[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3210 Reported in House (RH)]

                                                 Union Calendar No. 181
107th CONGRESS
  1st Session
                                H. R. 3210

                  [Report No. 107-300, Parts I and II]

   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

                           November 19, 2001

  Reported from the Committee on Financial Services with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           November 19, 2001

 Referral to the Committee on the Budget extended for a period ending 
                    not later than November 26, 2001

                           November 19, 2001

  Referred to the Committee on the Judiciary for a period ending not 
 later than November 26, 2001, for consideration of such provisions of 
    the bill and amendment as fall within the jurisdiction of that 
               committee pursuant to clause 1(k), rule X

                           November 19, 2001

    Reported from the Committee on Ways and Means with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                           in boldface roman]

                           November 26, 2001

Additional sponsors: Mr. Leach, Ms. Hart, Mr. Bereuter, Mr. LaTourette, 
                         and Ms. Pryce of Ohio

                           November 26, 2001

Committees on the Budget and the Judiciary discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed
    [For text of introduced bill, see copy of bill as introduced on 
                           November 1, 2001]

_______________________________________________________________________

                                 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. Authority of Secretary of the Treasury.
Sec. 4. Submission of premium information to Secretary.
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. Application to self-insurance arrangements and offshore 
                            insurers and reinsurers.
Sec. 11. Reserve for terrorism coverage under commercial lines of 
                            business.
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. Sovereign immunity protections.
Sec. 16. Study of potential effects of terrorism on life insurance 
                            industry.
Sec. 17. Railroad insurance study.
Sec. 18. Study of reinsurance pool system for future acts of terrorism.
Sec. 19. Definitions.
Sec. 20. Extension of program.
Sec. 21. 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 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) in addition, it is necessary to repeal portions of the 
        tax law which discourage the insurance market from developing 
        the necessary reserves to handle possible future losses due to 
        acts of terrorism.

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 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 Secretary 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 Secretary that the insured 
losses resulting from the occurrence of an act of terrorism during the 
covered period (as such term is defined in subsection (b)), or the 
aggregate insured losses resulting from multiple occurrences of acts of 
terrorism all occurring during the covered period, meet the 
requirements under either of the following paragraphs:
            (1) Industry-wide trigger.--Such industry-wide losses 
        exceed $1,000,000,000.
            (2) Individual insurer trigger.--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 
                Secretary); and
                    (B) 10 percent of the net commercial property and 
                casualty premiums written by such commercial insurer;
        except that this paragraph shall not apply to any commercial 
        insurer that was not providing commercial property and casualty 
        insurance coverage prior to September 11, 2001.
    (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 Occurrences.--For purposes of 
subsection (a), the Secretary 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;
            (2) insured losses from acts of terrorism were caused by 
        one or multiple occurrences; and
            (3) 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 cover insured losses resulting from 
acts of terrorism, which shall be repaid in accordance with subsection 
(e).
    (b) Amount.--
            (1) Industry-wide trigger.--Subject to subsection (c), with 
        respect to a triggering determination under section 5(a)(1), 
        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 insured losses of the insurer as a result of 
        the triggering event involved.
            (2) Individual insurer trigger.--Subject to subsection (c), 
        with respect to a triggering determination under section 
        5(a)(2), financial assistance shall be made available under 
        this section, to each commercial insurer incurring insured 
        losses as a result of the triggering event involved that exceed 
        the amounts under subparagraphs (A) and (B) of such section, in 
        an amount equal to the difference between--
                    (A) 90 percent of the amount of the insured losses 
                of the insurer as a result of such triggering event; 
                and
                    (B) the amount under subparagraph (B) of section 
                5(a)(2).
    (c) Aggregate Limitation.--The aggregate amount of financial 
assistance provided pursuant to this section may not exceed 
$100,000,000,000.
    (d) Limitations.--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 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 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.
    (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 Secretary shall determine the aggregate amount to be assessed among 
all commercial insurers, which shall be equal to the lesser of--
            (1) $20,000,000,000; and
            (2) the amount of financial assistance paid under section 6 
        in connection with the triggering determination.
    (c) Allocation of Assessment.--
            (1) In general.--The Secretary 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 
        Secretary of an assessment under this section, each commercial 
        insurer shall be required to pay to the Secretary, in the 
        manner provided under section 9 by the Secretary, 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 net 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 Secretary 
                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.
            (4) Administrative flexibility.--
                    (A) Timing of assessments.--Assessments under this 
                section in connection with a triggering determination 
                shall be made, to the extent that the Secretary 
                considers practicable and appropriate, at the beginning 
                of the calendar year immediately following the 
                triggering determination.
                    (B) Estimates and corrections.--If the Secretary 
                makes an assessment at a time other than provided under 
                subparagraph (A), the Secretary may--
                            (i) require commercial insurers to estimate 
                        their net premium written 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.
            (5) Deferral of contributions.--The Secretary 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 Secretary determines that such deferral is 
        necessary to avoid the likely insolvency of the commercial 
        insurer.

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 $20,000,000,000, 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.--The 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 to 
cover insured losses resulting from the triggering event that exceed 
$20,000,000,000.
    (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 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).
    (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.--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 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.
            (2) Effect of assessments and surcharges on urban 
        commercial centers.--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 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) 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.

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. 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 joint pooled 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 premium for insurance for 
                                commercial lines of business which does 
                                not exclude coverage for acts of 
                                terrorism bears to the aggregate 
                                written premium for insurance (without 
                                regard to terrorism coverage) for all 
                                companies for commercial lines of 
                                business.
                                    ``(II) 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.
                                    ``(III) Aggregate written premiums 
                                and net premiums.--For purposes of this 
                                clause, the terms `aggregate written 
                                premium' and `net premium' have the 
                                meanings given such terms in section 19 
                                of the Terrorism Risk Protection Act.
                            ``(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 net 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 
                Secretary of the Treasury 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. 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.--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. 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 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 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 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 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.

SEC. 15. 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 or coverage claimed by or 
against 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.
Nothing in this subsection may be construed to limit an action by an 
injured party for damages other than a claim for commercial property 
and casualty insurance resulting from an act of terrorism causing a 
triggering determination.
    (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 the Secretary 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.
    (e) Exclusion.--Nothing in this section shall apply to, or in any 
way limit, the liability of any person who--
            (1) attempts to commit, knowingly participates in, 
        knowingly and intentionally aids and abets, or commits, any act 
        of terrorism or any criminal act related to or resulting from 
        an act of terrorism that caused the insured losses resulting in 
        the triggering determination; or
            (2) knowingly participates in a conspiracy to commit any 
        act of terrorism or any criminal act resulting from or related 
        to an act of terrorism that caused the insured losses resulting 
        in the triggering determination.
    (f) Satisfaction of Judgments From Seized Assets of Terrorists.--
All assets of terrorists or terrorist organizations seized or frozen by 
the United States in accordance with law shall be liable for 
satisfaction of judgments rendered for acts of terrorism, in 
proportions determined by the courts.

SEC. 16. 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 
        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 as provided for in subsection (e).

SEC. 17. RAILROAD 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 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. 18. STUDY OF REINSURANCE POOL SYSTEM FOR FUTURE ACTS OF TERRORISM.

    (a) Study.--The Secretary of the Treasury, the Board of Governors 
of the Federal Reserve System, and the Comptroller General of the 
United States shall jointly conduct a study on--
            (1) 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; and
            (2) the potential effects of the amendments made by section 
        11 of this Act on the availability of terrorism insurance 
        coverage.
    (b) Consultation.--In conducting the study under subsection (a), 
the Secretary of the Treasury, 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. 19. 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, 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 a 
                        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 by 
                        coercion; and
                            (v) is not considered an act of war.
            (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 for persons or 
        properties in the United States 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 5(b).
            (8) 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.
            (9) Insured loss.--The term ``insured loss'' means any loss 
        in the United States 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 for persons or properties in the United States 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. 20. EXTENSION OF PROGRAM.

    (a) Authority.--If the Secretary 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 Secretary may, subject to subsection (c), provide 
that the provisions of this Act shall continue to apply with respect to 
calendar year 2003. If the Secretary extends such applicability to 
2003, the Secretary may, in addition, extend such applicability to 
calendar year 2004.
    (b) Covered Period.--If the Secretary exercises the authority under 
subsection (a), notwithstanding section 5(b) and 19(7), each of the 
calendar years to which the Secretary extends the applicability of this 
Act shall be considered to be a covered period for purposes of this 
Act.
    (c) Report.--The Secretary may exercise the authority under 
subsection (a) to extend the applicability of this Act to 2003 or 2004 
only if the Secretary submits a report to the Congress providing notice 
of and setting forth the reasons for such extension for such specific 
year.

SEC. 21. REGULATIONS.

    The Secretary shall issue any regulations necessary to carry out 
this Act.

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. Study of reserves for property and casualty insurance for 
                            terrorist or other catastrophic events.
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 promptly to conduct a 
        study of whether there is a need for reserves for property and 
        casualty insurance for terrorist or other catastrophic events.

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. STUDY OF RESERVES FOR PROPERTY AND CASUALTY INSURANCE FOR 
              TERRORIST OR OTHER CATASTROPHIC EVENTS.

    (a) In General.--The Secretary of the Treasury shall conduct a 
study of issues relating to permitting property and casualty insurance 
companies to establish deductible reserves against losses for future 
acts of terrorism, including--
            (1) whether such tax-favored reserves would promote (A) 
        insurance coverage of risks of terrorism and (B) the 
        accumulation of additional resources needed to satisfy 
        potential claims resulting from such risks,
            (2) the lines of business for which such reserves would be 
        appropriate, including whether such reserves should be applied 
        to personal or commercial lines of business,
            (3) how the amount of such reserves would be determined,
            (4) how such reserves would be administered,
            (5) a comparison of the Federal tax treatment of such 
        reserves with other insurance reserves permitted under Federal 
        tax laws,
            (6) an analysis of the use of tax-favored reserves for 
        catastrophic events, including acts of terrorism, under the tax 
        laws of foreign countries, and
            (7) whether it would be appropriate to permit similar 
        reserves for other future catastrophic events, such as natural 
        disasters, taking into account the factors under the preceding 
        paragraphs.
    (b) Report.--Not later than 4 months after the date of the 
enactment of this Act, the Secretary of the Treasury shall submit a 
report to Congress on the results of the study under subsection (a), 
together with recommendations for amending the Internal Revenue Code of 
1986 or other appropriate action.

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.
                    (B) 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.
                                                 Union Calendar No. 181

107th CONGRESS

  1st Session

                               H. R. 3210

                  [Report No. 107-300, Parts I and II]

_______________________________________________________________________

                                 A BILL

   To ensure the continued financial capacity of insurers to provide 
                   coverage for risks from terrorism.

_______________________________________________________________________

                           November 19, 2001

  Reported from the Committee on Financial Services with an amendment

 Referral to the Committee on the Budget extended for a period ending 
                    not later than November 26, 2001

  Referred to the Committee on the Judiciary for a period ending not 
 later than November 26, 2001, for consideration of such provisions of 
    the bill and amendment as fall within the jurisdiction of that 
               committee pursuant to clause 1(k), rule X

    Reported from the Committee on Ways and Means with an amendment

                           November 26, 2001

Committees on the Budget and the Judiciary discharged; committed to the 
 Committee of the Whole House on the State of the Union and ordered to 
                               be printed