Act.
(b) Consultation.--In conducting the study under subsection (a), the
Secretary, the Board of Governors of the Federal Reserve System, and the
Comptroller General shall consult with (1) academic experts, (2) the
United Nations Secretariat for Trade and Development, (3)
representatives from the property and casualty insurance industry, (4)
representatives from the reinsurance industry, (5) the NAIC, and (6)
such consumer organizations as the Secretary considers appropriate.
(c) Report.--Not later than 6 months after the date of the enactment
of this Act, the Secretary, the Board of Governors of the Federal
Reserve System, and the Comptroller General shall jointly submit a
report to the Congress on the results of the study under subsection (a).
SEC. 18. 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 Secretary determines meets the requirements under subparagraph (B),
as such requirements are further defined and specified by the Secretary
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, or in the case of a domestic United States air carrier or a
United States flag vessel (or a vessel based principally in the United
States on which United States income tax is paid and whose insurance
coverage is subject to regulation in the United States), in or outside
the United States;
(iii) is committed by a person or group of persons or associations
who are recognized, either before or after such act, by the Department
of State or the Secretary as an international terrorist group or have
conspired with such a group or the group's agents or surrogates;
(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 or any segment of the economy of United
States, by coercion; and
(v) is not considered an act of war, except that this clause shall
not apply with respect to any coverage for workers compensation.
(2) 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.
(3) 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 under all lines of commercial property and casualty insurance.
(4) 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 provides commercial property and casualty insurance. Such
term includes any affiliates of a commercial insurer.
(5) Commercial property and casualty insurance.--
(A) In general.--The term ``commercial property and casualty
insurance'' means insurance or reinsurance, or retrocessional
reinsurance, for persons or properties in the United States against--
(i) loss of or damage to property;
(ii) loss of income or extra expense incurred because of loss of or
damage to property;
(iii) third party liability claims caused by negligence or imposed
by statute or contract, including workers compensation; or
(iv) loss resulting from debt or default of another.
(B) Exclusions.--Such term does not include--
(i) insurance for homeowners, tenants, private passenger nonfleet
automobiles, mobile homes, or other insurance for personal, family, or
household needs;
(ii) insurance for professional liability, including medical
malpractice, errors and omissions, or directors' and officers'
liability; or
(iii) health or life insurance.
(6) 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 Secretary 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.
(7) Covered period.--The term ``covered period'' has the meaning
given such term in section 19.
(8) Industry-wide losses.--The term ``industry-wide losses'' means
the aggregate insured losses sustained by all insurers from coverage
written under all lines of commercial property and casualty insurance.
(9) Insured loss.--The term ``insured loss'' means any loss, net of
reinsurance and retrocessional reinsurance, covered by commercial
property and casualty insurance.
(10) NAIC.--The term ``NAIC'' means the National Association of
Insurance Commissioners.
(11) Net premium.--The term ``net premium'' means, with respect a
commercial insurer and a year, the aggregate premium amount collected by
such commercial insurer for all commercial property and casualty
insurance coverage written during such year under all lines of
commercial property and casualty insurance by such commercial insurer,
less any premium paid by such commercial insurer to other commercial
insurers to insure or reinsure those risks.
(12) Secretary.--The term ``Secretary'' means the Secretary of the
Treasury.
(13) 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.
(14) State insurance regulator.--The term ``State insurance
regulator'' means, with respect to a State, the principal insurance
regulatory authority of the State.
(15) Triggering determination.--The term ``triggering
determination'' has the meaning given such term in section 5(a).
(16) Triggering event.--The term ``triggering event'' means, with
respect to a triggering determination, the occurrence of an act of
terrorism, or the occurrence of such acts, that caused the insured
losses resulting in such triggering determination.
(17) United states.--The term ``United States'' means, collectively,
the States (as such term is defined in this section).
SEC. 19. COVERED PERIOD AND EXTENSION OF PROGRAM.
(a) Covered Period.--Except to the extent provided otherwise under
subsection (b), for purposes of this Act, the term ``covered period''
means the period beginning on the date of the enactment of this Act and
ending on January 1, 2003.
(b) Extension of Program.--If the Secretary determines that extending
the covered period is necessary to ensure the adequate availability in
the United States of commercial property and casualty insurance coverage
for acts of terrorism, the Secretary may, subject to subsection (c),
extend the covered period by not more than two years.
(c) Report.--The Secretary may exercise the authority under
subsection (b) to extend the covered period only if the Secretary
submits a report to the Congress providing notice of and setting forth
the reasons for such extension.
SEC. 20. REGULATIONS.
The Secretary shall issue any regulations necessary to carry out this
Act.
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