Short title; table of contents

(a)

Short Title

This Act may be cited as the

Terrorism Risk Insurance Program Reauthorization Act of 2007

. (b)

Table of Contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Definition of act of terrorism.

Sec. 3. Reauthorization of the program.

Sec. 4. Annual liability cap.

Sec. 5. Enhanced reports to Congress.

Sec. 6. Coverage of group life insurance.

Sec. 7. Large event reset.

Sec. 8. Availability of life insurance without regard to lawful foreign travel.

Sec. 9. Program trigger.

Sec. 10. Applicability.

Definition of act of terrorism

Section 102(1)(A)(iv) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking acting on behalf of any foreign person or foreign interest.

Reauthorization of the program

(a)

Termination Date

Section 108(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking 2007 and inserting 2014. (b)

Additional Program Years

Section 102(11) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following:

(G)

Additional program years

Except when used as provided in subparagraphs (B) through (F), the term Program Year means, as the context requires, any of Program Year 1, Program Year 2, Program Year 3, Program Year 4, Program Year 5, or any of calendar years 2008 through 2014.

(c)

Conforming Amendments

The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in section 102(7)(F)— (A)by inserting and each Program Year thereafter before , the value; and (B)by striking preceding Program Year 5 and inserting preceding that Program Year; (2)in section 103(e)(1)(A), by inserting and each Program Year thereafter after Year 5; (3)in section 103(e)(1)(B)(ii), by inserting before the period at the end and any Program Year thereafter; (4)in section 103(e)(2)(A), by striking of Program Years 2 through 5 and inserting Program Year thereafter; (5)in section 103(e)(3), by striking of Program Years 2 through 5, and inserting other Program Year; and (6)in section 103(e)(6)(E), by inserting and any Program Year thereafter after Year 5.

Annual liability cap

(a)

In General

Section 103(e)(2) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in subparagraph (A)— (A)by striking (until such time as the Congress may act otherwise with respect to such losses); and (B)in clause (ii), by striking that amount and inserting the amount of such losses; and (2)in subparagraph (B), by inserting before the period at the end , except that, notwithstanding paragraph (1) or any other provision of Federal or State law, no insurer may be required to make any payment for insured losses in excess of its deductible under section 102(7) combined with its share of insured losses under paragraph (1)(A) of this subsection. (b)

Notice to Congress

Section 103(e)(3) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)by adding at the end the following: The Secretary shall provide an initial notice to Congress not later than 15 days after the date of an act of terrorism, stating whether the Secretary estimates that aggregate insured losses will exceed $100,000,000,000.; and (2)by striking and the Congress shall and all that follows through the end of the paragraph and inserting a period. (c)

Regulations for Pro Rata Payments; Report to Congress

Section 103(e)(2)(B) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)by striking For purposes and inserting the following:

(i)

In general

For purposes

; and

(2)by adding at the end the following:

(ii)

Regulations

Not later than 240 days after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, the Secretary shall issue final regulations for determining the pro rata share of insured losses under the Program when insured losses exceed $100,000,000,000, in accordance with clause (i). (iii)

Report to congress

Not later than 120 days after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, the Secretary shall provide a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives describing the process to be used by the Secretary for determining the allocation of pro rata payments for insured losses under the Program when such losses exceed $100,000,000,000.

(d)

Disclosure

Section 103(b) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and (2)by inserting after paragraph (2) the following:

(3)in the case of any policy that is issued after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, the insurer provides clear and conspicuous disclosure to the policyholder of the existence of the $100,000,000,000 cap under subsection (e)(2), at the time of offer, purchase, and renewal of the policy;

(e)

Surcharges

Section 103(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in paragraph (7)— (A)in subparagraph (C), by inserting 133 percent of before any mandatory recoupment; and (B)by adding at the end the following:

(E)

Timing of mandatory recoupment

(i)

In general

If the Secretary is required to collect terrorism loss risk-spreading premiums under subparagraph (C)— (I)for any act of terrorism that occurs on or before December 31, 2010, the Secretary shall collect all required premiums by September 30, 2012; (II)for any act of terrorism that occurs between January 1 and December 31, 2011, the Secretary shall collect 35 percent of any required premiums by September 30, 2012, and the remainder by September 30, 2017; and (III)for any act of terrorism that occurs on or after January 1, 2012, the Secretary shall collect all required premiums by September 30, 2017. (ii)

Regulations required

Not later than 180 days after the date of enactment of this subparagraph, the Secretary shall issue regulations describing the procedures to be used for collecting the required premiums in the time periods referred to in clause (i). (F)

Notice of estimated losses

Not later than 90 days after the date of an act of terrorism, the Secretary shall publish an estimate of aggregate insured losses, which shall be used as the basis for determining whether mandatory recoupment will be required under this paragraph. Such estimate shall be updated as appropriate, and at least annually.

; and

(2)in paragraph (8)— (A)in subparagraph (C)— (i)by striking (including any additional amount included in such premium and inserting collected; and (ii)by striking (D)) and inserting (D); and (B)in subparagraph (D)(ii), by inserting before the period at the end , in accordance with the timing requirements of paragraph (7)(E).

Enhanced reports to Congress

(a)

Study and Report on Insurance for Nuclear, Biological, Chemical, and Radiological Terrorist Events

Section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following:

(f)

Insurance for Nuclear, Biological, Chemical, and Radiological Terrorist Events

(1)

Study

The Comptroller General of the United States shall examine— (A)the availability and affordability of insurance coverage for losses caused by terrorist attacks involving nuclear, biological, chemical, or radiological materials; (B)the outlook for such coverage in the future; and (C)the capacity of private insurers and State workers compensation funds to manage risk associated with nuclear, biological, chemical, and radiological terrorist events. (2)

Report

Not later than 1 year after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, the Comptroller General shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report containing a detailed statement of the findings under paragraph (1), and recommendations for any legislative, regulatory, administrative, or other actions at the Federal, State, or local levels that the Comptroller General considers appropriate to expand the availability and affordability of insurance for nuclear, biological, chemical, or radiological terrorist events.

(b)

Study and Report on Availability and Affordability of Terrorism Insurance in Specific Markets

Section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following:

(g)

Availability and Affordability of Terrorism Insurance in Specific Markets

(1)

Study

The Comptroller General of the United States shall conduct a study to determine whether there are specific markets in the United States where there are unique capacity constraints on the amount of terrorism risk insurance available. (2)

Elements of study

The study required by paragraph (1) shall contain— (A)an analysis of both insurance and reinsurance capacity in specific markets, including pricing and coverage limits in existing policies; (B)an assessment of the factors contributing to any capacity constraints that are identified; and (C)recommendations for addressing those capacity constraints. (3)

Report

Not later than 180 days after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, the Comptroller General shall submit a report on the study required by paragraph (1) to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives.

(c)

Ongoing Reports

Section 108(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in paragraph (1)— (A)by inserting ongoing before analysis; and (B)by striking , including and all that follows through the end of the paragraph, and inserting a period; and (2)in paragraph (2)— (A)by inserting and thereafter in 2010 and 2013, after 2006,; and (B)by striking subsection (a) and inserting paragraph (1).

Coverage of group life insurance

(a)

Findings and purpose

Section 101 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in subsection (a)— (A)in paragraph (5), by striking and at the end; (B)by redesignating paragraph (6) as paragraph (8); and (C)by inserting after paragraph (5) the following new paragraphs:

(6)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; (7)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 terrorism risks while most catastrophic reinsurance does exclude such risks, and because a large-scale loss of life would fall outside of actuarial expectations of death; and

; and

(2)in subsection (b)(1), by inserting and group life insurance after property and casualty insurance. (b)

Definitions

Section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note), as amended by the preceding provisions of this Act, is further amended— (1)in paragraph (1)(B)(ii), by inserting and group life insurance before losses; (2)in paragraph (5), in the matter preceding subparagraph (A)— (A)by inserting , or group life insurance to the extent of the amount at risk, after property and casualty insurance; (B)by inserting a comma after insurer; and (C)by adding after and below subparagraph (B) the following:

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).

;

(3)in paragraph (6)— (A)in subparagraph (A)(i), by inserting , or group life insurance, after excess insurance; and (B)in subparagraph (B), by inserting or, in the case of group life insurance, that receives direct premiums, after insurance coverage,; (4)in paragraph (7)— (A)in subparagraph (F)— (i)by striking the first comma and inserting (i) with respect to property and casualty insurance,; and (ii)by inserting before the semicolon the following: (ii) with respect to group life insurance, the value of an insurer’s amount at risk for a covered line of insurance over the calendar year immediately preceding such Program Year, multiplied by 0.0351 percent; (B)in subparagraph (G)— (i)by inserting with respect to property and casualty insurance, and such portion of the amounts at risk with respect to group life insurance, after such portion of the direct earned premiums; and (ii)by inserting and amounts at risk after such direct earned premiums; (5)by redesignating paragraph (16) as paragraph (18); and (6)by inserting after paragraph (15) the following new paragraphs:

(16)

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. (17)

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 (5).

(c)

Mandatory availability

Section 103(c) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking During each Program Year and all that follows through property and casualty insurance in paragraph (2) and inserting the following:

(1)

Availability of coverage for insured losses

During each Program Year, each entity that meets the definition of an insurer under section 102 shall make available, in all of its insurance policies for property and casualty insurance and in all of its insurance policies for group life insurance,

(d)

Federal share of compensation

Section 103(e)(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following new subparagraph:

(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 Program Year exceed $1,000,000.

(e)

Separate retention pool

Section 103(e)(6)(E) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking clauses (i) and (ii) and inserting the following new clauses:

(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.

(f)

Separate recoupment

Section 103(e)(7) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note), as amended by the preceding provisions of this Act, is further amended— (1)in subparagraph (A)— (A)in clause (i), by inserting applicable before insurance; and (B)in clause (ii), by striking all insurers and inserting all applicable insurers (pursuant to subparagraph (G)); (2)in subparagraph (B)— (A)in the heading, by inserting

applicable

before

insurance

; and (B)by inserting applicable before insurance; and (3)by adding at the end the following new subparagraph:

(G)

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.

(g)

Policy surcharge for terrorism loss risk-spreading premiums

Section 103(e)(8) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in subparagraph (A)— (A)in the matter preceding clause (i), by striking Any and inserting Subject to paragraph (7)(G), any; (B)in clause (i), by inserting and group life insurance policies after policies; and (C)by striking clause (iii) and inserting the following new clause:

(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.

; and

(2)in subparagraph (C)— (A)by inserting with respect to property and casualty insurance, after annual basis,; and (B)by inserting before the period at the end the following: and, with respect to group life insurance, the amount equal to 0.0053 percent of the amount at risk for covered lines under the policy.

Large event reset

The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended— (1)in section 102(7)— (A)in subparagraph (F), by striking and at the end; (B)in subparagraph (G), by striking the period at the end and inserting ; and; and (C)by adding at the end the following new subparagraph:

(H)notwithstanding subparagraph (F)(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 Program Year consisting of calendar year 2008 shall be 5 percent; and (ii)for each Program Year thereafter, shall be 50 basis points greater than the percentage applicable to the preceding Program Year, except that if an act of terrorism occurs during any such Program Year that results in aggregate industry insured losses exceeding $1,000,000,000, the percentage for the succeeding Program Year shall be 5 percent and the increase under this clause shall apply to 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 (F)(i) shall apply.

; and

(2)in section 103(e)(1)(B)— (A)in clause (ii), by striking the period at the end and inserting a semicolon; and (B)by adding after and below clause (ii) the following:

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).

Availability of life insurance without regard to lawful foreign travel

Section 103(c) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new paragraph:

(2)

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 and any other entity that issues insurance contracts that provide life insurance coverage shall make available, in all of its life insurance policies issued after the date of the enactment of the Terrorism Risk Insurance Program Reauthorization 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 foreign destination to which the insured person is traveling; or (iii) (I)that the insurer has specifically designated in the terms of the life insurance policy at the inception of the policy or at renewal, as applicable; and (II)with respect to which the insurer has made a good-faith determination that— (aa)a serious fraudulent situation exists which is ongoing; and (bb)the credibility of information by which the insurer can verify the death of the insured person is substantially compromised; and (B)in the case of any limitation of coverage, such limitation is specifically stated in the terms of the life insurance policy at the inception of the policy or at renewal, as applicable.

Program trigger

Section 103(e)(1)(B)(ii) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking $100,000,000 and inserting $50,000,000.

10.

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.