[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2761 Reported in House (RH)]






                                                 Union Calendar No. 201
110th CONGRESS
  1st Session
                                H. R. 2761

                          [Report No. 110-318]

  To extend the Terrorism Insurance Program of the Department of the 
                   Treasury, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 18, 2007

 Mr. Capuano (for himself, Mrs. Maloney of New York, Mr. Ackerman, Mr. 
Meeks of New York, Mrs. McCarthy of New York, Mr. Crowley, Mr. Israel, 
Mr. King of New York, Mr. Gutierrez, Mr. Watt, Mr. Sherman, Mr. Lynch, 
 Mr. Scott of Georgia, Mr. Al Green of Texas, Mr. Cleaver, Mr. Lincoln 
 Davis of Tennessee, Mr. Sires, Mr. Mahoney of Florida, Mr. Murphy of 
  Connecticut, Mr. Wexler, Mr. Boren, Mr. Frank of Massachusetts, Mr. 
Hodes, and Mr. Shays) introduced the following bill; which was referred 
                 to the Committee on Financial Services

                           September 6, 2007

   Additional sponsors: Mr. Ramstad, Mr. Donnelly, Mr. Higgins, Ms. 
    Hooley, Mr. Hinojosa, Ms. Berkley, Mr. Courtney, and Mr. Rothman

                           September 6, 2007

  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 June 
                               18, 2007]

_______________________________________________________________________

                                 A BILL


 
  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.--Upon 
                certification of an act of terrorism, 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 such act of terrorism as an act of NBCR 
                terrorism.
                    ``(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.
            ``(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; and
                    ``(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;
                            ``(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.
            ``(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 nuclear, biological, chemical, 
        or radiological reactions, releases, or contaminations, to the 
        extent any insured losses result from any such reactions, 
        releases, or contaminations.
            ``(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 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) 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 (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;
            ``(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.--
            ``(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 unlawful situation 
                                exists which is ongoing; and
                                    ``(bb) the credibility of 
                                information by which the insurer can 
                                verify the death of the insured person 
                                is 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 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) exceeds 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 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--
                                    ``(I) exceeds 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 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 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 to its 
                applicable insurer deductible and its applicable share 
                of insured losses that exceed its applicable insurer 
                deductible, subject to the requirements of paragraph 
                (2).
                    ``(B) Federal reimbursement.--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.
            ``(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 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.
            ``(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.'';
            (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 an appropriate 
        index during the 12-month period preceding such Program Year, 
        each of the following amounts (as such amount may have been 
        previously adjusted):
                    ``(A) The dollar amount in section 102(1)(B)(ii) 
                (relating to act of terrorism).
                    ``(B) The dollar amount in section 102(11)(J) 
                (relating to aggregate industry insured losses in a 
                previously impacted area).
                    ``(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 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 103(b)(2) 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.
                                                 Union Calendar No. 201

110th CONGRESS

  1st Session

                               H. R. 2761

                          [Report No. 110-318]

_______________________________________________________________________

                                 A BILL

  To extend the Terrorism Insurance Program of the Department of the 
                   Treasury, and for other purposes.

_______________________________________________________________________

                           September 6, 2007

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