[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4314 Reported in House (RH)]







                                                 Union Calendar No. 180
109th CONGRESS
  1st Session
                                H. R. 4314

                          [Report No. 109-327]

  To extend the applicability of the Terrorism Risk Insurance Act of 
                                 2002.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 14, 2005

 Mr. Baker (for himself, Mr. Oxley, Mrs. Kelly, Ms. Pryce of Ohio, Mr. 
   Sessions, Mr. Ferguson, Mr. Renzi, Mr. Fossella, and Mr. Davis of 
  Kentucky) introduced the following bill; which was referred to the 
                    Committee on Financial Services

                            December 6, 2005

                Additional sponsor: Mr. King of New York

                            December 6, 2005

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
    [For text of introduced bill, see copy of bill as introduced on 
                           November 14, 2005]

_______________________________________________________________________

                                 A BILL


 
  To extend the applicability of the Terrorism Risk Insurance Act of 
                                 2002.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Terrorism Risk Insurance Revision 
Act of 2005''.

SEC. 2. EXTENSION OF PROGRAM AND PROGRAM CHANGES.

    (a) In General.--Title I of the Terrorism Risk Insurance Act of 
2002 (15 U.S.C. 6701 note) is amended--
            (1) by striking sections 101 through 106 and inserting the 
        following new sections:

``SEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE.

    ``(a) Findings.--The Congress finds that--
            ``(1) the ability of businesses and individuals to obtain 
        property, casualty, group life, and NBCR insurance at 
        reasonable and predictable prices, in order to spread the risk 
        of both routine and catastrophic loss, is critical to economic 
        growth, urban development, and the construction and maintenance 
        of public and private housing, as well as to the promotion of 
        United States exports and foreign trade in an increasingly 
        interconnected world;
            ``(2) property, casualty, and life insurance firms are 
        important financial institutions, the products of which allow 
        mutualization of risk and the efficient use of financial 
        resources and enhance the ability of the economy to maintain 
        stability, while responding to a variety of economic, 
        political, environmental, and other risks with a minimum of 
        disruption;
            ``(3) the ability of the insurance industry to cover the 
        unprecedented financial risks presented by potential acts of 
        terrorism in the United States can be a major factor in the 
        recovery from terrorist attacks, while maintaining the 
        stability of the economy;
            ``(4) widespread financial market uncertainties have arisen 
        following the terrorist attacks of September 11, 2001, 
        including the absence of information from which financial 
        institutions can make statistically valid estimates of the 
        probability and cost of future terrorist events, and therefore 
        the size, funding, and allocation of the risk of loss caused by 
        such acts of terrorism;
            ``(5) a decision by property, casualty, group life, and 
        NBCR insurers to deal with such uncertainties, either by 
        terminating property, casualty, group life and NBCR coverage 
        for losses arising from terrorist events, or by radically 
        escalating premium coverage to compensate for risks of loss 
        that are not readily predictable, could seriously hamper 
        ongoing and planned construction, property acquisition, and 
        other business projects, generate a dramatic increase in rents, 
        and otherwise suppress economic activity; and
            ``(6) the United States Government should provide temporary 
        financial compensation to insured parties, contributing to the 
        stabilization of the United States economy in a time of 
        national crisis, while the financial services industry develops 
        the systems, mechanisms, products, and programs necessary to 
        create a viable financial services market for private terrorism 
        risk insurance.
    ``(b) Purpose.--The purpose of this title is to establish a 
temporary Federal program that provides for a transparent system of 
shared public and private compensation for insured losses resulting 
from acts of terrorism, in order to--
            ``(1) protect consumers by addressing market disruptions 
        and ensure the continued widespread availability and 
        affordability of property, casualty, group life, and NBCR 
        insurance for terrorism risk; and
            ``(2) allow for a transitional period for the private 
        markets to stabilize, resume pricing of such insurance, and 
        build capacity to absorb any future losses, while preserving 
        State insurance regulation and consumer protections.

``SEC. 102. DEFINITIONS.

    ``In this title, the following definitions shall apply:
            ``(1) Act of terrorism.--
                    ``(A) Certification.--The term `act of terrorism' 
                means any act that is certified by the Secretary, in 
                concurrence with the Secretary of State, and the 
                Attorney General of the United States--
                            ``(i) to be an act of terrorism;
                            ``(ii) to be a violent act or an act that 
                        is dangerous to--
                                    ``(I) human life;
                                    ``(II) property; or
                                    ``(III) infrastructure;
                            ``(iii) to have resulted in damage within 
                        the United States, or outside of the United 
                        States in the case of--
                                    ``(I) an air carrier or vessel 
                                described in paragraph (5)(B); or
                                    ``(II) the premises of a United 
                                States mission; and
                            ``(iv) to have been committed by an 
                        individual or individuals as part of an effort 
                        to coerce the civilian population of the United 
                        States or to influence the policy or affect the 
                        conduct of the United States Government by 
                        coercion.
                    ``(B) Limitation.--No act shall be certified by the 
                Secretary as an act of terrorism if the act is 
                committed as part of the course of a war declared by 
                the Congress, except that this clause shall not apply 
                with respect to any coverage for workers' compensation 
                or group life insurance.
                    ``(C) Determinations final.--Any certification of, 
                or determination not to certify, an act as an act of 
                terrorism under this paragraph shall be final, and 
                shall not be subject to judicial review.
                    ``(D) Nondelegation.--The Secretary may not 
                delegate or designate to any other officer, employee, 
                or person, any determination under this paragraph of 
                whether, during the effective period of the Program, an 
                act of terrorism has occurred.
            ``(2) Affiliate.--The term `affiliate' means, with respect 
        to an insurer, any insurer that owns, is owned by, or is under 
        common ownership with another insurer.
            ``(3) Casualty insurance.--The term `casualty insurance' 
        means--
                    ``(A) insurance, including excess insurance and 
                surety insurance, against legal liability for losses 
                caused by the death, injury, or disability of any 
                person or for damage to property, with provision for 
                medical, hospital and surgical benefits to the injured 
                persons; and
                    ``(B) for the purposes of this Act, does not 
                include any type of commercial automobile or workers' 
                compensation insurance.
            ``(4) Covered line of insurance.--The term `covered line of 
        insurance' means--
                    ``(A) commercial property insurance, commercial 
                casualty insurance, workers' compensation insurance and 
                group life insurance; and
                    ``(B) does not include--
                            ``(i) Federal crop insurance issued or 
                        reinsured under the Federal Crop Insurance Act 
                        (7 U.S.C. 1501 et seq.), or any other type of 
                        crop or livestock insurance that is privately 
                        issued or reinsured;
                            ``(ii) private mortgage insurance (as that 
                        term is defined in section 2 of the Homeowners 
                        Protection Act of 1998 (12 U.S.C. 4901)) or 
                        title insurance;
                            ``(iii) financial guaranty insurance issued 
                        by monoline financial guaranty insurance 
                        corporations;
                            ``(iv) insurance for medical malpractice;
                            ``(v) health or life insurance, except 
                        group life insurance;
                            ``(vi) flood insurance provided under the 
                        National Flood Insurance Act of 1968 (42 U.S.C. 
                        4001 et seq.);
                            ``(vii) reinsurance or retrocessional 
                        reinsurance; or
                            ``(viii) commercial automobile insurance.
            ``(5) Direct earned premium.--The term `direct earned 
        premium' means a direct earned premium for commercial property, 
        commercial casualty, workers' compensation, or group life 
        insurance issued by any insurer for insurance against losses 
        occurring at the locations described in subparagraphs (A) and 
        (B) of paragraph (10).
            ``(6) Exempt commercial purchaser.--The term `exempt 
        commercial purchaser' means any person purchasing commercial 
        insurance that meets the following requirements:
                    ``(A) The person employs or retains a qualified 
                risk manager to negotiate insurance coverage.
                    ``(B) The person meets at least two of the 
                following criteria:
                            ``(i) The person possesses a net worth in 
                        excess of $20,000,000.
                            ``(ii) The person generates annual revenues 
                        in excess of $50,000,000.
                            ``(iii) The person employs more than 500 
                        full time or full time equivalent employees per 
                        individual insured or is a member of affiliated 
                        group employing more than 1,000 employees in 
                        the aggregate.
                            ``(iv) The person pays annual aggregate 
                        nationwide insurance premiums in excess of 
                        $100,000 for covered lines of insurance.
                            ``(v) The person is a not-for-profit 
                        organization or public entity generating annual 
                        budgeted expenditures of at least $30,000,000.
                            ``(vi) The person is a municipality with a 
                        population in excess of 50,000 persons.
            ``(7) Exempt commercial purchaser certification.--The term 
        `exempt commercial purchaser certification' means a written 
        certification that the insurer offering a policy to an exempt 
        commercial purchaser has obtained, at least within the previous 
        12 months, a certification signed by the qualified risk 
        manager, the chief executive officer, or the chief financial 
        officer of the exempt commercial purchaser, certifying with 
        respect to the insurance to which the requirements of section 
        103(c)(1) apply to that insurer that--
                    ``(A) the purchaser has an employee that meets the 
                definition of a qualified risk manager under this 
                section;
                    ``(B) the purchaser meets the definition of an 
                exempt commercial purchaser in accordance with this 
                section;
                    ``(C) the purchaser is aware that the policy being 
                considered for purchase contains forms and rates that 
                are not subject to State regulatory review or approval;
                    ``(D) the purchaser has or has retained the 
                necessary expertise to negotiate its own policy 
                language and rates; and
                    ``(E) the purchaser agrees to the use of exempted 
                rates and forms by its insurer or insurers.
            ``(8) Group life insurance.--The term `group life 
        insurance' means an insurance contract that provides term life 
        insurance coverage, accidental death coverage, or a combination 
        thereof, for a number of individuals under a single contract, 
        on the basis of a group selection of risks, but does not 
        include `Corporate Owned Life Insurance' or `Business Owned 
        Life Insurance,' each as defined under the Internal Revenue 
        Code of 1986, or any similar product.
            ``(9) Home state.--The term `home State' means as follows:
                    ``(A) In the case of a policy written for 
                commercial risks that are primarily located in a State, 
                such term means such State.
                    ``(B) If subparagraph (A) does not apply, such term 
                means the State where the commercial policyholder has 
                its principal place of business (such as where the 
                policyholder's headquarters are located, as determined 
                by the predominant physical location in the United 
                States of the officers and senior management of the 
                policyholder).
            ``(10) Insured loss.--The term `insured loss' means any 
        loss resulting from an act of terrorism (including an act of 
        war, in the case of workers' compensation and group life 
        insurance) that is covered by primary or excess property, 
        casualty, workers' compensation, or group life insurance issued 
        by an insurer if such loss--
                    ``(A) occurs within the United States; or
                    ``(B) occurs to an air carrier (as defined in 
                section 40102 of title 49, United States Code), to a 
                United States flag vessel (or a vessel based 
                principally in the United States, on which United 
                States income tax is paid and whose insurance coverage 
                is subject to regulation in the United States), 
                regardless of where the loss occurs, or at the premises 
                of any United States mission.
            ``(11) Insurer.--The term `insurer' means any entity, 
        including any affiliate thereof--
                    ``(A) that is--
                            ``(i) licensed or admitted to engage in the 
                        business of providing primary or excess 
                        insurance in any State;
                            ``(ii) not licensed or admitted as 
                        described in clause (i), if it is an eligible 
                        surplus line carrier listed on the Quarterly 
                        Listing of Alien Insurers of the NAIC, or any 
                        successor thereto;
                            ``(iii) approved for the purpose of 
                        offering a covered line of insurance by a 
                        Federal agency in connection with maritime, 
                        energy, or aviation activity;
                            ``(iv) a State residual market insurance 
                        entity or State workers' compensation fund; or
                            ``(v) any other entity described in section 
                        103(f), to the extent provided in the rules of 
                        the Secretary issued under section 103(f);
                    ``(B) that receives direct earned premiums for any 
                type of covered line of insurance coverage, other than 
                in the case of entities described in subsections (d) 
                and (f) of section 103; and
                    ``(C) that meets any other criteria that the 
                Secretary may reasonably prescribe.
            ``(12) Insurer deductible.--The term `insurer deductible' 
        means--
                    ``(A) for the Transition Period, the value of an 
                insurer's direct earned premiums over the calendar year 
                immediately preceding the date of enactment of this 
                Act, multiplied by 1 percent;
                    ``(B) for Program Year 1, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 1, multiplied by 7 
                percent;
                    ``(C) for Program Year 2, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 2, multiplied by 10 
                percent;
                    ``(D) for Program Year 3, the value of an insurer's 
                direct earned premiums over the calendar year 
                immediately preceding Program Year 3, multiplied by 15 
                percent;
                    ``(E) for Program Year 4--
                            ``(i) except as provided in clause (ii), 
                        the value of an insurer's direct earned premium 
                        for a covered line of insurance over the 
                        calendar year immediately preceding Program 
                        Year 4, multiplied by--
                                    ``(I) for workers' compensation 
                                insurance, 16 percent;
                                    ``(II) for group life insurance, 
                                21.5 percent;
                                    ``(III) for property insurance, 20 
                                percent; and
                                    ``(IV) for casualty insurance, 25 
                                percent; and
                            ``(ii) with respect to NBCR terrorism 
                        coverage, the value of an insurer's direct 
                        earned premium for a covered line of insurance 
                        over the calendar year immediately preceding 
                        Program Year 4, multiplied by the following 
                        percentages which shall be treated as sub-
                        deductibles that apply in lieu of the 
                        deductibles set forth in clause (i) for NBCR 
                        terrorism losses--
                                    ``(I) for workers' compensation 
                                insurance, 7.5 percent;
                                    ``(II) for group life insurance, 
                                7.5 percent;
                                    ``(III) for property insurance, 7.5 
                                percent; and
                                    ``(IV) for casualty insurance, 7.5 
                                percent; and
                            ``(iii) if, for any covered line of 
                        insurance, an insurer incurs insured losses 
                        caused by NBCR terrorism, such NBCR insured 
                        losses shall be applied against both the 
                        deductible set forth in clause (i) and the NBCR 
                        terrorism deductible set forth in clause (ii) 
                        for that covered line of insurance;
                    ``(F) for any Additional Program Years--
                            ``(i) except as provided in clause (ii), 
                        the value of an insurer's direct earned premium 
                        for a covered line of insurance over the 
                        calendar year immediately preceding that year, 
                        multiplied by the insurer deductible for each 
                        covered line of insurance for the preceding 
                        calendar year plus an additional percentage, as 
                        follows--
                                    ``(I) for workers' compensation 
                                insurance, 2.0 percent;
                                    ``(II) for group life insurance, 
                                2.5 percent;
                                    ``(III) for property insurance, 2.5 
                                percent; and
                                    ``(IV) for casualty insurance, 5.0 
                                percent; and
                            ``(ii) with respect to NBCR terrorism 
                        coverage, the value of an insurer's direct 
                        earned premium for a covered line of insurance 
                        over the calendar year immediately preceding 
                        that year, multiplied by the NBCR terrorism 
                        deductible for the preceding year for that 
                        covered line of insurance plus the following 
                        additional percentages, all of which shall be 
                        treated as subdeductibles that apply in lieu of 
                        the deductibles listed in clause (i) for NBCR 
                        terrorism insured losses--
                                    ``(I) for workers' compensation 
                                insurance, 0.75 percent;
                                    ``(II) for group life insurance, 
                                0.75 percent;
                                    ``(III) for property insurance, 
                                0.75 percent; and
                                    ``(IV) for casualty insurance, 0.75 
                                percent; and
                            ``(iii) if, for any covered line of 
                        insurance, an insurer incurs insured losses 
                        caused by NBCR terrorism, such NBCR insured 
                        losses shall be applied against both the 
                        deductible set forth in clause (i) and the NBCR 
                        terrorism deductible set forth in clause (ii) 
                        for that covered line of insurance;
                    ``(G) notwithstanding subparagraphs (A) through 
                (F), for the Transition Period and any other Program 
                Year or other calendar year, if an insurer has not had 
                a full year of operations during the calendar year 
                immediately preceding such Period or year, such portion 
                of the direct earned premiums of the insurer as the 
                Secretary determines appropriate, subject to 
                appropriate methodologies established by the Secretary 
                for measuring such direct earned premiums; and
                    ``(H) if, in any calendar year, aggregate industry 
                insured losses exceed $1,000,000,000, the insurer 
                deductibles for the next calendar year shall be reduced 
                by 0.1 percent for each $1,000,000,000 in insured 
                losses that have occurred during the preceding calendar 
                year, except that no insurer deductible shall be 
                reduced below 5 percent.
            ``(13) NAIC.--The term `NAIC' means the National 
        Association of Insurance Commissioners.
            ``(14) Ownership.--An insurer `owns' another insurer if the 
        insurer, directly or indirectly or acting through one or more 
        other persons, owns 25 percent or more of any class of voting 
        securities of the other insurer.
            ``(15) NBCR terrorism.--The term `NBCR terrorism' means an 
        act of terrorism involving nuclear, biological, chemical, or 
        radioactive reactions, releases, or contaminations, to the 
        extent any insured losses are caused by any such reactions, 
        releases, or contaminations.
            ``(16) Person.--The term `person' means any individual, 
        business or nonprofit entity (including those organized in the 
        form of a partnership, limited liability company, corporation, 
        or association), trust or estate, or a State or political 
        subdivision of a State or other governmental unit.
            ``(17) Program.--The term `Program' means the Terrorism 
        Insurance Program established by this title.
            ``(18) Program years.--
                    ``(A) Transition period.--The term `Transition 
                Period' means the period beginning on the date of 
                enactment of this Act and ending on December 31, 2002.
                    ``(B) Program year 1.--The term `Program Year 1' 
                means the period beginning on January 1, 2003 and 
                ending on December 31, 2003.
                    ``(C) Program year 2.--The term `Program Year 2' 
                means the period beginning on January 1, 2004 and 
                ending on December 31, 2004.
                    ``(D) Program year 3.--The term `Program Year 3' 
                means the period beginning on January 1, 2005 and 
                ending on December 31, 2005.
                    ``(E) Program year 4.--The term `Program Year 4' 
                means the period beginning on January 1, 2006 and 
                ending on December 31, 2006.
                    ``(F) Additional program years.--The term 
                `Additional Program Year' means any additional one-year 
                period after Program Year 4 during which the Program is 
                in effect, which period shall begin on January 1 and 
                end on December 31 of the same calendar year.
            ``(19) Property insurance.--The term `property insurance' 
        means--
                    ``(A) except as provided in subparagraph (B), 
                insurance on real or personal property of every kind, 
                including excess insurance, against loss or damage from 
                any and all hazard or cause and against loss 
                consequential upon such loss or damage, including 
                business interruption insurance, other than non-
                contractual legal liability for such loss or damage; 
                and
                    ``(B) does not include any type of commercial 
                automobile or workers' compensation insurance.
            ``(20) Qualified risk manager.--The term `qualified risk 
        manager' means any person who meets all of the following 
        criteria:
                    ``(A) The person is an employee of, or third party 
                consultant retained by, the commercial policyholder.
                    ``(B) The person provides skilled services in loss 
                prevention, loss reduction, or risk and insurance 
                coverage analysis, and purchase of insurance.
                    ``(C) The person possesses at least 1 of the 
                following credentials:
                            ``(i) A bachelor's or higher degree in risk 
                        management issued by an accredited college or 
                        university.
                            ``(ii) A designation as a Chartered 
                        Property and Casualty Underwriter (in this 
                        subparagraph referred to as `CPCU') issued by 
                        the American Institute for CPCU/Insurance 
                        Institute of America.
                            ``(iii) A designation as an Associate in 
                        Risk Management (ARM) issued by American 
                        Institute for CPCU/Insurance Institute of 
                        America.
                            ``(iv) A designation as a Certified Risk 
                        Manager (CRM) issued by the National Alliance 
                        for Insurance Education & Research.
                            ``(v) A designation as a RIMS Fellow (RS) 
                        issued by the Global Risk Management Institute.
                            ``(vi) At least 5 years of experience in 1 
                        or more of the following areas of commercial 
                        property insurance or commercial casualty 
                        insurance:
                                    ``(I) Risk financing.
                                    ``(II) Claims administration.
                                    ``(III) Loss prevention.
                                    ``(IV) Risk and insurance coverage 
                                analysis.
            ``(21) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(22) State.--The term `State' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        American Samoa, Guam, each of the United States Virgin Islands, 
        and any territory or possession of the United States.
            ``(23) United states.--The term `United States' means the 
        several States, and includes the territorial sea and the 
        continental shelf of the United States, as those terms are 
        defined in the Violent Crime Control and Law Enforcement Act of 
        1994 (18 U.S.C. 2280, 2281).
            ``(24) Workers' compensation.--The term `workers' 
        compensation' means insurance against loss from liability 
        imposed by law upon employers to compensate employees and their 
        dependents for injury sustained by the employees arising out of 
        and in the course of the employment, irrespective of negligence 
        or of the fault of either party.
            ``(25) Rule of construction for dates.--With respect to any 
        reference to a date in this title, such day shall be 
        construed--
                    ``(A) to begin at 12:01 a.m. on that date; and
                    ``(B) to end at midnight on that date.

``SEC. 103. TERRORISM INSURANCE PROGRAM.

    ``(a) Establishment of Program.--
            ``(1) In general.--There is established in the Department 
        of the Treasury the Terrorism Insurance Program.
            ``(2) Authority of the secretary.--Notwithstanding any 
        other provision of State or Federal law, the Secretary shall 
        administer the Program, and shall pay the Federal share of 
        compensation for insured losses in accordance with subsection 
        (e).
            ``(3) Mandatory participation.--Each entity that meets the 
        definition of an insurer under this title shall participate in 
        the Program.
    ``(b) Conditions for Federal Payments.--No payment may be made by 
the Secretary under this section with respect to an insured loss that 
is covered by an insurer, unless--
            ``(1) the person that suffers the insured loss, or a person 
        acting on behalf of that person, files a claim with the 
        insurer;
            ``(2) the insurer provides clear and conspicuous disclosure 
        to the policyholder of the premium charged for insured losses 
        covered by the program and the Federal share of compensation 
        for insured losses under the Program--
                    ``(A) in the case of any policy that is issued 
                before the date of enactment of this Act, not later 
                than 90 days after that date of enactment;
                    ``(B) in the case of any policy that is issued 
                within 90 days of the date of enactment of this Act, at 
                the time of offer, purchase, and renewal of the policy; 
                and
                    ``(C) in the case of any policy that is issued more 
                than 90 days after the date of enactment of this Act, 
                on a separate line item in the policy, at the time of 
                offer, purchase, and renewal of the policy;
            ``(3) the insurer processes the claim for the insured loss 
        in accordance with appropriate business practices, and any 
        reasonable procedures that the Secretary may prescribe; and
            ``(4) the insurer submits to the Secretary, in accordance 
        with such reasonable procedures as the Secretary may 
        establish--
                    ``(A) a claim for payment of the Federal share of 
                compensation for insured losses under the Program;
                    ``(B) written certification--
                            ``(i) of the underlying claim; and
                            ``(ii) of all payments made for insured 
                        losses; and
                    ``(C) certification of its compliance with the 
                provisions of this subsection.
    ``(c) Mandatory Availability.--Each entity that meets the 
definition of an insurer under section 102--
            ``(1) shall make available, in all of its covered lines of 
        insurance policies, coverage for insured losses that does not 
        differ materially from the terms, amounts, and other coverage 
        limitations applicable to losses arising from events other than 
        acts of terrorism;
            ``(2) shall make available, in any of its covered lines of 
        insurance policies that exclude coverage for losses resulting 
        from NBCR terrorism, coverage for losses resulting from NBCR 
        terrorism that may differ materially from the terms, amounts, 
        and other coverage limitations applicable to losses arising 
        from events other than NBCR terrorism; and
            ``(3) shall make available, in any life insurance policy, 
        coverage that does not preclude future lawful foreign travel by 
        the person insured, and shall not charge a premium for such 
        coverage that is excessive and not based on a good faith 
        actuarial analysis.
    ``(d) State Residual Market Insurance Entities.--
            ``(1) In general.--The Secretary shall issue regulations, 
        as soon as practicable after the date of enactment of this Act, 
        that apply the provisions of this title to State residual 
        market insurance entities, State workers' compensation funds, 
        and State workers' compensation reinsurance pools.
            ``(2) Treatment of certain entities.--For purposes of the 
        regulations issued pursuant to paragraph (1)--
                    ``(A) a State residual market insurance entity that 
                does not share its profits and losses with private 
                sector insurers shall be treated as a separate insurer; 
                and
                    ``(B) a State residual market insurance entity that 
                shares its profits and losses with private sector 
                insurers shall not be treated as a separate insurer, 
                and shall report to each private sector insurance 
                participant its share of the insured losses of the 
                entity, which shall be included in each private sector 
                insurer's insured losses.
            ``(3) Treatment of participation in certain entities.--Any 
        insurer that participates in sharing profits and losses of a 
        State residual market insurance entity shall include in its 
        calculations of premiums any premiums distributed to the 
        insurer by the State residual market insurance entity.
    ``(e) Insured Loss Shared Compensation.--
            ``(1) Federal share.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), the Federal share of compensation under the 
                Program to be paid by the Secretary for insured losses 
                of an insurer during each Program Year shall be equal 
                to that portion of the amount of such insured losses 
                for each covered line of insurance that exceeds the 
                applicable insurer deductible required to be paid 
                during such Program Year, multiplied by a percentage 
                based on aggregate industry insured losses for a 
                Program Year, which shall be as follows:
                            ``(i) 80 percent of the aggregate industry 
                        insured losses of less than $10,000,000,000;
                            ``(ii) 85 percent of the aggregate industry 
                        insured losses between $10,000,000,000 and 
                        $20,000,000,000;
                            ``(iii) 90 percent of the aggregate 
                        industry insured losses between $20,000,000,000 
                        and $40,000,000,000; and
                            ``(iv) 95 percent of the aggregate industry 
                        insured losses above industry losses above 
                        $40,000,000,000;
                and shall be prorated by insurer based on each 
                insurer's percentage of the aggregate industry insured 
                losses for that Program Year.
                    ``(B) Program trigger.--No compensation shall be 
                paid by the Secretary under subsection (a) unless the 
                aggregate industry insured losses exceed--
                            ``(i) $50,000,000, with respect to insured 
                        losses occurring in Program Year 4;
                            ``(ii) $100,000,000, with respect to 
                        insured losses occurring in the Additional 
                        Program Year beginning on January 1, 2007;
                            ``(iii) with respect to each Additional 
                        Program Year thereafter that coverage is 
                        provided under the Program, the amount that is 
                        equal to the sum of (I) the dollar amount 
                        applicable under this subparagraph for the 
                        Program Year preceding such Additional Program 
                        Year, and (II) $50,000,000;
                except that the applicable Program Trigger amount shall 
                be reduced by $10,000,000 for each $1,000,000,000 in 
                insured losses occurring in any preceding year, 
                provided that the Program Trigger shall not be reduced 
                below $50,000,000 for any year.
                    ``(C) Prohibition on duplicative compensation.--The 
                Federal share of compensation for insured losses under 
                the Program shall be reduced by the amount of 
                compensation provided by the Federal Government to any 
                person under any other Federal program for those 
                insured losses.
            ``(2) TRIA capital reserve funds.--
                    ``(A) Establishment.--Any insurer may establish a 
                TRIA Capital Reserve Fund (in this section referred to 
                as a `CRF') in which it may hold funds in a fiduciary 
                capacity on behalf of the Secretary.
                    ``(B) Funding.--An insurer may fund a CRF by making 
                an election, in advance, to treat some or all of the 
                premiums it has disclosed pursuant to section 103(b)(2) 
                as TRIA program fee charges imposed by the Secretary. 
                Any such premiums for which such an election has been 
                made must be maintained in segregated accounts in a 
                fiduciary capacity on behalf of the Secretary. Such 
                funds may be invested in any otherwise legally 
                permissible manner but all interest, dividends, and 
                capital accumulations also shall be retained in such 
                segregated accounts on behalf of the Secretary.
                    ``(C) Use.--Funds from a CRF shall be collected and 
                used by the Secretary to offset, in whole or in part, 
                the Federal share of compensation provided to all 
                insurers under the Program as provided for in paragraph 
                (1), except that an insurer may first use the funds in 
                a CRF of that insurer to satisfy any one or more of the 
                following:
                            ``(i) The applicable insurer deductibles 
                        for the insurer.
                            ``(ii) The portion of the insurer's losses 
                        that exceed the insurer deductible but are not 
                        compensated by the Federal share pursuant to 
                        paragraph (1).
                            ``(iii) The insurer's obligations to pay 
                        for insured losses if the program trigger 
                        established in paragraph (1)(B) is not 
                        satisfied.
                            ``(iv) Any risk sharing obligations the 
                        insurer may have under any agreements made 
                        pursuant to or in accordance with paragraph 
                        (3).
                    ``(D) Termination.--
                            ``(i) Termination of program.--Upon 
                        termination of the Program under section 
                        108(a), and subject to the Secretary's 
                        continuing authority under section 108(b) to 
                        adjust claims in satisfaction of the Federal 
                        share of compensation under the Program as 
                        provided in paragraph (1) of this subsection, 
                        10 percent of each insurer's CRF funds shall be 
                        remitted to the Secretary and the remainder 
                        shall be remitted to the insurer. The Secretary 
                        shall determine the manner in which the 
                        remittance of such income to the insurer shall 
                        be made.
                            ``(ii) Elimination of federal share of 
                        compensation.--If the Program remains in effect 
                        but the Federal share of compensation for 
                        insured losses under the Program is eliminated 
                        from the Program, the CRF funds shall be 
                        retained and used for the purposes set forth in 
                        subparagraph (C) of this paragraph. At such 
                        time as an insurer's liability for insured 
                        losses under the Program terminates, as a 
                        consequence of the insurer's termination of its 
                        business or otherwise, the insurer shall remit 
                        any remaining CRF funds to the Secretary.
            ``(3) Risk-sharing mechanisms.--
                    ``(A) Finding; rule of construction.--Congress 
                finds that it is desirable to encourage the growth of 
                nongovernmental, private market reinsurance capacity 
                for protection against losses arising from acts of 
                terrorism. Therefore, nothing in this title shall 
                prohibit insurers from developing risk-sharing 
                mechanisms (including mutual reinsurance facilities and 
                agreements) to voluntarily reinsure terrorism losses 
                between and among themselves that are not subject to 
                reimbursement under this section 103.
                    ``(B) Establishment of advisory committee.--The 
                Secretary shall appoint an Advisory Committee to--
                            ``(i) encourage the creation and 
                        development of such mechanisms;
                            ``(ii) assist the Secretary and be 
                        available to administer such mechanisms; and
                            ``(iii) develop articles of incorporation, 
                        bylaws, and a plan of operation for any long-
                        term reinsurance facility authorized or created 
                        in the future.
                    ``(C) Membership.--The Advisory Committee shall be 
                composed of nine members who are directors, officers, 
                or other employees of insurers that are participating 
                or that desire to participate in such mechanisms, and 
                who are representative of the affected sectors of the 
                insurance industry. In making these appointments, the 
                Secretary shall solicit major trade associations of the 
                insurance industry to nominate lists of qualified 
                individuals representative of the commercial property 
                insurance, commercial casualty insurance, group life 
                insurance, and reinsurance industries.
            ``(4) Cap on annual liability.--
                    ``(A) In general.--Notwithstanding paragraph (1) or 
                any other provision of Federal or State law, if the 
                aggregate insured losses exceed $100,000,000,000 during 
                any Program Year (until such time as the Congress may 
                act otherwise with respect to such losses)--
                            ``(i) the Secretary shall not make any 
                        payment under this title for any portion of the 
                        amount of such losses that exceeds 
                        $100,000,000,000; and
                            ``(ii) no insurer that has met its insurer 
                        deductible shall be liable for the payment of 
                        any portion of that amount that exceeds 
                        $100,000,000,000.
                    ``(B) Insurer share.--For purposes of subparagraph 
                (A), the Secretary shall determine the pro rata share 
                of insured losses to be paid by each insurer that 
                incurs insured losses under the Program.
            ``(5) Notice to congress.--The Secretary shall notify the 
        Congress if estimated or actual aggregate insured losses exceed 
        $100,000,000,000 during during any Program Year and the 
        Congress shall determine the procedures for and the source of 
        any payments for such excess insured losses.
            ``(6) Final netting.--The Secretary shall have sole 
        discretion to determine the time at which claims relating to 
        any insured loss or act of terrorism shall become final.
            ``(7) Determinations final.--Any determination of the 
        Secretary under this subsection shall be final, unless 
        expressly provided, and shall not be subject to judicial 
        review.
            ``(8) Full recoupment of federal share.--The Secretary 
        shall collect, for repayment of the Federal financial 
        assistance provided in connection with all acts of terrorism 
        (or acts of war, in the case of workers' compensation and group 
        life insurance), terrorism loss risk-spreading premiums in an 
        amount equal to the total amount paid by the Secretary in 
        accordance with this section.
            ``(9) Policy surcharge for terrorism loss risk-spreading 
        premiums.--
                    ``(A) Policyholder premium.--Any amount established 
                by the Secretary as a terrorism loss risk-spreading 
                premium shall--
                            ``(i) be imposed as a policyholder premium 
                        surcharge on all covered lines of insurance 
                        policies in force after the date of such 
                        establishment;
                            ``(ii) begin with such period of coverage 
                        during the year as the Secretary determines 
                        appropriate; and
                            ``(iii) be based on a percentage of the 
                        premium amount charged for covered lines of 
                        insurance coverage under the policy.
                    ``(B) Collection.--The Secretary shall provide for 
                insurers to collect terrorism loss risk-spreading 
                premiums and remit such amounts collected to the 
                Secretary.
                    ``(C) Percentage limitation.--A terrorism loss 
                risk-spreading premium may not exceed, on an annual 
                basis, the amount equal to 3 percent of the premium 
                charged for covered lines of insurance coverage under 
                the policy.
                    ``(D) Adjustment for urban and smaller commercial 
                and rural areas and different lines of insurance.--
                            ``(i) Adjustments.--In determining the 
                        method and manner of imposing terrorism loss 
                        risk-spreading premiums, including the amount 
                        of such premiums, the Secretary shall take into 
                        consideration--
                                    ``(I) the economic impact 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;
                                    ``(II) the risk factors related to 
                                rural areas and smaller commercial 
                                centers, including the potential 
                                exposure to loss and the likely 
                                magnitude of such loss, as well as any 
                                resulting cross-subsidization that 
                                might result; and
                                    ``(III) the various exposures to 
                                terrorism risk for different lines of 
                                insurance.
                            ``(ii) Recoupment of adjustments.--Any 
                        recoupment amounts not collected by the 
                        Secretary because of adjustments under this 
                        subparagraph shall be recouped through 
                        additional terrorism loss risk-spreading 
                        premiums.
                    ``(E) Timing of premiums.--The Secretary may adjust 
                the timing of terrorism loss risk-spreading premiums to 
                provide for equivalent application of the provisions of 
                this title to policies that are not based on a calendar 
                year, or to apply such provisions on a daily, monthly, 
                or quarterly basis, as appropriate.
                    ``(F) Replenishment of tria capital reserve 
                funds.--After any funds expended directly from the 
                United States Treasury are fully repaid, the balance of 
                the amounts collected under this paragraph shall be 
                used to fully replenish all insurer CRFs used by the 
                Secretary in accordance with the provisions of 
                paragraph (2)(C) that were not used by the insurer to 
                satisfy its obligations in accordance with clauses (i) 
                through (iv) of paragraph (2)(C).
    ``(f) Captive Insurers and Other Self-Insurance Arrangements.--The 
Secretary may, in consultation with the NAIC or the appropriate State 
regulatory authority, apply the provisions of this title, as 
appropriate, to other classes or types of captive insurers and other 
self-insurance arrangements by municipalities and other entities (such 
as workers' compensation self-insurance programs and State workers' 
compensation reinsurance pools), but only if such application is 
determined before the occurrence of an act of terrorism in which such 
an entity incurs an insured loss and all of the provisions of this 
title are applied comparably to such entities.
    ``(g) Reinsurance to Cover Exposure.--
            ``(1) Obtaining coverage.--This title may not be construed 
        to limit or prevent insurers from obtaining reinsurance 
        coverage for insurer deductibles or insured losses retained by 
        insurers pursuant to this section, nor shall the obtaining of 
        such coverage affect the calculation of such deductibles or 
        retentions.
            ``(2) Limitation on financial assistance.--The amount of 
        financial assistance provided pursuant to this section, 
        including amounts from a CRF used pursuant to subsection 
        (e)(2)(C), shall not be reduced by reinsurance paid or payable 
        to an insurer from other sources, except that recoveries from 
        such other sources, taken together with financial assistance 
        for the Transition Period or a Program Year provided pursuant 
        to this section, may not exceed the aggregate amount of the 
        insurer's insured losses for such period. If such recoveries 
        and financial assistance for the Transition Period or a Program 
        Year exceed such aggregate amount of insured losses for that 
        period and there is no agreement between the insurer and any 
        reinsurer to the contrary, an amount in excess of such 
        aggregate insured losses shall be returned to the Secretary.
    ``(h) Personal Lines Study.--
            ``(1) In general.--The Comptroller General of the United 
        States, after consultation with the NAIC, representatives of 
        the insurance industry, and other experts in the insurance 
        field, including a cross-section of insurers, independent 
        insurance agents and brokers, and policyholders, shall conduct 
        a study concerning the exposure of personal lines (including 
        homeowners insurance) to terrorism risk, the coverage currently 
        available, and potential policy responses.
            ``(2) Report.--Not later than September 1, 2006, the 
        Comptroller General shall submit a report to the Congress on 
        the results of the study conducted under subparagraph (1), 
        together with specific policy recommendations.
    ``(i) Study of Risks Stemming From Nuclear, Biological, Chemical 
and Radioactive Events.--
            ``(1) In general.--The Comptroller General of the United 
        States, after consultation with the NAIC, representatives of 
        the insurance industry, including a cross-section of insurers, 
        independent insurance agents and brokers, and policyholders, 
        and other experts in the insurance field, shall conduct a study 
        concerning the risk of potential terrorist acts stemming from 
        the use of nuclear, biological, chemical, and radioactive 
        weapons.
            ``(2) Report.--Not later than September 1, 2006, the 
        Comptroller General shall submit a report to the Congress on 
        the results of the study conducted under paragraph (1), 
        together with specific policy recommendations.
    ``(j) Study of Need for Federal Natural Disaster Catastrophe 
Program.--
            ``(1) In general.--The Comptroller General of the United 
        States, after consultation with the NAIC, representatives of 
        the insurance industry, including a cross-section of insurers, 
        independent insurance agents and brokers, and policyholders, 
        and other experts in the insurance field, shall conduct a study 
        concerning the need for a Federal program that provides for a 
        system of shared public and private compensation for insured 
        losses resulting from natural disaster.
            ``(2) Issues.--The study under this section shall include 
        an analysis of whether, and in what manner, such a Federal 
        program should incorporate any or all of the following 
        concepts: tax-free capital reserves; voluntary mutual 
        reinsurance pools; a distinction between sophisticated and non-
        sophisticated commercial purchasers for the purposes of 
        exemption from regulation; or Federal support for the purchase 
        of reinsurance by State disaster insurance programs.
            ``(3) Report.--Not later than September 1, 2006, the 
        Comptroller General shall submit a report to the Congress on 
        the results of the study conducted under this subsection 
        together with specific policy recommendations.

``SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

    ``(a) General Authority.--The Secretary shall have the powers and 
authorities necessary to carry out the program, including authority--
            ``(1) to investigate and audit all claims under the 
        Program; and
            ``(2) to prescribe regulations and procedures to 
        effectively administer and implement the Program, and to ensure 
        that all insurers and self-insured entities that participate in 
        the Program are treated comparably under the Program.
    ``(b) Interim Rules and Procedures.--The Secretary may issue 
interim final rules or procedures specifying the manner in which--
            ``(1) insurers may file and certify claims under the 
        Program;
            ``(2) the Federal share of compensation for insured losses 
        will be paid under the Program, including payments based on 
        estimates of or actual insured losses;
            ``(3) the Secretary may, at any time, seek repayment from 
        or reimburse any insurer, based on estimates of insured losses 
        under the Program, to effectuate the insured loss sharing 
        provisions in section 103; and
            ``(4) the Secretary will determine any final netting of 
        payments under the Program, including payments owed to the 
        Federal Government from any insurer and any Federal share of 
        compensation for insured losses owed to any insurer, to 
        effectuate the insured loss sharing provisions in section 103.
    ``(c) Consultation.--The Secretary shall consult with the NAIC, as 
the Secretary determines appropriate, concerning the Program.
    ``(d) Contracts for Services.--The Secretary may employ persons or 
contract for services as may be necessary to implement the Program.
    ``(e) Civil Penalties.--
            ``(1) In general.--The Secretary may assess a civil 
        monetary penalty in an amount not exceeding the amount under 
        paragraph (2) against any insurer that the Secretary 
        determines, on the record after opportunity for a hearing----
                    ``(A) has failed to charge, collect, or remit 
                terrorism loss risk-spreading premiums under section 
                103(e) in accordance with the requirements of, or 
                regulations issued under, this title;
                    ``(B) has intentionally provided to the Secretary 
                erroneous information regarding premium or loss 
                amounts;
                    ``(C) submits to the Secretary fraudulent claims 
                under the Program for insured losses;
                    ``(D) has failed to provide the disclosures 
                required under subsection (f); or
                    ``(E) has otherwise failed to comply with the 
                provisions of, or the regulations issued under, this 
                title.
            ``(2) Amount.--The amount under this paragraph is the 
        greater of $1,000,000 and, in the case of any failure to pay, 
        charge, collect, or remit amounts in accordance with this title 
        or the regulations issued under this title, such amount in 
        dispute.
            ``(3) Recovery of amount in dispute.--A penalty under this 
        subsection for any failure to pay, charge, collect, or remit 
        amounts in accordance with this title or the regulations under 
        this title shall be in addition to any such amounts recovered 
        by the Secretary.
    ``(f) Submission of Premium Information.--
            ``(1) In general.--The Secretary shall annually compile 
        information on the terrorism risk insurance premium rates of 
        insurers for the preceding year.
            ``(2) Access to information.--To the extent that such 
        information is not otherwise available to the Secretary, the 
        Secretary may require each insurer to submit to the NAIC 
        terrorism risk insurance premium rates, as necessary to carry 
        out paragraph (1), and the NAIC shall make such information 
        available to the Secretary.
            ``(3) Availability to congress.--The Secretary shall make 
        information compiled under this subsection available to the 
        Congress, upon request.
    ``(g) Funding.--
            ``(1) Federal payments.--There are hereby appropriated, out 
        of funds in the Treasury not otherwise appropriated, such sums 
        as may be necessary to pay the Federal share of compensation 
        for insured losses under the Program to the extent such Federal 
        share exceeds funds collected by the Secretary pursuant to 
        section 103(e)(2).
            ``(2) Administrative expenses.--There are hereby 
        appropriated, out of funds in the Treasury not otherwise 
        appropriated, such sums as may be necessary to pay reasonable 
        costs of administering the Program.

``SEC. 105. ESTABLISHMENT OF COMMISSION ON TERRORISM RISK INSURANCE.

    ``(a) In General.--There is hereby established the Commission on 
Terrorism Risk Insurance (in this section referred to as the 
`Commission').
    ``(b) Membership.--
            ``(1) The Commission shall consist of 11 members, as 
        follows:
                    ``(A) The Secretary of the Treasury or his 
                designee.
                    ``(B) One State insurance commissioner designated 
                by the members of the NAIC.
                    ``(C) Nine members appointed by the President, who 
                shall be--
                            ``(i) a representative of group life 
                        insurers;
                            ``(ii) a representative of property and 
                        casualty insurers with direct written premium 
                        of $1,000,000,000 or less;
                            ``(iii) a representative of property and 
                        casualty insurers with direct written premium 
                        of more than $1,000,000,000;
                            ``(iv) a representative of multiline 
                        insurers;
                            ``(v) a representative of independent 
                        insurance agents;
                            ``(vi) a representative of insurance 
                        brokers;
                            ``(vii) a policyholder representative;
                            ``(viii) a representative of the survivors 
                        of the victims of the attacks of September 11, 
                        2001; and
                            ``(ix) a representative of the reinsurance 
                        industry.
            ``(2) Secretary.--The Program Director of the Terrorism 
        Risk Insurance Act shall serve as Secretary of the Commission. 
        The Secretary of the Commission shall determine the manner in 
        which the Commission shall operate, including funding and 
        staffing.
    ``(c) Duties.--
            ``(1) In general.--The Commission shall identify and make 
        recommendations regarding--
                    ``(A) possible actions to encourage, facilitate, 
                and sustain provision by the private insurance industry 
                in the United States of affordable coverage for losses 
                due to an act or acts of terrorism;
                    ``(B) possible actions or mechanisms to sustain or 
                supplement the ability of the insurance industry in the 
                United States to cover losses resulting from acts of 
                terrorism in the event that--
                            ``(i) such losses jeopardize the capital 
                        and surplus of the insurance industry in the 
                        United States as a whole; or
                            ``(ii) other consequences from such acts 
                        occur, as determined by the Commission, that 
                        may significantly affect the ability of the 
                        insurance industry in the United States to 
                        independently cover such losses; and
                    ``(C) significantly reducing the expected Federal 
                role over time in any continuing Federal terrorism risk 
                insurance program.
            ``(2) Evaluations.--In identifying and making the 
        recommendations required under paragraph (1), the Commission 
        shall specifically evaluate the utility and viability of TRIA 
        Capital Reserve Funds made available under section 103(e)(2), 
        any risk sharing mechanism created or made available under 
        section 103(e)(3), a Federally created or mandated reinsurance 
        facility, empowering such a facility to issue pre-event 
        financing bonds, post-event financing bonds, assessments, 
        single or multiple pooling arrangements, and other risk sharing 
        arrangements to accomplish, in whole or in part, the specified 
        objectives, taking into consideration the studies and reports 
        to the Congress pursuant to subsections (h) and (i) of section 
        103.
            ``(3) Report.--Not later than December 31, 2006, the 
        Commission shall submit a report to Congress evaluating and 
        making recommendations regarding whether there is a need for a 
        Federal terrorism risk insurance program and, if so, shall make 
        a specific, detailed recommendation for the replacement of the 
        Program, including specific, detailed recommendations for the 
        creation of a terrorism reinsurance facility or facilities or 
        single or multiple pooling arrangements, or both.
    ``(d) Effect on Existing Program.--For purposes of section 108(a), 
the Secretary shall make a determination not later than January 31, 
2007, of whether the Commission has satisfied its obligations under 
subsection (c)(3).

``SEC. 106. PRESERVATION PROVISIONS.

    ``(a) State Law.--Nothing in this title shall affect the 
jurisdiction or regulatory authority of the insurance commissioner (or 
any agency or office performing like functions) of any State over any 
insurer or other person--
            ``(1) except as specifically provided in this title; and
            ``(2) except that--
                    ``(A) the definition of the term `act of terrorism' 
                in section 102 shall be the exclusive definition of 
                that term for purposes of compensation for insured 
                losses under this title, and shall preempt any 
                provision of State law that is inconsistent with that 
                definition, to the extent that such provision of law 
                would otherwise apply to any type of insurance covered 
                by this title; and
                    ``(B) during the period beginning on the date of 
                enactment of this Act and for so long as the Program is 
                in effect, as provided in section 108, including 
                authority in subsection 108(b), books and records of 
                any insurer that are relevant to the Program shall be 
                provided, or caused to be provided, to the Secretary, 
                upon request by the Secretary, notwithstanding any 
                provision of the laws of any State prohibiting or 
                limiting such access; and
            ``(3) except that with respect to coverage required to be 
        made available under section 103(c)--
                    ``(A) no laws or regulations of a State imposing a 
                diligent search requirement for the placement of a 
                surplus lines policy shall apply in connection with the 
                purchase of such insurance by an exempt commercial 
                policyholder; and
                    ``(B) no laws or regulations of a State, except of 
                the home State, imposing a diligent search requirement 
                for the placement of a surplus lines policy shall apply 
                with respect to the placement of a multi-State surplus 
                lines commercial insurance policy, provided the 
                contract of insurance insures risks in the home State.
    ``(b) Streamlined Rate and Form Filing.--The Congress intends that, 
by December 31, 2007, all States, with respect to submission of a 
commercial property insurance policy or commercial casualty insurance 
policy that includes coverage for acts of terrorism--
            ``(1) implement and fully utilize the System for Electronic 
        Rate and Form Filing (in this section referred to as `SERFF'), 
        developed by the NAIC, without deviation to provide a single 
        point for electronic filing of property insurance and casualty 
        insurance forms for review;
            ``(2) update SERFF to provide a single coordinated 
        checklist for inputting the required information used by 
        various States for filing reviews and designating to which 
        States the information will be submitted;
            ``(3) allow the option of filing of self-certified 
        commercial property insurance and commercial casualty insurance 
        forms through a substantially nationwide coordinated electronic 
        filing system that--
                    ``(A) includes a review checklist with uniform 
                nomenclature clearly establishing what is required 
                under the laws of such State for a compliant filing of 
                such forms;
                    ``(B) uses a single input system and transmittal 
                document that allows the filer to submit such form for 
                review without required format deviations to any 
                combination of the States participating in the system;
                    ``(C) does not require prior approval for such 
                self-certified form filing;
                    ``(D) keeps such filings confidential until they 
                are implemented, deemed implemented, or disapproved; 
                and
                    ``(E) only allows disapproval of such filings in 
                writing based on specific standards that are published 
                in statute, rule, or regulation.
    ``(c) Streamlined Surplus Lines Placement.--The Congress intends 
that, by December 31, 2007, all States streamline their surplus lines 
diligent search rules with respect to the placement of surplus lines 
policies in any covered line of insurance that includes coverage for 
acts of terrorism by providing for--
            ``(1) automatic export for exempt commercial purchasers, 
        under which a surplus lines broker seeking to obtain, provide, 
        or place insurance in a State for an insured that qualifies as 
        an exempt commercial purchaser may procure surplus lines 
        insurance from or place surplus lines insurance with any 
        nonadmitted insurer without making a diligent search to 
        determine whether the full amount or type of insurance sought 
        by the exempt commercial purchaser can be obtained from 
        admitted insurers in such State.
            ``(2) home State regulation of diligent search 
        requirements, that provides that, except as provided in 
        paragraph (1), only the home State may impose a diligent search 
        requirement for the placement of a multi-State surplus lines 
        commercial insurance policy, provided the contract of insurance 
        insures risks in the Home State.
    ``(d) Existing Reinsurance Agreements.--Nothing in this title shall 
be construed to alter, amend, or expand the terms of coverage under any 
reinsurance agreement in effect on the date of enactment of this Act. 
The terms and conditions of such an agreement shall be determined by 
the language of that agreement.''; and
            (2) in section 108--
                    (A) by striking subsection (a) and inserting the 
                following new subsection:
    ``(a) Termination of Program.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Program shall terminate on December 31, 2008.
            ``(2) Failure of commission to submit report.--If the 
        Secretary determines pursuant to section 105(d) that the 
        Commission on Terrorism Risk Insurance established under 
        section 105 has not satisfied its obligations under section 
        105(c)(3), the Program shall terminate on December 31, 2007.''; 
        and
                    (B) in subsection (c)(1), by striking ``paragraph 
                (4), (5), (6), (7), or (8) of''.
    (b) Applicability.--The amendments made by subsection (a) shall 
apply beginning on January 1, 2006. The provisions of the Terrorism 
Risk Insurance Act of 2002, as in effect on the day before the date of 
the enactment of this Act, shall apply through the end of December 31, 
2005.
                                                 Union Calendar No. 180

109th CONGRESS

  1st Session

                               H. R. 4314

                          [Report No. 109-327]

_______________________________________________________________________

                                 A BILL

  To extend the applicability of the Terrorism Risk Insurance Act of 
                                 2002.

_______________________________________________________________________

                            December 6, 2005

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed