[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2761 Engrossed in House (EH)]
110th CONGRESS
1st Session
H. R. 2761
_______________________________________________________________________
AN ACT
To extend the Terrorism Insurance Program of the Department of the
Treasury, and for other purposes.
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
and Extension Act of 2007''.
SEC. 2. TERMINATION OF PROGRAM.
Subsection (a) of section 108 of the Terrorism Risk Insurance Act
of 2002 (15 U.S.C. 6701 note) is amended by striking ``December 31,
2007'' and inserting ``December 31, 2022''.
SEC. 3. REVISION OF TERRORISM INSURANCE PROGRAM.
(a) In General.--The Terrorism Risk Insurance Act of 2002 is
amended--
(1) by striking sections 101, 102, and 103 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 and casualty 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 and casualty 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 and casualty insurers to deal
with such uncertainties, either by terminating property and
casualty 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;
``(6) the United States Government should coordinate with
insurers to provide financial compensation to insured parties
for losses from acts of terrorism, contributing to the
stabilization of the United States economy in a time of
national crisis, and periodically assess the ability of the
financial services industry to develop the systems, mechanisms,
products, and programs necessary to create a viable financial
services market for private terrorism risk insurance that will
lessen the financial participation of the United States
Government;
``(7) in addition to a terrorist attack on the United
States using conventional means or weapons, there is and
continues to be a potential threat of a terrorist attack
involving the use of unconventional means or weapons, such as
nuclear, biological, chemical, or radiological agents;
``(8) as nuclear, biological, chemical, or radiological
acts of terrorism (known as NBCR terrorism) present a threat of
loss of life, injury, disease, and property damage potentially
unparalleled in scope and complexity by any prior event,
natural or man-made, the Federal Government's responsibility in
providing for and preserving national economic security calls
for a strong Federal role in ensuring financial compensation
and economic recovery in the event of such an attack;
``(9) a report issued by the Government Accountability
Office in September 2006 concluded that `any purely market-
driven expansion of coverage' for NBCR terrorism risk is
`highly unlikely in the foreseeable future', and the September
2006 report from the President's Working Group on Financial
Markets concluded that reinsurance for NBCR terrorist events is
virtually unavailable and that `[g]iven the general reluctance
of insurance companies to provide coverage for these types of
risks, there may be little potential for future market
development';
``(10) group life insurance companies are important
financial institutions whose products make life insurance
coverage affordable for millions of Americans and often serve
as their only life insurance benefit;
``(11) the group life insurance industry, in the event of a
severe act of terrorism, is vulnerable to insolvency because
high concentrations of covered employees work in the same
locations, because primary group life insurers do not exclude
conventional and NBCR terrorism risks while most catastrophic
reinsurance does exclude such terrorism risks, and because a
large-scale loss of life would fall outside of actuarial
expectations of death; and
``(12) 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 and casualty insurance and group life
insurance for all types of terrorism risk, including
conventional terrorism risk and nuclear, biological, chemical,
and radiological terrorism risk;
``(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 (unless
otherwise preempted by this Act); and
``(3) provide finite liability limits for terrorism
insurance losses for insurers and the United States Government.
``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, the Secretary
of Homeland Security, 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 (9)(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--
``(i) 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
``(ii) property and casualty insurance and
group life insurance losses resulting from the
act, in the aggregate, do not exceed
$5,000,000.
``(C) Certification of act of nbcr terrorism.--
Where a certified act of terrorism is carried out by
means of a nuclear, biological, chemical, or
radiological weapon or similar instrumentality, the
Secretary shall further certify such act of terrorism
as an act of NBCR terrorism. If a certified act of
terrorism involves any other weapon or instrumentality,
the Secretary, in concurrence with the Secretary of
State, the Secretary of Homeland Security, and the
Attorney General of the United States, shall determine
whether the act of terrorism meets the definition of
NBCR terrorism in this section. If such determination
is that the act does meet such definition, the
Secretary shall further certify that such act as an act
of NBCR terrorism. Nothing in this subparagraph shall
prohibit the Secretary from determining that a single
act of terrorism resulted in both NBCR and non-NBCR
insured losses.
``(D) Determinations final.--Any certification of,
or determination not to certify, an act as an act of
terrorism or as an act of NBCR terrorism under this
paragraph shall be final, and shall not be subject to
judicial review.
``(E) 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, including an act of NBCR terrorism,
has occurred.
``(F) Compensation subject to further congressional
action.--Notwithstanding any certification of an act
under this paragraph as an act of terrorism or an act
of NBCR terrorism, Federal compensation under the
Program shall be subject to the provisions of section
103(h).
``(G) Submission of certification under this
paragraph.--Upon any certification under subparagraph
(A), the Secretary shall submit such certification to
the Congress.
``(2) Affiliate.--The term `affiliate' means, with respect
to an insurer, any entity that controls, is controlled by, or
is under common control with the insurer.
``(3) Amount at risk.--The term `amount at risk' means face
amount less statutory policy reserves for group life insurance
issued by any insurer for insurance against losses occurring at
the locations described in subparagraph (A) of paragraph (9).
``(4) Control.--An entity has `control' over another
entity, if--
``(A) the entity directly or indirectly or acting
through 1 or more other persons owns, controls, or has
power to vote 25 percent or more of any class of voting
securities of the other entity;
``(B) the entity controls in any manner the
election of a majority of the directors or trustees of
the other entity; or
``(C) the Secretary determines, after notice and
opportunity for hearing, that the entity directly or
indirectly exercises a controlling influence over the
management or policies of the other entity; except that
for purposes of any proceeding under this subparagraph,
there shall be a presumption that any entity which
directly or indirectly owns, controls, or has power to
vote less than 5 percent of any class of voting
securities of another entity does not have control over
that entity.
``(5) Covered lines.--The term `covered lines' means
property and casualty insurance and group life insurance, as
defined in this section.
``(6) Direct earned premium.--The term `direct earned
premium' means a direct earned premium for property and
casualty insurance issued by any insurer for insurance against
losses occurring at the locations described in subparagraph (A)
of paragraph (9).
``(7) Excess insured loss.--The term `excess insured loss'
means, with respect to a Program Year, any portion of the
amount of insured losses during such Program Year that exceeds
the cap on annual liability under section 103(e)(2)(A).
``(8) Group life insurance.--The term `group life
insurance' means an insurance contract that provides life
insurance coverage, including term life insurance coverage,
universal life insurance coverage, variable universal life
insurance coverage, and 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, or group life reinsurance
or retrocessional reinsurance.
``(9) Insured loss.--
``(A) In general.--Except as provided in
subparagraph (B), the term `insured loss' means any
loss resulting from an act of terrorism (including an
act of war, in the case of workers' compensation) that
is covered by primary or excess property and casualty
insurance, or group life insurance to the extent of the
amount at risk, issued by an insurer, if such loss--
``(i) occurs within the United States; or
``(ii) 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.
``(B) Limitation for group life insurance.--Such
term shall not include any losses of an insurer
resulting from coverage of any single certificate
holder under any group life insurance coverages of the
insurer to the extent such losses are not compensated
under the Program by reason of section 103(e)(1)(D).
``(10) 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, or group life 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 property and casualty 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 commercial property and casualty insurance
coverage, or, in the case of group life insurance, that
receives direct premiums, other than in the case of
entities described in sections 103(d) and 103(f); and
``(C) that meets any other criteria that the
Secretary may reasonably prescribe.
``(11) 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, the value of an insurer's
direct earned premiums over the calendar year
immediately preceding Program Year 4, multiplied by
17.5 percent;
``(F) for Program Year 5, the value of an insurer's
direct earned premiums over the calendar year
immediately preceding Program Year 5, multiplied by 20
percent;
``(G) for each additional Program Year--
``(i) with respect to property and casualty
insurance, the value of an insurer's direct
earned premiums over the calendar year
immediately preceding such Program Year,
multiplied by 20 percent; and
``(ii) with respect to group life
insurance, the value of an insurer's amount at
risk over the calendar year immediately
preceding such Program Year, multiplied by
0.0351 percent;
``(H) notwithstanding subparagraphs (A) through
(G), for the Transition Period or any Program Year, if
an insurer has not had a full year of operations during
the calendar year immediately preceding such Period or
Program Year, such portion of the direct earned
premiums with respect to property and casualty
insurance, and such portion of the amounts at risk with
respect to group life insurance, of the insurer as the
Secretary determines appropriate, subject to
appropriate methodologies established by the Secretary
for measuring such direct earned premiums and amounts
at risk;
``(I) notwithstanding subparagraphs (A) through (H)
and (J), in the case of any act of NBCR terrorism, for
any additional Program Year--
``(i) with respect to property and casualty
insurance, the value of an insurer's direct
earned premiums over the calendar year
immediately preceding such Program Year,
multiplied by a percentage, which--
``(I) for the second additional
Program Year, shall be 3.5 percent; and
``(II) for each succeeding Program
Year thereafter, shall be 50 basis
points greater than the percentage
applicable to the preceding additional
Program Year; and
``(ii) with respect to group life
insurance, the value of an insurer's amount at
risk over the calendar year immediately
preceding such Program Year, multiplied by a
percentage, which--
``(I) for the first additional
Program Year, shall be 0.00614 percent;
and
``(II) for each succeeding Program
Year thereafter, shall be 0.088 basis
point greater than the percentage
applicable to the preceding additional
Program Year;
``(J) notwithstanding subparagraph (G)(i), if
aggregate industry insured losses resulting from a
certified act of terrorism exceed $1,000,000,000, for
any insurer that sustains insured losses resulting from
such act of terrorism, the value of such insurer's
direct earned premiums over the calendar year
immediately preceding the Program Year, multiplied by a
percentage, which--
``(i) for the first additional Program Year
shall be 5 percent; and
``(ii) for each additional Program Year
thereafter, shall be 50 basis points greater
than the percentage applicable to the preceding
additional Program Year, except that if an act
of terrorism occurs during any additional
Program Year that results in aggregate industry
insured losses exceeding $1,000,000,000, the
percentage for the succeeding additional
Program Year shall be 5 percent and the
increase under this clause shall apply to
additional Program Years thereafter;
except that for purposes of determining under this
subparagraph whether aggregate industry insured losses
exceed $1,000,000,000, the Secretary may combine
insured losses resulting from two or more certified
acts of terrorism occurring during such Program Year in
the same geographic area (with such area determined by
the Secretary), in which case such insurer shall be
permitted to combine insured losses resulting from such
acts of terrorism for purposes of satisfying its
insurer deductible under this subparagraph; and except
that the insurer deductible under this subparagraph
shall apply only with respect to compensation of
insured losses resulting from such certified act, or
combined certified acts, and that for purposes of
compensation of any other insured losses occurring in
the same Program Year, the insurer deductible
determined under subparagraph (G)(i) or (I) shall
apply; and
``(K) for the fifth additional Program Year and any
Additional Program year thereafter, notwithstanding
subparagraph (I)(i), if aggregate industry insured
losses resulting from a certified act of NBCR terrorism
exceed $1,000,000,000, for any insurer that sustains
insured losses resulting from such act of NBCR
terrorism, the value of such insurer's direct earned
premiums over the calendar year immediately preceding
the Program Year, multiplied by a percentage, which--
``(i) for the fifth additional Program Year
shall be 5 percent; and
``(ii) for each additional Program Year
thereafter, shall be 50 basis points greater
than the percentage applicable to the preceding
additional Program Year, except that if an act
of NBCR terrorism occurs during the fifth
additional Program Year or any additional
Program Year thereafter that results in
aggregate industry insured losses exceeding
$1,000,000,000, the percentage for the
succeeding additional Program Year shall be 5
percent and the increase under this clause
shall apply to additional Program Years
thereafter;
except that for purposes of determining under this
subparagraph whether aggregate industry insured losses
exceed $1,000,000,000, the Secretary may combine
insured losses resulting from two or more certified
acts of NBCR terrorism occurring during such Program
Year in the same geographic area (with such area
determined by the Secretary), in which case such
insurer shall be permitted to combine insured losses
resulting from such acts of NBCR terrorism for purposes
of satisfying its insurer deductible under this
subparagraph; and except that the insurer deductible
under this subparagraph shall apply only with respect
to compensation of insured losses resulting from such
certified act, or combined certified acts, and that for
purposes of compensation of any other insured losses
occurring in the same Program Year, the insurer
deductible determined under subparagraph (I)(i) shall
apply.
``(12) NAIC.--The term `NAIC' means the National
Association of Insurance Commissioners.
``(13) NBCR terrorism.--The term `NBCR terrorism' means an
act of terrorism that involves or triggers nuclear, biological,
chemical, or radiological reactions, releases, or
contaminations, but only if any aggregate industry insured
losses that result from such reactions, releases, or
contaminations exceed the amount set forth in paragraph
(1)(B)(ii).
``(14) 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.
``(15) Program.--The term `Program' means the Terrorism
Insurance Program established by this title.
``(16) 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) Program year 5.--The term `Program Year 5'
means the period beginning on January 1, 2007 and
ending on December 31, 2007.
``(G) Additional program year.--The term
`additional Program Year' means any additional one-year
period after Program Year 5 during which the Program is
in effect, which period shall begin on January 1 and
end on December 31 of the same calendar year.
``(17) Property and casualty insurance.--The term `property
and casualty insurance'--
``(A) means commercial lines of property and
casualty insurance, including excess insurance,
workers' compensation insurance, and directors and
officers liability 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, including
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;
``(viii) commercial automobile insurance;
``(ix) burglary and theft insurance;
``(x) surety insurance; or
``(xi) professional liability insurance.
``(18) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(19) 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.
``(20) 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).
``(21) 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, subject only to subsection (h)(1),
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.
``(4) NBCR exemption for certain insurers.--Notwithstanding
the requirements of paragraph (3):
``(A) Eligibility.--Upon request, the Secretary may
provide an exemption from the requirements of
subparagraph (B) of subsection (c)(1) in the Program to
an entity that otherwise meets the definition of an
insurer under this title if--
``(i) such insurer's direct earned premium
is less than $50,000,000 in the calendar year
immediately preceding the current additional
Program Year; and
``(ii) the Secretary makes the
determination set forth in subparagraph (D).
``(B) Insurer group.--For purposes of subparagraph
(A)(i), the direct earned premium of any insurer shall
include the direct earned premiums of every affiliate
of that insurer.
``(C) Information and consultation.--Any insurer
requesting an exemption pursuant to this paragraph
shall provide any information the Secretary may require
to establish its eligibility for the exemption. In
developing standards for evaluating eligibility for the
exemption under this paragraph, the Secretary shall
consult with the NAIC.
``(D) Determination.--In making any determination
regarding eligibility for exemption under this
paragraph, the Secretary shall consult with the
insurance commissioner of the State or other
appropriate State regulatory authority where the
insurer is domiciled and determine whether the insurer
has demonstrated that it would become insolvent if it
were required, in the event of an act of NBCR
terrorism, to satisfy--
``(i) its deductible and maximum applicable
share above the deductible pursuant to sections
102(11)(I) and 103(e)(1)(B), respectively, for
such act of NBCR terrorism resulting in
aggregate industry insured losses above the
trigger established in section 103(e)(1)(C); or
``(ii) its maximum payment obligations for
insured losses for such act of NBCR terrorism
resulting in aggregate industry insured losses
below the trigger established in section
103(e)(1)(C).
``(E) Workers' compensation and other compulsory
insurance law.--In granting an exemption under this
paragraph, the Secretary shall not approve any request
for exemption with regard to State workers'
compensation insurance or other compulsory insurance
law requiring coverage of the risks described in
subparagraph (B) of subsection (c)(1).
``(F) Exemption period.--
``(i) In general.--Any exemption granted to
an insurer by the Secretary under this
paragraph shall have a duration of not longer
than 2 years.
``(ii) Extension.--Notwithstanding clause
(i), the Secretary may, upon application by an
insurer granted an exemption under this
paragraph, extend such exemption for additional
periods of not longer than 2 years.
``(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) there is enacted a joint resolution for payment of
Federal compensation with respect to the act of terrorism that
resulted in the insured loss;
``(2) the person that suffers the insured loss, or a person
acting on behalf of that person, files a claim with the
insurer;
``(3) the insurer provides clear and conspicuous disclosure
to the policyholder of the premium charged for insured losses
covered by the Program (including the additional premium, if
any, charged for the coverage for insured losses resulting from
acts of NBCR terrorism as made available pursuant to subsection
(c)(1)(B)) 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;
``(4) 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
``(5) 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.--
``(1) Availability of coverage for insured losses.--Subject
to paragraph (3), during each Program Year, each entity that
meets the definition of an insurer under section 102 shall make
available--
``(A) in all of its insurance policies for covered
lines, 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; and
``(B) in insurance policies for covered lines for
which the coverage described in subparagraph (A) is
provided, exceptions to the pollution and nuclear
hazard exclusions of such policies that render such
exclusions inapplicable only as to insured losses
arising from acts of NBCR terrorism.
``(2) Allowable exclusions in other coverage.--Subject to
paragraph (3) and notwithstanding any other provision of
Federal or State law, including any State workers' compensation
and other compulsory insurance law, if a person elects not to
purchase an insurance policy with the coverage described in
paragraph (1)--
``(A) an insurer may exclude coverage for all
losses from acts of terrorism including acts of NBCR
terrorism, except for State workers' compensation and
other compulsory insurance law requiring coverage of
the risks described in subsection (c)(1) (unless
permitted by State law); or
``(B) an insurer may offer other options for
coverage that differ materially from the terms,
amounts, and other coverage limitations applicable to
losses arising from events other than acts of
terrorism;
except that nothing in this paragraph shall affect paragraph
(4).
``(3) Applicability for nbcr terrorism.--Notwithstanding
any other provision of this Act, paragraphs (1)(B) and (2)
shall apply, beginning upon January 1, 2009, with respect to
coverage for acts of NBCR terrorism, that is purchased or
renewed on or after such date.
``(4) Availability of life insurance without regard to
lawful foreign travel.--During each Program Year, each entity
that meets the definition of an insurer under section 102 shall
make available, in all of its life insurance policies issued
after the date of the enactment of the Terrorism Risk Insurance
Revision and Extension Act of 2007 under which the insured
person is a citizen of the United States or an alien lawfully
admitted for permanent residence in the United States, coverage
that neither considers past, nor precludes future, lawful
foreign travel by the person insured, and shall not decline
such coverage based on past or future, lawful foreign travel by
the person insured or charge a premium for such coverage that
is excessive and not based on a good faith actuarial analysis,
except that an insurer may decline or, upon inception or
renewal of a policy, limit the amount of coverage provided
under any life insurance policy based on plans to engage in
future lawful foreign travel to occur within 12 months of such
inception or renewal of the policy but only if, at time of
application--
``(A) such declination is based on, or such
limitation applies only with respect to, travel to a
foreign destination--
``(i) for which the Director of the Centers
for Disease Control and Prevention of the
Department of Health and Human Services has
issued a highest level alert or warning,
including a recommendation against non-
essential travel, due to a serious health-
related condition;
``(ii) in which there is an ongoing
military conflict involving the armed forces of
a sovereign nation other than the nation to
which the insured person is traveling; or
``(iii)(I) that the insurer has
specifically designated in the terms of the
life insurance policy at the inception of the
policy or at renewal, as applicable; and
``(II) with respect to which the insurer
has made a good-faith determination that--
``(aa) a serious fraudulent
situation exists which is ongoing; and
``(bb) the credibility of
information by which the insurer can
verify the death of the insured person
is substantially compromised; and
``(B) in the case of any limitation of coverage,
such limitation is specifically stated in the terms of
the life insurance policy at the inception of the
policy or at renewal, as applicable.
``(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 and State workers' compensation
funds.
``(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) Conventional terrorism.--Except as provided
in subparagraph (B), the Federal share of compensation
under the Program to be paid by the Secretary, subject
to subsection (h)(1), for insured losses of an insurer
during any additional Program Year shall be equal to
the sum of--
``(i) 85 percent of that portion of the
amount of such insured losses that--
``(I) exceed the applicable insurer
deductible required to be paid during
such Program Year; and
``(II) based upon pro rata
determinations pursuant to paragraph
(2)(B), does not result in aggregate
industry insured losses during such
Program Year exceeding
$100,000,000,000; and
``(ii) 100 percent of the insured losses of
the insurer that, based upon pro rata
determinations pursuant to paragraph (2)(B),
result in aggregate industry insured losses
during such Program Year exceeding
$100,000,000,000, up to the limit under
paragraph (2)(A).
``(B) NBCR terrorism.--
``(i) Amount of compensation.--The Federal
share of compensation under the Program to be
paid by the Secretary, subject to subsection
(h)(1), for insured losses of an insurer
resulting from NBCR terrorism during any
additional Program Year shall be equal to the
sum of--
``(I) the amount of qualified NBCR
losses (as such term is defined in
clause (ii)) of the insurer, multiplied
by a percentage based on the aggregate
industry qualified NBCR losses for the
Program Year, which percentage shall
be--
``(aa) 85 percent of such
aggregate industry qualified
NBCR losses of less than
$10,000,000,000;
``(bb) 87.5 percent of such
aggregate industry qualified
NBCR losses between
$10,000,000,000 and
$20,000,000,000;
``(cc) 90 percent of such
aggregate industry qualified
NBCR losses between
$20,000,000,000 and
$40,000,000,000;
``(dd) 92.5 percent of such
aggregate industry qualified
NBCR losses of between
$40,000,000,000 and
$60,000,000,000; and
``(ee) 95 percent of such
aggregate industry qualified
NBCR losses of more than
$60,000,000,000;
and shall be prorated per insurer based
on each insurer's percentage of the
aggregate industry qualified NBCR
losses for such additional Program
Year; and
``(II) 100 percent of the insured
losses of the insurer resulting from
NBCR terrorism that, based upon pro
rata determinations pursuant to
paragraph (2)(B), result in aggregate
industry insured losses during such
Program Year exceeding
$100,000,000,000, up to the limit under
paragraph (2)(A).
``(ii) Qualified nbcr losses.--For purposes
of this subparagraph, the term `qualified NBCR
losses' means, with respect to insured losses
of an insurer resulting from NBCR terrorism
during an additional Program Year, that portion
of the amount of such insured losses that
result from any such reactions, releases, or
contaminations and that--
``(I) exceed the applicable insurer
deductible required to be paid during
such Program Year; and
``(II) based upon pro rata
determinations pursuant to paragraph
(2)(B), does not result in aggregate
industry insured losses during such
Program Year exceeding
$100,000,000,000.
``(C) Program trigger.--In the case of a certified
act of terrorism occurring after March 31, 2006, no
compensation shall be paid, pursuant to subsection
(h)(1), by the Secretary under subsection (a), unless
the aggregate industry insured losses resulting from
such certified act of terrorism exceed $50,000,000,
except that if a certified act of terrorism occurs for
which resulting aggregate industry insured losses
exceed $1,000,000,000, the applicable amount for any
subsequent certified act of terrorism shall be the
amount specified in section 102(1)(B)(ii).
``(D) Limitation on compensation for group life
insurance.--Notwithstanding any other provision of this
Act, the Federal share of compensation under the
Program paid, pursuant to subsection (h)(1), by the
Secretary for insured losses of an insurer resulting
from coverage of any single certificate holder under
any group life insurance coverages of the insurer may
not during any additional Program Year exceed
$1,000,000.
``(E) 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) Cap on annual liability.--
``(A) In general.--Notwithstanding paragraph (1) or
any other provision of Federal or State law, including
any State workers' compensation or other compulsory
insurance law, if the aggregate amount of the Federal
share of compensation to be paid to all insurers
pursuant to paragraph (1) exceeds $100,000,000,000,
during any additional 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 the aggregate insured losses during
such Program Year for which the Federal share
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 the aggregate insured losses
during such Program Year 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.
``(C) Claims allocations.--The Secretary shall, by
regulation, provide for insurers to allocate claims
payments for insured losses under applicable insurance
policies in any case described in subparagraph (A).
Such regulations shall include provisions for payment,
for the purpose of addressing emergency needs of
applicable individuals affected by an act of terrorism,
of a portion of claims for insured losses promptly upon
filing of such claims.
``(3) Limitation on insurer financial responsibility.--
``(A) Limitation.--Notwithstanding any other
provision of Federal or State law, including any State
workers' compensation or other compulsory insurance
law, an insurer's financial responsibility for insured
losses from acts of terrorism shall be limited as
follows:
``(i) Federal compensation not provided.--
In any case of an act of terrorism with respect
to which there has not been enacted a joint
resolution for payment of Federal compensation
described in subsection (h)(2), an insurer's
financial responsibility for insured losses
from such act of terrorism shall be limited to
its applicable insurer deductible.
``(ii) Federal compensation provided.--In
any case of an act of terrorism with respect to
which there has been enacted a joint resolution
for payment of Federal compensation described
in subsection (h)(2), an insurer's financial
responsibility for insured losses from such act
of terrorism shall be limited to--
``(I) its applicable insurer
deductible; and
``(II) its applicable share of
insured losses that exceed its
applicable insurer deductible, subject
to the requirements of paragraph (2).
``(B) Federal reimbursement.--In the case of any
act of terrorism with respect to which there has been
enacted a joint resolution for payment of Federal
compensation described in subsection (h)(2) and
notwithstanding any other provision of Federal or State
law, the Secretary shall--
``(i) reimburse insurers for any payment of
excess insured losses made prior to publication
of any notification pursuant to paragraph
(4)(A);
``(ii) reimburse insurers for any payment
of excess insured losses occurring on or after
the date of any notification pursuant to
paragraph (4)(A), but only to the extent that--
``(I) such payment is ordered by a
court pursuant to subparagraph (C) of
this paragraph or is directed by State
law, notwithstanding this paragraph, or
by Federal law;
``(II) such payment is limited to
compensating insurers for their payment
of excess insured losses and does not
include punitive damages, or litigation
or other costs; and
``(III) the insurer has made a
good-faith effort to defend against any
claims for such payment; and
``(iii) have the right to intervene in any
legal proceedings relating to such claims
specified in clause (ii)(III).
``(C) Federal court jurisdiction.--
``(i) Conditions.--All claims relating to
or arising out of an insurer's financial
responsibility for insured losses from acts of
terrorism under this paragraph shall be within
the original and exclusive jurisdiction of the
district courts of the United States, in
accordance with the procedures established in
subparagraph (D), if the Secretary certifies
that the following conditions have been met, or
that there is a reasonable likelihood that the
following conditions may be met:
``(I) The aggregate amount of the
Federal share of compensation to be
paid to all insurers pursuant to
paragraph (1) exceeds $100,000,000,000,
pursuant to paragraph (2); and
``(II) the insurer has paid its
applicable insurer deductible and its
pro rata share of insured losses
determined pursuant to paragraph
(2)(B).
``(ii) Removal of state court actions.--If
the Secretary certifies that conditions set
forth in subclauses (I) and (II) of clause (i)
have been met, all pending State court actions
that relate to or arise out of an insurer's
financial responsibility for insured losses
from acts of terrorism under this paragraph
shall be removed to a district court of the
United States in accordance with subparagraph
(D).
``(D) Venue.--For each certification made by the
Secretary pursuant to subparagraph (C)(i), not later
than 90 days after the Secretary's determination the
Judicial Panel on Multidistrict Litigation shall
designate one district court or, if necessary, multiple
district courts of the United States that shall have
original and exclusive jurisdiction over all actions
for any claim relating to or arising out of an
insurer's financial responsibility for insured losses
from acts of terrorism under this paragraph.
``(E) Federal court jurisdiction and venue in cases
of no federal compensation.--In the case of any act of
terrorism with respect to which there has not been
enacted a joint resolution for payment of Federal
compensation described in subsection (h)(2)--
``(i) all claims relating to or arising out
of an insurer's financial responsibility for
insured losses from such act of terrorism shall
be within the original and exclusive
jurisdiction of the district courts of the
United States, in accordance with the
procedures established in clause (iii);
``(ii) all pending State court actions that
relate to or arise out of an insurer's
financial responsibility for insured losses
from such act of terrorism shall be removed to
a district court of the United States in
accordance with clause (iii); and
``(iii) not later than 90 days after the
Secretary's certification of such act of
terrorism, the Judicial Panel on Multidistrict
Litigation shall designate one district court
or, if necessary, multiple district courts of
the United States that shall have original and
exclusive jurisdiction over all actions for any
claim relating to or arising out of an
insurer's financial responsibility for insured
losses from such act of terrorism.
``(4) Notices regarding losses and annual liability cap.--
``(A) Approaching cap.--If the Secretary determines
estimated or actual aggregate Federal compensation to
be paid pursuant to paragraph (1) equals or exceeds
$80,000,000,000 during any Program Year, the Secretary
shall promptly provide notification in accordance with
subparagraph (D)--
``(i) of such estimated or actual aggregate
Federal compensation to be paid;
``(ii) of the likelihood that such
aggregate Federal compensation to be paid for
such Program Year will equal or exceed
$100,000,000,000; and
``(iii) that, pursuant to paragraph
(2)(A)(ii), insurers are not required to make
payments of excess insured losses.
``(B) Event likely to cause losses to exceed cap.--
If any act of terrorism occurs that the Secretary
determines is likely to cause estimated or actual
aggregate Federal compensation to be paid pursuant to
paragraph (1) to exceed $100,000,000,000 during any
Program Year, the Secretary shall, not later than 10
days after such act, provide notification in accordance
with subparagraph (D)--
``(i) of such estimated or actual aggregate
Federal compensation to be paid; and
``(ii) that, pursuant to paragraph
(2)(A)(ii), insurers are not required to make
payments for excess insured losses.
``(C) Exceeding cap.--If the Secretary determines
estimated or actual aggregate Federal compensation to
be paid pursuant to paragraph (1) equals or exceeds
$100,000,000,000 during any Program Year--
``(i) the Secretary shall promptly provide
notification in accordance with subparagraph
(D)--
``(I) of such estimated or actual
aggregate Federal compensation to be
paid; and
``(II) that, pursuant to paragraph
(2)(A)(ii), insurers are not required
to make payments for excess insured
losses unless the Congress provides for
payments for excess insured losses
pursuant to clause (ii) of this
subparagraph; and
``(ii) the Congress shall determine the
procedures for and the source of any payments
for such excess insured losses.
``(D) Parties notified.--Notification is provided
in accordance with this subparagraph only if
notification is provided--
``(i) to the Congress, in writing; and
``(ii) to insurers, by causing such notice
to be published in the Federal Register.
``(E) Determinations.--The Secretary shall make
determinations regarding estimated and actual aggregate
Federal compensation to be paid promptly after any act
of terrorism as may be necessary to comply with this
paragraph.
``(F) Mandatory disclosure for insurance
contracts.--All policies for property and casualty
insurance and group life insurance shall be deemed to
contain a provision to the effect that, in the case of
any act of terrorism with respect to which there has
been enacted a joint resolution for payment of Federal
compensation described in subsection (h)(2), no insurer
that has met its applicable insurer deductible and its
applicable share of insured losses that exceed its
applicable insurer deductible but are not compensated
pursuant to paragraph (1), shall be obligated to pay
for any portion of excess insured loss. Notwithstanding
the preceding sentence, insurers shall include a
disclosure in their policies detailing the maximum
level of Government assistance and the applicable
insurer share. All policies for property and casualty
insurance and group life insurance shall be deemed to
contain, and insurers shall be permitted to include in
their policies, a provision to the effect that, in the
case of insured losses resulting from any act of
terrorism with respect to which there has not been
enacted a joint resolution for payment of Federal
compensation described in subsection (h)(2), no insurer
shall be obligated to pay for any portion of any such
insured losses that exceeds its applicable insurer
deductible.
``(5) 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.
``(6) Determinations final.--Any determination of the
Secretary under this subsection shall be final, unless
expressly provided, and shall not be subject to judicial
review.
``(7) Insurance marketplace aggregate retention amount.--
For purposes of paragraph (8), the insurance marketplace
aggregate retention amount shall be--
``(A) for the period beginning on the first day of
the Transition Period and ending on the last day of
Program Year 1, the lesser of--
``(i) $10,000,000,000; and
``(ii) the aggregate amount, for all
insurers, of insured losses during such period;
``(B) for Program Year 2, the lesser of--
``(i) $12,500,000,000; and
``(ii) the aggregate amount, for all
insurers, of insured losses during such Program
Year;
``(C) for Program Year 3, the lesser of--
``(i) $15,000,000,000; and
``(ii) the aggregate amount, for all
insurers, of insured losses during such Program
Year;
``(D) for Program Year 4, the lesser of--
``(i) $25,000,000,000; and
``(ii) the aggregate amount, for all
insurers, of insured losses during such Program
Year;
``(E) for Program Year 5, the lesser of--
``(i) $27,500,000,000; and
``(ii) the aggregate amount, for all
insurers, of insured losses during such Program
Year; and
``(F) for each additional Program Year--
``(i) for property and casualty insurance,
the lesser of--
``(I) $27,500,000,000; and
``(II) the aggregate amount, for
all such insurance, of insured losses
during such Program Year; and
``(ii) for group life insurance, the lesser
of--
``(I) $5,000,000,000; and
``(II) the aggregate amount, for
all such insurance, of insured losses
during such Program Year.
``(8) Recoupment of federal share.--
``(A) Mandatory recoupment amount.--For purposes of
this paragraph, the mandatory recoupment amount for
each of the Program Years referred to in subparagraphs
(A) through (F) of paragraph (7) shall be the
difference between--
``(i) the applicable insurance marketplace
aggregate retention amount under paragraph (7)
for such Program Year; and
``(ii) the aggregate amount, for all
applicable insurers (pursuant to subparagraph
(E)), of insured losses during such Program
Year that are not compensated by the Federal
Government because such losses--
``(I) are within the insurer
deductible for the insurer subject to
the losses; or
``(II) are within the portion of
losses of the insurer that exceed the
insurer deductible, but are not
compensated pursuant to paragraph (1).
``(B) No mandatory recoupment if uncompensated
losses exceed applicable insurance marketplace
retention.--Notwithstanding subparagraph (A), if the
aggregate amount of uncompensated insured losses
referred to in clause (ii) of such subparagraph for any
Program Year referred to in any of subparagraphs (A)
through (F) of paragraph (7) is greater than the
applicable insurance marketplace aggregate retention
amount under paragraph (7) for such Program Year, the
mandatory recoupment amount shall be $0.
``(C) Mandatory establishment of surcharges to
recoup mandatory recoupment amount.--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) occurring during any of the Program Years
referred to in any of subparagraphs (A) through (F) of
paragraph (7), terrorism loss risk-spreading premiums
in an amount equal to any mandatory recoupment amount
for such Program Year.
``(D) Discretionary recoupment of remainder of
financial assistance.--To the extent that the amount of
Federal financial assistance provided exceeds any
mandatory recoupment amount, the Secretary may--
``(i) recoup, through terrorism loss risk-
spreading premiums, such additional amounts; or
``(ii) submit a report to the Congress
identifying such amounts that the Secretary
believes cannot be recouped, based on--
``(I) the ultimate costs to
taxpayers of no additional recoupment;
``(II) the economic conditions in
the commercial marketplace, including
the capitalization, profitability, and
investment returns of the insurance
industry and the current cycle of the
insurance markets;
``(III) the affordability of
commercial insurance for small- and
medium-sized businesses; and
``(IV) such other factors as the
Secretary considers appropriate.
``(E) Separate recoupment.--``The Secretary shall
provide that--
``(i) any recoupment under this paragraph
of amounts paid for Federal financial
assistance for insured losses for property and
casualty insurance shall be applied to property
and casualty insurance policies; and
``(ii) any recoupment under this paragraph
of amounts paid for Federal financial
assistance for insured losses for group life
insurance shall be applied to group life
insurance policies.
``(9) Policy surcharge for terrorism loss risk-spreading
premiums.--
``(A) Policyholder premium.--Subject to paragraph
(8)(E), any amount established by the Secretary as a
terrorism loss risk-spreading premium shall--
``(i) be imposed as a policyholder premium
surcharge on property and casualty insurance
policies and group life 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--
``(I) a percentage of the premium
amount charged for property and
casualty insurance coverage under the
policy; and
``(II) a percentage of the amount
at risk for group life 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--
``(i) with respect to property and casualty
insurance, the amount equal to 3 percent of the
premium charged under the policy; and
``(ii) with respect to group life
insurance, the amount equal to 0.0053 percent
of the amount at risk 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
mandatory 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) 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 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) Privileged Procedure for Joint Resolution for Payment of
Federal Compensation.--
``(1) In general.--The Secretary shall pay the Federal
share of compensation under the Program for insured losses
resulting from an act of terrorism only if there is enacted a
joint resolution for payment of Federal compensation with
respect to such act of terrorism.
``(2) Joint resolution.--For purposes of this subsection,
the term `joint resolution for payment of Federal compensation'
means a joint resolution that--
``(A) does not have a preamble;
``(B) the matter after the resolving clause of
which is as follows: `That the Congress approves of the
certification by the Secretary of the Treasury under
section 102(1)(A) of the Terrorism Risk Insurance Act
of 2002.'; and
``(C) the title of which is as follows: `To permit
Federal compensation under the Terrorism Risk Insurance
Act of 2002'.
``(3) Introduction and referral.--Upon receipt of a
submission under section 102(1)(G), the joint resolution
described in this subsection shall be introduced by the
majority leader of each House or his designee (by request). In
the case in which a House is not in session, such joint
resolution shall be so introduced upon convening the first day
of session after the date of receipt of the certification. Upon
introduction, the joint resolution shall be referred to the
appropriate calendar in each House.
``(4) Consideration in the house of representatives.--
``(A) Proceeding to consideration.--Upon referral
to the appropriate calendar, it shall be in order to
move to proceed to consider the joint resolution in the
House. Such a motion shall be in order only at a time
designated by the Speaker in the legislative schedule
within two legislative days. The previous question
shall be considered as ordered on the motion to its
adoption without intervening motion. A motion to
reconsider the vote by which the motion is disposed of
shall not be in order.
``(B) Consideration.--The joint resolution shall be
considered as read. All points of order against the
joint resolution and against its consideration are
waived. The previous question shall be considered as
ordered on the joint resolution to its passage without
intervening motion except one hour of debate equally
divided and controlled by a proponent and an opponent
and one motion to limit debate on the joint resolution.
A motion to reconsider the vote on passage of the joint
resolution shall not be in order.
``(5) Consideration in the senate.--
``(A) Proceeding.--Upon introduction, the joint
resolution shall be placed on the Calendar of Business,
General Orders. A motion to proceed to the
consideration of the joint resolution shall be in order
at any time. The motion is privileged and not
debatable. A motion to proceed to consideration of the
joint resolution may be made even though a previous
motion to the same effect has been disagreed to. An
amendment to the motion shall not be in order, nor
shall it be in order to move to reconsider the vote by
which the motion is agreed to.
``(B) Debate.--Debate on the joint resolution, and
all debatable motions and appeals in connection
therewith, shall be limited to not more than ten hours.
The time shall be equally divided between and
controlled by, the majority leader and the minority
leader or their designees.
``(C) Debatable motions and appeals.--Debate on any
debatable motion or appeal in relation to the joint
resolution shall be limited to not more than one hour
from the time allotted for debate, equally divided and
controlled by the majority leader and the minority
leader or their designees.
``(D) Motion to limit debate.--A motion to further
limit debate is not debatable.
``(E) Motion to recommit.--Any motion to commit or
recommit the joint resolution shall not be in order.
``(F) Final passage.--The Chair shall put the
question on final passage of the joint resolution no
later than 72 hours from the time the measure is
introduced.
``(6) Amendments prohibited.--No amendment to, or motion to
strike a provision from, a joint resolution considered under
this subsection shall be in order in either the Senate or the
House of Representatives.
``(7) Consideration by the other house.--In the case of a
joint resolution described in this subsection, if before
passage by one House of a joint resolution of that House, that
House receives such joint resolution from the other House,
then--
``(A) the procedure in that House shall be the same
as if no joint resolution had been received from the
other House; but
``(B) the vote on final passage shall be on the
joint resolution of the other House.
``(8) House and senate rulemaking.--This subsection is
enacted by the Congress as an exercise of the rulemaking power
of the House of Representatives and Senate, respectively, and
as such is deemed a part of the rules of each House,
respectively, and such procedures supersede other rules only to
the extent that they are inconsistent with such rules; and with
full recognition of the constitutional right of either House to
change the rules (so far as relating to the procedures of that
House) at any time, in the same manner, and to the same extent
as any other rule of that House.'';
(2) in section 104(a)--
(A) in paragraph (1), by striking ``and'' at the
end;
(B) in paragraph (2), by striking the period and
inserting ``; and''; and
(C) by adding at the end the following new
paragraph:
``(3) during the 90-day period beginning upon the
certification of any act of terrorism, to issue such
regulations as the Secretary considers necessary to carry out
this Act without regard to the notice and comment provisions of
section 553 of title 5, United States Code.'';
(3) in section 104, by adding at the end the following new
subsection:
``(h) Annual Adjustment.--
``(1) In general.--Notwithstanding any other provision of
this title, the Secretary shall adjust, for the second
additional Program Year and for each additional Program Year
thereafter, based upon the percentage change in the Consumer
Price Index for All Urban Consumers (CPI-U), as published by
the Bureau of Labor Statistics of the Department of Labor,
during the 12-month period preceding such program year, each of
the dollar amounts set forth in this title (as such amount may
have been previously adjusted), including the following
amounts:
``(A) The dollar amount in section 102(1)(B)(ii)
(relating to act of terrorism).
``(B) The dollar amounts in subparagraphs (J) and
(K) of section 102(11) (relating to an insurer
deductible threshold based on the amount of aggregate
industry insured losses).
``(C) The dollar amounts in subparagraphs (A) and
(B) of section 103(e)(1) (relating to limitation on
Federal share).
``(D) The dollar amounts in section 103(e)(1)(C)
(relating to Program trigger).
``(E) The dollar amount in section 103(e)(1)(D)
(relating to limitation on group life insurance
compensation).
``(F) The dollar amounts in section 103(e)(2)
(relating to cap on annual liability).
``(G) The dollar amounts in section 103(e)(3)(C)
(relating to limitation on insurer financial
liability).
``(H) The dollar amounts in section 103(e)(4)
(relating to notices regarding losses and annual
liability cap).
``(I) The dollar amounts in section 103(e)(7)
(relating to insurance marketplace aggregate retention
amount).
``(J) The dollar amounts in section 109(b)(1)(C)
(relating to membership of Commission on Terrorism
Insurance Risk).
``(2) Publication.--The Secretary shall make the dollar
amounts for each additional Program Year, as adjusted pursuant
to this subsection, publicly available in a timely manner.'';
(4) in section 106(a)(2)--
(A) in subparagraph (B), by striking ``and'' at the
end;
(B) by redesignating subparagraph (C) as
subparagraph (F); and
(C) by inserting after subparagraph (B) the
following new subparagraphs:
``(C) during the period beginning on the date of
the enactment of the Terrorism Risk Insurance Revision
and Extension Act of 2007 and ending on December 31,
2008, rates and forms for property and casualty
insurance, and group life insurance, required by this
title and providing coverage except for NBCR terrorism
that are filed with any State shall not be subject to
prior approval or a waiting period under any law of a
State that would otherwise be applicable, except that
nothing in this title affects the ability of any State
to invalidate a rate as excessive, inadequate, or
unfairly discriminatory, and, with respect to forms,
where a State has prior approval authority, it shall
apply to allow subsequent review of such forms;
``(D) during the period beginning on the date of
the enactment of the Terrorism Risk Insurance Revision
and Extension Act of 2007, and ending on December 31,
2009, forms for property and casualty insurance, and
group life insurance, covered by this title and
providing coverage for NBCR terrorism that are filed
with any State, to the extent of the addition of such
coverage for NBCR terrorism and where such coverage was
not previously required, shall not be subject to prior
approval or waiting period under any law of a State
that would otherwise be applicable;
``(E) during the period beginning on the date of
the enactment of the Terrorism Risk Insurance Revision
and Extension Act of 2007, and ending on December 31,
2010, rates for property and casualty insurance, and
group life insurance, covered by this title and
providing coverage for NBCR terrorism that are filed
with any State, to the extent of the addition of such
coverage for NBCR terrorism and where such coverage was
not previously required, shall not be subject to prior
approval or waiting period under any law of a State
that would otherwise be applicable, except that nothing
in this title affects the ability of any State to
invalidate a rate as inadequate or unfairly
discriminatory; and'';
(5) in section 106, by adding at the end the following new
subsection:
``(c) Rule of Construction Regarding Insurer Coordination.--Nothing
in this Act shall be construed to prohibit, restrict, or otherwise
limit an insurer from entering into an arrangement with another insurer
to make available coverage for any portion of insured losses to fulfill
the requirements of section 103(c). The Secretary shall develop, in
consultation with the NAIC, minimum financial solvency standards and
other standards the Secretary determines appropriate with respect to
such arrangements. Nothing in this subsection shall be construed to
establish any legal partnership.''; and
(6) in section 108(c)(1), by striking ``paragraph (4), (5),
(6), (7), or (8)'' and inserting ``paragraph (5), (6), (7),
(8), or (9)''.
(b) Regulations on Claims Allocations.--The Secretary of the
Treasury shall issue the regulations referred to in subparagraph (C) of
section 103(e)(2) of the Terrorism Risk Insurance Act of 2002, as
amended by subsection (a)(1) of this section, and to carry out
subparagraph (B) of such section 103(e)(2), not later than the
expiration of the 120-day period beginning upon the date of the
enactment of this Act.
(c) Regulations on Certification of an Act of NBCR Terrorism.--The
Secretary of the Treasury shall issue the regulations to carry out
subparagraph (C) of section 102(1) of the Terrorism Risk Insurance Act
of 2002, as amended by subsection (a)(1) of this section, not later
than the expiration of the 180-day period beginning upon the date of
the enactment of this Act.
(d) Regulations on NBCR Exemptions.--The Secretary of the Treasury
shall issue the regulations to carry out paragraph (4) of section
103(a) of the Terrorism Risk Insurance Act of 2002, as amended by
subsection (a)(1) of this section, not later than the expiration of the
180-day period beginning upon the date of the enactment of this Act.
SEC. 4. TERRORISM BUY-DOWN FUND.
The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is
amended--
(1) by inserting after section 106 the following new
section:
``SEC. 106A. TERRORISM BUY-DOWN FUND.
``(a) Establishment.--The Secretary shall establish a Terrorism
Buy-Down Fund (in this section referred to as the `Fund') that shall
make available additional terrorism coverage for the insured losses of
insurers, which shall be available for purchase by insurers on a
voluntary basis.
``(b) Purchase of Deductible, Co-Share, and Trigger Buy-Down
Coverage.--
``(1) In general.--An insurer may purchase deductible, co-
share, and pre-trigger buy-down coverage (in this section
referred to as `buy-down coverage') through the Fund by making
an election, in advance, to treat some or all of the premiums
it has disclosed pursuant to section 106(b)(3) as fee charges
for the Program imposed by the Secretary and remitting such
amounts to the Fund.
``(2) Limits.--An insurer may not purchase buy-down
coverage in an amount greater than the lesser of--
``(A) the highest amount specified in section
103(e)(1)(C); and
``(B) the insurer's one-in-one-hundred-year risk
exposure to acts of terrorism.
``(c) Buy-Down Coverage.--The Fund shall provide the buy-down
coverage to an insurer for losses for acts of terrorism, without
application of the insurer deductible and in addition to any otherwise
payable Federal share of compensation pursuant to section 103(e).
``(d) Build-up.--The buy-down coverage that shall be payable to an
insurer for qualifying losses shall be the aggregate of the insurer's
buy-down coverage premiums plus interest accrued on such amounts.
``(e) Use by Insurers.--
``(1) Qualifying losses.--For the purpose of this section,
qualifying losses are insured losses by an insurer that are not
excess losses and that do not include amounts for which Federal
financial assistance pursuant to section 103(e) is received,
notwithstanding any limits otherwise applicable regarding
section 103(e)(1)(C) (regarding program triggers) or section
102(11) (regarding insurer deductibles).
``(2) Use of buy-down coverage.--An insurer may use any
buy-down coverage payments received under subsection (f) to
satisfy--
``(A) the applicable insurer deductibles for the
insurer;
``(B) the portion of the insurer's losses that
exceed the insurer deductible but are not compensated
by the Federal share; and
``(C) the insurer's obligations to pay for insured
losses if the Program trigger under section
103(e)(1)(C) is not satisfied.
``(3) Buy-down coverage does not reduce federal co-share.--
The receipt by an insurer of buy-down coverage under this
section for insured losses shall not be considered with respect
to calculating the insurer's insured losses with respect to the
insurer's deductible and eligibility for Federal financial
assistance pursuant to section 103(e).
``(4) Insolvency.--An insurer may sell its rights to buy-
down coverage from the Fund to another insurer as part of or to
avoid an insolvency or as part of a merger, sale, or major
reorganization.
``(f) Payment of Buy-Down Coverage.--The Fund shall pay the
qualifying losses of an insurer purchasing buy-down coverage up to the
amount described in subsection (d).
``(g) Government Borrowing.--The Secretary may borrow the funds
from the Fund to offset, in whole or in part, the Federal share of
compensation provided to all insurers under the Program, except that--
``(1) the Fund shall always immediately provide any buy-
down coverage payments required under subsection (f); and
``(2) any such amounts borrowed must be replenished with
appropriate interest.
``(h) Risk-Sharing Mechanisms.--The Secretary shall establish
voluntary risk-sharing mechanisms for insurers purchasing buy-down
coverage from the Fund to pool their reinsurance purchases and
otherwise share terrorism risk.
``(i) Termination.--Upon termination of the Program under section
108, and subject to the Secretary's continuing authority under section
108(b) to adjust claims in satisfaction under the Program, the
Secretary shall provide that the Fund shall become a privately-operated
mutual terrorism reinsurance company owned by the insurers that have
submitted buy-down coverage premiums in proportion to such premiums
minus any buy-down coverage payments received.''; and
(2) in the table of contents in section 1(b), by inserting
after the item relating to section 106 the following new item:
``Sec. 106A. Terrorism Buy-Down Fund.''.
SEC. 5. ANALYSIS AND STUDY.
(a) Analysis of Market Conditions.--Section 108 of the Terrorism
Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking
subsection (e) and inserting the following:
``(e) Analysis of Market Conditions for Terrorism Risk Insurance.--
``(1) In general.--The Secretary, in consultation with the
NAIC, representatives of the insurance industry,
representatives of the securities industry, and representatives
of policyholders, shall perform an analysis regarding the long-
term availability and affordability of insurance for terrorism
risk in the private marketplace, including coverage for--
``(A) property and casualty insurance;
``(B) group life insurance;
``(C) workers' compensation;
``(D) nuclear, biological, chemical, and
radiological events; and
``(E) commercial real estate.
``(2) Biennial reports.--The Secretary shall submit
biennial reports to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate, on its findings pursuant to
the analysis conducted under paragraph (1). The first such
report shall be submitted not later than the expiration of the
24-month period beginning on the date of the enactment of the
Terrorism Risk Insurance Revision and Extension Act of 2007.
``(3) Testimony.--Upon submission of each biennial report
under paragraph (2), the Secretary shall provide oral testimony
to the Committee on Financial Services of the House of
Representatives and Committee on Banking, Housing, and Urban
Affairs of the United States Senate regarding the report and
the analysis under this subsection for which the report is
submitted.''.
(b) Commission on Terrorism Risk Insurance.--Title I of the
Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--
(1) by adding at the end the following new section:
``SEC. 109. COMMISSION ON TERRORISM RISK INSURANCE.
``(a) Establishment.--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 21 members, as
follows:
``(A) The Secretary of the Treasury or the designee
of the Secretary.
``(B) One member who is a State insurance
commissioner, designated by the NAIC.
``(C) 15 members, who shall be appointed by the
President, who shall include--
``(i) a representative of group life
insurers;
``(ii) a representative of property and
casualty insurers with direct earned premium of
$1,000,000,000 or less;
``(iii) a representative of property and
casualty insurers with direct earned 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;
``(ix) a representative of the reinsurance
industry;
``(x) a representative of workers'
compensation insurers;
``(xi) a representative from the commercial
mortgage-backed securities industry;
``(xii) a representative from a nationally
recognized statistical rating organization;
``(xiii) a real estate developer;
``(xiv) a representative of workers'
compensation insurers created by State
legislatures, selected in consultation with the
American Association of State Compensation
Insurance Funds from among its members; and
``(xv) a representative from the commercial
real estate brokerage industry or the
commercial property management industry.
``(D) Four members, who shall serve as liaisons to
the Congress, who shall include two members jointly
selected by the Chairman and Ranking Member of the
Committee on Financial Services of the House of
Representatives and two members jointly selected by the
Chairman and Ranking Member of the Committee on
Banking, Housing, and Urban Affairs of the Senate.
``(2) Secretary.--The Program Director of the Terrorism
Risk Insurance Act of the Department of the Treasury 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
cover such losses independently; and
``(C) possible actions to significantly reduce the
Federal role in covering losses resulting from acts of
terrorism.
``(2) Evaluations.--In identifying and making the
recommendations required under paragraph (1), the Commission
shall specifically evaluate the utility and viability of
proposals aimed at improving the availability of insurance
against terrorism risk in the private marketplace.
``(3) Initial meeting.--The Commission shall hold its first
meeting during the 3-month period that begins 15 months after
the date of the enactment of the Terrorism Risk Insurance
Revision and Extension Act of 2007.
``(4) Reports.--
``(A) Contents.--The Commission shall submit two
reports to the Congress that--
``(i) evaluate and make recommendations
regarding whether there is a need for a Federal
terrorism risk insurance program;
``(ii) if so, include a specific, detailed
recommendation for the replacement of the
Program under this title; and
``(iii) include the identifications,
evaluations, and recommendations required under
paragraphs (1) and (2).
``(B) Timing.--The first report required under
subparagraph (A) shall be submitted before the
expiration of the 60-month period beginning on the date
of the enactment of the Terrorism Risk Insurance
Revision and Extension Act of 2007. The second such
report shall be submitted before the expiration of the
96-month period beginning upon such date of
enactment.''; and
(2) in the table of contents in section 1(b), by inserting
after the item relating to section 108 the following new item:
``Sec. 109. Commission on Terrorism Risk Insurance.''.
SEC. 6. APPLICABILITY.
The amendments made by this Act shall apply beginning on January 1,
2008. 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, 2007.
Passed the House of Representatives September 19, 2007.
Attest:
Clerk.
110th CONGRESS
1st Session
H. R. 2761
_______________________________________________________________________
AN ACT
To extend the Terrorism Insurance Program of the Department of the
Treasury, and for other purposes.