[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3210 Introduced in House (IH)]
107th CONGRESS
1st Session
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
_______________________________________________________________________
A BILL
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
(2) $20,000,000,000.
(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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