Short Title

This Act may be cited as the

Terrorism Risk Insurance Program Reauthorization Act of 2014

Extension of Terrorism Insurance Program

Section 108(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking December 31, 2014 and inserting December 31, 2021.

Federal share

Section 103(e)(1)(A) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by inserting and beginning in the calendar year that follows the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2014on January 1, 2016, shall decrease by 1 percent1 percentage point per calendar year until equal to 80 percent after 85 percent.

Recoupment of Federal share of compensation under the program

Section 103(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—(1)in paragraph (6), in the matter preceding subparagraph (A), by striking shall be and all that follows through subparagraph (E) and inserting shall be $27,500,000,000 and beginning in the calendar year that follows the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2014 shall increase by $2,000,000,000 per calendar year until equal to $37,500,000,000.; and

“shall be the lesser of—

(A)$27,500,000,000, as such amount is adjusted pursuant to this paragraph; and(B)the aggregate amount, for all insurers, of insured losses during such calendar year,

provided that beginning in the calendar year that follows the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2014, the amount set forth under subparagraph (A) shall increase by $2,000,000,000 per calendar year until equal to $37,500,000,000.

;

(2)in paragraph (7)—(A)in subparagraph (A)—(i)in the matter preceding clause (i), by striking for each of the periods referred to in subparagraphs (A) through (E) of paragraph 6(6); and(ii)in clause (i), by striking for such period;(B)in subparagraph (B)—(i)by striking for any period referred to in any of subparagraphs (A) through (E) of paragraph (6); and(ii)by striking for such period;(B)by striking subparagraph (B) and inserting the following:

(B)[Reserved.]

;

(C)in subparagraph (C), by striking occurring during any of the periods referred to in any of subparagraphs (A) through (E) of paragraph (6); and(C)in subparagraph (C)—(i)by striking occurring during any of the periods referred to in any of subparagraphs (A) through (E) of paragraph (6), terrorism loss risk-spreading premiums in an amount equal to 133 percent and inserting , terrorism loss risk-spreading premiums in an amount equal to 135.5 percent; and(ii)by inserting as calculated under subparagraph (A) after mandatory recoupment amount; and(D)in subparagraph (E)(i)—(i)in subclause (I)—(I)by striking 2010 and inserting 2017; and(II)by striking 2012 and inserting 2019;(ii)in subclause (II)—(I)by striking 2011 and inserting 2018;(II)by striking 2012 and inserting 2019; and(III)by striking 2017 and inserting 2024; and(iii)in subclause (III)—(I)by striking 2012 and inserting 2019; and(II)by striking 2017 and inserting 2024.

Technical amendments

The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—(1)in section 102—(A)in paragraph (3)—(i)by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively;(ii)in the matter preceding clause (i) (as so redesignated), by striking An entity has and inserting the following:

(A)

In general

An entity has

; and

(iii)by adding at the end the following new subparagraph:

(B)

Rule of construction

An entity, including any affiliate thereof, does not have control over another entity, if, as of the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2014, the entity is acting as an attorney-in-fact, as defined by the Secretary, for the other entity and such other entity is a reciprocal insurer, provided that the entity is not, for reasons other than the attorney-in-fact relationship, defined as having control under subparagraph (A).

;

(AB)in paragraph (7)—(i)by striking subparagraphs (A) through (F) and inserting the following:

(A)the value of an insurer's direct earned premiums during the immediately preceding calendar year, multiplied by 20 percent; and

;

(ii)by redesignating subparagraph (G) as subparagraph (B); and(iii)in subparagraph (B), as so redesignated by clause (ii)—(I)by striking notwithstanding subparagraphs (A) through (F), for the Transition Period or any Program Year and inserting notwithstanding subparagraph (A), for any calendar year; and(II)by striking Period or Program Year and inserting calendar year;(BC)by striking paragraph (11); and(CD)by redesignating paragraphs (12) through (16) as paragraphs (11) through (15), respectively; and(2)in section 103—(A)in subsection (c), by striking Program Year and inserting calendar year;(B)in subsection (e)—(i)in paragraph (1)—(I)in subparagraph (A), as previously amended by section 3—(aa)by striking the Transition Period and each Program Year through Program Year 4 shall be equal to 90 percent, and during Program Year 5 and each Program Year thereafter and inserting each calendar year;(bb)by striking the comma after 80 percent; and(cc)by striking such Transition Period or such Program Year and inserting such calendar year; and(II)in subparagraph (B), by striking exceed and all that follows through clause (ii) and inserting exceed $100,000,000 with respect to such insured losses occurring in the calendar year.;(ii)in paragraph (2)(A), by striking the period beginning on the first day of the Transition Period and ending on the last day of Program Year 1, or during any Program Year thereafter and inserting a calendar year; and(iii)in paragraph (3), by striking the period beginning on the first day of the Transition Period and ending on the last day of Program Year 1, or during any other Program Year and inserting any calendar year; and(C)in subsection (g)(2)—(i)by striking the Transition Period or a Program Year each place that term appears and inserting the calendar year;(ii)by striking such period and inserting the calendar year; and(iii)by striking that period and inserting the calendar year.

Improving the certification process

(a)

Definitions

As used in this section—(1)the term act of terrorism has the same meaning as in section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note);(2)the term certification process means the process by which the Secretary determines whether to certify an act as an act of terrorism under section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note); and(3)the term Secretary means the Secretary of the Treasury.(b)

Study

Not later than 9 months after the date of enactment of this Act, the Secretary shall conduct and complete a study on the certification process.(c)

Required content

The study required under subsection (a) shall include an examination and analysis of—(1)the establishment of a reasonable timeline by which the Secretary must make an accurate determination on whether to certify an act as an act of terrorism;(2)the impact that the length of any timeline proposed to be established under paragraph (1) may have on the insurance industry, policyholders, consumers, and taxpayers as a whole;(3)the factors the Secretary would evaluate and monitor during the certification process, including the ability of the Secretary to obtain the required information regarding the amount of projected and incurred losses resulting from an act which the Secretary would need in determining whether to certify the act as an act of terrorism;(4)the appropriateness, efficiency, and effectiveness of the consultation process required under section 102(1)(A) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) and any recommendations on changes to the consultation process; and(5)the ability of the Secretary to provide guidance and updates to the public regarding any act that may reasonably be certified as an act of terrorism.(d)

Report

Upon completion of the study required under subsection (a), the Secretary shall submit a report on the results of such study to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.(e)

Rulemaking

Section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—(1)by redesignating subparagraph (D) as subparagraph (E); and(2)by inserting after subparagraph (C) the following:

(D)

Timing of certification

Not later than 9 months after the report required under section 6 of the Terrorism Risk Insurance Program Reauthorization Act of 2014 is submitted to the appropriate committees of Congress, the Secretary shall issue final rules governing the certification process, including any timeline applicable to any certification by the Secretary on whether an act is an act of terrorism under this paragraph.

GAO study on upfront premiums

(a)

Study

Not later than 2 years after the date of enactment of this Act, the Comptroller General of the United States shall complete a study on the viability and effects of the Federal Government assessing and collecting upfront premiums on insurers that participate in the Terrorism Insurance Program established under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) (hereafter in this section referred to as the Program).(b)

Required content

The study required under subsection (a) shall examine, but shall not be limited to, the following issues:(1)How the Federal Government could determine the price of such upfront premiums on insurers that participate in the Program.(2)How the Federal Government could collect and manage such upfront premiums.(3)How the Federal Government could ensure that such upfront premiums are not spent for purposes other than claims through the Program.(4)How the assessment and collection of such upfront premiums could affect take-up rates for terrorism risk coverage in different regions and industries and how it could impact small businesses and consumers in both metropolitan and non-metropolitan areas.(5)The effect of collecting such upfront premiums on insurers both large and small.(6)The effect of collecting such upfront premiums on the private market for terrorism risk reinsurance.(7)The size of any Federal Government subsidy insurers may receive through their participation in the Program, taking into account the Program’s current post-event recoupment structure. (c)

Report

Upon completion of the study required under subsection (a), the Comptroller General shall submit a report on the results of such study to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.(d)

Public availability

The study and report required under this section shall be made available to the public in electronic form and shall be published on the website of the Government Accountability Office.