[Congressional Record Volume 147, Number 163 (Thursday, November 29, 2001)]
[House]
[Pages H8572-H8630]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TERRORISM RISK PROTECTION ACT
Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I
call up House Resolution 297 ask for its immediate consideration.
The Clerk read the resolution, as follows:
H. Res. 297
Resolved, That upon the adoption of this resolution it
shall be in order without intervention of any point of order
to consider in the House the bill (H.R. 3210) to ensure the
continued financial capacity of insurers to provide coverage
for risks from terrorism. The bill shall be considered as
read for amendment. In lieu of the amendments recommended by
the Committee on Financial Services and the Committee on Ways
and Means now printed in the bill, an amendment in the nature
of a substitute consisting of the text of H.R. 3357 shall be
considered as adopted. The previous question shall be
considered as ordered on the bill, as amended, and on any
further amendment thereto to final passage without
intervening motion except: (1) one hour of debate on the
bill, as amended, equally divided and controlled by the
chairman and ranking minority member of the Committee on
Financial Services; (2) the further amendment printed in the
report of the Committee on Rules accompanying this
resolution, if offered by Representative LaFalce of New York
or his designee, which shall be in order without intervention
of any point of order, shall be considered as read, and shall
be separately debatable for one hour equally divided and
controlled by the proponent and an opponent; and (3) one
motion to recommit with or without instructions.
The SPEAKER pro tempore (Mr. Shimkus). The gentleman from Texas (Mr.
Sessions) is recognized for 1 hour.
Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield
the customary 30 minutes to the gentlewoman from New York (Ms.
Slaughter), pending which I yield myself such time as I may consume.
During consideration of this resolution, all time yielded is for the
purpose of debate only.
Mr. Speaker, the resolution before us today is a fair, modified rule
providing for the consideration of H.R. 3210, the Terrorism Risk
Protection Act. The rule provides that in lieu of the amendments
recommended by the Committee on Financial Services and the Committee on
Ways and Means, an amendment in the nature of a substitute consisting
of the text of H.R. 3357 shall be considered as adopted.
The rule waives all points of order against consideration of the
bill, as amended, and provides for 1 hour of debate in the House,
equally divided and controlled by the chairman and ranking minority
member of the Committee on Financial Services. It also provides for
consideration of the amendment in the nature of a substitute printed in
the Committee on Rules report accompanying the resolution, if offered
by the gentleman from New York (Mr. LaFalce) or his designee.
The bill shall be considered as read and shall be separately
debatable for 1 hour, equally divided and controlled by the proponent
and opponent. The rule waives all points of order against consideration
of the amendment printed in the reported. Finally, the rule provides
for one motion to recommit, with or without instructions.
Mr. Speaker, on September 11, the collective memory of Americans was
altered forever. The terrorist attacks resulted in an incalculable
loss, both in terms of life and the destruction of buildings, property
and businesses. In the 2\1/2\ months since the attacks, America has
begun the painful process of recovery and healing.
Today we are here to consider H.R. 3210, the Terrorism Risk
Protection Act. Exposure to terrorism is not only a threat to our
national security, but is also a threat to the United States and global
economies. The full extent of insured losses from September 11 is not
yet known, but current estimates span from the range of $30 billion to
$70 billion.
There is no doubt that these terrorist attacks have resulted in the
most catastrophic loss in the history of property and casualty
insurance. While the insurance industry has indicated that it will be
able to cover total losses, and should be commended for its resiliency,
we are faced with a new situation that requires an innovative and
creative solution.
[[Page H8573]]
As our President, President Bush, declared, this Nation is now faced
with fighting a different kind of war against a new enemy. Just as our
military leaders have had to employ new strategies and tactics to fight
the war abroad, we have had to make adjustments in our own homeland.
Prior to September 11, terrorism insurance coverage was generally
included in most commercial and personal contracts. However, the
prospect of future attacks has set off a dangerous chain reaction.
The reinsurance industry, which insures insurance companies, has
indicated its inability to provide terrorism coverage without a short-
term Federal backstop. Without reinsurance for the risk of terrorism,
insurance companies are forced to specifically exclude it from future
policies. Without this terrorism coverage, lenders are unlikely to
underwrite loans for major projects. This sequence of events could
result in dangerous disruptions to the marketplace and further hurt our
economy.
While a few fully understood intricacies of risk assessment and
premium pricing are apparent, the effects on our marketplace are
already being felt. I would like to highlight just a few of these real
live examples.
There is a small construction contractor in Maryland that recently
found out that his insurance premium might triple to $150,000 a year.
New York's JFK International Airport terminal cannot secure the $1
billion in insurance coverage it needs, which has led the developer to
reconsider shutting the terminal down.
The city of Chicago has received a bill to renew its war on terrorism
insurance for next year at a 5,000 percent increase over its 2001
rates.
These snapshots from around the country form a composite picture of a
dire circumstance that requires action from Congress.
Since September 11, Congress has moved in a timely fashion to address
the needs that have arisen from the bipartisan supplemental
appropriations funding, provided just a few days after the attacks, to
legislation that addresses the need for increased airline security, to
an economic stimulus package. This House has responded to its calling.
Mr. Speaker, we now must step up again to pass this bill that is
before us today. Reinsurance policies are generally written on a 1-year
basis. Approximately 70 percent of current reinsurance contracts are
set to expire at the end of this year, December 31, 2001.
As the year draws to a close, Congress must act quickly to avert a
national economic disaster. The Terrorism Risk Protection Act provides
a Federal backstop for financial losses in the event of future
terrorism attacks. This crucially needed backstop would create a
temporary risk-spreading program to ensure the continued availability
of commercial property and casualty insurance and reinsurance for
terrorism-related risks. Under the House plan, the Federal Government
provides the necessary backstop without opening the pocketbooks of
taxpayers. Every dollar of Federal assistance will be repaid.
The legislation also contains reasonable legal reforms to ensure that
Federal assistance reaches its intended recipient. The 1993 World Trade
Center bombing which killed 6 people resulted in 500 lawsuits by 700
individuals, businesses and insurance companies.
Mr. Speaker, it has been 8 years and the cases are only just now
getting to the trial stage, and hundreds of plaintiffs have yet to even
receive 1 cent of compensation. By providing reasonable reforms,
victims of terrorism will more quickly and equitably receive
compensation, while also reducing the substantial uncertainty facing
the insurance industry when pricing terrorism risk.
Finally, the bill provides for studies that examine the effects on
terrorism on various sectors of the insurance industry and ways to
establish reserves, and guards against losses for future acts of
terrorism.
Yesterday, in his testimony before the Committee on Rules, the
gentleman from Ohio (Chairman Oxley) described insurance as ``the glue
which holds our economy together.'' The ranking member, the gentleman
from New York (Mr. LaFalce), also spoke, saying that this bill is not a
bailout for the insurance company, and is of critical importance.
While there may be many competing ideas on the best way to address
this situation, there is one unanimous agreement: that this legislation
is absolutely critical to prevent major disruptions in the marketplace
and further harm to our economy.
As the gentleman from Louisiana (Chairman Baker) stated when he
testified yesterday, the only intolerable action at this time is to do
nothing.
Mr. Speaker, I urge my colleagues to join me in supporting this rule,
a fair rule, and the underlying legislation.
Mr. Speaker, I reserve the balance of my time.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
(Ms. SLAUGHTER asked and was given permission to revise and extend
her remarks.)
Ms. SLAUGHTER. Mr. Speaker, I thank my colleague from Texas for
yielding me the customary 30 minutes.
Mr. Speaker, I rise in opposition to the rule. I oppose the hubris it
embodies and the process it represents. In what is becoming standard
procedure, the House is preparing to move forward with an important
bill that is not ready for prime time.
No one doubts the critical nature of this bill. The withdrawal of
terrorism coverage by reinsurers may force primary insurers to
radically increase premiums for policyholders or to withdraw coverage
entirely. The consequences could reverberate throughout the entire
economy. Virtually nothing could happen in the American economy without
insurance, and the vast majority in this body agrees that Congress has
a duty to intervene in the reinsurance marketplace to safeguard against
a cascading economic crisis.
Unfortunately, the leadership in the body has seized upon the crisis
in an attempt to circumvent regular order and move forward with tort
reform, a wholly extraneous matter. Tort reform does not belong in this
bill, nor was it requested by the reinsurance industry representatives
during the many discussions leading up to the legislation.
Even by the standards that are in place here, this is a heavy-handed
attempt to curtail victims' rights. The tort reform provision threatens
to derail the principal objective of the legislation, which is to
revitalize and reestablish a rational and functional reinsurance
market.
Yesterday's Committee on Rules hearing on the bill revealed utter
confusion among the chairmen and ranking members of the two committees
as to what the bill actually contained. The chairmen had not seen the
measure, but had a hunch of what might be in it. The ranking members
were wholly in the dark. Committee on Rules members were given copies
of the comprehensive substitute provisions seconds before the hearing
commenced.
Something else became apparent at the hearing as well. All the
principals involved in the legislation, the gentleman from Ohio
(Chairman Oxley), the gentleman from New York (Mr. LaFalce), the
gentleman from Pennsylvania (Mr. Kanjorski) and the gentleman from
Louisiana (Mr. Baker) were firmly convinced of the importance of the
legislation and the need to move it forward, and, indeed, all four
showed a great willingness to work together with each other to reach a
consensus and a good bill which the country sorely needs. They believed
that within an additional 24 hours they could have reached that
agreement and moved a bill that virtually all of us would have
supported.
Now, this is the way a deliberate body should operate, and, indeed,
was operating as this bill moved expeditiously through the legislative
process. But after the Committee on Financial Services carefully
crafted a bipartisan measure, the House leadership seized their work
product in order to move a controversial measure they know would not
survive the scrutiny of the entire Congress.
{time} 1115
Mr. Speaker, this is not leadership; this is petulance. The American
people expect more from their leaders in a time of crisis.
We are also being asked to support a rule that blocks any attempt to
remedy these extraneous provisions. Indeed, some measures in the
committee itself that had passed by a majority
[[Page H8574]]
vote to improve the bill were not even included as the bill was
written. The gentleman from New York (Mr. LaFalce) and the gentleman
from Michigan (Mr. Conyers) both offered amendments for the rule that
simply strike the sections of the bill that related to tort reform, and
the gentleman from Pennsylvania (Mr. Kanjorski) offered a compromise
amendment on tort reform to prohibit the use of Federal assistance to
cover punitive damage awards.
The gentleman from New York (Mr. Crowley) offered an amendment which
would have expanded the legislation to cover not only commercial
policyholders, but personal policyholders, like our Nation's homeowners
who have been grievously hurt in New York City and other parts of the
country. Without this extension, homeowners are going to see their
premiums rise dramatically. But none of these amendments were made in
order.
What is the leadership's aversion to regular order? Why the single-
minded obsession with sabotaging critical legislation unanimously
agreed upon at the committee level? And why the unwillingness to show
their handiwork to the scrutiny of their colleagues before a Committee
on Rules hearing and floor consideration?
Moreover, Mr. Speaker, there are other critical priorities that
Congress is ignoring. As we take the time to rush through a measure
designed to protect the insurance industry, surely we could utilize
that same energy to address the needs of those who have lost their jobs
and their health insurance in the wake of September 11.
With this in mind, I will be urging defeat of the previous question
so that we can adopt a rule to order an amendment offered by the
gentleman from New York (Mr. Rangel). This amendment would provide
relief for unemployed workers in the form of unemployment compensation
and the extension of COBRA benefits and Medicaid.
Mr. Speaker, I reserve the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield 5 minutes to the gentleman from
Ohio (Mr. Oxley), the chairman of the Committee on Financial Services,
to speak to us supporting this rule.
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, first I want to pay tribute to the gentleman from Texas
(Mr. Sessions), my good friend, for once again helping us craft a very
fair and equitable rule to debate this very difficult issue that faces
us. Just a few short weeks ago, we faced this terrible attack on
America on September 11, and I do not think any one of us could have
foreseen the events that have taken place since that time that have
drawn this Congress towards addressing some of the most critical issues
facing us.
We have done a great job, in my estimation, acting on a bipartisan
basis, dealing with things like giving the President the authority to
wage a military campaign in Afghanistan, providing the funding
necessary to get New York back on its feet and to compensate victims of
this terrible tragedy and, ultimately, I think, passing an economic
stimulus package.
This legislation that we will be taking up shortly is a direct
response to what happened after September 11, and that is almost
immediately. The reinsurance market which, for the most part, is
offshore and not American, indicated very strongly that they would no
longer write reinsurance policies for terrorism. This, of course, had a
resounding effect on the American domestic insurance industry, the
property and casualty companies, because with the inability to
essentially reinsure or to spread the risk through reinsurance, they
faced a real conundrum.
This is not about the losses that took place on September 11, and
this bill is not a bailout for the insurance companies. The insurance
companies stepped up to the plate and are taking care of their
obligations that resulted from the September 11 attack. Indeed, it is
going to be a $40 billion to $50 billion project for them to make these
folks whole.
What it is all about now is what happens next. All of us hope that
our efforts today will not be needed in the future because our bill
only occurs and only triggers when an event actually occurs of a
terrorist nature to be determined by the Secretary of the Treasury. We
all hope and pray that our efforts today, while beneficial, will not
have to be used. I think all of us share that. But in the event that we
have another terrorist attack, we have to be prepared, and the issue is
how can the domestic insurance companies provide the kind of coverage,
as the gentleman from Texas (Mr. Sessions) said yesterday in the
Committee on Rules, saying that the glue that holds our economy
together truly is insurance.
People have told us, lenders and everybody else, we can no longer
provide the kind of insurance coverage necessary. We do not know how to
price it. This is a case of first impression, and we need a backstop;
not a bailout, but a backstop, so that we can provide some kind of
certainty for the insurance industry and, more importantly, for our
concern. Because make no mistake about it: this legislation that we are
going to be taking up soon is all about keeping our economy strong, not
about bailing out insurers, but to actually provide the kind of
continuity and certainty in the economic field. I have talked to
developers who have development projects literally in the pipeline who
are waiting to see what the Congress can do to provide this backstop.
Mr. Speaker, this is a fair rule. It provides the opportunity for the
gentleman from New York (Mr. LaFalce), my good friend and the ranking
member, to offer a substitute of his choosing. It also offers the
minority the opportunity for a motion to recommit, as is the custom.
That basically says that the other side gets two bites of the apple.
That is fine. But I also think, Mr. Speaker, that this bill that we
will be debating should be a bipartisan effort, just like all the other
efforts have been in this House.
Make no mistake about it: this House is going to act. The other body
has some real problems. There is some question as to whether they can
even get their act together; but today, sometime between 3 and 4 this
afternoon, this House will have spoken loudly and clearly that we
understand the problem and that we are ready to address the problem in
a bipartisan way. This rule gets us towards that effort.
I want to thank the gentleman from Texas (Mr. Sessions), and
particularly the newly arriving chairman of the Committee on Rules (Mr.
Dreier), just newly arrived, not newly arrived to Congress obviously,
but newly arrived to the Chamber, for his excellent work in crafting a
rule that all of us can support.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
New York (Mr. LaFalce).
Mr. LaFALCE. Mr. Speaker, I thank the gentlewoman for yielding me
this time.
I rise in opposition to this rule, and I would hope that all of my
colleagues would join me in opposition. One of the most important
things for us to do is have a fair rule so that we can debate the
important issues of the day. It is not simply to get things behind us;
it is not simply to create partisan contests. It is to frame important
issues and then have discrete votes on those.
Now, the majority has not permitted that. They have said, oh, look,
lump every single issue imaginable that we are concerned about into one
substitute and put it all together. Well, the problem is, 90-some
percent of the time, the only thing we accomplish there is to get a
partisan vote with Democrats for the most part for, Republicans for the
most part against; and we cannot really focus in on the discrete, but
important, issues unless we have individual amendments, which the
majority has denied. That is unfortunate, because there are individual
issues of great import that do not have partisan considerations that we
should debate separately and vote on separately.
For example, should there or should there not be a deductible? Well,
I believe strongly that there should be a deductible before the Federal
Government comes in, and the bill coming out of the Committee on Rules
does not have a deductible. I personally believe, the administration
believes, that there should be a deductible. It would prefer at least
that portion of our substitute. The administration negotiated with
certain Senators a proposal that included a significant deductible.
That is
[[Page H8575]]
a separate and distinct issue. Let the insurance industry pay first;
how much is negotiable, but at least $5 billion, before it is necessary
to have a Federal backstop. And they absolutely have the capacity to do
that with no difficulty whatsoever, and yet they are denying us the
right to vote on that discrete issue.
Another discrete issue is, well, should the Federal Government come
in and pay from dollar one? Should the Federal contribution, that is,
90 percent of the damages, come in on the first dollar or should it
come in on the first dollar after a deductible? Under the House
Republican Committee on Rules bill, that 90 percent Federal payment
will come in on dollar one. Ours would come in the first dollar after
$5 billion. That is a very important issue, and we should be allowed a
discrete vote on that.
Mr. SESSIONS. Mr. Speaker, it is a delight and a pleasure to yield 7
minutes to the gentleman from Wisconsin (Mr. Sensenbrenner), the
chairman of the Committee on the Judiciary. As my colleagues have heard
me detail earlier, he is one of three of the brightest minds in the
Republican Conference, including the gentleman from Louisiana (Mr.
Baker) and the gentleman from Ohio (Mr. Oxley).
Mr. SENSENBRENNER. Mr. Speaker, I thank the fourth bright mind of the
gentleman from Texas (Mr. Sessions) for his compliments, and I rise in
support of the rule and in support of H.R. 3210. I wish to compliment
the gentleman from Ohio (Mr. Oxley) for his vigorous work on this
difficult issue.
I am particularly supportive of the litigation management provisions
in H.R. 3210 which will benefit all people in all industries that fall
victim to terrorist attacks of a catastrophic nature. Any bill that
fails to limit potentially infinite liability for terrorist-caused
litigation would fail to recognize the obvious. Traditional tort rules
are designed to address slip-and-fall cases caused by banana peels, not
terrorists; and while banana peels may be accidents waiting to happen,
terrorists are suicidal killers plotting the deaths of thousands of
innocents and the destruction of billions of dollars of property.
Under this legislation, if the Secretary of the Treasury determines
that one or more acts of terrorism have occurred, an exclusive Federal
cause of action kicks in for lawsuits arising out of, relating to, or
resulting from the acts of terrorism; and the lawsuit must be heard by
a Federal court or courts selected by the Judicial Panel on
Multidistrict Litigation. These claims in Federal court are subject to
limits on punitive damages and attorneys' fees. Defendants are only
liable for noneconomic damage in direct proportion to their
responsibility for the harm, and damage awards to plaintiffs must be
offset by any collateral source compensation received by the plaintiff.
By enacting these provisions to cover terrorist-inspired litigation,
individuals and businesses will be protected by Congress from
potentially limited liability and bankrupting litigation. Also under
these provisions, the size of damage awards for which the United States
taxpayer will have to provide up-front sums to cover would be reduced,
just as the Federal Tort Claims Act's limits on punitive damages and
attorneys' fees limit damages and litigation that will result in money
taken from the U.S. Treasury.
{time} 1130
These provisions protect the American taxpayer. Those opposed to them
wish to turn the key to the United States Treasury over to the
plaintiffs' bar.
Existing tort rules do not properly apply when the primary cause of
injury is a suicidal fanatic motivated by a deep hatred of America.
These are not garden variety slip-and-fall or auto accident cases, and
this Congress has already recognized this key distinction in passing
the liability protection provisions governing lawsuits relating to the
September 11 attacks.
As a result of the Aviation Security Act conference report, as well
as the Air Transportation Safety and Systems Stabilization Act,
September 11-related lawsuits against air carriers, air manufacturers,
owners and operators of airports, State port authorities, and persons
with property interests in the World Trade Center must be heard in
Federal court in New York; and the total damages against these
potential defendants, should they be found liable, are capped at the
limits of the insurance coverage they had on September 11.
Let this be clear, that what is proposed in the litigation management
provisions of this bill the House has already approved in both the
Aviation Security Act and in the Air Transportation Safety and Systems
Stabilization Act. So Members have already voted for this once and
twice.
In addition to these provisions, the Airline Security Act that
originally passed the House also limited punitive damages and
attorney's fees, and required that damage awards to plaintiffs be
offset by any collateral source compensation received by the
plaintiffs.
The litigation management provisions of H.R. 3210 would similarly
benefit victims of future terrorist attacks. If these same provisions
are not extended to private businesses which might be attacked in the
future, the mom-and-pop store down the street will have to invest
scarce resources to turn itself from a corner shop into a fortified
bunker designed to withstand foreign attacks to avoid potentially
infinite liability, or pay through the nose in higher insurance
premiums because the risks are higher and their exposure is greater.
Furthermore, without the litigation management provisions in H.R.
3210, no limits would be placed on the fees of attorneys bringing
terrorist-caused cases against Americans and their businesses, and
ultimately against the taxpayers, under this bill.
Reasonable limits on attorney's fees serve the same purpose behind
restrictions on permanent damages and joint and several liability. They
maximize the funds available to large numbers of victims when there are
only limited resources available for compensation. Such protections are
more important than ever in the context of the terrorist attacks
causing large-scale losses. Again, the litigation management provisions
in this bill will spread the wealth out to more victims, rather than
having one or two large awards ending up bankrupting the pot of money
available.
The 1993 World Trade Center bombing killed six people, yet resulted
in 500 lawsuits by 700 individuals, businesses, and insurance
companies. Damages claimed amounted to $500 million. Eight years later,
these cases are only now just getting to trial, and hundreds of
plaintiffs have yet to receive a cent in compensation.
By providing reasonable limits on potentially infinite liability and
consolidating all cases in one or a few Federal forums, victims of
terrorism will recover more quickly and more equitably because a few
enormous awards in one court will not bankrupt a responsible party
before another court can consider arguments of others who may have
stronger claims against the same party.
I urge all Members to support these vitally important provisions,
which ensure equitable compensation to victims while protecting the
American economy and the American taxpayer.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski).
Mr. KANJORSKI. Mr. Speaker, I rise in opposition to a rule I consider
fundamentally unfair. The previous speaker addressed one of the major
issues that I wanted to address in an amendment I had offered and asked
the Committee on Rules to make in order, and that is to have some
limitation on punitive damages and provide for consolidation of
lawsuits, but not to enter into tort revision.
Unfortunately, some of my friends have seen the opportunity to use
this as a locomotive today to go to one of their favorite topics, and
that is, tort revision in the country. I think that is unfortunate
because the history and the process of this legislation was initially
handled by the Committee on Financial Services for the sole purpose of
trying to bring together the entire Congress with a bipartisan effort
to accomplish something that would allow the economy to have terrorist
insurance and to have a reinsurance industry that could be vital, and
could be kept in the private sector until we straighten out the
problems and the new issues created by the terrorist attack on
September 11.
[[Page H8576]]
I thought we had moved a great deal along that line during the
committee operations, but since that time the bill has been taken and
fundamentally changed, and made a vehicle to carry everyone else's
desire to change fundamental existing law in the United States.
I recognize the fair right of all individuals to disagree with the
evolution of tort law responsibility in the United States over the last
200 years, and it may be subjected to change. This body is the place
that should consider that issue. It should not consider that issue at
this time when we have a very limited period of time to get a
comprehensive reinsurance bill passed so the economy can be stabilized
for the next year or two, so that American businesses can get the
insurance they need against terrorism, and so that the rate can be
reasonable.
What we have here is a political response: taking a very highly
emotional and disagreeable issue on the two sides of this aisle, and I
may say, Members on both sides in different proportions, and inserting
it in this bill, which will ultimately say this bill cannot be passed
by the Senate, will not be passed by the Senate, and I think puts at
risk the fact that we may have reinsurance legislation in this session,
and as a result, could materially destabilize the economy of the United
States over the next year or two.
That is unfortunate that some of us have given in to our basic
weaknesses and have gone to our ideology, rather than to the interests
of the people of the United States and the economy of the United
States.
I hope my predictions are wrong. I hope we can get terrorist
reinsurance put through this Congress before we adjourn. But if we do
not, if we do not, it will really be as a result of tort law revision
that has been inserted into this bill that prevents the passage of this
type of legislation in the waning days of this session.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it is obvious we disagree on this. But for someone to
stand up in this body and argue that because of what we are going to do
here today, it would encumber the Senate and ultimately would mean that
this bill could not be passed, I simply disagree with that.
The Senate, the other body, has an opportunity to debate this issue,
to bring forth their bill, and then for the conference committee, not
the other body to feel like they have been put upon, but for the
conference committee to be the body to determine what the final outcome
will be. That is what the process should be.
I am proud of what this bill stands for, and I think we are doing the
right thing.
Mr. Speaker, I yield 2 minutes to the gentleman from Utah (Mr.
Cannon).
(Mr. CANNON asked and was given permission to revise and extend his
remarks.)
Mr. CANNON. Mr. Speaker, I thank the gentleman for yielding time to
me.
I rise today in support of the rule and the underlying legislation.
The rule provides for the continued availability of insurance against
terrorism risks, and addresses multiple insurance and liability issues
arising out of the September 11 attacks.
This is a good rule that incorporates changes made by the Committee
on Financial Services and the Committee on Ways and Means and the
Committee on the Judiciary to the original bill. I would like to speak
about some of those important provisions that fell within the Committee
on the Judiciary jurisdiction.
First, by working with the gentleman from Ohio (Chairman Oxley) and
the gentleman from Wisconsin (Chairman Sensenbrenner), we were able to
expand language in the original bill dealing with the use of frozen
terrorist assets to compensate victims of terrorism.
This change to language offered by the gentleman from North Carolina
(Mr. Watt) brings the bill into line with an amendment I offered
earlier, in earlier legislation, that was accepted by the Committee on
the Judiciary this fall. It was also language that was approved by the
House on suspension in the 106th Congress.
The provision in the bill today will allow equal access to the frozen
assets of terrorists, terrorist organizations, and terrorist sponsor-
states for American victims of international terrorism who obtain
judgments against those terrorist parties.
In addition, the Committee on the Judiciary added important
litigation management provisions to deal with the legal aftermath of a
major terrorist attack. This is a commonsense recognition that major
terrorist attacks are not garden variety tort cases, and that there is
a compelling national interest in setting rules and limits for how
lawsuits arising from such attacks proceed. Exposing American citizens
and insurers to unlimited liability in multiple judicial forums for the
terrible acts of madmen is a recipe for a financial crisis.
This Congress overwhelmingly recognized the same principle when we
limited airline liability for the September 11 attacks and set them
back on a sound financial footing. We need to do the same today for
insurers, and equally important, to the insured.
I would like to thank again the gentleman from Ohio (Chairman Oxley),
the gentleman from Wisconsin (Chairman Sensenbrenner), the gentleman
from New York (Mr. Fossella), and the gentleman from North Carolina
(Mr. Watt), for all their efforts on these issues.
I urge my colleagues to support the rule and the bill today. By
providing partial Federal coverage for acts of terrorism, setting
reasonable limits and procedures for lawsuits arising from such acts,
and allowing victims to go directly after the frozen assets of
terrorists and their sponsors, we can help our Nation and economy move
forward.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentlewoman from
New York (Mrs. Maloney), a member of the committee.
(Mrs. MALONEY of New York asked and was given permission to revise
and extend her remarks.)
Mrs. MALONEY of New York. Mr. Speaker, I thank the gentlewoman for
yielding time to me.
Mr. Speaker, I rise in opposition to the rule for the reasons
outlined by the gentleman from New York (Mr. LaFalce) and the gentleman
from Pennsylvania (Mr. Kanjorski) for not allowing substantive
amendments and for fundamentally changing the work product of the
Committee on Financial Services.
But Mr. Speaker, the issue of terror insurance may affect our
national economy more immediately and more drastically than any tax or
spending bill that Congress considers in the next decade. Without
Federal intervention in the terror insurance market, our economy will
face a sudden, massive credit crunch after the first of the year.
Nowhere will this impact be more serious than in the district I
represent in New York City.
Even if Congress passed a perfect bill, I am sure that insurance
rates are going to go up and availability shortages will be a fact of
life next year, especially in New York.
The New York State insurance commissioner will have to be especially
vigilant next year to make sure that rates remain affordable and
products are available. The restrictions on victim rights in the
majority bill deserve their own vote as an amendment separate from the
substance of this bill. This effort to limit the access to the State
courts and restrict individuals' access to the civil courts is simply
an act of the majority's long-advocated partisan agenda. This bill is
too important to play politics, and these provisions have no place in
this debate.
Insurance coverage is vital to our economy. Without a safety net for
catastrophe, businesses simply will not do business, they will not
employ people, and they will not meet consumer needs.
While the industry should be complimented for quickly moving to cover
the $50 billion to $70 billion in losses from the World Trade Center,
the reinsurance industry, which buys risk from property and casualty
writers, is unable to cover massive future events.
Without reinsurance, we face a domino effect. Property and casualty
insurance will be unwilling to write policies. Without property and
casualty coverage, banks will refuse to lend money for major capital
improvements or real estate projects.
Mr. SESSIONS. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman
from Columbus, Indiana (Mr. Pence), of the Committee on the Judiciary.
[[Page H8577]]
Mr. PENCE. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, as a member of the Committee on the Judiciary and also
as a former trial attorney, I rise in strong support of the rule and
the underlying legislation.
Mr. Speaker, in the antiterrorism measures recently passed by
Congress, legal reforms were an integral part of shaping bills that
provide the President with the necessary means to combat evil. Legal
reform is equally important to the measure before us today in this
Chamber, terrorism risk protection.
Mr. Speaker, the existing legal system is simply not designed to
rectify attempts by international terrorists to murder thousands of
innocent Americans or obstruct our economy.
{time} 1145
We need look no further than the 1993 bombing at the World Trade
Center for proof. In that heinous crime 6 Americans were killed, but
500 lawsuits were filed claiming more than $500 million in damages.
These cases are only coming to trial today, over 7 years later, and
many plaintiffs have yet to receive a dime in compensation.
Mr. Speaker, our current legal system is inadequate to deal with this
very present threat against our people. The current legal system pits
victim against victim and encourages overreaching by the colleagues in
my former profession and, even worse, could result in putting hundreds
of millions of dollars into the deep pockets of attorneys' fees instead
of addressing real losses by Americans.
Mr. Speaker, my colleagues can understand the urgent need for legal
reform in the matter of risk protection. I applaud the gentleman from
Ohio (Mr. Oxley) and his colleagues for their hard work in creating a
pro-consumer, pro-taxpayer solution as read in H.R. 3210, and I urge my
colleagues to support the rule and the bill.
Ms. SLAUGHTER. Mr. Speaker, I am pleased to yield 1 minute to the
gentleman from Missouri (Mr. Gephardt), the minority leader.
(Mr. GEPHARDT asked and was given permission to revise and extend his
remarks.)
Mr. GEPHARDT. Mr. Speaker, I rise to ask Members to vote no on the
previous question so an amendment can be offered to include worker
relief in the base bill. It had been more than 2 months when we passed
the bill to help the airlines, since the Speaker promised to bring up a
bill soon to address the critical issue of worker relief.
It has been now more than 2 months. We have taken up all kinds of
appropriation bills. We have taken up all kinds of other legislation.
We have dealt in two instances with the airline industry, all of which
we needed to do, and I am not opposed to the basic idea of doing
something about insurance and the real estate industry. I understand
the problems that the committees tried to deal with, and I am
sympathetic with trying to do something about it.
I am opposed to some of the matters that got freighted on to this
bill, and so I am going to vote, if this bill survives the process,
because of what has been put in it with regard to civil justice system.
The basic idea of dealing with the insurance industry is a sound
idea. What I am unwilling to do and I think a lot of us are unwilling
to do is to take up one more bill to deal with one more industry
without finally dealing with the most important problem that faces us
as a country today, and that is the thousands of people that have
become unemployed in America who have no income, no health insurance,
and no ability to deal with the problems they now face.
I have thought a lot about it. Why are we constantly dealing with
other matters before we deal with the most important matter in front of
us? I have finally come to the conclusion that it is a result of the
fact that we personally are not facing these problems. We
intellectually know that people out there are hurting, but I guess we
are not hurting. We are all employed. We all have health insurance. We
just do not get it.
I was asked recently how the people in St. Louis, who I represent,
were dealing with the anthrax attacks here in Washington, and I have
talked obviously with my constituents a lot about what was happening
here in Washington with anthrax, and they understood it intellectually,
but they did not understand it the way I understood it. The analogy I
have used is, it is one thing to have your aunt or uncle diagnosed with
cancer. It is another thing when you are diagnosed with cancer. It
takes on a new meaning.
We have thousands of people in this country who have no unemployment
insurance, and they are unemployed. Probably today about 40 percent of
the unemployed do not even qualify for unemployment insurance because
of the changes that have been made in the laws across the country in
the last years. And none of them have the money, even if they get
unemployment insurance at 6- or 7- or $500 a month, or $300 a month,
none of them can afford their COBRA health insurance, none of them.
Just imagine in your own family, if your income had been wiped out,
you were not going to get a check at the end of the month, and you lost
your health insurance, what happens to your kids? What if your kids get
sick? What are you going to do?
That is the bill we ought to have on the floor today, and we are
unwilling to continue taking up bill after bill, as necessary and as
important it may be, until we deal with this single most important
issue that faces the American people.
Vote no on the previous question. Vote against the rule, and let us
come back on this floor today or tomorrow and deal with the most
important problem facing this country. We may not understand it because
it does not affect us, but I can assure my colleagues it affects
thousands of people in districts across this country. Let us come back
and do the right thing.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, one of the other speakers on the other side
said this was a fair rule and a fair process. There ain't nothing fair
about this rule. If my colleagues want to know where the fair process
was, it was in the Committee on Financial Services where, under the
gentleman from Ohio (Mr. Oxley) and the gentleman from Louisiana (Mr.
Baker), we debated and crafted a very good bill. In fact, I was one of
the original cosponsors, along with the gentleman from North Dakota
(Mr. Pomeroy) of the underlying bill.
Somewhere from the Committee on Financial Services to the House
floor, as often happens around this place, the bill changed greatly in
scope.
What I am concerned about is we had a chance to do something that we
really need to do the easy way, get a bill passed in a very temporary
nature where the government intervenes in the markets and basically
gets into the reinsurance business; and instead we have decided to pick
the hard way and add what is called legal reform.
This bill is not about reform. This bill is about avoiding defaults
on virtually every major development loan that is out in the country
today. It is about stopping, or not having new projects being stopped.
And here is what is going to happen, because I do have a little
experience in this, and I do not think all the Members do. All the
lawyers do.
We are worried about the trial lawyers. We have need to be worried
about the bank lawyers out there, because what they are going to do
when we do not pass this bill, when the other body kills it because we
are getting down off a rabbit trail on this thing, is the reinsurance
companies are not going to write any new policies. So the bank lawyers
are going to go pull down the documents for all the deals for all the
buildings that are going to be done. And they are going to go down to
the section on insurance and the covenants that are there, and they are
going to say, okay, you are in technical default, ACME Development
Corp. And ACME Bank is going to call ACME Development Corp. and say,
you have 45 days to cure this default and if you do not cure this
default, then we are going to put the deal in default and we are either
going to call your loan or you will have to renegotiate your loan.
If we go read the Wall Street Journal today, we will read about Enron
Corp. which is based in my home city. They
[[Page H8578]]
have huge loans out with some of the big money center banks. They are
probably not going to get repaid. We have a credit crunch going on in
the economy right now, and now we want to have an insurance crunch
occur. That is the hard way to do things.
We fixed the problem in the committee. We passed, in a bipartisan
vote, the Bentsen amendment that made sure that the taxpayer would not
be on the hook for punitive or noneconomic damages. But what we also
said was the defendant, the building owner, the airline owner, if they
had liability, if they had negligence, even in a terrorist attack, if
they had locked the exit door, if they had not had proper exits and
there was liability, that they would have that liability if there was
negligence; but the taxpayers would not have that liability.
We solved the problem in a temporary nature in what is otherwise I
think is a very good bill. But for some reason, as is always the case
around here, we decide to do it the hard way rather than the easy way.
And someday we will do it the easy way. But what I am worried about is
it is going to be January when we are doing it the easy way, and we
have caused all this problem by trying to put ideological changes in a
bill that has nothing to do with that.
I hope we defeat the previous question, defeat the rule, and let us
get a good bill like we started with in a very bipartisan fashion.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Oregon, (Ms. Hooley).
Ms. HOOLEY of Oregon. Mr. Speaker, I thank the gentlewoman for
yielding me time.
Mr. Speaker, I rise in opposition to this rule. Earlier this week,
the National Bureau of Economic Research announced the U.S. economy had
been in recession since last March. This is not really shocking news
for Oregon. Over the last year our economy has been battered, and right
now we have the highest unemployment rate of any State outside of
Alaska.
Yesterday the Feds announced economic growth across the United States
is continuing to lag despite our best efforts of slashing taxes and
cutting interest rates. Well, in about 7 weeks, about 70 percent of
reinsurance contracts will expire. The unavailability of terrorism
coverage for commercial businesses could have devastating results for
businesses and consumers.
For the past several weeks the Committee on Financial Services worked
to bring a bill to the floor that actually stood a chance of passing.
In normal times it would take years, if not decades, to find a workable
solution to this problem. Yet we were able to negotiate, we were able
to pass a bill by voice vote, a bipartisan bill, to get us where we
needed to be.
Unfortunately, we find ourselves in a familiar place, a place that
mocks our legislative process. Out of the clear blue sky, a half hour
before the Committee on Rules met yesterday, a new bill was introduced.
No committee hearings, no work sessions, no markups. A new bill. Not
only did it shred the bill which came out of the Committee on Financial
Services, it comes to the floor of the House loaded with legal reform,
something that has no bearing whatsoever on the health of our economy.
Someone once again decided that politics were more important than the
good of business, the good of consumers and the good of the Nation.
This is no laughing matter and this should not be business as usual.
Even as I speak, primary insurance companies have started filing
petitions with State regulators, seeking to exclude terrorism from
commercial and personal policies. Do we really expect banks to loan
cash to businesses who are not insured against acts of terror?
Mr. Speaker, I stand here able and willing to reach across a
political divide to bring a bill to the floor which makes sense, which
will have a positive effect on our economy. But until then, I have no
other choice than to oppose the rule, the underlying bill, and urge my
colleagues to support the LaFalce-Kanjorski substitute.
Ms. SLAUGHTER. Mr. Speaker, I yield 2 minutes to the gentleman from
North Dakota (Mr. Pomeroy).
Mr. POMEROY. Mr. Speaker, I thank the gentlewoman for yielding me
time.
Mr. Speaker, I want to begin by commending the Committee on Financial
Services leadership, the gentleman from Ohio (Chairman Oxley) and the
gentleman from Louisiana (Mr. Baker), the subcommittee chairman, as
well as the ranking members, the gentleman from New York (Mr. LaFalce)
and the gentleman from Pennsylvania (Mr. Kanjorski). This committee has
done a very serious effort at trying to address an urgent problem.
We must act. We simply must act. Those are the words of the gentleman
from Louisiana (Chairman Baker) to the Committee on Rules yesterday in
describing the urgency of moving this legislation.
Well, what a shame, what an incredible shame that majority leadership
would then stomp all over the work product brought out of the Committee
on Financial Services to address this issue by drafting onto the bill
an unrelated, partisan, highly ideological agenda.
Sometimes we just need to put our partisan roles aside and deal in a
bipartisan way to address the concerns of this Nation, especially the
urgent needs of this Nation. There was no need to make a political
issue out of this. Both sides recognize the need to act, both sides can
find an agreement in terms of how to get this terrorism coverage out
there through this Federal legislation.
Instead, the majority leadership dramatically complicates this whole
effort to address and get enacted legislation in the few remaining
weeks.
My friend, the gentleman from Ohio (Chairman Oxley) has described
this as a fair and equitable rule. What is fair and equitable about a
rule that prohibits us from offering an amendment that would restore
his own work product, the Committee on Financial Services' work
product, in place of the new language dropped on the bill by majority
leadership? We wanted to get this and get it right.
I used to be an insurance commissioner. I can tell you, this is a
very technically demanding, tricky piece of work we are attempting to
do here, and to sidetrack the whole discussion by slapping the red
herring of tort reform unnecessarily onto this legislation detracts
considerably from our efforts and our ability to get this right.
{time} 1200
This was a time when the House could have provided leadership to the
Senate by passing a bill setting the framework for how this tort reform
could have been established. We could improve this today significantly
if the rule would allow us to put on the bill the committee's own work
products.
Reject this rule. We need to do a better job.
Ms. SLAUGHTER. Mr. Speaker, I yield 3 minutes to the gentleman from
Massachusetts (Mr. Delahunt).
Mr. DELAHUNT. Mr. Speaker, I thank the gentlewoman for yielding me
this time.
Unfortunately, Mr. Speaker, this bill has become an attempt to
rewrite the rules of our civil justice system. And I think it is
important to note that statements by Members in the majority on the
Committee on the Judiciary would suggest, and I know it was not their
intention, but would suggest that the Committee on the Judiciary had
hearings on this particular bill. Well, I think it is important that
everyone in this Chamber and the American people should clearly
understand that there were no hearings on this bill before the
Committee on the Judiciary.
Now, no one objects to responsible measures that help ensure the
availability of insurance against future acts of terrorism. Indeed,
given the collapse of the reinsurance market for terrorism coverage, it
is incumbent upon us to respond. But the manager's amendment that we
are considering today is not a responsible measure. It transfers to the
taxpayers the risk of losses, which the insurance industry has said it
is willing and able to absorb; and it asks the public to assume this
huge contingent liability without imposing any obligation on insurers
to provide affordable coverage to those who need it.
But the worst feature of the legislation is one which has nothing
whatsoever to do with stabilizing the insurance market. Section 15 of
the bill would limit relief of the victims of terrorist attack by
immunizing wrongdoers in advance from the consequences of their own
wanton and
[[Page H8579]]
reckless acts. This sweeping provision would prohibit the courts from
awarding punitive damages; it would eliminate joint and several
liability for economic damages; require courts to reduce damage awards
by the amounts received from life insurance or other collateral
sources; and waive prejudgment interests, even in those egregious
cases, for example, where private airport security contractors who
wantonly, recklessly, or maliciously hire convicted felons, who fail to
perform required background checks, or who fail to check for weapons.
Now, nobody wants to hold parties responsible if they bear no blame.
But this bill lets them off the hook even if they knowingly engage in
conduct that puts Americans at risk.
It is interesting to note, Mr. Speaker, that the bill would also
place a cap on attorneys' fees, making it harder for victims to pursue
meritorious claims in a court. But the caps apply just to plaintiffs'
attorneys. Corporate defendants remain free to hire the most expensive
lawyers they can find.
Mr. Speaker, it is hard to see these provisions as anything other
than a tax-free gift for corporations and an attempt to rewrite the
rules of our civil justice system. I urge defeat of the previous
question and the rule.
Ms. SLAUGHTER. Mr. Speaker, I have one speaker remaining. How much
time do I have?
The SPEAKER pro tempore (Mr. Shimkus). The gentlewoman from New York
(Ms. Slaughter) has 6 minutes remaining, and the gentleman from Texas
(Mr. Sessions) has 6\1/2\ minutes remaining.
Ms. SLAUGHTER. Mr. Speaker, I yield 5 minutes to the gentleman from
California (Mr. George Miller).
(Mr. George Miller of California asked and was given permission to
revise and extend his remarks.)
Mr. GEORGE MILLER of California. Mr. Speaker, I thank the gentlewoman
for yielding me this time.
Mr. Speaker, I was hoping that we would have a bill today that we
could support, because I think the committee, on the underlying bill on
insurance protection for the real estate industry and for the insurance
companies and others, is on the right track. Yet we find this bill is
substantially now loaded down with a whole series of tort reforms,
without hearings, as many of my colleagues have alluded to here, and
now threatens to delay, if not make impossible, the passage of this
legislation.
I also, though, want to raise some questions with respect to the
legislation as we continue the consideration. I would refer Members of
the House to the Wall Street Journal of November 15, an article on the
insurance companies that points out that the market has taken a
somewhat different picture of the insurance industry than the insurance
industry is presenting to the Congress of the United States. The title
of the article is, ``Insurance Companies Benefit From September 11,
Still Seek Federal Aid.''
The article talks about raising premiums 100 percent, or 400 percent
in some instances. It also makes it very clear that the insurance
companies see this as an opportunity. A number of memos sent back and
forth in Marsh & McLennan and other large insurance companies have made
it clear the time is now to fully exploit the opportunity that was
presented by September 11 in terms of creating new companies, creating
new entities, and going after new capital.
In an effort to raise a billion dollars in new capital within a few
days after September 11, in an insurance industry that is seriously in
trouble supposedly, what they are telling us in Washington, they were
so oversubscribed they had to turn people away. Other entities then
came in, and they raised about $4 billion in new capital. Many of the
companies have sold additional stock that have been subscribed to by
very, very reputable investors that have decided that this is a good
take.
On the date of that article the insurance company stocks were up
about 7 percent. What is going on here? They are running in and
frightening the banks and frightening the real estate industry,
everybody else, raising their premiums; and they know on the other end
they are going to get Federal protection. As the article points out,
they know they have an ability now to raise premiums up to 400 percent,
to limit their liability; and the payouts will be taken on the other
end.
That is why I think this committee is on the right track with the
suggestion that we are prepared to help them out, but we also think
there ought to be some payback. Because, again, the article makes it
very clear, and the financing of this industry makes it very clear that
even with the huge payouts they will experience from September 11 their
reserves are sufficient. Over time, and hope to God we do not have
other terrorist activities, those reserves will be built up. The
premiums will be raised.
We may have a catastrophic event, we may have to step in, but the
nature of the industry is they have the ability to pay the taxpayer
back. There are others who want to suggest that $10 billion and the
industry is off the hook, or that we pick up all of the cost. I think
we have to be very careful about how we approach this and we recognize
the real financial capacity of this industry.
They are running around telling people they are not going to rewrite
the insurance. That is not what they are telling other people where
they know they can extract the dollars. There may be some people that
cannot afford this coverage. That is a different issue. But, clearly,
this industry is rapidly rebuilding its reserves, rapidly rebuilding
its premium base, rapidly rebuilding its revenues and its capital.
That is what is going on on Wall Street, that is what is going on in
the American marketplace, and they are running around Washington with a
tin cup suggesting, in many instances, that we should pick up all this
liability as a result of a terrorist attack.
I think the committee is on the right track. Unfortunately, this bill
now has been saddled with a whole series of issues that threaten to
bring down its consideration by both bodies.
I would also raise the point raised by the minority leader that, once
again, here we are bailing out an industry that obviously is exuding a
great market force at this very time; and yet we have hundreds of
thousands of families that have lost their livelihood, that have no
market force, have no ability to make their mortgage payments; and this
Congress is about to leave town, about to adjourn.
In spite of the representations of the President of the United States
that he was going to have money, that money was taken away last night
for unemployment insurance. That money was taken away from the States
that could help pay people's health insurance. That was a Presidential
program that was destroyed last night. The Speaker said he was going to
work with the minority leader to help people put out of work in the
airline industry and elsewhere because of September 11. Nothing has
happened on that front.
So what we find here is that the majority party is keeping from us
any consideration of help for those people who, as a result of
September 11, lost their employment, or those people who lost their
employment before September 11 but now see their opportunities greatly
diminished. We are going to do nothing for those people. Yet we are
here, after the airline industry, and now with the insurance industry.
Clearly, this Congress can see its way to help the most unfortunate
people in our society and not make them further victims of the attack
on September 11.
Mr. Speaker, I submit for the Record the full newspaper article I
referred to earlier.
[From the Wall Street Journal, Nov. 15, 2001]
Insurance Companies Benefit From Sept. 11, Still Seek Federal Aid
(By Christopher Oster)
For Marsh & McLennan Cos., the Sept. 11 attacks have meant
two very different things.
One is personal loss. The world's largest insurance
brokerage lost 295 employees who worked at the World Trade
Center. ``It was very painful for us, agonizing for loved
ones and close friends,'' Jeffrey W. Greenberg, Marsh's
chairman and chief executive, told employees at a memorial
service in St. Patrick's Cathedral in New York on Sept. 28.
But in the days after the attacks, even as the company was
sorting out who was safe and who had perished, it quickly
became clear that Sept. 11 presented a tremendous business
opportunity for Marsh and other strong players in the
industry.
Within days of the twin towers' destruction, Mr. Greenberg
and top lieutenants began planning to form a new subsidiary
to sell insurance to corporate customers at sharply higher
rates than were common before Sept. 11. Marsh also
accelerated plans to
[[Page H8580]]
launch a new consulting unit to capitalize on heightened
corporate fears of terrorism. Vice Chairman Charles A. Davis
says the company is merely meeting new marketplace demands.
``There is a financial reward for doing that,'' he says.
Unlike airlines, which are reeling as travelers hesitate to
fly, insurers have seen improved financial prospects since
Sept. 11. Insurers expect to have to pay out $40 billion to
$70 billion in claims related to the attacks. That sounds
daunting, but in fact, it is manageable for an industry that
collectively has $300 billion in capital.
Moreover, in response to Sept. 11, insurers are already
raising prices by 100% or more on some lines of commercial
and industrial insurance. Nearly all such lines are seeing
rate increases of more than 20%. For much of the 1990s,
carriers had engaged in a price war, keeping premiums
relatively low. The prospect of large payouts related to the
attacks gave the industry grounds for demanding substantial
increases.
Sept. 11 payouts will hurt insurers' balance sheets for a
number of quarters. The higher rats they are introducing are
expected to last for years.
Insurance stocks have jumped 7% since the attacks,
outpacing the broader market, and the atmosphere in the
industry is one of eager anticipation. Marsh set out to raise
about $1 billion in outside money to capitalize its new
company. Investors volunteered six times that much, and
dozens had to be turned away.
Amid these signs of robust health, however, the industry is
stressing potential disaster as it pressures Congress for
emergency aid. By the end of December, lawmakers are expected
to approve legislation under which the government could have
to pick up billions of dollars in claims related to future
terror assaults in the U.S.
This federal backing would have tremendous financial value
to insurers in the event of another disaster. And it would
have an immediate impact, too, emboldening the industry to
sell new terrorism coverage, for which it will charge higher
premiums. Carriers collect their money now, while the
government would help pay any claims later.
Even consumer advocates say newly recognized dangers
warrant some sort of broader government role in insurance.
But these advocates say the changed terror calculus doesn't
justify a wave of steep rate increases for policies unrelated
to terrorism--especially since the government is taking on
the additional risk. ``It's very opportunistic'' of the
industry, says Robert Hunter, insurance director for Consumer
Federation of America, a Washington, D.C., advocacy group.
In the weeks after Sept. 11, newspapers carried numerous
advertisements touting insurers' intent to pay disaster
claims promptly. Less well known is how these companies plan
to recoup much of the money they will be sending to
policyholders.
The decade-long premium price war had been ending before
the attacks, as weaker insurers collapsed or retrenched and
stronger ones began gradually to charge more. Now, faced with
payouts related to Sept. 11, the healthier companies are
demanding that their customers share the pain by paying
bigger premiums. Some insurance companies are so confident in
this strategy that they are expanding operations. Since Sept.
11, at least seven insurers have sold additional shares of
stock. An additional six, including Marsh, have formed new
companies.
Among the new units is a Bermuda-based carrier put together
by American International Group Inc. Chubb Corp, and
investment bank Goldman Sachs Group Inc. State Farm Mutual
Automoible Insurance Co. and RenaissanceRe Holdings Ltd. are
creating another one. Since Sept. 11, insurers have raised a
total of about $4 billion in new capital, to which they are
adding a modest amount of their own money. Deals valued at
another $14 billion are expected to be completed in coming
months, according to industry analysis.
Since the attacks, aviation underwriters have raised
premiums for airlines by 200% to 400%, according to insurance
brokers. At the same time, the underwriters are cancelling
parts of airlines' coverage for liability to third parties
other than passengers in future terrorist acts.
U.S. airlines don't have to worry about these increases
immediately. The airline-bailout bill Congress approved after
Sept. 11 included provisions under which the federal
government for six months will pay any increases in
commercial insurance and cover airlines' potential third-
party liability for terrorism. In the not-too-distant future,
though, the airlines could collectively face billions of
dollars in additional annual premiums.
new surcharge
Led by giant AIG, insurers have offered airlines a new,
more-expensive package to replace the rescinded terrorism
coverage. The new price includes a $3.10-per-passenger
surcharge. Lacking the backing of the U.S. government,
numerous foreign airlines are buying the new coverage, which
is expected to boost insurers' revenue by a total of hundreds
of millions of dollars a year.
Owners of New York trophy properties are seeing giant rate
increases. Douglas Durst, a developer with large holdings in
midtown Manhattan, including the 50-story Conde Nast
building, says his insurance broker has told him that he will
be lucky if his premiums increase by only 20% at renewal time
in April. ``There are [real estate] people who are seeing
their rates double,'' Mr. Durst says.
Brookfield Properties Inc., which owns most of the World
Financial Center complex adjacent to the World Trade Center,
has said that insurers are cutting back on its terrorism
coverage. Brookfield said its insurers agreed to cover its
liability risk associated with future terrorist attacks but
are refusing to reimburse it for property damage or the costs
of business interruption. (The Wall Street Journal has
offices in Brookfield's World Financial Center property.)
Medium-sized and small corporate policyholders are also
seeing premiums jump. One week after the attacks, Industrial
Risk Insurers, a unit of General Electric Co.'s Employers
Reinsurance unit, told textile manufacturer Johnston
Industries Inc. that it wouldn't renew Johnston's property-
insurance policies, which expired Oct. 31, Bill Henry, a vice
president at the Columbus, Ga., company, says it wound up
paying $1 million more to a European carrier for a year's
coverage, ending in October 2002--a 150% increase. The limit
of the new policy is only $350 million, or half of what
Johnston previously received from the GE insurance unit. For
a company with annual revenue of about $240 million, ``it's a
major blow,'' says Mr. Henry.
Dean Davison, a spokesman for the GE unit, confirms that it
has discontinued many of its policies. But he adds that Sept.
11 merely hastened actions that had already been planned for
later this year.
government aid
While aggressively raising premiums, the insurance industry
has been busy seeking relief in Washington. Ten days after
the attacks, a delegation of chief executives, including
AIG's Maurice R. Greenberg, the father of Marsh's Jeffrey
Greenberg, descended on the capital to lobby President Bush
and lawmakers.
The industry leaders sounded an alarm that reinsurance
companies--which spread corporate risk by selling insurance
policies to the insurance industry--were moving to cancel
terrorism-related reinsurance coverage. The big primary
carriers told the politicians they would eliminate almost all
terrorism coverage unless the government stepped into the
role of the reinsurers.
Without this coverage, many lenders would hesitate to
finance everything from factories to new real estate
development, the insurance executives warned their Washington
hosts. Large areas of the economy could grind to a halt.
The pitch worked. Congress is now expected to approve a
mechanism that will guarantee that if there are huge future
terrorism liabilities, taxpayers will help pay them. A plan
under consideration in the Senate would require the industry
to pay the first $10 billion in claims, with the government
picking up 90% of any remaining amount. The House Financial
Services Committee favors government loans to insurers to
help pay future terrorism claims.
``This is not a bailout,'' says Democratic Sen. Christopher
Dodd of Connecticut, home to several large carriers. Rather,
the government is proposing to serve as a ``backstop'' to
encourage underwriters to provide terrorism coverage, he
says.
The legislation also gives carriers the confidence to sell
some terrorism policies, for which they are charging much
higher premiums. ``In the absence of future terrorist
attacks, such an approach could create `windfall' profits for
insurers, to the detriment of policyholders,'' says Fitch
Inc., which provides investors with financial analysis of the
insurance industry.
Marsh & McLennan sees vast opportunity in this fast-
changing environment. The company is primarily an insurance
broker, not an underwriter. As a result, it has limited
exposure to Sept. 11 property and liability claims. It took a
$173 million charge for the third quarter, which ended Sept.
30, to cover costs related to the attacks. A big piece of
that was for payments to families of its own injured and dead
employees.
Marsh's Mr. Greenberg knows well the dangers of appearing
opportunistic in the wake of catastrophe. He gained this
experience after Hurricane Andrew hit Florida in 1992, which
until Sept. 11 was the industry's costliest disaster. Then a
vice president at his father's AIG, the younger Mr. Greenberg
wrote an internal memo saying that Andrew was ``an
opportunity to get price increases now.'' After the memo was
leaked to the media, Florida regulators imposed a moratorium
on premium-rate increases.
This embarrassment didn't stop Jeffrey Greenberg, now 50
years old, and his subordinates at Marsh from swiftly
scouring the post-Sept. 11 business landscape for new
opportunities.
The World Trade Center attacks were a devastating blow to
the company, which has its headquarters in midtown Manhattan.
About 1,900 Marsh employees worked in the twin towers. Within
an hour of the attacks, the company had set up a phone bank
to assemble information about the missing. Counseling
sessions and memorial services were held daily for weeks.
modest disruption
From a business perspective, the disaster caused only
modest disruption for Marsh, which has 57,000 employees
world-wide. On the evening of Sept. 11, Mr. Davis, Marsh's
vice chairman and chief of its MMC Capital arm, sent a fax to
Mr. Greenberg's home that accounted for the unit's
employees--they were all safe--and suggested the formation of
a new subsidiary that would underwrite corporate policies.
``We were absolutely thinking about the impact [of the
attacks] and
[[Page H8581]]
what the opportunities were in front of us,'' says Mr. Davis,
who came to Marsh from Goldman Sachs three years ago.
At a Sept. 18 meeting, 20 executives from Marsh's operating
companies discussed the new terrain in their industry.
Participants noted the premium increases already being
announced and cancellations of terrorism coverage. Policy-
holder demands was as strong as ever, meaning prices could
only rise.
There was strong support for Mr. Davis's idea for a new
company. It wouldn't be the first time Marsh gave birth to an
underwriter. In the mid-1980s, it launched Ace Ltd. and Exel
Capital, now known as XL. Those moves came in response to
some established insurers ceasing to write liability coverage
in the wake of huge jury awards for asbestos-related
illnesses and big judgments against corporate directors and
officers. Both Ace and XL went on to become publicly traded.
Marsh retains small stakes in them.
Marsh raised its initial fundraising plan for the new
carrier by 50%, to $1.5 billion. But that still wasn't enough
to accommodate all of the investors lining up for a piece of
the action. GE's GE Asset Management unit and TIAA-CREF, the
national teachers' pension-fund manager, were among those
allowed to buy stakes. Many others were turned away.
As the investor list was being winnowed, Mr. Greenberg was
stirring another pot. He called L. Paul Bremer, a former U.S.
ambassador at large for counterterrorism, who had joined
Marsh a year earlier. ``Funny you should ask'' Mr. Bremer
says he responded to Mr. Greenberg's query about new business
opportunities.
Mr. Bremer had been working on a plan for a crisis-
consulting practice for several months. ``It was clear to
both of us that he should accelerate the introduction of that
practice,'' Mr. Greenberg says.
On Oct. 11, Marsh announced the formation of a new
consulting unit, with Mr. Bremer at its head. Two weeks
later, Marsh unveiled a partnership between its new unit and
Versar Inc., a counterterrorism-service provider. The
partnership will assess chemical and bioterrorism risks for
corporate clients.
Mr. SESSIONS. Mr. Speaker, I yield 5 minutes to the gentleman from
Louisiana (Mr. Baker), chairman of the Subcommittee on Capital Markets,
Insurance and Government Sponsored Enterprises, one of two gentlemen
who have worked diligently to see to it that this is a good bill, the
other being the chairman of the full Committee on Financial Services,
the gentleman from Ohio (Mr. Oxley).
Mr. BAKER. Mr. Speaker, I thank the gentleman for his courtesy and
generosity with the time.
I wish to extend my appreciation and commend the chairman of the
Committee on Financial Services, the gentleman from Ohio (Mr. Oxley),
for his perspicacious leadership on this matter; to the chairman of the
Committee on the Judiciary, the gentleman from Wisconsin (Mr.
Sensenbrenner), for his visionary legal acumen; and to the gentleman
from New York (Mr. LaFalce) and the gentleman from Pennsylvania (Mr.
Kanjorski) for their critical suggestions at important steps along the
way to craft a proposal which, in essence, solves, to a great extent,
the potential exposure for further liability as a result of future
terrorist attacks.
I cannot, however, today stand without responding to the remarks of
the minority leader who said, ``We don't get it.'' I am appalled that
in this instance, when faced with legislation of such magnitude, he
would suggest that Members of Congress do not know people who are
without medical insurance. I have a family member this morning in the
hospital without private medical insurance. To suggest that there are
those of us in Congress who do not know people who are unemployed, that
we do not get it because we do not know the unemployed, I would just
advise that in my extended family there have been people on
unemployment through no fault of their own.
We are here today to respond to a crisis, a national crisis of
proportion this Nation has never seen. The vision of the morning of
September 11 will never vanish from our minds, and what are we to do in
response to this? To say we should postpone, delay, or otherwise
obfuscate the ability to respond to this crisis when it is so clear, I
cannot conceive that any Member of this Congress, despite their
objections to the elements contained in this legislation, would say no
to this process. This is a process. We all know there will be a very
difficult conference committee at which all of these issues will be
visited at length.
And let us speak to the one point of contention which brings us to
this difficult moment, that is of liability reform. This House has
adopted the provisions contained in the proposal before us today not
once but twice. This House. I would point to the fact that the Price-
Anderson Act was renewed by this Congress by a voice vote last week,
which contains similar provisions.
Some have said we should not buy this pig in a poke because we do not
know what is in it. I would point out this Congress has adopted the
Swine Flu Act, which has the same liability provisions that this act
contains.
There is no legitimate platform from which a Member can stand on this
floor and say we should not act. Member after Member has said the base
elements of this legislation are, indeed, acceptable to respond to the
crisis we potentially face. But if we do not act, the concerns
expressed for those unemployed and uninsured will only be aggravated,
to a great extent, because there will be more unemployed and uninsured
as economic opportunity is snatched away from the American economy by
our failure to act.
Let us make this clear: this is not an insurance bailout. I do not
care if an insurance company makes a profit or not. That is not my job.
I do not care whether a trial lawyer gets his 30 percent cut off an
unfortunate victim as a result of loss. That is not my problem. What I
care about is how American taxpayer resources are used to meet a crisis
of this magnitude, and to ensure that every penny extended in times of
crisis are repaid to the American taxpayer.
That is what this bill does. It is an extraordinary first step. It is
to say we will respond timely and appropriately. But when an insurance
company is making a $10 or $20 or $30 billion annual profit, they are
going to pay us back. Now, what is wrong with that? And my colleagues
are going to tell me today that they do not want to act to preclude the
possibility of economic calamity because we have a dispute whether the
trial lawyers get 20 percent or a third or half?
We will hash that out in conference committee. We will, in all
likelihood, have a bill my colleagues can support with enthusiasm. But
to say no today is to walk away from our responsibility as a Member of
the United States Congress to respond to terrorist assaults on the
United States sovereign Nation.
Did the firefighters, responding to the call on September 11, check
their employment forms or see what possibility there might be for some
liability provision? Did they think about what wage they were going to
get paid? No. They responded. They acted. There was a crisis, and they
put their lives on the line. We are not even close to considering such
a heroic act. We are simply being asked to be stewards of the American
taxpayers' resources and to provide for a method of response should,
should, some untoward heinous act occur in the future.
{time} 1215
To fail to take this modest step would be a serious disappointment to
the American taxpayer. I hope this House can rise above that.
Ms. SLAUGHTER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I am going to call a vote on the previous question and
ask for its defeat; and if it is defeated, I am going to offer an
amendment to the rule.
My amendment will make in order an amendment by the gentleman from
New York (Mr. Rangel) or his designee which would provide health and
unemployment compensation relief to workers who have lost their jobs.
Mr. Speaker, nearly 3 months have passed since the tragic events of
September 11, and since that time thousands and thousands of workers
have lost their jobs, and they need relief. Their unemployment benefits
will run out, and they have no health care. We passed an airline
bailout the week after the terrorist attacks, and promises were made at
that time by the Republican leadership that a worker relief package
would follow the following the week. Today, weeks later, we are passing
legislation that would provide relief to the insurance industry, still
leaving no help for the workers. They desperately need our help, they
need it now, and I urge a ``no'' vote on the previous question.
Mr. Speaker, I ask unanimous consent that the text of the amendment
be printed in the Record immediately before the vote on the previous
question.
[[Page H8582]]
The SPEAKER pro tempore (Mr. Shimkus). Is there objection to the
request of the gentlewoman from New York?
There was no objection.
Ms. SLAUGHTER. Mr. Speaker, I yield back the balance of my time.
Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, we have heard a vigorous debate today about this issue.
We have heard a good number of speakers say that we did it the hard
way. They would have done it the easy way. I think they are right; we
did do it the hard way. But I would like to be accused of doing it the
right way, doing what is in the best interest of not only the taxpayer,
but also in the best interest of people who have needs and who need to
make sure that their insurance coverage is done right.
Mr. Speaker, Members have heard the debate on this side from some of
our best and our brightest. The gentleman from Ohio (Chairman Oxley),
the gentleman from Wisconsin (Chairman Sensenbrenner), and the
gentleman from Louisiana (Chairman Baker) talk about a very difficult
issue, and they have delivered on that issue. They have worked with the
White House and President Bush; and President Bush is proud of the work
that they have done.
So whether it was done the hard way or the easy way, it did not
matter to me and did not matter to us. We have done it the right way.
Mr. Speaker, I can proudly ask my colleagues to support not only this
fair rule, but one which has the underlying legislation which is good
for all of America and will ensure that the confidence and the
stability of this country is held together. I am very proud of what we
have done.
Mr. BAKER. Mr. Speaker, I congratulate and thank Mr. Sessions,
Chairman Dreier and all the members of the Rules Committee for
responding to the need to act swiftly on the Terrorism Risk Protection
Act by crafting a fair rule that paves the way for our consideration of
the Bill on the House floor today. I also wish to thank Chairman Oxley
for his leadership on this issue and to recognize the efforts of
Ranking Members LaFalce and Kanjorski.
The attacks on New York City and Washington, D.C. on September 11,
2001, resulted in a large number of deaths and injuries, the
destruction and damage to buildings, and the interruption of business
operations. These consequences of the attacks were not only a human
tragedy, they were also a financial disaster. The attacks inflicted
possibly the largest losses ever incurred by insurers and reinsurers in
a single day. Estimates of losses start at about $40 billion and vary
significantly upward from there. Fortunately, the insurance and
reinsurance industry have the capital capacity to cover such losses and
have committed to pay the losses due to the attacks.
However, with the events of September 11, 2001, there is great
uncertainty from an underwriter's perspective. Commercial property and
casualty insurance companies have little to no experience in
underwriting for the types of terrorist attacks that we experienced in
New York City and Washington, D.C. The attacks set a new and very high
level for potential severity. Additionally, there is an inability for
underwriters to forecast the frequency or nature of future attacks. As
a result of this uncertainty, many commercial property and casualty
insurers and reinsurers have begun excluding terrorism risk coverage
from their policies or providing very limited coverage at high costs.
The potential unavailability of terrorism risk coverage for
businesses comes at precisely the time when there is the greatest
demand for the insurance. Moreover, insurance coverage is almost
universally a requirement of any commercial lending contract. Lenders
will simply not provide financing for new or existing construction or
other operations without certainty that the properties and businesses
that they are funding have adequate insurance to protect the lenders'
investment. Thus, the lack of available insurance for terrorism risk
has adverse consequences that would spread throughout the entire
economy and stifle if not halt its growth.
That is why I come before you today in strong support of H.R. 3210,
the Terrorism Risk Protection Act. The temporary risk spreading program
established by this Act is a bridge to allow the private market to
develop the mechanisms to provide terrorism risk coverage at reasonable
cost and sufficient levels, while guaranteeing that any federal
assistance from the U.S. taxpayer in the interim is paid back by the
insurance industry and those that benefit from the program.
I urge my fellow colleagues to support this rule and to vote yes on
the bill to prevent any further slowdown of our dynamic national
economy.
Mr. SENNIONS. Mr. Speaker, I yield back the balance of my time, and I
move the previous question on the resolution.
The material previously referred to by Ms. Slaughter is as follows:
Previous Question for Rule on H.R. 3210, Terrorism Risk Insurance Act
At the end of the resolution add the following new section:
``Sec 2. Notwithstanding any other provision of this
resolution, it shall be in order without intervention of any
point of order following disposition of the further amendment
printed in the report to accompany the resolution to consider
the further amendment printed in Section 3 of this resolution
if offered by Representative Rangel or his designee. The
amendment shall be considered as read; shall be debatable for
one hour, equally divided between a proponent and an
opponent, shall not be subject to amendment, and shall not be
subject to a demand for a division of the question. The
previous question shall be considered as ordered on the
amendment.
Sec. 3. The text of the amendment is as follows;
AMENDMENT OFFERED BY MR. RANGEL
Insert at the end the following:
SECTION 1. SHORT TITLE, ETC.
(a) Short Title.--This Act may be cited as the ``Fiscal
Stimulus and Worker Relief Act of 2001''.
TITLE II--WORKER RELIEF
Subtitle A--Temporary Unemployment Compensation
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary Supplemental Unemployment Compensation Account.
Sec. 204. Payments to States having agreements under this subtitle.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Subtitle B--Premium Assistance for COBRA Continuation Coverage
Sec. 211. Premium assistance for COBRA continuation coverage.
Subtitle C--Additional Assistance for Temporary Health Insurance
Coverage
Sec. 221. Optional temporary medicaid coverage for certain uninsured
employees.
Sec. 222. Optional temporary coverage for unsubsidized portion of COBRA
continuation premiums.
TITLE II--WORKER RELIEF
Subtitle A--Temporary Unemployment Compensation
SEC. 201. SHORT TITLE.
This subtitle may be cited as the ``Temporary Unemployment
Compensation Act of 2001''.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) In General.--Any State which desires to do so may enter
into and participate in an agreement under this subtitle with
the Secretary of Labor (hereinafter in this subtitle referred
to as the ``Secretary''). Any State which is a party to an
agreement under this subtitle may, upon providing 30 days'
written notice to the Secretary, terminate such agreement.
(b) Provisions of Agreement.--
(1) In general.--Any agreement under subsection (a) shall
provide that the State agency of the State will make--
(A) payments of regular compensation to individuals in
amounts and to the extent that they would be determined if
the State law were applied with the modifications described
in paragraph (2), and
(B) payments of temporary supplemental unemployment
compensation to individuals who--
(i) have exhausted all rights to regular compensation under
the State law,
(ii) do not, with respect to a week, have any rights to
compensation (excluding compensation) under the State law of
any other State (whether one that has entered into an
agreement under this subtitle or otherwise) nor compensation
under any other Federal law (other than under the Federal-
State Extended Unemployment Compensation Act of 1970), and
are not paid or entitled to be paid any additional
compensation under any State or Federal law, and
(iii) are not receiving compensation with respect to such
week under the unemployment compensation law of Canada.
(2) Modifications described.--The modifications described
in this paragraph are as follows:
(A) An individual shall be eligible for regular
compensation if the individual would be so eligible,
determined by applying--
(i) the base period that would otherwise apply under the
State law if this subtitle had not been enacted, or
(ii) a base period ending at the close of the calendar
quarter most recently completed before the date of the
individual's application for benefits.
whichever results in the greater amount.
(B) An individual shall not be denied regular compensation
under the State law's provisions relating to availability for
work, active search for work, or refusal to accept work,
solely by virtue of the fact that such individual is seeking,
or available for, only part-time (and not full-time) work.
(C)(i) Subject to clause (ii), the amount of regular
compensation (including dependents'
[[Page H8583]]
allowances) payable for any week shall be equal to the amount
determined under the State law (before the application of
this subparagraph), plus an additional--
(I) 25 percent, or
(II) $65,
whichever is greater.
(ii) In no event may the total amount determined under
clause (i) with respect to any individual exceed the average
weekly insured wages of that individual in that calendar
quarter of the base period in which such individual's insured
wages were the highest (or one such quarter if his wages were
the same for more than one such quarter).
(c) Nonreduction Rule.--Under the agreement, subsection
(b)(2)(C) shall not apply (or shall cease to apply) with
respect to a State upon a determination by the Secretary that
the method governing the computation or regular compensation
under the State law of that State has been modified in a way
such that--
(1) the average weekly amount of regular compensation which
will be payable during the period of the agreement
(determined disregarding the modifications described in
subsection (b)(2)) will be less than
(2) the average weekly amount of regular compensation which
would otherwise have been payable during such period under
the State law, as in effect on September 11, 2001.
(d) Coordination Rules.--
(1) Regular compensation payable under a federal law.--The
modifications described in subsection (b)(2) shall also apply
in determining the amount of benefits payable under any
Federal law to the extent that those benefits are determined
by reference to regular compensation payable under the State
law of the State involved.
(2) TSUC to serve as second-tier benefits.--Notwithstanding
any other provision of law, extended benefits shall not be
payable to any individual for any week for which temporary
supplemental unemployment compensation is payable to such
individual.
(e) Exhaustion of Benefits.--For purposes of subsection
(b)(1)(B)(i), an individual shall be considered to have
exhausted such individual's rights to regular compensation
under a State law when--
(1) no payments of regular compensation can be made under
such law because such individual has received all regular
compensation available to such individual based on employment
or wages during such individual's base period, or
(2) such individual's rights to such compensation have been
terminated by reason of the expiration of the benefit year
with respect to which such rights existed.
(f) Weekly Benefit Amount, Terms and Conditions, Etc.
Relating to TSUC.--For purposes of any agreement under this
subtitle--
(1) the amount of temporary supplemental unemployment
compensation which shall be payable to an individual for any
week of total unemployment shall be equal to the amount of
regular compensation (including dependents' allowances)
payable to such individual under the State law for a week for
total unemployment during such individual's benefit year,
(2) the terms and conditions of the State law which apply
to claims for regular compensation and to the payment thereof
shall apply to claims for temporary supplemental unemployment
compensation and the payment thereof, except where
inconsistent with the provisions of this subtitle or with the
regulations or operating instructions of the Secretary
promulgated to carry out this subtitle, and
(3) the maximum amount of temporary supplemental
unemployment compensation payable to any individual for whom
a temporary supplemental unemployment compensation account is
established under section 203 shall not exceed the amount
established in such account for such individual.
SEC. 203. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION
ACCOUNT.
(a) In General.--Any agreement under this subtitle shall
provide that the State will establish, for each eligible
individual who files an application for temporary
supplemental unemployment compensation, a temporary
supplemental unemployment compensation account.
(b) Amount in Account.--
(1) In general.--The amount established in an account under
subsection (a) shall be equal to the product obtained by
multiplying an individual's weekly benefit amount by the
applicable factor under paragraph (3).
(2) Weekley benefit amount.--For purposes of this
subsection, an individual's weekly benefit amount for any
week is the amount of regular compensation (including
dependents' allowances) under the State law payable to such
individual for a week of total unemployment in such
individual's benefit year.
(3) Applicable factor.--
(A) General rule.--The applicable factor under this
paragraph is 13, unless the individual's benefit year begins
or ends during a period of high unemployment within such
individual's State, in which case the applicable factor is
26.
(B) Period of high unemployment.--For purposes of this
paragraph, a period of high unemployment within a State shall
begin and end, if at all, in a way (to be set forth in the
State's agreement under this subtitle) similar to the way in
which an extended benefit period would under section 203
of the Federal-State Extended Unemployment Compensation
Act of 1970, subject to the following:
(a) In General.--Any State which desires to do so may enter
into and participate in an agreement under this subtitle with
the Secretary of Labor (hereinafter in this subtitle referred
to as the ``Secretary''). Any State which is a party to an
agreement under this subtitle may, upon providing 30 days'
written notice to the Secretary, terminate such agreement.
(b) Provisions of Agreement.--
(1) In general.--Any agreement under subsection (a) shall
provide that the State agency of the State will make--
(A) payments of regular compensation to individuals in
amounts and to the extent that they would be determined if
the State law were applied with the modifications described
in paragraph (2), and
(B) payments of temporary supplemental unemployment
compensation to individuals who--
(i) have exhausted all rights to regular compensation under
the State law,
(ii) do not, with respect to a week, have any rights to
compensation (excluding extended compensation) under the
State law of any other State (whether one that has entered
into an agreement under this subtitle or otherwise) nor
compensation under any other Federal law (other than under
the Federal-State Extended Unemployment Compensation Act of
1970), and are not paid or entitled to be paid any additional
compensation under any State or Federal law, and
(iii) are not receiving compensation with respect to such
week under the unemployment compensation law of Canada.
(2) Modifications described.--The modifications described
in this paragraph are as follows:
(A) An individual shall be eligible for regular
compensation if the individual would be so eligible,
determined by applying--
(i) the base period that would otherwise apply under the
State law if this subtitle had not been enacted, or
(ii) a base period ending at the close of the calendar
quarter most recently completed before the date of the
individual's application for benefits,
whichever results in the greater amount.
(B) An individual shall not be denied regular compensation
under the State law's provisions relating to availability for
work, active search for work, or refusal to accept work,
solely by virtue of the fact that such individual is seeking,
or available for, only part-time (and not full-time) work.
(C)(i) Subject to clause (ii), the amount of regular
compensation (including dependents' allowances) payable for
any week shall be equal to the amount determined under the
State law (before the application of this subparagraph), plus
an additional--
(I) 25 percent, or
(II) $65,
whichever is greater.
(ii) In no event may the total amount determined under
clause (i) with respect to any individual exceed the average
weekly insured wages of that individual in that calendar
quarter of the base period in which such individual's insured
wages were the highest (or one such quarter if his wages were
the same for more than one such quarter).
(c) Nonreduction Rule.--Under the agreement, subsection
(b)(2)(C) shall not apply (or shall cease to apply) with
respect to a State upon a determination by the Secretary that
the method governing the computation of regular compensation
under the State law of that State has been modified in a way
such that--
(1) the average weekly amount of regular compensation which
will be payable during the period of the agreement
(determined disregarding the modifications described in
subsection (b)(2)) will be less than
(2) the average weekly amount of regular compensation which
would otherwise have been payable during such period under
the State law, as in effect on September 11, 2001.
(d) Coordination Rules.--
(1) Regular compensation payable under a federal law.--The
modifications described in subsection (b)(2) shall also apply
in determining the amount of benefits payable under any
Federal law to the extent that those benefits are determined
by reference to regular compensation payable under the State
law of the State involved.
(2) TSUC to serve as second-tier benefits.--Notwithstanding
any other provision of law, extended benefits shall not be
payable to any individual for any week for which temporary
supplemental unemployment compensation is payable to such
individual.
(e) Exhaustion of Benefits.--For purposes of subsection
(b)(1)(B)(i), an individual shall be considered to have
exhausted such individual's rights to regular compensation
under a State law when--
(1) no payments of regular compensation can be made under
such law because such individual has received all regular
compensation available to such individual based on employment
or wages during such individual's base period, or
(2) such individual's rights to such compensation have been
terminated by reason of the expiration of the benefit year
with respect to which such rights existed.
(f) Weekly Benefit Amount, Terms and Conditions, Etc,
Relating to TSUC.--For purposes of any agreement under this
subtitle--
(1) the amount of temporary supplemental unemployment
compensation which shall be payable to an individual for any
week of total unemployment shall be equal to the amount of
regular compensation (including
[[Page H8584]]
dependents' allowances) payable to such individual under the
State law for a week for total unemployment during such
individual's benefit year,
(2) the term and conditions of the State law which apply to
claims for regular compensation and to the payment thereof
shall apply to claims for temporary supplemental unemployment
compensation and the payment thereof, except where
inconsistent with the provisions of this subtitle or with the
regulations or operating instructions of the Secretary
promulgated to carry out this subtitle, and
(3) the maximum amount of temporary supplemental
unemployment compensation payable to any individual for whom
a temporary supplemental unemployment compensation account is
established under section 203 shall not exceed the amount
established in such account for such individual.
SEC. 203. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT COMPENSATION
ACCOUNT.
(a) In General.--Any agreement under this subtitle shall
provide that the State will establish, for each eligible
individual who files an application for temporary
supplemental unemployment compensation, a temporary
supplemental unemployment compensation account.
(b) Amount in Account.--
(1) In general.--The amount established in an account under
subsection (a) shall be equal to the product obtained by
multiplying an individual's weekly benefit amount by the
applicable factor under paragraph (3).
(2) Weekly benefit amount.--For purposes of this
subsection, an individual's weekly benefit amount for any
week is the amount of regular compensation (including
dependents' allowances) under the State law payable to such
individual for a week of total unemployment in such
individual's benefit year.
(3) Applicable factors.--
(A) General rule.--The applicable factor under this
paragraph is 13, unless the individual's benefit year begins
or ends during a period of high unemployment within such
individual's State, in which case the applicable factor is
26.
(B) Period of high unemployment.--For purposes of this
paragraph, a period of high unemployment within a State shall
begin and end, if at all, in a way (to be set forth in the
State's agreement under this subtitle) similar to the way in
which an extended benefit period would under section 203 of
the Federal-State Extended Unemployment Compensation Act of
1970, subject to the following:
(i) To determine if there is a State ``on'' or ``off''
indicator, apply section 203(f) of such Act, but--
(I) substitute ``5 percent'' for ``6.5 percent'' in
paragraph (1)(A)(i) thereof, and
(II) disregard paragraph (a)(A)(ii) thereof and the last
sentence of paragraph (1) thereof.
(ii) To determine the beginning and ending dates of a
period of high unemployment within a State, apply section
203(a) and (b) of such Act, except that--
(I) in applying such section 203(a), deem paragraphs (1)
and (2) thereof to be amended by striking ``the third week
after'', and
(II) in applying such section 203(b), deem paragraph (1)(A)
thereof amended by striking ``thirteen'' and inserting
``twenty-six'' and paragraph (1)(B) thereof amended by
striking ``fourteenth'' and inserting ``twenty-seventh''.
(4) Rule of construction.--For purposes of any computation
under paragraph (1) (and any determination of amount under
section 202(f)(1)), the modification described in section
202(b)(2)(C) (relating to increased benefits) shall be deemed
to have been in effect with respect to the entirety of the
benefit year involved.
(c) Eligibility Period.--An individual whose applicable
factor under subsection (b)(3) is 26 shall be eligible for
temporary supplemental unemployment compensation for each
week of total unemployment in his benefit year which begins
in the State's period of high unemployment and, if his
benefit year ends within such period, any such weeks
thereafter which begin in such period of high unemployment,
not to exceed a total of 26 weeks.
SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS
SUBTITLE.
(a) General Rule.--There shall be paid to each State which
has entered into an agreement under this subtitle an amount
equal to--
(1) 100 percent of any regular compensation made payable to
individuals by such State by virtue of the modifications
which are described in section 202(b)(2) and deemed to be in
effect with respect to such State pursuant to section
202(b)(1)(A),
(2) 100 percent of any regular compensation--
(A) which is paid to individuals by such State by reason of
the fact that its State law contains provisions comparable to
the modifications described in section 202(b)(2)(A)-(B), but
only
(B) to the extent that those amounts would, if such amounts
were instead payable by virtue of the State law's being
deemed to be so modified pursuant to section 202(b)(1)(A),
have been reimbursable under paragraph (1), and
(3) 100 percent of the temporary supplemental unemployment
compensation paid to individuals by the State pursuant to
such agreement.
(b) Determination of Amount.--Sums under subsection (a)
payable to any State by reason of such State having an
agreement under this subtitle shall be payable, either in
advance or by way of reimbursement (as may be determined
by the Secretary), in such amounts as the Secretary
estimates the State will be entitled to receive under this
subtitle for each calendar month, reduced or increased, as
the case may be, by any amount by which the Secretary
finds that the Secretary's estimates for any prior
calendar month were greater or less than the amounts which
should have been paid to the State. Such estimates may be
made on the basis of such statistical, sampling, or other
method as may be agreed upon by the Secretary and the
State agency of the State involved.
(c) Administrative Expenses, Etc.--There is hereby
appropriated out of the employment security administration
account of the Unemployment Trust Fund (as established by
section 901(a) of the Social Security Act) $500,000,000 to
reimburse States for the costs of the administration of
agreements under this subtitle (including any improvements in
technology in connection therewith) and to provide
reemployment services to unemployment compensation claimants
in States having agreements under this subtitle. Each State's
share of the amount appropriated by the preceding sentence
shall be determined by the Secretary according to the factors
described in section 302(a) of the Social Security Act and
certified by the Secretary to the Secretary of the Treasury.
SEC. 205. FINANCING PROVISIONS.
(a) In General.--Funds in the extended unemployment
compensation account (as established by section 905(a) of the
Social Security Act), and the Federal unemployment account
(as established by section 904(g) of the Social Security
Act), of the Unemployment Trust Fund shall be used, in
accordance with subsection (b), for the making of payments
(described in section 204(a)) to States having agreements
entered into under this subtitle.
(b) Certification.--The Secretary shall from time to time
certify to the Secretary of the Treasury for payment to each
State the sums described in section 204(a) which are payable
to such State under this subtitle. The Secretary of the
Treasury, prior to audit or settlement by the General
Accounting Office, shall make payments to the State in
accordance with such certification by transfers from the
extended unemployment compensation account (or, to the extent
that there are insufficient funds in that account, from the
Federal unemployment account) to the account of such State in
the Unemployment Trust Fund.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) In General.--If an individual knowingly has made, or
caused to be made by another, a false statement or
representation of a material fact, or knowingly has failed,
or caused another to fail, to disclose a material fact, and
as a result of such false statement or representation or of
such nondisclosure such individual has received any regular
compensation or temporary supplemental unemployment
compensation under this subtitle to which he was not
entitled, such individual--
(1) shall be ineligible for any further benefits under this
subtitle in accordance with the provisions of the applicable
State unemployment compensation law relating to fraud in
connection with a claim for unemployment compensation, and
(2) shall be subject to prosecution under section 1001 of
title 18, United States Code.
(b) Repayment.--In the case of individuals who have
received any regular compensation or temporary supplemental
unemployment compensation under this subtitle to which they
were not entitled, the State shall require such individuals
to repay those benefits to the State agency, except that the
State agency may waive such repayment if it determines that--
(1) the payment of such benefits was without fault on the
part of any such individual, and
(2) such repayment would be contrary to equity and good
conscience.
(c) Recovery by State Agency.--
(1) In general.--The State agency may recover the amount to
be repaid, or any part thereof, by deductions from any
regular compensation or temporary supplemental unemployment
compensation payable to such individual under this subtitle
or from any unemployment compensation payable to such
individual under any Federal unemployment compensation law
administered by the State agency or under any other
Federal law administered by the State agency which
provides for the payment of any assistance or allowance
with respect to any week of unemployment, during the 3-
year period after the date such individuals received the
payment of the regular compensation or temporary
supplemental unemployment compensation to which they were
not entitled, except that no single deduction may exceed
50 percent of the weekly benefit amount from which such
deduction is made.
(2) Opportunity for hearing.--No repayment shall be
required, and no deduction shall be made, until a
determination has been made, notice thereof and an
opportunity for a fair hearing has been given to the
individual, and the determination has become final.
(d) Review.--Any determination by a State agency under this
section shall be subject to review in the same manner and to
the same
[[Page H8585]]
extent as determinations under the State unemployment
compensation law, and only in that manner and to that extent.
SEC. 207. DEFINITIONS.
For purposes of this subtitle:
(1) In general.--The terms ``compensation'', ``regular
compensation'', ``extended compensation'', ``additional
compensation'', ``benefit year'', ``base period'', ``State'',
``State agency'', ``State law'', and ``week'' have the
respective meanings given such terms under section 205 of the
Federal-State Extended Unemployment Compensation Act of 1970,
subject to paragraph (2).
(2) State law and regular compensation.--In the case of a
State entering into an agreement under this subtitle--
(A) ``State law'' shall be considered to refer to the State
law of such State, applied in conformance with the
modifications described in section 202(b)(2), subject to
section 202(c), and
(B) ``regular compensation'' shall be considered to refer
to such compensation, determined under its State law (applied
in the manner described in subparagraph (A)),
except as otherwise provided or where the context clearly
indicates otherwise.
SEC. 208. APPLICABILITY.
(a) In General.--An agreement entered into under this
subtitle shall apply to weeks of unemployment--
(1) beginning after the date on which such agreement is
entered into, and
(2) ending before January 1, 2003.
(b) Specific Rules.--Under such an agreement--
(1) the modification described in section 202(b)(2)(A)
(relating to alternative base periods) shall not apply except
in the case of initial claims filed after September 11, 2001,
(2) the modifications described in section 202(b)(2) (B)-
(C) (relating to part-time employment and increased benefits,
respectively) shall apply to weeks of unemployment (described
in subsection (a)), irrespective of the date on which an
individual's claim for benefits is filed, and
(3) the payments described in section 202(b)(1)(B)
(relating to temporary supplemental unemployment
compensation) shall not apply except in the case of
individuals exhausting their rights to regular compensation
(as described in clause (i) thereof) after September 11,
2001.
Subtitle B--Premium Assistance for COBRA Continuation Coverage
SEC. 211. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE.
(a) Establishment.--
(1) In general.--Not later than 60 days after the date of
enactment of this Act, the Secretary of the Treasury, in
consultation with the Secretary of Labor, shall establish a
program under which premium assistance for COBRA continuation
coverage shall be provided for qualified individuals under
this section.
(b) Determination of Amount.--Sums under subsection (a)
payable to any State by reason of such State having an
agreement under this subtitle shall be payable, either in
advance or by way of reimbursement (as may be determined by
the Secretary), in such amounts as the Secretary estimates
the State will be entitled to receive under this subtitle for
each calendar month, reduced or increased, as the case may
be, by any amount by which the Secretary finds that the
Secretary's estimates for any prior calendar month were
greater or less than the amounts which should have been paid
to the State. Such estimates may be made on the basis of such
statistical, sampling, or other method as may be agreed upon
by the Secretary and the State agency of the State involved.
(c) Administrative Expenses, Etc.--There is hereby
appropriated out of the employment security administration
account of the Unemployment Trust Fund (as established by
section 901(a) of the Social Security Act) $500,000,000 to
reimburse States for the costs of the administration of
agreements under this subtitle (including any improvements in
technology in connection therewith) and to provide
reemployment services to unemployment compensation claimants
in States having agreements under this subtitle. Each State's
share of the amount appropriated by the proceeding sentence
shall be determined by the Secretary according to the factors
described in section 302(a) of the Social Security Act and
certified by the Secretary to the Secretary of the Treasury.
SEC. 205. FINANCING PROVISIONS.
(a) In General.--Funds in the extended unemployment
compensation account (as established by section 905(a) of the
Social Security Act), and the Federal unemployment account
(as established by section 904(g) of the Social Security
Act), of the Unemployment Trust Fund shall be used, in
accordance with subsection (b), for the making of payments
(described in section 204(a)) to States having agreements
entered into under this subtitle.
(b) Certification.--The Secretary shall from time to time
certify to the Secretary of the Treasury for payment to each
State the sums described in section 204(a) which are payable
to such State under this subtitle. The Secretary of the
Treasury, prior to audit or settlement by the General
Accounting Office, shall make payments to the State in
accordance with such certification by transfers from the
extended unemployment compensation account (or, to the extent
that there are insufficient funds in that account, from the
Federal unemployment account) to the account of such State in
the Unemployment Trust Fund.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) In General.--If an individual knowingly has made, or
caused to be made by another, a false statement or
representation of a material fact, or knowingly has failed,
or caused another to fail, to disclose a material fact, and
as a result of such false statement or representation or of
such nondisclosure such individual has received any regular
compensation or temporary supplemental unemployment
compensation under this subtitle to which he was not
entitled, such individual--
(1) shall be ineligible for any further benefits under this
subtitle in accordance with the provisions of the applicable
State unemployment compensation law relating to fraud in
connection with a claim for unemployment compensation, and
(2) shall be subject to prosecution under section 1001 of
title 18, United States Code.
(b) Repayment.--In the case of individuals who have
received any regular compensation or temporary8 supplemental
unemployment compensation under this subtitle to which they
were not entitled, the State shall require such individuals
to repay those benefits to the State agency, except that the
State agency may waive such repayment if it determines that--
(1) the payment of such benefits was without fault on the
part of any such individual, and
(2) such repayment would be contrary to equity and good
conscience.
(c) Recovery by State Agency.--
(1) In general.--The State agency may recover the amount to
be repaid, or any part thereof, by deductions from any
regular compensation or temporary supplemental unemployment
compensation payable to such individual under this subtitle
or from any unemployment compensation payable to such
individual under any Federal unemployment compensation law
administered by the State agency or under any Federal law
administered by the State agency which provides for the
payment of any assistance or allowance with respect to any
week of unemployment, during the 3-year period after the date
such individual received the payment of the regular
compensation or temporary supplemental unemployment
compensation to which they were not entitled, except that no
single deduction may exceed 50 percent of the weekly benefit
from which such deduction is made.
(4) Opportunity for hearing.--No repayment shall be
required, and no deduction shall be made, until a
determination has been made, notice thereof and an
opportunity for a fair hearing has been given to the
individual, and the determination has become final.
(d) Review.--Any determination by a State agency under this
section shall be subject to review in the same manner and to
the same extent as determinations under the State
unemployment compensation law, and only in that manner and to
that extent.
SEC. 207. DEFINITIONS.
For purposes of this subtitle:
(1) In general.--The terms ``compensation'', ``regular
compensation'', extended compensation'', ``additional
compensation'', benefit year'', base period'', ``State''
``State agency'', State law'', and ``week'' have the
respective meanings given such terms under section 205 of the
Federal-State Extended Unemployment Compensation Act of 1970,
subject to paragraph (2).
(2) State law and regular compensation.--In the case of a
State entering into an agreement under this subtitle--
(A) ``State law'' shall be considered to refer to the State
law of such State, applied in conformance with the
modifications described in section 202(b)(b), subject to
section 202(c), and
(B) ``regular compensation'' shall be considered to refer
such compensation, determined under its State law (applied in
a manner described in subparagraph (A)),
except as otherwise provided or where the context clearly
indicates otherwise.
SEC. 208. APPLICABILITY.
(a) In General.--An agreement entered into under this
subtitle shall apply to weeks of unemployment--
(1) beginning after the date on which such agreement is
entered into, and
(2) ending before January 1, 2003.
(b) Specified Rules.--Under such an agreement--
(1) the modifications described in section 202(b)(2)(A)
(relating to alternative base periods) shall not apply except
in the case of initial claims filed after September 11, 2001.
(2) the modifications described in section 202(b)(2)(B)-(C)
(relating to part-time employment and increased benefits,
respectively) shall apply to weeks of unemployment (described
in subsection (a)), irrespective of the date on which an
individual's claim for benefits is filed, and
(3) the payments described in section 202(b)(1)(B)
(relating to temporary supplemental unemployment compensation
) shall not apply except in the case of individuals
exhausting their rights to regular compensation (as described
in clause (i) thereof) after September 11, 2001.
Subtitle B--Premium Assistance for COBRA Continuation Coverage
SEC. 211. PREMIUM ASSISTANCE FOR COBRA CONTINUATION COVERAGE.
(a) Establishment.--
(1) In general.--Not later than 60 days after the date of
enactment of this Act, the
[[Page H8586]]
Secretary of the Treasury, in consultation with the Secretary
of Labor, shall establish a program under which premium
assistance for COBRA continuation coverage shall be provided
for qualified individuals under this section.
(2) Qualified individuals.--For purposes of this section, a
qualified individual is an individual who--
(A) establishes that the individual--
(i) on or after July 1, 2001, and before the end of the 1-
year period beginning on the date of the enactment of this
Act, became entitled to elect COBRA continuation coverage;
and
(ii) has elected such coverage; and
(B) enrolls in the premium assistance program under this
section by not later than the end of such 1-year period.
(b) Limitation of Period of Premium Assistance.--Premium
assistance provided under this subsection shall end with
respect to an individual on the earlier of--
(1) the date the individual is no longer covered under
COBRA continuation coverage; or
(2) 12 months after the date the individual is first
enrolled in the premium assistance program established under
this section.
(c) Payment, and Crediting of Assistance.--
(1) Amount of assistance.--Premium assistance provided
under this section shall be equal to 75 percent of the amount
of the premium required for the COBRA continuation coverage.
(2) Provision of assistance.--Premium assistance provided
under this section shall be provided through the
establishment of direct payment arrangements with the
administrator of the group health plan (or other entity) that
provides or administers the COBRA continuation coverage. It
shall be a fiduciary duty of such administrator (or other
entity) to enter into such arrangements under this section.
(3) Premiums payable by qualified individual reduced by
amount of assistance.--Premium assistance provided under this
section shall be credited by such administrator (or other
entity) against the premium otherwise owed by the individual
involved for such coverage.
(d) Change in COBRA Notice.--
(1) General notice.--
(A) In general.--In the case of notices provided under
section 4980B(f)(6) of the Internal Revenue Code of 1986 with
respect to individuals who, on or after July 1, 2001, and
before the end of the 1-year period beginning on the date of
the enactment of this Act, become entitled to elect COBRA
continuation coverage, such notices shall include an
additional notification to the recipient of the availability
of premium assistance for such coverage under this section.
(B) Alternative notice.--In the case of COBRA continuation
coverage to which the notice provision under section
4980B(f)(6) of the Internal Revenue Code of 1986 does not
apply, the Secretary of the Treasury shall, in coordination
with administrators of the group health plans (or other
entities) that provide or administer the COBRA continuation
coverage involved, assure provision of such notice.
(C) Form.--The requirement of the additional notification
under this paragraph may be met by amendment of existing
notice forms or by inclusion of a separate document with
the notice otherwise required.
(2) Specific requirements.--Each additional notification
under paragraph (1) shall include--
(A) the forms necessary for establishing eligibility under
subsection (a)(2)(A) and enrollment under subsection
(a)(2)(B) in connection with the coverage with respect to
each covered employee or other qualified beneficiary;
(B) the name, address, and telephone number necessary to
contact the plan administrator and any other person
maintaining relevant information in connection with the
premium assistance; and
(C) the following statement displayed in a prominent
manner:
``You may be eligible to receive assistance with payment of
75 percent of your COBRA continuation coverage premiums for a
duration of not to exceed 12 months.''.
(3) Notice relating to retroactive coverage.--In the case
of such notices previously transmitted before the date of the
enactment of this Act in the case of an individual described
in paragraph (1) who has elected (or is still eligible to
elect) COBRA continuation coverage as of the date of the
enactment of this Act, the administrator of the group health
plan (or other entity) involved or the Secretary of the
Treasury (in the case described in the paragraph (1)(B))
shall provide (within 60 days after the date of the enactment
of this Act) for the additional notification required to be
provided under paragraph (1).
(4) Model notices.--The Secretary shall prescribe models
for the additional notification required under this
subsection.
(f) Obligation of Funds.--This section constitutes budget
authority in advance of appropriations Acts and represents
the obligation of the Federal Government to provide for the
payment of premium assistance under this section.
(g) Prompt Issuance of Guidance.--The Secretary of the
Treasury, in consultation with the Secretary of Labor, shall
issue guidance under this section not later than 30 days
after the date of the enactment of this Act.
(h) Definitions.--In this section:
(l) Administrator.--The term ``administrator'' has the
meaning given such term in section 3(16) of the Employee
Retirement Income Security Act of 1974.
(2) COBRA continuation coverage.--The term ``COBRA
continuation coverage'' means continuation coverage provided
pursuant to title XXII of the Public Health Service Act,
section 4980B of the Internal Revenue Code of 1986 (other
than subsection (f)(1) of such section insofar as it relates
to pediatric vaccines), part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 (other
than under section 609), section 8905a of title 5, United
States Code, or under a State program that provides
continuation coverage comparable to such continuation
coverage.
(3) Group health plan.--The term ``group health plan'' has
the meaning given such term in section 9832(a) of the
Internal Revenue Code of 1986.
(4) State.--The term ``State'' includes the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
Subtitle C--Additional Assistance for Temporary Health Insurance
Coverage
SEC. 221. OPTIONAL TEMPORARY MEDICAID COVERAGE FOR CERTAIN
UNINSURED EMPLOYEES.
(a) In General.--Notwithstanding any other provision of
law, with respect to any month before the ending month, a
State may elect to provide, under its medicaid program under
title XIX of the Social Security Act, medical assistance in
the case of an individual--
(1)(A) who has become totally or partially separated from
employment on or after July 1, 2001, and before the end of
such ending month; or
(B) whose hours of employment have been reduced on or after
July 1, 2001, and before the end of such ending month;
(2) who is not eligible for COBRA continuation coverage;
and
(3) who is uninsured.
(b) Limitation of Period of Coverage.--Assistance under
this section shall end with respect to an individual on the
earlier of--
(1) the date the individual is no longer uninsured; or
(2) 12 months after the date the individual is first
determined to be eligible for medical assistance under this
section.
(c) Special Rules.--In the case of medical assistance
provided under this section--
(1) the Federal medical assistance percentage under section
1905(b) of the Social Security Act shall be the enhanced FMAP
(as defined in section 2105(b) of such Act);
(2) a State may elect to apply alternative income, asset,
and resource limitations and the provisions of section
1916(g) of such Act, except that in no case shall a State
cover individuals with higher family income without covering
individuals with a lower family income;
(3) such medical assistance shall not be provided for
periods before the date the individual becomes uninsured;
(4) a State may elect to make eligible for such assistance
a spouse or children of an individual eligible for medical
assistance under paragraph (1), if such spouse or children
are uninsured;
(5) individuals eligible for medical assistance under this
section shall be deemed to be described in the list of
individuals described in the matter preceding paragraph (1)
of section 1905(a) of such Act; and
(6) the Secretary of Health and Human Services shall not
count, for purposes of section 1108(f) of the Social Security
Act, such amount of payments under this section as bears a
reasonable relationship to the average national proportion of
payments made under this section for the 50 States and the
District of Columbia to the payments otherwise made under
title XIX for such States and District.
(d) Definition.--For purposes of this subtitle:
(1) Uninsured.--The term ``uninsured'' means, with respect
to an individual, that the individual is not covered under--
(A) a group health plan (as defined in section 2791(a) of
the Public Health Service Act),
(B) health insurance coverage (as defined in section
2791(b)(1) of the Public Health Service Act), or
(C) a program under title XVIII, XIX, or XXI of the Social
Security Act, other than under such title XIX pursuant to
this section.
For purposes of this paragraph, such coverage under
subparagraph (A) or (B) shall not include coverage consisting
solely of coverage of excepted benefits (as defined in
section 2791(c) of the Public Health Service Act).
(2) Cobra continuation coverage.--The term ``COBRA
continuation coverage'' means coverage under a group health
plan provided by an employer pursuant to title XXII of the
Public Health Service Act, section 4980B of the Internal
Revenue Code of 1986, part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974, or section
8905a of title 5, United States Code.
(3) State.--The term ``State'' has the meaning given such
term for purposes of title XIX of the Social Security Act.
(4) Ending month.--The term ``ending month'' means the last
month that begins before the date that is 1 year after the
date of the enactment of this Act.
(e) Effective Date.--This section shall take effect upon
its enactment, whether or not regulations implementing this
section are issued.
[[Page H8587]]
(B) Alternative notice.--In the case of COBRA continuation
coverage to which the notice provision under section
4980B(f)(6) of the Internal Revenue Code of 1986 does not
apply, the Secretary of the Treasury shall, in coordination
with administrators of the group health plans (or other
entities) that provide or administer the COBRA continuation
coverage involved, assure provision of such notice.
(C) Form.--The requirement of the additional notification
under this paragraph may be met by amendment of existing
notice forms or by inclusion of a separate document with the
notice otherwise required.
(2) Specific requirements.--Each additional notification
under this paragraph (1) shall include--
(A) the forms necessary for establishing eligibility under
subsection (a)(2)(A) and enrollment under subsection
(a)(2)(B) in connection with the coverage with respect to
each covered employee or other qualified beneficiary;
(B) the name, address, and telephone number necessary to
contact the plan administrator and any other person
maintaining relevant information in connection with the
premium assistance; and
(C) the following statement displayed in a prominent
manner:
``You may be eligible to receive assistance with payment of
75 percent of your COBRA continuation coverage premiums for a
duration of not to exceed 12 months.''.
(3) Notice relating to retroactive coverage.--In the case
of such notices previously transmitted before the date of the
enactment of this Act in the case of an individual described
in paragraph (1) who has elected (or is still eligible to
elect) COBRA continuation coverage as to the date of the
enactment of this Act, the administrator of the group health
plan (or other entity) involved or the Secretary of the
Treasury (in the case described in the paragraph (1)(B))
shall provide (within 60 days after the date of the enactment
of this Act) for the additional notification required to be
provided under paragraph (1).
(4) Model notices.--The Secretary shall prescribe models
for the additional notification required under this
subsection.
(f) Obligation of Funds.--This section constitutes budget
authority in advance of appropriations Acts and represents
the obligation of the Federal government to provide for the
payment of premium assistance under this section.
(g) Prompt Issuance of Guidance.--The Secretary of the
Treasury, in consultation with the Secretary of Labor, shall
issue guidance under this section not later than 30 days
after the date of the enactment of this Act.
(h) Definitions.--In this section:
(1) Administrator.--The team ``administrator'' has the
meaning given such term in section 3(16) of the Employee
Retirement Income Security Act of 1974.
(2) COBRA continuation coverage.-- The term ``COBRA
continuation coverage'' means continuation coverage provided
pursuant to title XXII of the Public Health Service Act,
section 4980B of the Internal Revenue Code of 1986 (other
than subsection (f)(1) of such section insofar as it relates
to pediatric vaccines), part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974 (other
than under section 609), section 8905a of title 5, United
States Code, or under a State program that provides
continuation coverage comparable to such continuation
coverage.
(3) Group health plan.--The term ``group health plan'' has
the meaning given such term in section 9832(a) of the
Internal Revenue Code of 1986.
(4) State.--The term ``State'' includes the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands.
Subtitle C--Additional Assistance for Temporary Health Insurance
Coverage
SEC. 221. OPTIONAL TEMPORARY MEDICAID COVERAGE FOR CERTAIN
UNINSURED EMPLOYEES.
(a) In General.--Notwithstanding any other provision of
law, with respect to any month before the ending month, a
State may elect to provide, under its medicaid program under
title XIX of the Social Security Act, medical assistance in
the case of an individual--
(1)(A) who has become totally or partially separated from
employment on or after July 1, 2001, and before the end of
such ending month; or
(B) whose hours of employment have been reduced on or after
July 1, 2001, and before the end of such ending month;
(2) who is not eligible for COBRA continuation coverage;
and
(3) who is uninsured.
(b) Limitation of Period of Coverage.--Assistance under
this section shall end with respect to an individual on the
earlier of--
(1) the date the individual is no longer uninsured; or
(2) 12 months after the date the individual is first
determined to be eligible for medical assistance under this
section.
(c) Special Rules.--In the case of medical assistance
provided under this section--
(1) the Federal medical assistance percentage under section
1905(b) of the Social Security Act shall be the enhanced FMAP
(as defined in section 2105(b) of such Act);
(2) a State may elect to apply alternative income, asset,
and resource limitations and the provisions of section
1916(g) of such Act, except that in no case shall a State
cover individuals with higher family income without covering
individuals with a lower family income;
(3) such medical assistance shall not be provided for
periods before the date the individual becomes uninsured;
(4) a State may elect to make eligible for such assistance
a spouse or children of an individual eligible for medical
assistance under paragraph (l), if such spouse or children
are uninsured;
(5) individuals eligible for medical assistance under this
section shall be deemed to be described in the list of
individuals described in the matter preceding paragraph (1)
of section 1905(a) of such Act; and
(6) the Secretary of Health and Human Services shall not
count, for purposes of section 1108(f) of the Social Security
Act, such amount of payments under this section as bears a
reasonable relationship to the average national proportion of
payments made under this section for the 50 States and the
District of Columbia to the payments otherwise made under
title XIX for such States and District.
(d) Definitions.--For purposes of this subtitle:
(1) Uninsured.--The term ``uninsured'' means, with respect
to an individual, that the individual is not covered under--
(A) a group health plan (as defined in section 2791(a) of
the Public Health Service Act),
(B) health insurance coverage (as defined in section
2791(b)(1) of the Public Health Service Act), or
(C) a program under title XVIII, XIX, or XXI of the Social
Security Act, other than under such title XIX pursuant to
this section.
For purposes of this paragraph, such coverage under
subparagraph (A) or (B) shall not include coverage consisting
solely of coverage of excepted benefits (as defined in
section 2791(c) of the Public Health Service Act).
(2) Cobra continuation coverage.--The term ``COBRA
continuation coverage'' means coverage under a group health
plan provided by an employer pursuant to title XXII of the
Public Health Service Act, section 4980B of the Internal
Revenue Code of 1986 part 6 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974, or section
8905a of title 5, United States Code.
(3) State.--The term ``State'' has the meaning given such
term for purposes of title XIX of the Social Security Act.
(4) Ending month.--The term ``ending month'' means the last
month that begins before the date that is 1 year after the
date of the enactment of this Act.
(e) Effective Date.--This section shall take effect upon
its enactment, whether or not regulations implementing this
section are issued.
(f) Limitation of Election.--A State may not elect to
provide coverage under this section unless the State elects
to provide coverage under section 222.
SEC. 222. OPTIONAL TEMPORARY COVERAGE FOR UNSUBSIDIZED
PORTION OF COBRA CONTINUATION PREMIUMS.
(a) In General.--Notwithstanding any other provision of
law, with respect to COBRA continuation coverage provided for
any month through the ending month, a State may elect to
provide payment of the unsubsidized portion of the premium
for COBRA continuation coverage in the case of any
individual--
(1)(A) who has become totally or partially separated from
employment on or after July 1, 2001, and before the end of
the ending month; or
(B) whose hours of employment have been reduced on or after
July 1, 2001, and before the end of such ending month; and
(2) who is eligible for, and has elected coverage under,
COBRA continuation coverage.
(b) Limitation of Period of Coverage.--Premium assistance
under this section shall end with respect to an individual on
the earlier of--
(1) the date the individual is no longer covered under
COBRA continuation coverage; or
(2) 12 months after the date the individual is first
determined to be eligible for premium assistance under this
section.
(c) Financial Payment to States.--A State providing premium
assistance under this section shall be entitled to payment
under section 1903(a) of the Social Security Act with respect
to such assistance (and administrative expenses relating to
such assistance) in the same manner as such State is entitled
to payment with respect to medical assistance (and such
administrative expenses) under such section, except that, for
purposes of this subsection, any reference to the Federal
medical assistance percentage shall be deemed a reference to
the enhanced FMAP (as defined in section 2105(b) of such
Act). The provisions of subsection (c)(6) of section 221
shall apply with respect to this section in the same manner
as it applies under such section.
(d) Unsubsidized Portion of Premium for COBRA Continuatioin
Coverage.--For purposes of this section, the term
`unsubsidized portion of premium for COBRA continuation
coverage' means that portion of the premium for COBRA
continuation coverage for which there is no financial
assistance available under 211.
(e) Effective Date.--This section shall take effect upon
its enactment, whether or not regulations implementing this
section are issued.
[[Page H8588]]
(f) Limitation on Election.--A State may not elect to
provide coverage under this section unless the State elects
to provide coverage under section 221.
The SPEAKER pro tempore. The question is on ordering the previous
question.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Ms. SLAUGHTER. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
Pursuant to clause 9 of rule XX, the Chair will reduce to 5 minutes
the minimum time for electronic voting, if ordered, on the question of
adoption of the resolution.
The vote was taken by electronic device, and there were--yeas 220,
nays 204, not voting 9, as follows:
[Roll No. 460]
YEAS--220
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cox
Crane
Crenshaw
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)
NAYS--204
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Woolsey
Wu
Wynn
NOT VOTING--9
Carson (IN)
Cooksey
Cubin
DeFazio
Ford
Frost
Quinn
Rothman
Wexler
{time} 1246
Messrs. HONDA, OBEY, BARRETT of Wisconsin, RUSH and WU and Ms.
WOOLSEY changed their vote from ``yea'' to ``nay.''
Mr. BACHUS and Mr. TANCREDO changed their vote from ``nay'' to
``yea.''
So the previous question was ordered.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Hansen). The question is on the
resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Ms. SLAUGHTER. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 216,
noes 202, not voting 15, as follows:
[Roll No. 461]
AYES--216
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cox
Crane
Crenshaw
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)
[[Page H8589]]
NOES--202
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Hall (TX)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kucinich
LaFalce
Lampson
Langevin
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Woolsey
Wu
Wynn
NOT VOTING--15
Carson (IN)
Cooksey
Cubin
DeFazio
Dingell
Ford
Frost
Horn
Kleczka
Lantos
Quinn
Radanovich
Rothman
Watkins (OK)
Wexler
{time} 1255
So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
Mr. OXLEY. Mr. Chairman, pursuant to House Resolution 297, I call up
the bill (H.R. 3210) to ensure the continued financial capacity of
insurers to provide coverage for risks from terrorism, and ask for its
immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 297, the bill
is considered read for amendment.
The text of H.R. 3210 is as follows:
H.R. 3210
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Terrorism
Risk Protection Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Designation of Administrators.
Sec. 4. Submission of premium information to Administrator.
Sec. 5. Triggering determination and covered period.
Sec. 6. Federal cost-sharing for commercial insurers.
Sec. 7. Assessments.
Sec. 8. Terrorism loss repayment surcharge.
Sec. 9. Administration of assessments and surcharges.
Sec. 10. Reserve for terrorism coverage under commercial lines of
business.
Sec. 11. State preemption.
Sec. 12. Consistent State guidelines for coverage for acts of
terrorism.
Sec. 13. Consultation with State insurance regulators and NAIC.
Sec. 14. Sovereign immunity protections.
Sec. 15. Study of potential effects of terrorism on life insurance
industry.
Sec. 16. Definitions.
Sec. 17. Extension of program.
Sec. 18. Regulations.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) the terrorist attacks on the World Trade Center and the
Pentagon of September 11, 2001, resulted in a large number of
deaths and injuries, the destruction and damage to buildings,
and interruption of business operations;
(2) the attacks have inflicted possibly the largest losses
ever incurred by insurers and reinsurers;
(3) while the insurance and reinsurance industries have
committed to pay the losses arising from the September 11
attacks, the resulting disruption has created widespread
market uncertainties with regard to the risk of losses
arising from possible future terrorist attacks;
(4) such uncertainty threatens the continued availability
of United States commercial property casualty insurance for
terrorism risk at meaningful coverage levels;
(5) the unavailability of affordable commercial property
and casualty insurance for terrorist acts threatens the
growth and stability of the United States economy, including
impeding the ability of financial services providers to
finance commercial property acquisitions and new
construction;
(6) in the past, the private insurance markets have shown a
remarkable resiliency in adapting to changed circumstances;
(7) given time, the private markets will diversify and
develop risk spreading mechanisms to increase capacity and
guard against possible future losses incurred by terrorist
attacks;
(8) it is necessary to create a temporary industry risk
sharing loan program to ensure the continued availability of
commercial property and casualty insurance and reinsurance
for terrorism-related risks;
(9) such action is necessary to limit immediate market
disruptions, encourage economic stabilization, and facilitate
a transition to a viable market for private terrorism risk
insurance; and
(10) in addition, it is necessary to repeal portions of the
tax law which prohibit the insurance market from developing
the necessary reserves to handle possible future losses due
to acts of terrorism.
SEC. 3. DESIGNATION OF ADMINISTRATORS.
(a) In General.--Not later than December 1, 2001, the
President shall designate a Federal officer or officers to
act as the Administrator or Administrators responsible for
carrying out this Act and the responsibilities under this Act
to be carried out by each such officer.
(b) Sense of Congress.--It is the sense of the Congress
that in determining the Administrator responsible for making
any determinations, for purposes of this Act, as to whether a
loss was caused by an act of terrorism and whether such loss
was caused by one or multiple such events, pursuant to
section 5(b), the President should consider the appropriate
role of the Assistant to the President for Homeland Security.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO ADMINISTRATOR.
To the extent such information is not otherwise available
to the Administrators, the appropriate Administrator may
require each insurer to submit, to the appropriate
Administrator or to the NAIC, a statement specifying the
aggregate premium amount of coverage written by such insurer
for properties and persons in the United States under each
line of commercial property and casualty insurance sold by
such insurer during such periods as the appropriate
Administrator may provide.
SEC. 5. TRIGGERING DETERMINATION AND COVERED PERIOD.
(a) In General.--For purposes of this Act, a ``triggering
determination'' is a determination by the appropriate
Administrator that the insured losses resulting from the
event of an act of terrorism occurring during the covered
period (as such term is defined in subsection (b)), or the
aggregate insured losses resulting from multiple events of
acts of terrorism all occurring during the covered period,
meet the requirements under either of the following
paragraphs:
(1) Industry-wide loss test.--Such industry-wide losses
exceed $1,000,000,000.
(2) Capital surplus and industry aggregate test.--Such
industry-wide losses exceed $100,000,000 and some portion of
such losses for any single commercial insurer exceed--
(A) 10 percent of the capital surplus of such commercial
insurer (as such term is defined by the appropriate
Administrator); and
(B) 10 percent of the commercial property and casualty
premiums written by such commercial insurer;
except that this paragraph shall not apply to any commercial
insurer that has been making commercial property and casualty
insurance coverage available for less than 4 years as of the
date of the determination under this subsection.
(b) Covered Period.--For purposes of this Act, the
``covered period'' is the period beginning on the date of the
enactment of this Act and ending on January 1, 2003.
(c) Determinations Regarding Events.--For purposes of
subsection (a), the appropriate Administrator shall have the
sole authority for determining whether--
(1) an occurrence or event was caused by an act of
terrorism;
(2) insured losses from acts of terrorism were caused by
one or multiple events or occurrences; and
(3) whether an act of terrorism occurred during the covered
period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSURERS.
(a) In General.--Pursuant to a triggering determination,
the appropriate Administrator shall provide financial
assistance to
[[Page H8590]]
commercial insurers in accordance with this section to cover
insured losses resulting from acts of terrorism, which shall
be repaid in accordance with subsection (e).
(b) Amount.--Subject to subsection (c), with respect to a
triggering determination, the amount of financial assistance
made available under this section to each commercial insurer
shall be equal to 90 percent of the amount of the insured
losses of the insurer as a result of the triggering event
involved.
(c) Aggregate Limitation.--The aggregate amount of
financial assistance provided pursuant to this section may
not exceed $100,000,000,000.
(d) Limitations.--The appropriate Administrator may
establish such limitations as may be necessary to ensure that
payments under this section in connection with a triggering
determination are made only to commercial insurers that are
not in default of any obligation under section 7 to pay
assessments or under section 8 to collect surcharges.
(e) Repayment.--Financial assistance made available under
this section shall be repaid through assessments under
section 7 collected by the appropriate Administrator and
surcharges remitted to the appropriate Administrator under
section 8. Any such amounts collected or remitted shall be
deposited into the general fund of the Treasury.
(f) Emergency Designation.--Congress designates the amount
of new budget authority and outlays in all fiscal years
resulting from this section as an emergency requirement
pursuant to section 252(e) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901(e)). Such
amount shall be available only to the extent that a request,
that includes designation of such amount as an emergency
requirement as defined in such Act, is transmitted by the
President to Congress.
SEC. 7. ASSESSMENTS.
(a) In General.--In the case of a triggering determination,
each commercial insurer shall be subject to assessments under
this section for the purpose of repaying financial assistance
made available under section 6 in connection with such
determination.
(b) Aggregate Assessment.--Pursuant to a triggering
determination, the appropriate Administrator shall determine
the aggregate amount to be assessed among all commercial
insurers, which shall be equal to 90 percent of the lesser
of--
(1) the amount of industry-wide losses resulting from the
triggering event involved; and
(2) $20,000,000,000.
(c) Allocation of Assessment.--
(1) In general.--The appropriate Administrator shall
allocate the aggregate assessment amount determined under
subsection (b) among all commercial insurers. The portion of
the aggregate assessment amount that is allocated as an
assessment on each commercial insurer shall be based on the
percentage, written by that insurer, of the aggregate written
premium, for all commercial insurers, for the calendar year
preceding the assessment.
(2) Payment requirement.--Upon notification by the
appropriate Administrator of an assessment under this
section, each commercial insurer shall be required to pay to
the appropriate Administrator, in the manner provided under
section 9 by the appropriate Administrator, the amount equal
to the assessment on such commercial insurer (subject to the
limitation under paragraph (3)).
(3) Annual limitation on amount allocated to each
commercial insurer.--
(A) In general.--Of any assessments under this section on a
commercial insurer, the portion required to be paid by any
commercial insurer during a calendar year shall not exceed
the amount that is equal to 3 percent of the aggregate
written premium for such insurer for the preceding calendar
year.
(B) Multiple payments.--If any amounts required to be
repaid under this section for a calendar year are limited by
operation of subparagraph (A), the appropriate Administrator
shall provide that all such remaining amounts shall be
reallocated among all commercial insurers (in the manner
provided in paragraph (1)) over such immediately succeeding
calendar years, and repaid over such years, as may be
necessary to provide for full payment of such remaining
amounts, except that the limitation under subparagraph (A)
shall apply to the amounts paid in any such successive
calendar years.
(C) Administrative flexibility.--
(i) Timing of assessments.--Assessments under this section
in connection with a triggering demonstration shall be made,
to the extent that the appropriate Administrator considers
practicable and appropriate, at the beginning of the calendar
year immediately following the triggering determination.
(ii) Estimates and corrections.--If the appropriate
Administrator makes an assessment at a time other than
provided under clause (i), the appropriate Administrator
may--
(I) require commercial insurers to estimate their aggregate
written premiums for the year in which the assessment is
made; and
(II) make a subsequent refund or require additional
payments to correct such estimation at the end of the
calendar year.
(4) Deferral of contributions.--The appropriate
Administrator may defer the payment of part or all of the
assessment required under paragraph (2) to be paid by a
commercial insurer, but only to the extent that the
appropriate Administrator determines that such deferral is
necessary to avoid the likely insolvency of the commercial
insurer.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) Imposition and Collection.--If, pursuant to a
triggering determination, the appropriate Administrator
determines that the aggregate amount of industry-wide losses
resulting from the triggering event involved exceeds
$20,000,000,000, the appropriate Administrator shall--
(1) establish and impose a policyholder premium surcharge,
as provided under this section, on commercial property and
casualty insurance written after such determination, for the
purpose of repaying financial assistance made available under
section 6 in connection with such triggering determination;
and
(2) provide for commercial insurers to collect such
surcharge and remit amounts collected to the appropriate
Administrator.
(b) Amount and Duration.--The surcharge under this section
shall be established in such amount, and shall apply to
commercial property and casualty insurance written during
such period, as the appropriate Administrator determines is
necessary to recover the aggregate amount of financial
assistance provided under section 6 to cover insured losses
resulting from the triggering event that exceed
$20,000,000,000.
(c) Other Terms.--The surcharge under this section shall--
(1) be based on a percentage of the amount of commercial
property and casualty insurance coverage that a policy
provides; and
(2) be imposed with respect to all commercial property and
casualty insurance coverage written during the period
referred to in subsection (b).
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) Manner and Method.--The appropriate Administrator shall
provide for the manner and method of carrying out assessments
under section 7 and surcharges under section 8, including the
timing and procedures of making assessments and surcharges,
notifying commercial insurers of assessments or surcharge
requirements, collecting payments from and surcharges through
commercial insurers, and refunding of any excess amounts paid
or crediting such amounts against future assessments.
(b) Timing of Coverages and Assessments.--The appropriate
Administrator may adjust the timing of coverages and
assessments provided under this Act to provide for equivalent
application of the provisions of this Act to commercial
insurers and policies that are not based on a calendar year.
(c) Application to Self-Insurance Arrangements.--The
appropriate Administrator may, in consultation with the NAIC,
apply the provisions of this Act, as appropriate, to self-
insurance arrangements by municipalities and other entities,
but only if such application is determined before the
occurrence of a triggering event and all of the provisions of
this Act are applied uniformly to such entities.
(d) Adjustment.--The appropriate Administrator may adjust
the assessments charged under section 7 or the percentage
imposed under the surcharge under section 8 at any time, as
the appropriate Administrator considers appropriate to
protect the national interest, which may include avoiding
unreasonable economic disruption or excessive market
instability.
SEC. 10. RESERVE FOR TERRORISM COVERAGE UNDER COMMERCIAL
LINES OF BUSINESS.
(a) In General.--Section 832 of the Internal Revenue Code
of 1986 (relating to insurance company taxable income) is
amended by adding at the end the following new subsection:
``(h) Terrorism Reserve for Commercial Lines of Business.--
In the case of an insurance company subject to tax under
section 831(a)--
``(1) Inclusion for decreases, and deduction for increases,
in balance of reserve.--
``(A) Decrease treated as gross income.--If for any taxable
year--
``(i) the opening balance for the terrorism commercial
business reserve exceeds
``(ii) the closing balance for such reserve,
such excess shall be included in gross income under
subsection (b)(1)(F).
``(B) Increase treated as deduction.--If for any taxable
year--
``(i) the closing balance for the terrorism commercial
business reserve exceeds
``(ii) the opening balance for such reserve,
such excess shall be taken into account as a deduction under
subsection (c)(14).
``(2) Terrorism commercial business reserve.--For purposes
of this section, the term `terrorism commercial business
reserve' means amounts held in a segregated account (or other
separately identifiable arrangement or account) which are set
aside exclusively--
``(A) to mature or liquidate, either by payment or
reinsurance, future unaccrued claims arising from declared
terrorism losses under commercial lines of business, and
``(B) if so directed by the insurance commissioner of any
State, to pay other claims as part of a plan of the company
to avoid insolvency.
``(3) Limitation on amount of reserve.--
``(A) In general.--If the closing balance of any terrorism
commercial business reserve for any taxable year exceeds such
reserve's limit for such year--
[[Page H8591]]
``(i) such excess shall be included in gross income under
subsection (b)(1)(F) for the following taxable year, and
``(ii) if such excess is distributed during such following
taxable year, the opening balance of such reserve for such
following taxable year shall be determined without regard to
such excess.
``(B) Reserve limit.--
``(i) In general.--For purposes of subparagraph (A), a
reserve's limit for any taxable year is such reserve's
allocable share of the national limit for the calendar year
in which such taxable year begins.
``(ii) National limit.--The national limit is
$40,000,000,000 ($13,340,000,000 for 2002).
``(iii) Allocation of limit.--
``(I) In general.--A reserve's allocable share of the
national limit for any calendar year is the amount which
bears the same ratio to the national limit for such year as
the company's net written premiums for commercial lines of
business bears to such net written premiums for all companies
for commercial line of business.
``(II) Exclusion of premiums for insurance not covering
declared terrorism losses and for reinsurance.--Subclause (I)
shall be applied without regard to premiums for insurance
which does not cover declared terrorism losses and premiums
for reinsurance.
``(III) Determination of net written premiums.--Except as
otherwise provided in this section, all determinations under
this subsection shall be made on the basis of the amounts
required to be set forth on the annual statement approved by
the National Association of Insurance Commissioners.
``(iv) Inflation adjustment of limit.--In the case of any
calendar year after 2002, the $40,000,000,000 amount in
clause (ii) shall be increased by an amount equal to the
product of--
``(I) such dollar amount, and
``(II) the cost-of-living adjustment determined under
subsection (f)(3) for such calendar year, determined by
substituting `calendar year 2001' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount after adjustment under the preceding sentence
is not a multiple of $1,000,000, such amount shall be rounded
to the nearest multiple of $1,000,000.
``(4) Declared terrorism losses.--For purposes of this
subsection--
``(A) In general.--The term `declared terrorism losses'
means, with respect to a taxable year--
``(i) the amount of losses and loss adjustment expenses
incurred in commercial lines of business that are
attributable to 1 or more declared terrorism events, plus
``(ii) any nonrecoverable assessments, surcharges, or other
liabilities that are borne by the company and are
attributable to such events.
``(B) Declared terrorism event.--The term `declared
terrorism event' means any event declared by the President to
be an act of terrorism against the United States for purposes
of this section.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be appropriate to carry out this
subsection, and shall prescribe such regulations after
consultation with the National Association of Insurance
Commissioners.''
(b) Conforming Amendments.--
(1) Paragraph (1) of section 832(b) of such Code is amended
by striking ``and'' at the end of subparagraph (D), by
striking the period at the end of subparagraph (E) and
inserting in lieu thereof ``, and'', and by adding at the end
the following new subparagraph:
``(F) each net decrease in reserves which is required by
paragraph (1) or (3) of subsection (h) to be taken into
account under this subparagraph.''
(2) Subsection (c) of section 832 of such Code is amended
by striking ``and'' at the end of paragraph (12), by striking
the period at the end of paragraph (13) and inserting in lieu
thereof ``; and'', and by adding at the end the following new
paragraph:
``(14) each net increase in reserves which is required by
subsection (h)(1) to be taken into account under this
paragraph.''
(c) Effective Date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2001.
SEC. 11. STATE PREEMPTION.
(a) Covered Perils.--A commercial insurer shall be
considered to have complied with any State law that requires
or regulates the provision of insurance coverage for acts of
terrorism if the insurer provides coverage in accordance with
the definitions regarding acts of terrorism under the
regulations issued by the Administrators.
(b) Rate Laws.--If any provision of any State law prevents
an insurer from increasing its premium rates in an amount
necessary to recover any assessments pursuant to section 7,
such provision is preempted only to the extent necessary to
provide for such insurer to recover such losses.
(c) File and Use.--With respect only to commercial property
and casualty insurance covering acts of terrorism, any
provision of State law that requires, as a condition
precedent to the effectiveness of rates or policies for such
insurance that is made available by an insurer licensed to
transact such business in the State, any action (including
prior approval by the State insurance regulator for such
State) other than filing of such rates and policies and
related information with such State insurance regulator is
preempted to the extent such law requires such additional
actions for such insurance coverage. This subsection shall
not be considered to preempt a provision of State law solely
because the law provides that rates and policies for such
insurance coverage are, upon such filing, subject to
subsequent review and action, which may include actions to
disapprove or discontinue use of such rates or policies, by
the State insurance regulator.
SEC. 12. CONSISTENT STATE GUIDELINES FOR COVERAGE FOR ACTS OF
TERRORISM.
(a) Sense of Congress Regarding Covered Perils.--It is the
sense of the Congress that--
(1) the NAIC, in consultation with the appropriate
Administrator, should develop appropriate definitions for
acts of terrorism and appropriate standards for making
determinations regarding events or occurrences of acts of
terrorism;
(2) each State should adopt the definitions and standards
developed by the NAIC for purposes of regulating insurance
coverage made available in that State;
(3) in consulting with the NAIC, the appropriate
Administrator should advocate and promote the development of
definitions and standards that are appropriate for purposes
of this Act; and
(4) after consultation with the NAIC, the appropriate
Administrator should adopt definitions for acts of terrorism
and standards for determinations that are appropriate for
this Act.
(b) Insurance Reserve Guidelines.--
(1) Sense of congress regarding adoption by states.--It is
the sense of the Congress that--
(A) the NAIC should develop appropriate guidelines for
commercial insurers and pools regarding maintenance of
reserves against the risks of acts of terrorism; and
(B) each State should adopt such guidelines for purposes of
regulating commercial insurers doing business in that State.
(2) Consideration of adoption of national guidelines.--Upon
the expiration of the 6-month period beginning on the date of
the enactment of this Act, the appropriate Administrator
shall make a determination of whether the guidelines referred
to in paragraph (1) have, by such time, been developed and
adopted by nearly all States in a uniform manner. If the
appropriate Administrator determines that such guidelines
have not been so developed and adopted, the appropriate
Administrator shall consider adopting, and may adopt, such
guidelines on a national basis in a manner that would
supercede any State law regarding maintenance of reserves
against such risks.
(c) Guidelines Regarding Disclosure of Pricing and Terms of
Coverage.--
(1) Sense of congress.--It is the sense of the Congress
that the States should require, by laws or regulations
governing the provision of commercial property and casualty
insurance that includes coverage for acts of terrorism, that
the price of any such terrorism coverage, including the costs
of any terrorism related assessments or surcharges under this
Act, be separately disclosed.
(2) Adoption of national guidelines.--If the appropriate
Administrator determines that the States have not enacted
laws or adopted regulations adequately providing for the
disclosures described in paragraph (1) within a reasonable
period of time after the date of the enactment of this Act,
the appropriate Administrator shall, after consultation with
the NAIC, adopt guidelines on a national basis requiring such
disclosure in a manner that supercedes any State law
regarding such disclosure.
SEC. 13. CONSULTATION WITH STATE INSURANCE REGULATORS AND
NAIC.
The Administrators shall consult with the State insurance
regulators and the NAIC in carrying out this Act. The
Administrators may take such actions, including entering into
such agreements and providing such technical and
organizational assistance to insurers and State insurance
regulators, as may be necessary to provide for the
distribution of financial assistance under section 6 and the
collection of assessments under section 7 and surcharges
under section 8.
SEC. 14. SOVEREIGN IMMUNITY PROTECTIONS.
(a) Federal Cause of Action for Damages From Terrorist Acts
Resulting in Triggering Determination.--
(1) In general.--If a triggering determination occurs
requiring an assessment under section 7 or a surcharge under
section 8, there shall exist a Federal cause of action, which
shall be the exclusive remedy, for damages claimed pursuant
to, or in connection with, any acts of terrorism that caused
the insured losses resulting in such triggering
determination.
(2) Substantive law.--The substantive law for decision in
any such action shall be derived from the law, including
choice of law principles, of the State in which such act of
terrorism occurred, unless such law is inconsistent with or
preempted by Federal law.
(3) Jurisdiction.--Pursuant to each triggering
determination, the Judicial Panel on Multidistrict Litigation
shall designate one or more district courts of the United
States which shall have original and exclusive jurisdiction
over all actions brought pursuant to this subsection that
arise out of the triggering event involved.
(4) Offset for relief payments.--Any recovery by a
plaintiff in an action under this subsection shall be offset
by the amount, if any, received by the plaintiff from the
United States pursuant to any emergency or disaster relief
program, or from any other collateral source, for
compensation of losses related to the act of terrorism
involved.
[[Page H8592]]
(b) Damages in Actions Regarding Insurance Claims.--In an
action brought under this section for damages claimed by an
insured pursuant to, or in connection with, any commercial
property and casualty insurance providing coverage for acts
of terrorism that resulted in a triggering determination:
(1) Prohibition of punitive damages.--No punitive damages
intended to punish or deter may be awarded.
(2) Noneconomic damages.--
(A) In general.--Each defendant in such an action shall be
liable only for the amount of noneconomic damages allocated
to the defendant in direct proportion to the percentage of
responsibility of the defendant for the harm to the claimant.
(B) Definition.--For purposes of subparagraph (A), the term
``noneconomic damages'' means damages for losses for physical
and emotional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss of enjoyment
of life, loss of society and companionship, loss of
consortium, hedonic damages, injury to reputation, and any
other nonpecuniary losses of any kind or nature.
(c) Right of Subrogation.--The United States shall have the
right of subrogation with respect to any claim paid by the
United States under this Act.
(d) Protective Orders.--The United States or any
appropriate Administrator carrying out responsibilities under
this Act may seek protective orders or assert privileges
ordinarily available to the United States to protect against
the disclosure of classified information, including the
invocation of the military and State secrets privilege
SEC. 15. STUDY OF POTENTIAL EFFECTS OF TERRORISM ON LIFE
INSURANCE INDUSTRY.
(a) Establishment.--Not later than 30 days after the date
of enactment of this Act, the President shall establish a
commission (in this section referred to as the
``Commission'') to study and report on the potential effects
of an act or acts of terrorism on the life insurance industry
in the United States and the markets served by such industry.
(b) Membership and Operations.--
(1) Appointment.--The Commission shall consist of 5
members, as follows:
(A) The appropriate Administrator, as designated by the
President.
(C) 4 members appointed by the President, who shall be--
(i) a representative of direct underwriters of life
insurance within the United States;
(ii) a representative of reinsurers of life insurance
within the United States;
(iii) an officer of the NAIC; and
(iv) a representative of insurance agents for life
underwriters.
(2) Operations.--The chairperson of the Commission shall
determine the manner in which the Commission shall operate,
including funding, staffing, and coordination with other
governmental entities.
(c) Study.--The Commission shall conduct a study of the
life insurance industry in the United States, which shall
identify and make recommendations regarding--
(1) possible actions to encourage, facilitate, and sustain
provision by the life insurance industry in the United States
of coverage for losses due to death or disability resulting
from an act or acts of terrorism, including in the face of
threats of such acts; and
(2) possible actions or mechanisms to sustain or supplement
the ability of the life insurance industry in the United
States to cover losses due to death or disability resulting
from an act or acts of terrorism in the event that--
(A) such acts significantly affect mortality experience of
the population of the United States over any period of time;
(B) such loses jeopardize the capital and surplus of the
life insurance industry in the United States as a whole; or
(C) other consequences from such acts occur, as determined
by the Commission, that may significantly affect the ability
of the life insurance industry in the United States to
independently cover such losses.
(d) Recommendations.--The Commission may make a
recommendation pursuant to subsection (c) only upon the
concurrence of a majority of the members of the Commission.
(e) Report.--Not later than 120 days after the date of
enactment of this Act, the Commission shall submit to the
House of Representatives and the Senate a report describing
the results of the study and any recommendations developed
under subsection (c).
(f) Termination.--The Commission shall terminate 60 days
after submission of the report as provided for in subsection
(e).
SEC. 16. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Act of terrorism.--
(A) In general.--The term ``act of terrorism'' means any
act that the appropriate Administrator determines meets the
requirements under subparagraph (B), as such requirements are
further defined and specified by the appropriate
Administrator in consultation with the NAIC.
(B) Requirements.--An act meets the requirements of this
subparagraph if the act--
(i) is unlawful;
(ii) causes harm to a person, property, or entity, in the
United States;
(iii) is committed by a group of persons or associations
who--
(I) are not a government of a foreign country or the de
facto government of a foreign country; and
(II) are recognized by the Department of State or the
appropriate Administrator as a terrorist group or have
conspired with such a group or the group's agents or
surrogates; and
(iv) has as its purpose to overthrow or destabilize the
government of any country or to influence the policy or
affect the conduct of the government of the United States by
coercion.
(2) Appropriate administrators.--The term ``appropriate
Administrator'' means, with respect to any function or
responsibility of the Federal Government under this Act, the
Federal officer designated by the President pursuant to
section 3 as responsible for carrying out such function or
responsibility.
(3) Affiliate.--The term ``affiliate'' means, with respect
to an insurer, any company that controls, is controlled by,
or is under common control with the insurer.
(4) Aggregate written premium.--The term ``aggregate
written premium'' means, with respect to a year, the
aggregate premium amount of all commercial property and
casualty insurance coverage written during such year for
persons or properties in the United States under all lines of
commercial property and casualty insurance.
(5) Commercial insurance.--The term ``commercial
insurance'' means property and casualty insurance that is not
insurance for homeowners, tenants, private passenger nonfleet
automobiles, mobile homes, or other insurance for personal,
family, or household needs.
(6) Commercial insurer.--The term ``commercial insurer''
means any corporation, association, society, order, firm,
company, mutual, partnership, individual, aggregation of
individuals, or any other legal entity that is engaged in the
business of providing commercial property and casualty
insurance for persons or properties in the United States.
Such term includes any affiliates of a commercial insurer.
(7) Commercial property and casualty insurance.--The term
``commercial property and casualty insurance'' means property
and casualty insurance that is commercial insurance.
(8) Control.--A company has control over another company
if--
(A) the company directly or indirectly or acting through
one or more other persons owns, controls, or has power to
vote 25 percent or more of any class of voting securities of
the other company;
(B) the company controls in any manner the election of a
majority of the directors or trustees of the other company;
or
(C) the appropriate Administrator determines, after notice
and opportunity for hearing, that the company directly or
indirectly exercises a controlling influence over the
management or policies of the other company.
(9) Covered period.--The term ``covered period'' has the
meaning given such term in section 5(b).
(10) Industry-wide losses.--The term ``industry-wide
losses'' means the aggregate insured losses sustained by all
insurers, from coverage written for persons or properties in
the United States, under all lines of commercial property and
casualty insurance.
(11) Insured loss.--The term ``insured loss'' means any
loss in the United States covered by commercial property and
casualty insurance.
(12) Insurer.--The term ``insurer'' means any corporation,
association, society, order, firm, company, mutual,
partnership, individual, aggregation of individuals, or any
other legal entity that is engaged in the business of
providing property and casualty insurance for persons or
properties in the United States. Such term includes any
affiliates of an insurer.
(13) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners.
(14) Property and casualty insurance.--The term ``property
and casualty insurance'' means insurance against--
(A) loss of or damage to property;
(B) loss of income or extra expense incurred because of
loss of or damage to property; and
(C) third party liability claims caused by negligence or
imposed by statute or contract.
Such term does not include health or life insurance.
(15) State.--The term ``State'' means the States of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands, American Samoa, and any
other territory or possession of the United States.
(16) State insurance regulator.--The term ``State insurance
regulator'' means, with respect to a State, the principal
insurance regulatory authority of the State.
(17) Triggering determination.--The term ``triggering
determination'' has the meaning given such term in section
5(a).
(18) Triggering event.--The term ``triggering event''
means, with respect to a triggering determination, the event
of an act of terrorism, or the events of such acts, that
caused the insured losses resulting in such triggering
determination.
(19) United states.--The term ``United States'' means,
collectively, the States (as such term is defined in this
section).
SEC. 17. EXTENSION OF PROGRAM.
(a) Authority.--If the appropriate Administrator determines
that action under this
[[Page H8593]]
section is necessary to ensure the adequate availability in
the United States of commercial property and casualty
insurance coverage for acts of terrorism, the appropriate
Administrator may provide that the provisions of this Act
shall continue to apply with respect to a period or periods,
as established by the Administrator, that begin after the
expiration of the covered period specified in section 5(b)
and end before January 1, 2005.
(b) Covered Period.--If the appropriate Administrator
exercises the authority under subsection (a), notwithstanding
section 5(b) and section 16(9), the period or periods
established by the appropriate Administrator shall be
considered to be the covered period for purposes of this Act.
SEC. 18. REGULATIONS.
The appropriate Administrators shall issue any regulations
necessary to carry out this Act.
The SPEAKER pro tempore. In lieu of the amendments recommended by the
Committee on Financial Services and the Committee on Ways and Means
printed in the bill, an amendment in the nature of a substitute
consisting of the text of H.R. 3357 is adopted.
The text of the bill as amended pursuant to House Resolution 297 is
as follows:
H.R. 3357
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Terrorism
Risk Protection Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Authority of Secretary of the Treasury.
Sec. 4. Submission of premium information to Secretary.
Sec. 5. Initial and subsequent triggering determinations.
Sec. 6. Federal cost-sharing for commercial insurers.
Sec. 7. Assessments.
Sec. 8. Terrorism loss repayment surcharge.
Sec. 9. Administration of assessments and surcharges.
Sec. 10. Application to self-insurance arrangements and offshore
insurers and reinsurers.
Sec. 11. Study of reserves for property and casualty insurance for
terrorist or other catastrophic events.
Sec. 12. State preemption.
Sec. 13. Consistent State guidelines for coverage for acts of
terrorism.
Sec. 14. Consultation with State insurance regulators and NAIC.
Sec. 15. Litigation management.
Sec. 16. Study of potential effects of terrorism on life insurance
industry.
Sec. 17. Railroad and trucking insurance study.
Sec. 18. Study of reinsurance pool system for future acts of terrorism.
Sec. 19. Definitions.
Sec. 20. Covered period and extension of program.
Sec. 21. Regulations.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) the terrorist attacks on the World Trade Center and the
Pentagon of September 11, 2001, resulted in a large number of
deaths and injuries, the destruction and damage to buildings,
and interruption of business operations;
(2) the attacks have inflicted possibly the largest losses
ever incurred by insurers and reinsurers in a single day;
(3) while the insurance and reinsurance industries have
committed to pay the losses arising from the September 11
attacks, the resulting disruption has created widespread
market uncertainties with regard to the risk of losses
arising from possible future terrorist attacks;
(4) such uncertainty threatens the continued availability
of United States commercial property and casualty insurance
for terrorism risk at meaningful coverage levels;
(5) the unavailability of affordable commercial property
and casualty insurance for terrorist acts threatens the
growth and stability of the United States economy, including
impeding the ability of financial services providers to
finance commercial property acquisitions and new
construction;
(6) in the past, the private insurance and reinsurance
markets have shown a remarkable resiliency in adapting to
changed circumstances;
(7) given time, the private markets will diversify and
develop risk spreading mechanisms to increase capacity and
guard against possible future losses incurred by terrorist
attacks;
(8) it is necessary to create a temporary industry risk
sharing program to ensure the continued availability of
commercial property and casualty insurance and reinsurance
for terrorism-related risks;
(9) such action is necessary to limit immediate market
disruptions, encourage economic stabilization, and facilitate
a transition to a viable market for private terrorism risk
insurance;
(10) in addition, it is necessary promptly to conduct a
study of whether there is a need for reserves for property
and casualty insurance for terrorist or other catastrophic
events; and
(11) terrorism insurance plays an important role in the
efficient functioning of the economy and the financing of
commercial property acquisitions and new construction and,
therefore, the Congress intends to continue to monitor,
review, and evaluate the private terrorism insurance and
reinsurance marketplace to determine whether additional
action is necessary to maintain the long-term stability of
the real estate and capital markets.
SEC. 3. AUTHORITY OF SECRETARY OF THE TREASURY.
The Secretary of the Treasury shall be responsible for
carrying out a program for financial assistance for
commercial property and casualty insurers, as provided in
this Act.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO SECRETARY.
To the extent such information is not otherwise available
to the Secretary, the Secretary may require each insurer to
submit, to the Secretary or to the NAIC, a statement
specifying the net premium amount of coverage written by such
insurer under each line of commercial property and casualty
insurance sold by such insurer during such periods as the
Secretary may provide.
SEC. 5. INITIAL AND SUBSEQUENT TRIGGERING DETERMINATIONS.
(a) In General.--For purposes of this Act, a ``triggering
determination'' is a determination by the Secretary that an
act of terrorism has occurred during the covered period and
that the aggregate insured losses resulting from such
occurrence or from multiple occurrences of acts of terrorism
all occurring during the covered period, meet the
requirements under either of the following paragraphs:
(1) Industry-wide trigger.--Such industry-wide losses
exceed $1,000,000,000.
(2) Individual insurer trigger.--Such industry-wide losses
exceed $100,000,000 and some portion of such losses for any
single commercial insurer exceed--
(A) 10 percent of the capital surplus of such commercial
insurer (as such term is defined by the Secretary); and
(B) 10 percent of the net premium written by such
commercial insurer that is in force at the time the insured
losses occurred;
except that this paragraph shall not apply to any commercial
insurer that was not providing commercial property and
casualty insurance coverage prior to September 11, 2001,
unless such insurer incurs such losses under commercial
property and casualty insurance providing coverage for acts
of terrorism through a pool of reserves for terrorism risks
that is not under the control of any commercial insurer.
(b) Determinations Regarding Occurrences.--The Secretary,
after consultation with the Attorney General of the United
States and the Secretary of State, shall have the sole
authority which may not be delegated or designated to any
other officer, employee, or position, for determining
whether--
(1) an occurrence was caused by an act of terrorism; and
(2) an act of terrorism occurred during the covered period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSURERS.
(a) In General.--Pursuant to a triggering determination,
the Secretary shall provide financial assistance to
commercial insurers in accordance with this section to cover
insured losses resulting from acts of terrorism, which shall
be repaid in accordance with subsection (e).
(b) Amount.--
(1) Industry-wide trigger.--Subject to subsections (c) and
(d), with respect to a triggering determination under section
5(a)(1), financial assistance shall be made available under
this section to each commercial insurer in an amount equal to
the difference between--
(A) 90 percent of the amount of the insured losses of the
insurer as a result of the triggering event involved; and
(B) $5,000,000.
(2) Individual insurer trigger.--Subject to subsections (c)
and (d), with respect to a triggering determination under
section 5(a)(2), financial assistance shall be made available
under this section, to each commercial insurer incurring
insured losses as a result of the triggering event involved
that exceed the amounts under subparagraphs (A) and (B) of
such section, in an amount equal to the difference between--
(A) 90 percent of the amount of the insured losses of the
insurer as a result of such triggering event; and
(B) the amount under subparagraph (B) of section 5(a)(2).
(3) Additional amounts.--Subject to subsection (c), if the
Secretary has provided financial assistance to a commercial
insurer pursuant to paragraph (2) of this subsection and
subsequently makes a triggering determination pursuant to
section 5(a)(1), the Secretary shall provide financial
assistance to such insurer in connection with such subsequent
triggering determination (in addition to the amount of
financial assistance provided to such insurer pursuant to
paragraph (1) of this subsection) in the amount under section
5(a)(2)(B).
(c) Aggregate Limitation.--
(1) In general.--The aggregate amount of financial
assistance provided pursuant to this section may not exceed
$100,000,000,000.
(2) Sense of congress regarding severe losses.--It is the
sense of the Congress that acts of terrorism resulting in
insured losses
[[Page H8594]]
greater than $100,000,000,000 would necessitate further
action by the Congress to address such additional losses.
(d) Limitations.--The Secretary may establish such
limitations as may be necessary to ensure that payments under
this section in connection with a triggering determination
are made only to commercial insurers that are not in default
of any obligation under section 7 to pay assessments or under
section 8 to collect surcharges.
(e) Repayment.--Financial assistance made available under
this section shall be repaid through assessments under
section 7 collected by the Secretary and surcharges remitted
to the Secretary under section 8. Any such amounts collected
or remitted shall be deposited into the general fund of the
Treasury.
(f) Emergency Designation.--Congress designates the amount
of new budget authority and outlays in all fiscal years
resulting from this section as an emergency requirement
pursuant to section 252(e) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901(e)). Such
amount shall be available only to the extent that a request,
that includes designation of such amount as an emergency
requirement as defined in such Act, is transmitted by the
President to Congress.
SEC. 7. ASSESSMENTS.
(a) In General.--In the case of a triggering determination,
each commercial insurer shall be subject to assessments under
this section for the purpose of repaying a portion of the
financial assistance made available under section 6 in
connection with such determination.
(b) Aggregate Assessment.--Pursuant to a triggering
determination, the Secretary shall determine the aggregate
amount to be assessed under this section among all commercial
insurers, which shall be equal to the lesser of--
(1) $20,000,000,000; and
(2) the amount of financial assistance paid under section 6
in connection with the triggering determination.
The aggregate assessment amount under this subsection shall
be assessed to commercial insurers through an industry
obligation assessment under subsection (c) and, if necessary,
the remainder shall be assessed through one or more financing
assessments under subsection (d).
(c) Industry Obligation Assessments.--
(1) In general.--Immediately upon the occurrence of a
triggering determination, the Secretary shall impose an
industry obligation assessment under this subsection on all
commercial insurers, subject to paragraph (3).
(2) Amount.--The aggregate amount of an industry obligation
assessment in connection with a triggering determination
shall be equal to--
(A) in the case of a triggering determination occurring
during the covered period specified in section 20(a), the
lesser of--
(i) the difference between (I) $5,000,000,000, and (II) the
aggregate amount of any assessments made by the Secretary
pursuant to this section during the portion of such covered
period preceding the triggering determination; and
(ii) the amount of financial assistance made available
under section 6 in connection with the triggering
determination; or
(B) such other aggregate industry obligation amount as may
apply pursuant to subsection (g).
(3) Timing of multiple assessments.--
(A) Delayed imposition and aggregation of assessments.--In
the case of any triggering determination occurring within 12
months of the occurrence of a previous triggering
determination, any industry obligation assessments under this
subsection resulting from such subsequent determination shall
be imposed upon the conclusion of the quarterly assessment
period under subparagraph (B) during which such determination
occurs.
(B) Quarterly assessment period.--With respect to a
subsequent triggering determination referred to in
subparagraph (A), the quarterly assessment periods under this
subparagraph are--
(i) the 3-month period that begins upon the imposition of
the industry obligation assessment resulting from the
triggering determination that--
(I) occurred most recently before such subsequent
triggering determination; and
(II) did not occur within 12 months of the occurrence of
any previous triggering determination; and
(ii) each successive 3-month period thereafter that begins
during the covered period.
(d) Financing Assessments.--
(1) In general.--If the aggregate assessment amount in
connection with a triggering determination exceeds the
aggregate amount of the industry obligation assessment under
subsection (c) in connection with the determination, the
remaining amount shall be assessed through one or more, as
may be necessary pursuant to paragraph (3), financing
assessments under this subsection.
(2) Timing.--A financing assessment under this subsection
in connection with a triggering determination shall be
imposed only upon the expiration of any 12-month period
beginning after such determination during which no
assessments under this section have been imposed.
(3) Limitation.--The aggregate amount of any financing
assessments imposed under this subsection on any single
commercial insurer during any 12-month period shall not
exceed the amount that is equal to 3 percent of the net
premium for such insurer for such period.
(e) Allocation of Assessment.--The portion of the aggregate
amount of any industry obligation assessment or financing
assessment under this section that is allocated to each
commercial insurer shall be based on the ratio that the net
premium written by such commercial insurer during the year
during which the assessment is imposed bears to the aggregate
written premium for such year, subject to section 9 and the
limitation under subsection (d)(3) of this section.
(f) Notice and Obligation To Pay.--
(1) Notice.--As soon as practicable after any triggering
determination, the Secretary shall notify each commercial
insurer in writing of an assessment under this section, which
notice shall include the amount of the assessment allocated
to such insurer.
(2) Effect of notice.--Upon notice to a commercial insurer,
the commercial insurer shall be obligated to pay to the
Secretary, not later than 60 days after receipt of such
notice, the amount of the assessment on such commercial
insurer.
(3) Failure to make timely payment.--If any commercial
insurer fails to pay an assessment under this section before
the deadline established under paragraph (2) for the
assessment, the Secretary may take either or both of the
following actions:
(A) Civil monetary penalty.--Assess a civil monetary
penalty pursuant to section 9(d) upon such insurer.
(B) Interest.--Require such insurer to pay interest, at
such rate as the Secretary considers appropriate, on the
amount of the assessment that was not paid before the
deadline established under paragraph (2).
(g) Aggregate Industry Obligation Amount for Program
Extension Years.--If the Secretary exercises the authority
under section 20(b) to extend the covered period, the
aggregate industry obligation amount for purposes of
subsection (c)(2)(B) shall, in the case of a triggering
determination occurring during the portion of the covered
period beginning on the date referred to in section 20(a), be
equal to the lesser of--
(1) the difference between (A) $10,000,000,000, and (B) the
aggregate amount of any assessments made by the Secretary
pursuant to this section during the 12-month period preceding
the triggering determination; and
(2) the amount of financial assistance made available under
section 6 in connection with the triggering determination.
(h) Administrative Flexibility.--
(1) Adjustment of assessments.--The Secretary may provide
for or require estimations of amounts under this section and
may provide for subsequent refunds or require additional
payments to correct such estimations, as appropriate.
(2) Deferral of contributions.--The Secretary may defer the
payment of part or all of an assessment required under this
section to be paid by a commercial insurer, but only to the
extent that the Secretary determines that such deferral is
necessary to avoid the likely insolvency of the commercial
insurer.
(3) Timing of assessments.--The Secretary shall make
adjustments regarding the timing and imposition of
assessments (including the calculation of net premiums and
aggregate written premium) as appropriate for commercial
insurers that provide commercial property and casualty
insurance on a non-calendar year basis.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) Determination of Imposition and Collection.--
(1) In general.--If, pursuant to a triggering
determination, the Secretary determines that the aggregate
amount of financial assistance provided pursuant to section 6
exceeds $20,000,000,000, the Secretary shall consider and
weigh the factors under paragraph (2) to determine the extent
to which a surcharge under this section should be
established.
(2) Factors.--The factors under this paragraph are--
(A) the ultimate costs to taxpayers if a surcharge under
this section is not established;
(B) the economic conditions in the commercial marketplace;
(C) the affordability of commercial insurance for small-
and medium-sized business; and
(D) such other factors as the Secretary considers
appropriate.
(3) Policyholder premium.--The amount established by the
Secretary as a surcharge under this section shall be
established and imposed as a policyholder premium surcharge
on commercial property and casualty insurance written after
such determination, for the purpose of repaying financial
assistance made available under section 6 in connection with
such triggering determination.
(4) Collection.--The Secretary shall provide for commercial
insurers to collect surcharge amounts established under this
section and remit such amounts collected to the Secretary.
(b) Amount and Duration.--Subject to subsection (c), the
surcharge under this section shall be established in such
amount, and shall apply to commercial property and casualty
insurance written during such period, as the Secretary
determines is necessary to recover the aggregate amount of
financial assistance provided under section 6 in connection
with the triggering determination that exceeds
$20,000,000,000.
[[Page H8595]]
(c) Percentage Limitation.--The surcharge under this
section applicable to commercial property and casualty
insurance coverage may not exceed, on an annual basis, the
amount equal to 3 percent of the premium charged for such
coverage.
(d) Other Terms.--The surcharge under this section shall--
(1) be based on a percentage of the premium amount charged
for commercial property and casualty insurance coverage that
a policy provides; and
(2) be imposed with respect to all commercial property and
casualty insurance coverage written during the period
referred to in subsection (b).
(e) Exclusions.--For purposes of this section, commercial
property and casualty insurance does not include any
reinsurance provided to primary insurance companies.
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) Manner and Method.--
(1) In general.--Except to the extent specified in such
sections, the Secretary shall provide for the manner and
method of carrying out assessments under section 7 and
surcharges under section 8, including the timing and
procedures of making assessments and surcharges, notifying
commercial insurers of assessments and surcharge
requirements, collecting payments from and surcharges through
commercial insurers, and refunding of any excess amounts paid
or crediting such amounts against future assessments.
(2) Effect of assessments and surcharges on urban and
smaller commercial and rural areas and different lines of
insurance.--In determining the method and manner of imposing
assessments under section 7 and surcharges under section 8,
including the amount of such assessments and surcharges, the
Secretary shall take into consideration--
(A) the economic impact of any such assessments and
surcharges on commercial centers of urban areas, including
the effect on commercial rents and commercial insurance
premiums, particularly rents and premiums charged to small
businesses, and the availability of lease space and
commercial insurance within urban areas;
(B) 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
(C) the various exposures to terrorism risk for different
lines of commercial property and casualty insurance.
(b) Timing of Coverages and Assessments.--The Secretary may
adjust the timing of coverages and assessments provided under
this Act to provide for equivalent application of the
provisions of this Act to commercial insurers and policies
that are not based on a calendar year.
(c) Adjustment.--The Secretary may adjust the assessments
charged under section 7 or the percentage imposed under the
surcharge under section 8 at any time, as the Secretary
considers appropriate to protect the national interest, which
may include avoiding unreasonable economic disruption or
excessive market instability and avoiding undue burdens on
small businesses.
(d) Civil Monetary Penalty.--
(1) In general.--The Secretary may assess a civil monetary
penalty in an amount not exceeding the amount under paragraph
(2) against any commercial insurer that the Secretary
determines, on the record after opportunity for a hearing--
(A) has failed to pay an assessment under section 7 in
accordance with the requirements of, or regulations issued,
under this Act;
(B) has failed to charge, collect, or remit surcharges
under section 8 in accordance with the requirements of, or
regulations issued under, this Act;
(C) has intentionally provided to the Secretary erroneous
information regarding premium or loss amounts; or
(D) has otherwise failed to comply with the provisions of,
or the regulations issued under, this Act.
(2) Amount.--The amount under this paragraph is the greater
of $1,000,000 and, in the case of any failure to pay, charge,
collect, or remit amounts in accordance with this Act or the
regulations issued under this Act, such amount in dispute.
SEC. 10. APPLICATION TO SELF-INSURANCE ARRANGEMENTS AND
OFFSHORE INSURERS AND REINSURERS.
(a) Self-Insurance Arrangements.--The Secretary may, in
consultation with the NAIC, apply the provisions of this Act,
as appropriate, to self-insurance arrangements by
municipalities and other entities, but only if such
application is determined before the occurrence of a
triggering event and all of the provisions of this Act are
applied uniformly to such entities.
(b) Offshore Insurers and Reinsurers.--The Secretary shall
ensure that the provisions of this Act are applied as
appropriate to any offshore or non-admitted entities that
provide commercial property and casualty insurance.
SEC. 11. STUDY OF RESERVES FOR PROPERTY AND CASUALTY
INSURANCE FOR TERRORIST OR OTHER CATASTROPHIC
EVENTS.
(a) In General.--The Secretary of the Treasury shall
conduct a study of issues relating to permitting property and
casualty insurance companies to establish deductible reserves
against losses for future acts of terrorism, including--
(1) whether such tax-favored reserves would promote (A)
insurance coverage of risks of terrorism, and (B) the
accumulation of additional resources needed to satisfy
potential claims resulting from such risks,
(2) the lines of business for which such reserves would be
appropriate, including whether such reserves should be
applied to personal or commercial lines of business,
(3) how the amount of such reserves would be determined,
(4) how such reserves would be administered,
(5) a comparison of the Federal tax treatment of such
reserves with other insurance reserves permitted under
Federal tax laws,
(6) an analysis of the use of tax-favored reserves for
catastrophic events, including acts of terrorism, under the
tax laws of foreign countries, and
(7) whether it would be appropriate to permit similar
reserves for other future catastrophic events, such as
natural disasters, taking into account the factors under the
preceding paragraphs.
(b) Report.--Not later than 4 months after the date of the
enactment of this Act, the Secretary of the Treasury shall
submit a report to Congress on the results of the study under
subsection (a), together with recommendations for amending
the Internal Revenue Code of 1986 or other appropriate
action.
SEC. 12. STATE PREEMPTION.
(a) Covered Perils.--A commercial insurer shall be
considered to have complied with any State law that requires
or regulates the provision of insurance coverage for acts of
terrorism if the insurer provides coverage in accordance with
the definitions regarding acts of terrorism under this Act or
under any regulations issued by the Secretary.
(b) Rate Laws.--If any provision of any State law prevents
an insurer from increasing its premium rates in an amount
necessary to recover any assessments pursuant to section 7,
such provision is preempted only to the extent necessary to
provide for such insurer to recover such losses.
(c) File and Use.--
(1) In general.--With respect only to commercial property
and casualty insurance covering acts of terrorism, any
provision of State law that requires, as a condition
precedent to the effectiveness of rates or policies for such
insurance that is made available by an insurer licensed to
transact such business in the State, any action (including
prior approval by the State insurance regulator for such
State) other than filing of such rates and policies and
related information with such State insurance regulator is
preempted to the extent such law requires such additional
actions for such insurance coverage.
(2) Subsequent review authority.--Paragraph (1) shall not
be considered to preempt a provision of State law solely
because the law provides that rates and policies for such
insurance coverage are, upon such filing, subject to
subsequent review and action, which may include actions to
disapprove or discontinue use of such rates or policies, by
the State insurance regulator.
(3) Treatment of prior review provisions.--Any authority
for prior review and action by a State regulator preempted
under paragraph (1) shall be deemed to be authority to
conduct a subsequent review and action on such filings.
SEC. 13. CONSISTENT STATE GUIDELINES FOR COVERAGE FOR ACTS OF
TERRORISM.
(a) Sense of Congress Regarding Covered Perils.--It is the
sense of the Congress that--
(1) the NAIC, in consultation with the Secretary, should
develop appropriate definitions for acts of terrorism that
are consistent with this Act and appropriate standards for
making determinations regarding occurrences of acts of
terrorism;
(2) each State should adopt the definitions and standards
developed by the NAIC for purposes of regulating insurance
coverage made available in that State;
(3) in consulting with the NAIC, the Secretary should
advocate and promote the development of definitions and
standards that are appropriate for purposes of this Act; and
(4) after consultation with the NAIC, the Secretary should
adopt further definitions for acts of terrorism and standards
for determinations that are appropriate for this Act.
(b) Insurance Reserve Guidelines.--
(1) Sense of congress regarding adoption by states.--It is
the sense of the Congress that--
(A) the NAIC should develop appropriate guidelines for
commercial insurers and pools regarding maintenance of
reserves against the risks of acts of terrorism; and
(B) each State should adopt such guidelines for purposes of
regulating commercial insurers doing business in that State.
(2) Consideration of adoption of national guidelines.--Upon
the expiration of the 6-month period beginning on the date of
the enactment of this Act, the Secretary shall make a
determination of whether the guidelines referred to in
paragraph (1) have, by such time, been developed and adopted
by nearly all States in a uniform manner. If the Secretary
determines that such guidelines have not been so developed
and adopted, the Secretary shall consider adopting, and may
adopt, such guidelines on a national basis in a manner that
supersedes any State law regarding maintenance of reserves
against such risks.
(c) Guidelines Regarding Disclosure of Pricing and Terms of
Coverage.--
[[Page H8596]]
(1) Sense of congress.--It is the sense of the Congress
that the States should require, by laws or regulations
governing the provision of commercial property and casualty
insurance that includes coverage for acts of terrorism, that
the price of any such terrorism coverage, including the costs
of any terrorism related assessments or surcharges under this
Act, be separately disclosed.
(2) Adoption of national guidelines.--If the Secretary
determines that the States have not enacted laws or adopted
regulations adequately providing for the disclosures
described in paragraph (1) within a reasonable period of time
after the date of the enactment of this Act, the Secretary
shall, after consultation with the NAIC, adopt guidelines on
a national basis requiring such disclosure in a manner that
supersedes any State law regarding such disclosure.
SEC. 14. CONSULTATION WITH STATE INSURANCE REGULATORS AND
NAIC.
(a) In General.--The Secretary shall consult with the State
insurance regulators and the NAIC in carrying out this Act.
(b) Financial Assistance, Assessments, and Surcharges.--The
Secretary may take such actions, including entering into such
agreements and providing such technical and organizational
assistance to insurers and State insurance regulators, as may
be necessary to provide for the distribution of financial
assistance under section 6 and the collection of assessments
under section 7 and surcharges under section 8.
(c) Investigating and Auditing Claims.--The Secretary may,
in consultation with the State insurance regulators and the
NAIC, investigate and audit claims of insured losses by
commercial insurers and otherwise require verification of
amounts of premiums or losses, as appropriate.
SEC. 15. LITIGATION MANAGEMENT.
(a) Federal Cause of Action for Claims Relating to
Terrorist Acts.--
(1) In general.--Subject to paragraph (2), if the Secretary
makes a determination pursuant to section 5(b) that one or
more acts of terrorism occurred, there shall exist a Federal
cause of action, which, except as provided in subsection (b),
shall be the exclusive remedy for claims arising out of,
relating to, or resulting from such acts of terrorism.
(2) Effect of determination.--A determination referred to
in paragraph (1)--
(A) shall not be subject to judicial review;
(B) shall take effect upon its publication in the Federal
Register; and
(C) shall be subject to such changes as the Secretary may
provide in one or more later determinations made in
accordance with the provisions of this paragraph.
(3) Substantive law.--The substantive law for decision in
any such action shall be derived from the law, including
choice of law principles, of the State in which such acts of
terrorism occurred, unless such law is inconsistent with or
preempted by Federal law.
(4) Jurisdiction.--For each determination under paragraph
(1), the Judicial Panel on Multidistrict Litigation shall
designate one or more district courts of the United States
which shall have original and exclusive jurisdiction over all
actions for any claim (including any claim for loss of
property, personal injury, or death) brought pursuant to this
subsection. The Judicial Panel on Multidistrict Litigation
shall select and assign the district court or courts based on
the convenience of the parties and the just and efficient
conduct of the proceedings. For purposes of personal
jurisdiction, the district court or courts designated by the
Judicial Panel on Multidistrict Litigation shall be deemed to
sit in all judicial districts in the United States.
(5) Limits on damages.--In an action brought under this
subsection for damages:
(A) No punitive damages intended to punish or deter,
exemplary damages, or other damages not intended to
compensate a plaintiff for actual losses may be awarded, nor
shall any party be liable for interest prior to the judgment.
(B)(i) Each defendant in such an action shall be liable
only for the amount of noneconomic damages allocated to the
defendant in direct proportion to the percentage of
responsibility of the defendant for the harm to the
plaintiff, and no plaintiff may recover noneconomic damages
unless the plaintiff suffered physical harm.
(ii) For purposes of clause (i), the term ``noneconomic
damages'' means damages for losses for physical and emotional
pain, suffering, inconvenience, physical impairment, mental
anguish, disfigurement, loss of enjoyment of life, loss of
society and companionship, loss of consortium, hedonic
damages, injury to reputation, and any other nonpecuniary
losses.
(6) Collateral sources.--Any recovery by a plaintiff in an
action under this subsection shall be reduced by the amount
of collateral source compensation, if any, that the plaintiff
has received or is entitled to receive as a result of the
acts of terrorism with respect to which the determination
under paragraph (1) was made.
(7) Attorney fees.--Reasonable attorneys fees for work
performed shall be subject to the discretion of the court,
but in no event shall any attorney charge, demand, receive,
or collect for services rendered, fees or compensation in an
amount in excess of 20 percent of the damages ordered by the
court to be paid pursuant to this section, or in excess of 20
percent of any court-approved settlement made of any claim
cognizable under this section. Any attorney who charges,
demands, receives, or collects for services rendered in
connection with such claim any amount in excess of that
allowed under this section, if recovery be had, shall be
fined not more than $2,000 or imprisoned not more than 1
year, or both.
(b) Exclusion.--Nothing in this section shall in any way
limit the liability of any person who--
(1) attempts to commit, knowingly participates in, aids and
abets, or commits any act of terrorism with respect to which
a determination under subsection (a)(1) was made, or any
criminal act related to or resulting from such act of
terrorism; or
(2) participates in a conspiracy to commit any such act of
terrorism or any such criminal act.
(c) Right of Subrogation.--The United States shall have the
right of subrogation with respect to any claim paid by the
United States under this Act.
(d) Relationship to Other Law.--Nothing in this section
shall be construed to affect--
(1) any party's contractual right to arbitrate a dispute;
or
(2) any provision of the Air Transportation Safety and
System Stabilization Act (Public Law 107-42; 49 U.S.C. 40101
note).
(e) Satisfaction of Judgments From Frozen Assets of
Terrorists, Terrorist Organizations, and State Sponsors of
Terrorism.--
(1) In general.--Except as provided in paragraph (2), in
every case in which a person obtains a judgment against a
terrorist party on a claim for compensatory damages for an
act of terrorism, or a claim for money damages brought
pursuant to section 1605(a)(7) of title 28, United States
Code, the frozen assets of that terrorist party, or any
agency or instrumentality of that terrorist party, shall be
available for satisfaction of the judgment, to the extent of
any compensatory damages awarded in the judgment for which
the terrorist party is liable.
(2) Presidential waiver.--
(A) Subject to subparagraph (B), upon determining on an
asset-by-asset basis that a waiver is necessary in the
national security interest, the President may waive the
requirements of this subsection in connection with (and prior
to the enforcement of) any judicial order directing
attachment in aid of execution or execution against any
property subject to the Vienna Convention on Diplomatic
Relations or the Vienna Convention on Consular Relations.
(B) A waiver under this paragraph shall not apply to--
(i) property subject to the Vienna Convention on Diplomatic
Relations or the Vienna Convention on Consular Relations that
has been used for any nondiplomatic purpose (including use as
rental property), the proceeds of such use; or
(ii) any asset subject to the Vienna Convention on
Diplomatic Relations or the Vienna Convention on Consular
Relations that is sold or otherwise transferred for value to
a third party, the proceeds of such sale or transfer.
(3) Definitions.--In this subsection:
(A) The term ``terrorist party'' means a terrorist, a
terrorist organization, or a foreign state designated as a
state sponsor of terrorism under section 6(j) of the Export
Administration Act of 1979 (50 U.S.C. App. 2405(j)) or
section 620A of the Foreign Assistance Act of 1961 (22 U.S.C.
2371).
(B) The term ``frozen assets'' means assets seized or
frozen by the United States in accordance with law.
(C) The term ``property subject to the Vienna Convention on
Diplomatic Relations or the Vienna Convention on Consular
Relations'' and the term ``asset subject to the Vienna
Convention on Diplomatic Relations or the Vienna Convention
on Consular Relations'' mean any property or asset,
respectively, the attachment in aid of execution or execution
of which would result in a violation of an obligation of the
United States under the Vienna Convention on Diplomatic
Relations or the Vienna Convention on Consular Relations, as
the case may be.
SEC. 16. STUDY OF POTENTIAL EFFECTS OF TERRORISM ON LIFE
INSURANCE INDUSTRY.
(a) Establishment.--Not later than 30 days after the date
of enactment of this Act, the President shall establish a
commission (in this section referred to as the
``Commission'') to study and report on the potential effects
of an act or acts of terrorism on the life insurance industry
in the United States and the markets served by such industry.
(b) Membership and Operations.--
(1) Appointment.--The Commission shall consist of 7
members, as follows:
(A) The Secretary of the Treasury or the designee of the
Secretary.
(B) The Chairman of the Board of Governors of the Federal
Reserve System or the designee of the Chairman.
(C) The Assistant to the President for Homeland Security.
(D) 4 members appointed by the President, who shall be--
(i) a representative of direct underwriters of life
insurance within the United States;
(ii) a representative of reinsurers of life insurance
within the United States;
(iii) an officer of the NAIC; and
(iv) a representative of insurance agents for life
underwriters.
(2) Operations.--The chairperson of the Commission shall
determine the manner in which the Commission shall operate,
including funding, staffing, and coordination with other
governmental entities.
(c) Study.--The Commission shall conduct a study of the
life insurance industry in the
[[Page H8597]]
United States, which shall identify and make recommendations
regarding--
(1) possible actions to encourage, facilitate, and sustain
the provision, by the life insurance industry in the United
States, of coverage for losses due to death or disability
resulting from an act or acts of terrorism, including in the
face of threats of such acts; and
(2) possible actions or mechanisms to sustain or supplement
the ability of the life insurance industry in the United
States to cover losses due to death or disability resulting
from an act or acts of terrorism in the event that--
(A) such acts significantly affect mortality experience of
the population of the United States over any period of time;
(B) such losses jeopardize the capital and surplus of the
life insurance industry in the United States as a whole; or
(C) other consequences from such acts occur, as determined
by the Commission, that may significantly affect the ability
of the life insurance industry in the United States to
independently cover such losses.
(d) Recommendations.--The Commission may make a
recommendation pursuant to subsection (c) only upon the
concurrence of a majority of the members of the Commission.
(e) Report.--Not later than 120 days after the date of
enactment of this Act, the Commission shall submit to the
House of Representatives and the Senate a report describing
the results of the study and any recommendations developed
under subsection (c).
(f) Termination.--The Commission shall terminate 60 days
after submission of the report pursuant to subsection (e).
SEC. 17. RAILROAD AND TRUCKING INSURANCE STUDY.
The Secretary of the Treasury shall conduct a study to
determine how the Federal Government can address a possible
crisis in the availability and affordability of railroad and
trucking insurance by making such insurance for acts of
terrorism available on commercially reasonable terms. Not
later than 120 days after the date of the enactment of this
Act the Secretary shall submit to the Congress a report
regarding the results and conclusions of the study.
SEC. 18. STUDY OF REINSURANCE POOL SYSTEM FOR FUTURE ACTS OF
TERRORISM.
(a) Study.--The Secretary, the Board of Governors of the
Federal Reserve System, and the Comptroller General of the
United States shall jointly conduct a study on the
advisability and effectiveness of establishing a reinsurance
pool system relating to future acts of terrorism to replace
the program provided for under this Act.
(b) Consultation.--In conducting the study under subsection
(a), the Secretary, the Board of Governors of the Federal
Reserve System, and the Comptroller General shall consult
with (1) academic experts, (2) the United Nations Secretariat
for Trade and Development, (3) representatives from the
property and casualty insurance industry, (4) representatives
from the reinsurance industry, (5) the NAIC, and (6) such
consumer organizations as the Secretary considers
appropriate.
(c) Report.--Not later than 6 months after the date of the
enactment of this Act, the Secretary, the Board of Governors
of the Federal Reserve System, and the Comptroller General
shall jointly submit a report to the Congress on the results
of the study under subsection (a).
SEC. 19. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Act of terrorism.--
(A) In general.--The term ``act of terrorism'' means any
act that the Secretary determines meets the requirements
under subparagraph (B), as such requirements are further
defined and specified by the Secretary in consultation with
the NAIC.
(B) Requirements.--An act meets the requirements of this
subparagraph if the act--
(i) is unlawful;
(ii) causes harm to a person, property, or entity, in the
United States, or in the case of a domestic United States air
carrier or a United States flag vessel (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), in or outside the United
States;
(iii) is committed by a person or group of persons or
associations who are recognized, either before or after such
act, by the Department of State or the Secretary as an
international terrorist group or have conspired with such a
group or the group's agents or surrogates;
(iv) has as its purpose to overthrow or destabilize the
government of any country, or to influence the policy or
affect the conduct of the government of the United States or
any segment of the economy of United States, by coercion; and
(v) is not considered an act of war, except that this
clause shall not apply with respect to any coverage for
workers compensation.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insurer, any company that controls, is controlled by,
or is under common control with the insurer.
(3) Aggregate written premium.--The term ``aggregate
written premium'' means, with respect to a year, the
aggregate premium amount of all commercial property and
casualty insurance coverage written during such year under
all lines of commercial property and casualty insurance.
(4) Commercial insurer.--The term ``commercial insurer''
means any corporation, association, society, order, firm,
company, mutual, partnership, individual, aggregation of
individuals, or any other legal entity that provides
commercial property and casualty insurance. Such term
includes any affiliates of a commercial insurer.
(5) Commercial property and casualty insurance.--
(A) In general.--The term ``commercial property and
casualty insurance'' means insurance or reinsurance, or
retrocessional reinsurance, for persons or properties in the
United States against--
(i) loss of or damage to property;
(ii) loss of income or extra expense incurred because of
loss of or damage to property;
(iii) third party liability claims caused by negligence or
imposed by statute or contract, including workers
compensation; or
(iv) loss resulting from debt or default of another.
(B) Exclusions.--Such term does not include--
(i) insurance for homeowners, tenants, private passenger
nonfleet automobiles, mobile homes, or other insurance for
personal, family, or household needs;
(ii) insurance for professional liability, including
medical malpractice, errors and omissions, or directors' and
officers' liability; or
(iii) health or life insurance.
(6) Control.--A company has control over another company
if--
(A) the company directly or indirectly or acting through
one or more other persons owns, controls, or has power to
vote 25 percent or more of any class of voting securities of
the other company;
(B) the company controls in any manner the election of a
majority of the directors or trustees of the other company;
or
(C) the Secretary determines, after notice and opportunity
for hearing, that the company directly or indirectly
exercises a controlling influence over the management or
policies of the other company.
(7) Covered period.--The term ``covered period'' has the
meaning given such term in section 20.
(8) Industry-wide losses.--The term ``industry-wide
losses'' means the aggregate insured losses sustained by all
insurers from coverage written under all lines of commercial
property and casualty insurance.
(9) Insured loss.--The term ``insured loss'' means any
loss, net of reinsurance and retrocessional reinsurance,
covered by commercial property and casualty insurance.
(10) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners.
(11) Net premium.--The term ``net premium'' means, with
respect a commercial insurer and a year, the aggregate
premium amount collected by such commercial insurer for all
commercial property and casualty insurance coverage written
during such year under all lines of commercial property and
casualty insurance by such commercial insurer, less any
premium paid by such commercial insurer to other commercial
insurers to insure or reinsure those risks.
(12) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(13) State.--The term ``State'' means the States of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, the Virgin Islands, American Samoa, and any
other territory or possession of the United States.
(14) State insurance regulator.--The term ``State insurance
regulator'' means, with respect to a State, the principal
insurance regulatory authority of the State.
(15) Triggering determination.--The term ``triggering
determination'' has the meaning given such term in section
5(a).
(16) Triggering event.--The term ``triggering event''
means, with respect to a triggering determination, the
occurrence of an act of terrorism, or the occurrence of such
acts, that caused the insured losses resulting in such
triggering determination.
(17) United states.--The term ``United States'' means,
collectively, the States (as such term is defined in this
section).
SEC. 20. COVERED PERIOD AND EXTENSION OF PROGRAM.
(a) Covered Period.--Except to the extent provided
otherwise under subsection (b), for purposes of this Act, the
term ``covered period'' means the period beginning on the
date of the enactment of this Act and ending on January 1,
2003.
(b) Extension of Program.--If the Secretary determines that
extending the covered period is necessary to ensure the
adequate availability in the United States of commercial
property and casualty insurance coverage for acts of
terrorism, the Secretary may, subject to subsection (c),
extend the covered period by not more than two years.
(c) Report.--The Secretary may exercise the authority under
subsection (b) to extend the covered period only if the
Secretary submits a report to the Congress providing notice
of and setting forth the reasons for such extension.
SEC. 21. REGULATIONS.
The Secretary shall issue any regulations necessary to
carry out this Act.
The SPEAKER pro tempore. After 1 hour of debate on the bill, as
amended,
[[Page H8598]]
it shall be in order to consider a further amendment printed in House
Report 107-304, if offered by the gentleman from New York (Mr.
LaFalce), or his designee, which shall be considered read and shall be
debatable for 1 hour, equally divided and controlled by the proponent
and an opponent.
The gentleman from Ohio (Mr. Oxley) and the gentleman from New York
(Mr. LaFalce) each will control 30 minutes of debate on the bill.
The Chair recognizes the gentleman from Ohio (Mr. Oxley).
General Leave
Mr. OXLEY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within which to revise and extend their remarks
and include extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Ohio?
There was no objection.
Mr. OXLEY. Mr. Speaker, I yield such time as she may consume to the
gentlewoman from New Jersey (Mrs. Roukema).
(Mrs. ROUKEMA asked and was given permission to revise and extend her
remarks.)
Mrs. ROUKEMA. Mr. Speaker, I congratulate the chairman for his
leadership on this issue, and strongly support the legislation.
Mr. Speaker, I rise in strong support of H.R. 3210, the Terrorism
Risk Protection Act and want to commend Chairman Oxley for his
leadership on this important issue. The legislation that we are
considering here today represents a balanced approach to a difficult
problem. It not only will allow the industry to move forward in
providing continued terrorist coverage but it will protect the American
taxpayer.
While the industry is able to pay the $40-$50 billion in claims
resulting from the September 11 attack, it will need our help to
protect against future acts of terrorism. The insurance industry is a
business of estimating risks on events that cannot be predicted with
any certainty such as earthquakes, fires, hurricanes and floods. These
types of events are priced according to history of catastrophic events
over time. But the World Trade terrorist disaster has no precedents.
There is no possible way to price for the likelihood of another
occurrence or the size of the potential loss.
Consequently, it stands to reason that any future incident of like
size could threaten the stability of the property/casualty market. In
these uncertain times and given the magnitude of the September 11
event, reinsurance companies are skittish about providing terrorist
coverage. If the reinsurance industry excludes terrorist coverage from
its policies, the primary insurers will find it difficult to provide
coverage without risking the financial health of their companies.
The lack of coverage has become an immediate issue for many companies
that are subject to short-term cancellation provisions (including many
aviation businesses) or that had October 1, 2001, renewal dates. It has
the potential to become a nationwide crisis January 1, 2002, when most
commercial policies are up for renewal. Companies may find terrorism
insurance impossible to buy. This could have a serious ripple effect on
the mortgage and real estate industries.
Congress must head off this danger. The industry needs the certainty
of this legislation to renegotiate their contracts prior to the January
2002 deadline.
The key elements of this bill includes provisions that are modeled
after existing State risk-sharing insurance programs. The bill sets a
trigger at $100 million for small insurers and $1 billion as an
industry wide aggregate and provides a 90 percent Federal share with 10
percent individual company retention. Companies would be required to
payback the first $20 billion in losses through assessments and allowed
to recoup subsequent losses through commercial policyholder surcharges.
Finally, this bill provides important liability reforms for private
businesses that could be affected by future terrorist attacks. We need
only look at the 1993 World Trade Center bombing to understand the need
for these important reforms. The 1993 World Trade Center bombing
resulted in 500 lawsuits by 700 individuals, businesses and insurance
companies. Damages claimed amounted to $550 million, and those cases
are just now getting started. It is unthinkable that we would not
provide innocent businesses protection against terrorist-inspired
litigation. Businesses and property owners simply cannot guard against
terrorist attacks seeking to cause mass destruction. This bill includes
common sense reforms that will assure the continued availability of
affordable insurance.
Let me remind my colleagues that provisions to limit punitive damages
and attorneys fees were included in the Airline Security Act that
originally passed the House with one distinct difference--H.R. 3210
does not cap damage awards. The litigation management provisions in
H.R. 3210 would also benefit victims of future terrorist attacks.
H.R. 3210 represents a balanced approach that will give the insurance
industry the short-term assistance they need and will protect the
taxpaying consumer by asking that every dollar of assistance be repaid.
Mr. OXLEY. Mr. Speaker, I yield myself 5\1/2\ minutes.
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, on September 11, the al Qaeda network began a
war of terrorism against our Nation. The insidious attack was planned
not only to kill Americans, but to disrupt our Nation's financial
center. The September 11 attack caused greater insured losses than most
of the recent top disasters combined, and, unfortunately, since that
attack, the foreign reinsurance market has refused to provide further
coverage for terrorism.
Without reinsurance for terrorism, primary insurers are not able to
responsibly insure high level risks. In fact, they have been filing new
policy forms to exclude terrorism coverage in almost every State of
this Nation. Without insurance, many creditors will not lend for new
projects, and many new businesses, projects, and buildings will simply
never happen.
We cannot afford this significant economic disruption at a time of
economic sluggishness. I am confident that the private insurance sector
will eventually adapt to the challenges of the new world, they always
do. But 70 percent of commercial insurance policies will be renewed
over the next 35 days, and if this Congress does not pass this
legislation, many of those policies will not be renewed and our economy
will be further injured. This is exactly the result that the terrorists
were hoping for, and this is why it is absolutely imperative that the
House act today to pass this bill.
{time} 1300
We crafted legislation in our committee to address this problem. Mr.
Speaker, H.R. 3210 creates a temporary risk-spreading program which
creates the strongest incentives for consumers to be able to obtain
coverage with significant solvency protections to maintain a stable
market. We created certainty in terrorist exposure for companies by
spreading any terrorism risk across the industry with temporary Federal
assistance. But the role of the Federal Government is limited to a
helping hand up, not a hand out. Any assistance provided must be repaid
by the industry over time.
We also based our bill on systems being used successfully in almost
every single State today: the State insurance guarantee funds. These
programs provide immediate liquidity up front to ensure that
policyholders are paid, and then the costs are collected back from the
industry as a whole. It is simple, it works, and we have the programs
in place today we can build on.
This is not the approach favored by many in the industry that want
free taxpayer money, but it is an approach supported by consumer and
taxpayer groups as diverse as the Consumer Federation of America,
Americans for Tax Reform, and Citizens Against Government Waste; and it
is critical for the House to pass this legislation today to make a
clear statement that we are going to protect the economy and we are
going to do it in a way that will not put the American taxpayer on the
hook or require future tax increases.
We need to get this legislation done today. Time is running out. We
passed H.R. 3210 out of committee with 35 bipartisan cosponsors on a
nearly unanimous voice vote. Since then, the only significant changes
our committee has made were in response to our good-faith commitment to
continue working to address Members' concerns, primarily to speed up
the assessments and create more flexibility for rural areas and small
towns.
The text made in order by the rule includes additional liability
reforms placing limitations on punitive damages and trial lawyer fees
for terrorist events. We have been working with Members' staffs in both
parties and will continue to make improvements to the insurance
provisions. But the minority is being given two opportunities to amend
this bill; and once the
[[Page H8599]]
House works its will, we cannot allow a disagreement on lawyers' fees
to sabotage what would otherwise be a bipartisan bill that is critical
to our economy.
Mr. Speaker, I support limits on legal fees and other liability
reforms to ensure that a future terrorist attack does not create a rush
to the courthouse. I supported more limited reforms in the Committee on
Financial Services. I will back the bill with or without the
strengthened provisions. But we cannot let the fight over the trial
lawyers undermine our critical responsibility to hold together our
Nation's financial foundations. This bill is critical, and it must be
sent to the President this year.
Mr. Speaker, H.R. 3210 is pro-consumer, pro-taxpayer, and pro-
business. Regardless of whether Members choose to side with the trial
lawyers or the liability reforms, we cannot let the terrorists win by
disrupting our economy because we failed to do our job in passing this
legislation.
I must point out the contributions of the gentleman from Louisiana
(Mr. Baker) to this bill which reflects many of his ideas and much of
his energy as well. He, of course, chairs the appropriate subcommittee
of our Committee on Financial Services. The gentleman from Alabama (Mr.
Bachus), the gentleman from Texas (Mr. Bentsen), and many others on the
Committee on Financial Services also deserve thanks for a great job on
this bill. The gentleman from Connecticut (Mr. Shays), the gentleman
from North Dakota (Mr. Pomeroy), the gentleman from New York (Mr.
Fossella), and the gentleman from New York (Mr. Grucci) were early and
enthusiastic supporters of our commonsense, pay-back-the-taxpayer
approach.
Today it is time to put away egos and forget partisan blustering and
special interest politics. It is time to help those Americans who are
working to create jobs: the guy who is trying to buy a business, expand
a manufacturing plant, or construct a new building.
The 9-11 attack is over, but the economic terrorism goes on and on
unless we act. I strongly urge support for this important legislation.
Mr. Speaker, I also want to thank the Chairman of the Budget
Committee, Mr. Nussle, for his assistance in moving this legislation to
the floor quickly. I am inserting for the Record an exchange of letters
regarding his committee's jurisdictional interest in this legislation.
House of Representatives,
Committee on the Budget,
Washington, DC, November 26, 2001.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services, Rayburn House
Office Building, Washington, DC.
Dear Chairman Oxley: I am writing regarding H.R. 3210, the
``Terrorism Risk Protection Act'' which was recently ordered
reported by the Committee on Financial Services. As you know,
the legislation includes provisions addressing the budgetary
treatment of certain spending, a matter which falls within
the jurisdiction of the Committee on the Budget pursuant to
rule X of the Rules of the House of Representatives.
Because of your ongoing willingness to work with the
Committee on the Budget on this matter, and the need to move
this legislation expeditiously, I will waive consideration of
the bill by the Budget Committee. By agreeing to waive its
consideration of the bill, the Budget Committee does not
waive its jurisdiction over H.R. 3210. In addition, the
Committee on the Budget reserves its authority to seek
conferees on any provisions of the bill that are within its
jurisdiction during any House-Senate conference that may be
convened on this legislation. I ask your commitment to
support any request by the Committee on the Budget for
conferees on H.R. 3210 or related legislation.
I request that you include this letter and your response as
part of your committee's report on the bill. Thank you for
your assistance in this matter.
Sincerely,
Jim Nussle,
Chairman.
____
House of Representatives,
Committee on Financial Services,
Washington, DC, November 26, 2001.
Hon. Jim Nussle,
Chairman, Committee on the Budget, Cannon House Office
Building, Washington, DC.
Dear Chairman Nussle: Thank you for your letter regarding
your Committee's jurisdictional interest in H.R. 3210, the
Terrorism Risk Protection Act.
I acknowledge your committee's jurisdictional interest in
the provisions addressing the budgetary treatment of certain
spending under the bill and appreciate your cooperation in
moving the bill to the House floor expeditiously. I agree
that your decision to forego further action on the bill will
not prejudice the Committee on the Budget with respect to its
jurisdictional prerogatives on this or similar legislation
and will support your request for conferees on those
provisions. I will include a copy of your letter and this
response in the Committee's report on the bill and the
Congressional Record when the legislation is considered by
the House.
Thank you again for your cooperation.
Sincerely,
Michael G. Oxley,
Chairman.
Mr. Speaker, I reserve the balance of my time.
Mr. LaFALCE. Mr. Speaker, I yield myself 5 minutes.
(Mr. LaFALCE asked and was given permission to revise and extend his
remarks.)
Mr. LaFALCE. Mr. Speaker, unfortunately the Republicans are snatching
defeat from the jaws of victory. When we worked together, we produced a
financial services modernization bill that had not been pulled off in
60 years, but it took true bipartisanship. Just a short time ago, a
month or so ago, we worked together in a bipartisan manner. With total
bipartisanship, we passed major anti money-laundering legislation, and
we stood together with President Bush at the White House signing when
he signed and gave the gentleman from Ohio (Mr. Oxley) and myself pens,
the pens he used to sign the PATRIOT bill. We could have done the same
thing on terrorism insurance. I desperately wanted to. I tried to. We
were rebuffed. They snatched defeat from the jaws of victory.
Why so? If the Republicans are victorious today, it is going to be a
Pyrrhic victory, but there were certain things that were more important
than a good victory. What was more important? Well, they had to include
extraneous material within the bill, either because they were told to,
or because it is part of a theological belief. And what is that? That
we must restrict victims' rights. Forget all lawyers. We are talking
about victims.
We are talking about the rights of victims to be able to obtain the
redress that they have been able to pursue from 1776 to now, from the
beginning of the Republic to the present. And those rights have evolved
over 200-plus years in the several States where they have become the
common law of the land, they have been codified in State law; and in
one fell swoop we say, we eliminate all State causes of actions and
there shall be one exclusive Federal cause of action, one exclusive
Federal cause of action.
Now, we will look to State law for a little bit of guidance, but
certainly not on the issue of damages. On damages, we will eviscerate
their rights for economic damages, we will eviscerate their rights for
noneconomic damages, we will eviscerate their rights, we will prohibit
their rights, for punitive damages.
That is going to kill this bill, and that is going to greatly,
greatly worsen our economy.
Mr. Speaker, they could take one of two approaches. They could say,
let us take the best bill we could fashion in a bipartisan manner that
might pass muster with the Senate and negotiate differences, send it to
the President, or they could say, oh, my gosh, we have a majority of
one Democrat in the Senate; therefore, the only approach we can take is
to come up with the worst possible bill imaginable, pass that, because
that will increase our negotiating leverage with the Senate. The worse
our bill, the better our negotiating stance. That is what they have
done.
This is not about passing a bill. They are not arguing the merits of
this bill because they want to see it become the law of the land. They
know it never will be. They just want to posture themselves, leverage,
to get better leverage in negotiating with Senator Daschle, Senator
Dodd, Senator Leahy, Senator Hollings, et cetera.
In doing this, they are playing Russian roulette. Because what they
are doing is they are permitting that Damoclean sword that is hanging
over the economy, producing a chilling effect right now on the
provision of credit to businessmen across America. They are permitting
that Damoclean sword to fall come January 1, 2002. It is Russian
roulette and it need not be.
We could pass a bill; we could pass the substitute that would go to
the Senate and, with minor changes, be signed by President Bush next
week and eliminate that Damoclean sword
[[Page H8600]]
that is hanging over the head of our economy.
Mr. Speaker, our Nation is faced with numerous economic dislocations
as a result of the September 11 attacks. A case in point is the
legitimate concern that the reinsurance market for terrorism coverage
is evaporating and will force primary insurers to increase prices or
withdraw coverage. This is not an industry problem. If industry cannot
reinsure the risk of further terrorist attacks, it will either not
offer terrorism coverage or price it out of the reach of most
consumers. The consequences of such action for our economy and for
consumers would be devastating, particularly given our current
recession.
We must recognize that the crisis is only weeks away, as most
policies are coming up for renewal on January 1, 2002. If businesses
are forced to go without coverage, lenders will not lend because they
require proof of insurance as part of the prudential credit decisions
they make. Congress does not have the luxury of time to debate
extraneous and controversial issues such as restrictions on victims'
compensation while the health of our fragile economy hangs in the
balance.
Since the markup of H.R. 3210 last month, I have repeatedly expressed
my willingness to work with Mr. Oxley and Mr. Baker on devising a plan
that I could support. The goal was to create a short-term solution that
will keep terrorism insurance coverage against any future attacks
available and affordable, until Congress can revisit the issue. The
approach Mr. Oxley devised was, in large part, reasonable and I could
have supported it. However, because this bill is laden with extraneous
provisions that limit victims rights and does not address some of the
core issues that I believe are essential, I cannot embrace this
legislation in its current form. It did not have to be this way.
First, H.R. 3210 does not impose an industry deductible. Instead, it
creates a program under which the Federal Government finances industry
losses from the first dollar and calls for those funds to be recouped
over time through industry assessments and policy surcharges. Second,
the bill does not require, by its terms, that property and casualty
coverage be part of commercial property and casualty coverage, as it
normally is now. Third, it egregiously limits victims rights by
eliminating punitive damages, limits noneconomic damages, caps
attorneys fees and creates a Federal cause of action. These provisions
are extraneous, represent a wish list for those who have long wished to
restrict the rights of victims in our civil justice system, alienate
most Democrats and many Republicans here and in the Senate, and,
therefore, imperils this legislation's ultimate enactment.
The advocates of radical tort reform in the White House and in the
Republican leadership are using this terrorism risk bill to promote an
aggressive antivictim agenda. Section 15 of the Armey bill, entitled
``Litigation Management'' may constitute the most radical and one-sided
liability limitations ever. Even worse, the provision bears little
relationship to the issue of insurance and is not even limited to cases
involving insurance coverage.
The Republican bill diminishes the protections that Americans enjoy
under state law by restricting the availability of noneconomic damages
and by eliminating punitive damages. These limitations on damages apply
not only to insurance companies, but also to the wrongdoer, as well.
Adoption of these provisions rewards wrongdoers at the expense of
innocent victims of terrorist attacks. If an airport screening firm
hires a known terrorist who allows a weapon to slip on board a plane,
this bill would protect that company.
Punitive damages are rare and only awarded in the most egregious
cases where a defendant willfully or intentionally disregards the
safety of the American public. The elimination of punitive damages
takes away incentives for businesses to do everything they can
reasonably do to protect the American public.
Noneconomic damages are real damages. The loss of a limb, eyesight,
constant pain and loss of a loved one are real life-altering events.
Limiting their recovery harms the most severely injured victims and
discriminates against children, the elderly, and homemakers, who do not
receive much in the way of economic damages.
The Republican bill tries to limit victims' access to the civil
justice system by capping the fees available to pay the victims'
attorneys and threatens their attorneys with criminal sanctions for
violations of the cap. This particular provision reveals the real
motives of the proponents because the provisions does not impose any
cap on the fees paid to defendants.
It bill takes away all judicial review relating to the issue of
whether terrorism caused the injury, an unprecedented and very likely
unconstitutional limitation on victim rights. It eliminates prejudgment
interest, which takes away any incentive for negligent parties to reach
settlements. It mandates collateral source, which forces victims to
choose between seeking money from charities and pursuing a grossly
negligent party in court, and permits wrongdoers to take advantage of
life and health insurance policies purchased by the victim or the
victim's employer.
The Republicans claim that the provisions are needed to protect the
taxpayers from paying for excessive damages through the reinsurance
mechanism. But, under the Republican bill every penny of assistance is
recouped through assessments on the industry. If they were really
concerned with limiting taxpayer exposure rather an aggressive and
radical tort reform agenda, why is there no limitation on property
damages under the bill? Does making a family whole means less to my
colleagues than making a corporation whole for the loss of a luxurious
building?
While I firmly believe these victim compensation restrictions have no
place in this bill, we on our side sought to find some common ground on
this tort reform issue, so we could report out a bill that is vitally
important for the economic recovery of this Nation. We presented to the
Rules Committee three amendments to modify the provision. But the
Republican leadership was unwilling to give the House an opportunity to
refine these provisions and reach a compromise on an issue that also
has the Senate tied up in knots. Instead they insist on pursuing a
radical, partisan agenda to limit the compensation needed to make the
victims of terrorist attacks whole.
Later in this debate, Ranking Member Kanjorski and I will offer a
substitute which cures many of the defects of the Republican bill and
presents this body with a clean piece of legislation that Members on
both sides of the aisle can support.
First, my bill would require a real up-front deductible. The
insurance industry would pay the first $5 billion of insured losses in
the first year, increasing to $10 billion in the second and third
years. Individual company liability would be capped at 7 percent of
premiums. The insurance industry has made clear that it can afford a
deductible of this magnitude and they were prepared to embrace it when
it was under consideration in the Senate. The administration, too,
supports such a deductible. It is a sensible mechanism that protects
taxpayers and imposes underwriting discipline. It is a necessary part
of any legislation that we ultimately send to the President.
At the same time, my bill maintains the sensible assessment
provisions of the Oxley bill for losses in excess of the deductible,
and imposes a discretionary surcharge on policyholders for losses above
$20 billion. I believe these provisions fairly protect the American
taxpayer while not overly burdening industry.
Second, to prevent insurance companies from cherry-picking the safest
properties and leaving sites which present greater risk uncovered, our
substitute, unlike the Republican bill, would require that terrorism
coverage be part of property and casualty coverage. This is essential
to avoid a situation where insurers would only insure ``good risks''
and leave large portions of the economy uncovered. This provision would
also eliminate any incentive for small businesses to opt out of
insurance coverage.
Finally, my bill does not limit victims rights by denying them the
legal redress that they deserve.
Although I cannot support the bill in its present form, I hope we can
engage in a bipartisan, collaborative process going forward.
Despite our present differences, I do see common ground and I do see
how we could meld our approaches. But if we are to get there, it will
take respectful bipartisan dialog, not the gratuitous and unnecessary
pushing of ideological agendas. We have little time, and a serious
responsibility which we must meet quickly to protect our economy.
Mr. Speaker, I reserve the balance of my time.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 5 minutes to the
gentleman from Louisiana (Mr. Baker), who has done extraordinary work
in this regard.
Mr. BAKER. Mr. Speaker, I thank the gentleman for his leadership and
his courtesy.
I think it appropriate at this point in our debate to talk simply
about what is it that this bill does and on what issues are there
agreement. It is very clear that through the extensive hearings and
work of the committee that much agreement was reached. First, that if
there is another unfortunate terrorist attack on this great Nation,
that we should not let the secondary effect of that attack to bring
terror to our national economy, and that we must respond quickly.
Some have criticized, for example, the concept of first-dollar
participation at the moment the event occurs. There are other views
that we should wait
[[Page H8601]]
until perhaps some $5 billion of damages have been paid out by the
industry before getting government involvement. In other words, after
the terrorist event has occurred, let us make sure the economy suffers
for a while before we respond. This bill takes a different approach and
says, we should get that assistance immediately, not 6 months, not 60
days, but immediately upon validation that there has been an event for
which there have been losses that can be substantiated.
Secondly, since we are providing this immediate assistance, there
should be some guarantee that this is not viewed or, in practice, turns
out to be a bailout of the insurance industry. So this bill provides
for repayment. Yes, we have a crisis. Yes, there are people who are
suffering. So we say, insurance company, go help the insureds. Make
sure they get the funds necessary to repair those businesses, to get
the economy going again, to make sure we do not have the unemployed or
we do not have those who are without medical insurance because their
company doors are closed. But when you are profitable and when you are
making money, we expect you to give the taxpayers their money back.
That is what this bill provides for. It is a new approach. We will
help, but we expect you to be responsible when you are profitable.
We give the Secretary of the Treasury large discretion in how to
implement the requirements of this legislation. If we find ourselves in
the very unfortunate event after a terrorist attack that our general
economic condition is poor, the Secretary of the Treasury may use his
judgment as to when and how to recoup repayment to the taxpayer. But
there is a guarantee that there will be a repayment to the taxpayer.
So first and foremost, there is bipartisan agreement that this
legislation is not an industry bailout. It is necessary, an absolutely
necessary step to maintenance of our economic survival.
Secondly, it is not going to be a gift, that this money will not go
out the door of the United States Treasury never to be seen again.
Third, we act to help not only the big insurance companies; this
proposal's effect is to help all insurance companies. It is true that
the top 25 percent of all insurance companies out there write 94.6
percent of all property and casualty premiums in this country. There
are very large companies providing the bulk of coverage in this
country, but there are an extraordinarily large number of very small
corporations that could not withstand $5 billion industry-wide loss
without going insolvent themselves. The bill provides immediate
assistance for small companies. It provides immediate assistance for
small businesses by not requiring terrorism insurance to be part of the
property and casualty coverage. Why is that important?
Our bill provides that one can stipulate what the cost of the
terrorism component is separate from the underlying property and
casualty bill. So if one is a business owner today who wants to make
sure his property and casualty insurance premiums have not been jacked
through the ceiling by some irresponsible insurance executive, one can
look at what they paid last year and look at what they are asking to be
paid this year, and then out over to one column to the side will be a
little line that says ``terrorism risk premium'' and you can identify
it. If you happen to be in Wyoming or on the great Gulf Coast of
Mississippi or somewhere where you make the judgment that you do not
wish to pay that terrorism premium, you do not have to. We do not
believe we should dictate to every business owner in America, you must
buy terrorism insurance regardless of what the cost may be, or what the
risk may be to you. So we provide market opportunity. You can buy the
property and casualty, you can buy the terrorism component from company
A, you can buy property and casualty from company B, and the terrorism
component from company C. It is free market at its best. It is a
responsible solution to the problems we face.
Mr. Speaker, I urge the adoption of this proposal.
{time} 1315
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski), the distinguished ranking member of the
subcommittee with jurisdiction on this issue.
Mr. KANJORSKI. Mr. Speaker, I thank the chairman for yielding time to
me, and I will take a moment to congratulate the chairman of the
committee, the gentleman from Ohio (Mr. Oxley), and the chairman of the
subcommittee, the gentleman from Louisiana (Mr. Baker), for what I
thought was a job well performed as far as moving a bill that could
gain bipartisan support through the Committee on Financial Services.
Unfortunately, with heavy heart, the product that we are about to
vote on on the floor today does not meet the standard that it met as it
came out of the Committee on Financial Services. It has had added to it
something called tort revision, tort reform, some sort of change.
To most people watching this debate today, they are going to say,
what is all this thing about liability? We are in an emergency.
What it means, to say it simply, is there is an attempt here today
with these new additions to change the history of responding to
liability claims and civil procedures to settle those claims, and
change significantly the history of the United States for 200 years by
passing this legislation.
It is unnecessary. It is not only unnecessary, it is something the
industry did not ask for. As a matter of fact, in discussions with the
industry, they did not even ask for support down to dollar one lost
from terrorist events. They had represented themselves that they were
perfectly able to handle as much as a $10 billion terrorist attack on
the United States without consequences.
What they asked us to do in the interim of a 2- to 3-year period
would be to provide a mechanism that if a terrorist attack of the
magnitude of September 11 occurred, there would be a mechanism in place
that they could move quickly to resolve the problem and put the money
back into the marketplace.
As a result of not having that mechanism, they are unable to sell
policies now with terrorist insurance as part of the policy face and
are asking the right to not write terrorism policy in this country. The
reinsurance industry will not touch this until the experience table is
established as to what rates they can set for terrorist insurance.
So what did the Committee on Financial Services start with? What did
the White House request? What did the industry request? That we put
together a stopgap measure to allow normal commerce to go on in the
United States and have terrorist protection insurance in place over the
next 3- to 5-year period so we would not stultify or have a
disadvantageous result to the economy as a whole. I call it an economic
stabilization bill, that is all it is, to show that the United States
government, at a time of extreme need and under dangerous
circumstances, can put the taxpayers of the United States in a
supportive situation to a free market institution, but not interfering
with the free market, encouraging the free market to come back and
handle the insurance as it has in the past and will in the future, but
for a period of 1 to 3 or 5 years, that the United States Government is
in there to create a position that would help the insurance industry,
the real estate industry, the financial services industry, but most of
all, the economy of the United States.
That has not happened. The one major reason it has not happened, in
spite of some of the changes, is the new additions on tort reform or
tort revision are so onerous, so extreme, that we are asking the
American people and this Congress to forget victims' rights, rights of
plaintiffs, rights of complainants, and rights of injured people, and
only taking care of the 25 largest companies in the United States who
write 94 percent of the insurance.
If I wanted to be a demagogue, I could easily say it is a bailout of
the insurance industry. But in my heart and mind, I know it is not
that; and it is not intended to be that. If we could have passed the
underlying bill, we would have had a very strong, bipartisan support to
do that; and it could not have been categorized as a bailout of the
insurance industry.
But it can clearly be labeled a locomotive for tort reform at the
wrong time, at the wrong place, in the wrong bill.
[[Page H8602]]
I urge my colleagues to vote down the existing bill, unfortunately,
taking some time to come back and work out another bill so we can go to
conference and pass this important legislation.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from New York (Mrs. Kelly).
Mrs. KELLY. Mr. Speaker, I thank the gentleman from Ohio for yielding
me the time.
Mr. Speaker, I rise today in strong support of the Terrorism Risk
Protection Act. This legislation is essential to not just the insurance
industry, but to the entire economy.
Businesses in America face a crisis this year, and they will face a
crisis next year if we are unable to obtain commercial insurance
coverage, which includes insurance against terrorism losses. Without
this insurance coverage, businesses will be unable to obtain financing
for new building projects, and an already weak economy will be served
another harsh blow.
With the cowardly acts of September 11, our insurance industry faces
a new reality which must be addressed as soon as possible. This is a
reality in which an act of terrorism is a risk which requires
insurance, the cost of which is impossible to predict, and hence,
impossible for an insurance company to price.
Because of this, insurance companies are currently unable to offer
coverage for impossible future terrorist acts. To prevent this crisis,
TRPA would spread the risk for possible future acts out across the
insurance industry, giving the industry time to develop their own
mechanisms to cover risk for the future. TRPA is designed to provide
only the necessary temporary stability to the insurance market and
sunset shortly thereafter.
Unlike like some of the solutions put forward, TRPA does not put
taxpayers' money at risk. All loans made under the act must be repaid.
In addition, the triggers in the bill are low enough to ensure that
small insurance companies remain competitive.
Finally, I want to assure my colleagues that the Committee on
Financial Services' work on the issue only begins with this
legislation. As the chairwoman of the oversight subcommittee, we will
be vigorous in our follow-up on this crisis. We must ensure that we do
all in our power to provide stability to the industry while we give the
private market time to innovate and quickly establish a new market to
cover potential terrorism loss.
TRPA is an excellent solution to this crisis and deserves our full
support. I ask my colleagues on both sides of the aisle to join me in
the strong support of this bill.
Mr. Speaker, obviously, I am pleased that the Financial Services
Committee and this House have acted expeditiously on the terrorism
reinsurance crisis, and that this legislation is being considered
today. Today in this chamber, we are appropriately engaging in a fierce
debate over various aspects of how to make this legislation work for
insurance consumers. We are debating federal backstops, mandates for
coverage, tort reform, and all trying to do the best thing for the
American economy--in the hope that this very complex and difficult
issue can be resolved by the time Congress recesses for the year.
But I would appreciate the opportunity, Mr. Speaker, to take just one
step back from this debate, and remind us all again why we are here.
One of the persons who would have been intimately involved in the
creation of a federal terrorism reinsurance program was Charlie
McCrann. Charlie was a senior vice president at Marsh and McLennan, the
world's largest commercial insurance brokerage firm, and his
responsibilities included advocacy at both the state and federal
levels. Charlie was a pivotal player on many of the issues surrounding
insurance regulation over the years--from the product liability crisis
of the 1980s, to the Dingell insurance solvency legislation in the
1990s, to our debates on agent/broker licensing reform as a part of
Gramm-Leach-Bliley two years ago. As he spoke on behalf of the firm
that sells more business insurance (and reinsurance) than any other
firm in the world, this terrorism insurance coverage legislation would
have been right down Charlie's alley. As always, he would have done
everything in his power to make sure that we craft a bill that restores
and calms the marketplace without overreaching.
On September 11, Charlie had arrived early to his office on the 100th
floor of 1 World Trade Center. Like 294 of his colleagues at Marsh, he
perished.
As a profile in the New York Times recently said of him, Charles
Austin McCrann was a levelheaded, respected executive, devoted to his
wife, Michelle, and children, Derek and Maxine. He was also a splendid
attorney and representative of the insurance industry, through his
earlier work at the New York Assembly's Insurance Committee, and at the
law firm of LeBoeuf, Greene & McRae. At Marsh, where he served since
1979, in addition to his advocacy, he was a regulatory compliance
officer, and was responsible for interpreting industry regulations and
providing guidance on these regulations to Marsh's brokers throughout
the country. He represented the National Association of Insurance
Brokers and its successor organization, the Council of Insurance Agents
and Brokers, before the National Association of Insurance
Commissioners.
I could go on and on.
As a subcommittee chair on the Financial Services Committee, I mourn
the fact that Charlie is not in this chamber today witnessing our
spirited debate and our actions designed to assist the commercial
insurance marketplace. And I hope that as this legislation continues to
move through the legislative process, we will be mindful of the 500
employees of the world's two largest commercial insurance brokerages--
Marsh and Aon--who lost their lives on that horrible day.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentlewoman from
California (Ms. Waters), the distinguished ranking member of the
subcommittee on Financial Institutions and Consumer Credit of the
Committee on Financial Services.
Ms. WATERS. Mr. Speaker, I serve on the Committee on the Judiciary
and the Committee on Financial Services, both of which have worked very
hard in a bipartisan manner to legislate cooperatively in the wake of
the events of September 11.
Last month, the Committee on the Judiciary reported out the PATRIOT
Act, the antiterrorism bill. The committee product was a true
bipartisan effort and was reported out unanimously. That product was
then abandoned in the Committee on Rules for a partisan, inferior
product.
Similarly, this bill, H.R. 3210, the Terrorism Risk Protection Act,
was reported out of the Committee on Financial Services by voice vote.
The bill we are debating today is not the product of that committee's
good work. It is, instead, a bill that does not contain a deductible
for the insurance industry before government steps up to the plate; and
even more disturbing, this necessary piece of legislation has become a
vehicle for broad-based tort reform.
The Armey substitute creates an exclusive Federal cause of action for
lawsuits arising out of acts of terrorism, prohibits punitive damages,
prohibits joint and several liability, limits attorney fees, and
requires that any victim compensation shall be reduced by any amount
the victim receives from other sources.
These tort reform provisions are broad and far-reaching. These
provisions are an appalling attempt by anti-consumer legislators to use
this bill to further their own agenda by changing the laws on victim
compensation. They would never get away with this under normal
circumstances, but these are not normal circumstances.
We have to respond quickly to the events of September 11, and we
should do so in a bipartisan manner. I find it utterly shameful that
certain Members see fit to exploit this terrible tragedy by using
necessary legislation as a vehicle for special interest items.
Unfortunately, this crass opportunism is becoming the hallmark of
this House. So far, we have seen attempts to load up bills that respond
to this tragedy with all sorts of tax breaks and Christmas presents for
corporate America, while we still have not taken care of the
unemployed.
Mr. Speaker, this bill has been corrupted with these harsh
limitations on victim compensation. These limitations are unrelated to
the issue at hand and have no place in this bill. I urge my colleagues
to oppose this legislation and support the LaFalce substitute, which
contains no limitations on tort actions or recoveries.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 3 minutes to the
gentlewoman from Illinois (Mrs. Biggert), a valued member of our
committee.
Mrs. BIGGERT. Mr. Speaker, I thank the chairman for yielding me the
time.
Mr. Speaker, the insured losses from September 11 attacks are
expected to total more than $70 billion, the largest insured
catastrophic loss in history.
[[Page H8603]]
The good news is that the insurance industry is paying these claims
and has stated that all claims will be paid expeditiously.
The bad news is that the insurance industry cannot withstand multiple
events of this magnitude without harming all consumers. This is
uncharted territory, and it will take some time for an efficient market
for terrorism insurance to develop. That is why passage of H.R. 3210 is
so important at this critical time.
For those who think that this bill applies only to the market for
commercial insurance, they should think again. Right now there are more
than 140 public self-insured risk pools operating in 41 States; and
they, too, will be covered by this bill.
What are public, self-insured risk pools? They are the entities that
provide coverage for those most often at the greatest risk: our
firefighters and police officers, our children in schools, teachers,
city workers, and many others.
In short, public self-insured risk pools provide an enormous cost
saving to State and local taxpayers. When private insurance premiums
are prohibitively expensive, these pools absorb the risk across their
membership base. Failure to include public risk pools in this bill
would have resulted in a dramatic increase in insurance premiums for
those providing critical public service and, ultimately, for taxpayers.
I appreciate the strong support this provision received in the
committee, especially from the gentleman from Ohio (Chairman Oxley) and
the subcommittee chairman, the gentleman from Louisiana (Mr. Baker). I
look forward to working closely with them to see that this provision is
retained in the conference.
Finally, Mr. Speaker, I want to thank the leadership members of the
Committee on Financial Services for including key litigation management
provisions in this bill. Let us face it, there is no reasonable way for
even the most responsible property owner or business to prepare for
every conceivable attack by a terrorist. Yet under current law, they
would be on the hook for 100 percent of such damages, facing total
financial ruin.
This bill limits the potential liability by barring punitive damages
and providing other protections if and when the Secretary of the
Treasury determines that an act of terrorism has occurred.
Mr. Speaker, H.R. 3210 is a responsible approach to a very difficult
situation. By demanding that every tax dollar is repaid, we will
provide a helping hand, not a handout, to the insurance industry.
I urge my colleagues to support this legislation.
Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from
North Carolina (Mr. Watt), a member of both the Committee on Financial
Services and the Committee on the Judiciary.
Mr. WATT of North Carolina. Mr. Speaker, several days after the
events of September 11, some of my insurance company representatives
who are based in my district approached me and described what would
become a very, very serious problem.
Essentially, they said that most of the reinsurance in this country,
a lot of it is being done by off-shore reinsurers, and that those
people were not going to reinsure against terrorism after the events of
September 11.
It became obvious that there was a serious problem that would need to
be addressed, and I committed to work to try to address that problem,
both in the Committee on Financial Services and in the Committee on the
Judiciary, both of which I am a member of.
We did that in the Committee on Financial Services. We reported out a
bill that received virtual unanimous support. Unfortunately, just like
the PATRIOT bill, the antiterrorism bill that the Committee on the
Judiciary had reported out unanimously, the leadership got its hands on
the product of our committee and rewrote the bill. They inserted
provisions that had little, or nothing, I would submit, to do with the
problem that the insurance companies had described to me in that
initial meeting, the one dealing with reinsurance and the necessity for
reinsurance.
{time} 1330
This bill has been hijacked, unfortunately, the same way that the so-
called PATRIOT bill was hijacked by the leadership, and provisions have
been placed in this bill which actually just make it unsupportable.
We are going to have a serious problem if we do not get to a final
product on this bill very soon. Insurance policies that are expiring
and are having to be renewed will need terrorism coverage, and it is
that kind of brinksmanship that I am concerned about; because as the
ranking member has indicated, we have taken a situation which could
have been resolved easily through bipartisan cooperation, that had been
resolved through bipartisan cooperation on our Committee on Financial
Services, and the leadership has decided that it would rather play
political brinksmanship with this bill.
If a product is not delivered that is satisfactory before the end of
this year, I hope that the American people will hold the people who are
responsible for this brinksmanship responsible for their conduct, and I
encourage my colleagues to vote against this bill today.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from Connecticut (Mrs. Johnson).
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman from
Ohio (Mr. Oxley) for his hard work and leadership on this difficult
issue.
Congress simply must act, before we adjourn, to avert an insurance
coverage crisis caused by the increased risk of terrorism against the
citizens and businesses of this country. I think that statement is
absolutely true. I am proud of the insurance industry and the way it
has stood up to what is going to be a $40 billion loss, but there is no
question that they cannot do this again tomorrow.
Furthermore, we in our Nation need to figure out how we are going to
share this new risk, because if we do not, the cities of America are
going to be the victims. It is not going to be Torrington, Connecticut.
It is not going to be Rutland, Vermont. It is going to be New York,
Chicago, San Francisco, Los Angeles, Houston. Who in their right mind
is going to pay the high premiums that will be charged of those who
locate in New York? Every one of the big cities will be seen as the
likely target for the next terrorist act, and so the premiums for
businesses in our cities are going to skyrocket if we do not legislate
now, do it right and follow it through over the next few years.
It is hard enough for the cities to attract businesses to them,
because cities have so many burdens that often their taxes are high,
their police problems are great, and so on and so forth. Now we are
going to add to that the highest possible insurance premiums for those
companies that are willing to headquarter in New York, Chicago, Los
Angeles, and other big cities of America.
We would not do it intentionally, but that is going to be the
unintended consequence of not handling this issue correctly. It will be
the cities that hurt; not the towns, not the little cities, not all of
America. We will put a death knell over economic activity in the big
cities of our country.
So I urge support of this legislation.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentlewoman from
New York (Mrs. Maloney), a member of the committee.
(Mrs. MALONEY of New York asked and was given permission to revise
and extend her remarks.)
Mrs. MALONEY of New York. Mr. Speaker, I thank the gentleman from New
York (Mr. LaFalce), the ranking member, for yielding me the time and
for his leadership and hard work on this issue.
Our work today is not bailout of the insurance industry. We are
simply working to keep our economy on track with a short-term program
that addresses the new terrorist threat.
I believe the gentleman from New York's (Mr. LaFalce) bill recognizes
the importance of this potential insurance crisis to our country and
the time-sensitive nature of the problem. With 70 percent of
reinsurance contracts expiring at the end of the year, we have a
limited time to act before the end of the year.
In the Committee on Financial Services, the gentleman from Ohio (Mr.
Oxley), the gentleman from Louisiana (Mr. Baker), the gentleman from
New York (Mr. LaFalce) and the gentleman from Pennsylvania (Mr.
Kanjorski) understand the importance of this issue
[[Page H8604]]
and they have worked tirelessly to move the process forward.
I was particularly concerned with surcharges placed on future
policyholders in the bill that the gentleman from Ohio (Mr. Oxley) and
the gentleman from Louisiana (Mr. Baker) originally introduced. It is
my belief that this language would have placed an undue burden on
future policyholders just as they are trying to recover from the
attack. Working together, we have reached a compromise on this issue,
limiting future surcharges to 3 percent of premiums.
While we have reached agreement on many issues, I believe the
approach taken in the Democratic substitute is superior to the bill
that is the underlying one today. The goal of any bill should be to
restore the availability and affordability of property and casualty
insurance. Limiting the rights of potential plaintiffs is a peripheral
issue. We are dealing with a crisis, and partisan legal reform issues
have no role in protecting the viability of insurance markets.
We do not know where the next attack will be, but we can be pretty
sure that right now terrorists are planning to strike again. Hopefully
our increased security will thwart any attack, but now is not the time
to prospectively limit the rights of individuals to make themselves
whole if they are victims of a future attack.
To quote a letter from the Consumer Union, ``Although individuals in
businesses may be unable to prevent future terrorist attacks and are
not directly responsible for those acts, they should be expected to
take reasonable and measured actions to promote public safety.''
I believe the legal limitations and the majority bill discourage such
conduct. Furthermore, the LaFalce substitute is more taxpayer friendly
by requiring the insurance industry to cover a deductible of $5 billion
in the first year and $10 billion in the second. This industry is
capable of covering this deductible and does not oppose this provision.
Every Member of this House owns an insurance policy and we all face
deductibles. This bill to prevent an insurance crisis should not be any
different.
Mr. Speaker, I rise in strong support of the LaFalce substitute.
Mr. Speaker, viewers of this debate should be clear.
Our work today is not a bailout of the insurance industry--we are
simply working to keep our economy on track with a short-term program
that address the new terrorist threat.
I believe Ranking Member LaFalce's bill recognizes the importance of
this potential insurance crisis to our country and the time sensitive
nature of the problem.
With 70 percent of reinsurance contracts expiring at the end of the
year we have a limited time to act before the end of the year and we
have to get this right.
In the Financial Services Committee Chairmen Oxley and Baker and
Ranking Members LaFalce and Kanjorski understand the importance of this
issue and have worked tirelessly to move the process forward.
I was particularly concerned with surcharges placed on future policy
holders in the bill that Mr. Oxley and Baker originally introduced.
It is my belief that this language would have placed an undue burden
on future policyholders just as they are trying to recover from an
attack.
Working together--we have reached a compromise on this issue--
limiting future surcharges to 3 percent of premiums.
While we have reached agreement on many issues, I believe the
approach taken in the Democratic Substitute is superior to the bill
that we are considering today.
The goal of any bill should be to restore the availability and
affordability of property and casualty insurance.
Limiting the rights of potential plaintiffs is a peripheral issue.
We are dealing with a crisis and partisan legal reform issues have no
role in protecting the viability of insurance markets.
We do not know where the next attack will be but we can be pretty
sure that right now terrorists are planning to strike again.
Hopefully our increased security will thwart any attack--but now is
not the time to prospectively limit the rights of individuals to make
themselves whole if they are victims of a future attack.
To quote a letter that Consumers Union which was sent to Members
yesterday. ``Although individuals and businesses may be unable to
prevent future terrorist attacks and are not directly responsible for
those acts, they should be expected to take reasonable and measured
actions to promote public safety.''
I believe the legal limitations in the Majority bill discourages such
conduct.
Furthermore, the LaFalce substitute is more taxpayer friendly by
requiring the insurance industry to cover a deductible of $5 billion in
the first year and $10 billion in the second.
This industry is capable of covering this deductible and does not
oppose this provision.
Every Member of this House owns an insurance policy and we all face
deductibles. This bill to prevent an insurance crisis should not be any
different.
Unfortunately, I am fairly certain that businesses will pay billions
more for insurance in New York in next year--even with Congressional
intervention. As I have said, this increase could amount to a tax of
billions of dollars on New York business.
I urge my colleagues not to tie outside issues to this legislation.
It is too important. Support the clean LaFalce substitute.
Mr. OXLEY. Mr. Speaker, I yield 3 minutes to the gentleman from
Connecticut (Mr. Shays), a very valuable member of our committee.
Mr. SHAYS. Mr. Speaker, I thank the gentleman for yielding me time.
Mr. Speaker, I rise in strong support of the Terrorism Risk
Protection Act. This bill creates a temporary industry risk-spreading
program to provide a financial backstop for insurers in the event of
losses from future terrorist attacks. It is not a bailout, and
taxpayers will recoup every penny of assistance insurance companies
receive.
It is critical for the Nation that terrorism insurance legislation be
enacted before January 1. This legislation is particularly critical for
insurance companies and financial services. The impact of not enacting
this legislation will significantly damage these vital industries and
will have dire consequences as well for the real estate, energy,
construction and transportation industries.
It is also clear our Nation's cities and metropolitan areas will be
impacted the most for failing to act on this legislation. Time is
quickly running out. The market for new commercial insurance contracts
and renewals is already undergoing serious and potentially severe
disruptions. Almost 70 percent of reinsurance policies expire on
December 31, and virtually all reinsurers have said they will no longer
provide terrorism insurance after that date.
This will create a chain reaction that will affect our entire
economy. Without insurance, lenders will not lend and investors will
not invest. The economic effects of inaction simply cannot be
overstated.
To me, this is the true stimulus bill. We need to enact this bill.
None of us can be sure when and where another terrorist act will occur,
but it will occur. And we have the opportunity today to offer
businesses, employers, and other economic activities across the country
much needed protection.
Mr. Speaker, I urge my colleagues to vote for this legislation and
help avoid an otherwise inevitable market dislocation and subsequent
economic crisis. We need to enact this bill. I thank my chairman, the
gentleman from Ohio (Mr. Oxley) for acting so quickly to see that we
will do that.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentlewoman from
California (Ms. Lee), a distinguished member of the Committee on
Financial Services.
Ms. LEE. Mr. Speaker, I want to thank the ranking member, the
gentleman from New York (Mr. LaFalce) for yielding me time.
Mr. Speaker, I am very disappointed in the process and also the
content of this bill. Many important amendments, including those on
tort reform and my consumer amendment on data disclosure, were not even
allowed to be offered. At a time when thousands of men and women are
losing their jobs and their health insurance, it is really a shame that
we are again putting corporate interests before the interests of our
workers.
Unemployment and health insurance benefits for those people who have
lost their jobs should be our first priority.
On the content of this bill, the egregious tort reform provisions are
reason enough to oppose it. Companies that do not take appropriate
safety steps or do not act responsibly in the face of credible threats
should not receive protection for their actions. If the owner of a
building locks the emergency exit doors and a terrorist attack occurs
there, that building owner must be held responsible for their negligent
actions. This is just common sense.
[[Page H8605]]
Under the Republican bill, they could not be held responsible. Under
the LaFalce substitute they would.
In terms of the process of this bill, I have tried to offer an
amendment to require insurers to provide the same data, the same data,
mind you, that banks currently provide on the race, ethnicity, gender
and location of their policyholders to ensure that they are not
discriminating against minority, women or low-income individuals.
However, this very modest amendment was not even allowed by the
Committee on Rules.
If we are to give billions of dollars to the insurance industry, we
should at least have basic data to know if they are using those Federal
dollars to engage in discriminatory practices. This is only fair.
It is time that this Congress really gets its priorities straight and
supports the working men and women in our Nation. The tragic events of
September 11 should not be used as an opportunity for corporate tax
cuts and bailouts. Let us put first things first and make sure that our
enhanced national security ensures economic security for those who so
desperately need our assistance.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Pennsylvania (Ms. Hart), a valuable member of our committee.
Ms. HART. Mr. Speaker, I thank the chairman for yielding me time.
Mr. Speaker, I serve both on the Committee on Financial Services and
on the Committee on the Judiciary and have certainly, like many Members
who have spoken, spent some time on this issue and certainly understand
the gravity of what we are doing here today, because in January, a
little more than 30 days from now, 70 percent of the commercial
insurance policies will be up for renewal.
Not only has the Committee on Financial Services received quite a bit
of testimony that without legislation, commercial insurers will be
unwilling to provide significant terrorism coverage, newspapers have
been full of stories about companies finding terrorism coverage
impossible to buy.
If businesses are unable to obtain insurance to cover their losses
caused by future acts of terror, they will not only potentially be
liable for significant damages any terrorist could cause, but they
would also face significantly higher financing and other costs. This
has the potential to wipe out any beneficial impact of an economic
stimulus package that we hope will be passed and signed by the
President.
In order to attract capital, companies have to convince investors
that their money will not be wiped out. We take steps through this
legislation to make sure that that is the case. This is not a bailout.
This is a backstop. This is legislation that will give confidence back
in your economy, confidence to investors.
It allows for exact pricing so that in the event of another terrorist
attack, the government would not only collect the amount of money it
needs in accordance with this law, it prevents the creation of another
mammoth government agency. In other words, we help finance money
temporarily.
This is not giving money away. This is assistance to our economy. It
is very important. Limiting the legal liability of these insurers by
restricting punitive damages is a big part of it. It is very important.
Terrorism is not the fault of insurers, it is the fault of the
terrorists. It is important that we take into consideration the
realities here.
Mr. Speaker, I appreciate the support of my colleagues, both the
gentleman from Ohio (Mr. Oxley) and the gentleman from Wisconsin (Mr.
Sensenbrenner). I urge support of the bill as it is, H.R. 3210.
{time} 1345
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentleman from
Washington (Mr. Inslee), a distinguished member of the committee.
Mr. INSLEE. Mr. Speaker, I speak vigorously against this bill because
it is radically callous toward reform provisions, and let me explain
how radical they are.
It seems to me that we have given a lot of at least lip service to
the value of marriage on this floor in a lot of different debates, but
look what this bill does. Take a situation where a wife lost her
husband, firefighter in New York City. She has had the destruction of
her relationship with her husband, she is a widow, and let us say this
bill becomes law. If this bill becomes law, it says that the only value
of that husband to that widow was the value of his paycheck.
This bill would destroy the ability that is now the case in 50 States
in this country that when a widow loses her husband she would be
entitled under American law to noneconomic damages. That is a sound
policy, because many of us believe that a husband has a value to a wife
that is greater than his paycheck. But the Republican proposal here is
based on the proposition that the only meaningful value of a husband to
a wife is what he brings home at the end of the month, and that the
value of the relationship between a husband and wife is zero under the
Republican bill. That is wrong. That is wrong.
The value of a relationship between a husband and wife is worthy of
the respect of us individually and worthy of the respect of the
American judicial system. This bill is wrong in eliminating that civil
right. I think it is a sad day when terrorists get to destroy the civil
right of an American to recognize the value of their spouse, which
under the Republican bill my colleagues are doing. Frankly, I do not
know if my colleagues intended to do it, but this bill accomplishes
that end, and it is wrong.
But there is a second reason I speak against this bill, Mr. Speaker.
If we pass this bill, it will have been after we passed the airline
bailout bill, or airline bill, whatever we want to call it, and did not
give a dime to the workers, over 100,000 workers who have been laid
off. Yet we now pass a bill to help the insurance industry, which I
think is necessary, some bill, to help the insurance industry, but
still without helping laid-off workers with a dime or a nickel.
I now have in the Puget Sound, or will have, 30,000 laid-off workers
from the Boeing company alone as a result of this terrorist activity.
And what has the Congress done? Nothing. Why do the big dogs always eat
first in Congress? It is time to take care of working people. Defeat
this bill.
Mr. OXLEY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from
New York (Mr. Grucci), another valuable member of our committee.
Mr. GRUCCI. Mr. Speaker, I rise today to express my strong support
for H.R. 3210, the Terrorist Risk Protection Act.
First, I would like to thank the gentleman from Ohio (Mr. Oxley), the
chairman of the Committee on Financial Services, and the gentleman from
Louisiana (Mr. Baker), chairman of the Subcommittee on Capital Markets,
Insurance and Government Sponsored Enterprises, the Republican
leadership, and my colleagues on the Committee on Financial Services
for their tireless efforts to negotiate a comprehensive package to
prevent the disruption and destabilization of America's markets via the
collapse of our insurance industry.
The horrifying events of September 11 have touched each and
everyone's lives in so many ways. Our Nation will never again be the
same. These events have introduced new problems for industries and
small businesses, because reinsurers have been telling primary insurers
that they will exclude terrorist coverage from their policies. Now,
without the ability to insure properties against future terrorist
attacks, financial institutions will be unable to provide loans, New
York will be unable to rebuild, and everyday business transactions will
be disrupted. If we permit this to happen, we let the terrorists win.
Time is running out. On December 31, 2001, 70 percent of these
reinsurance policies will expire. New policies are currently being
negotiated without these necessary legislative changes. We should have
passed this critical legislation in time for these companies to provide
45-day notices. Well, we missed that deadline; and now we have only 32
calendar days, leaving us only 16 business days until the Christmas
holiday. Speaking as a former small businessman, I can tell my
colleagues that does not provide much time for effective business
decision-making, particularly in light of our Nation's current economic
conditions.
H.R. 3210 creates a temporary industry risk-spreading program to
ensure
[[Page H8606]]
the continued availability of commercial property and casualty
insurance and reinsurance for American consumers. The post-event
assessment system provides an incentive to provide coverage, spreads
out risk, prevents guessing at costs, and does not take money out of
the economy. This requires that all of the Federal funds used to boost
liquidity are paid back by the commercial industry/policyholders over
time.
This is sound, effective, and timely legislation; and I urge my
colleagues to join me in supporting this critical measure and in
supporting the economic stabilization of our country.
Mr. LaFALCE. Mr. Speaker, I yield 5 minutes to the gentleman from
North Dakota (Mr. Pomeroy), a former insurance commissioner for that
great State.
Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this
time, and I commend him and the rest of the leadership of the
committee, including Chairman Oxley, ranking member LaFalce,
Subcommittee Chairman Baker, and ranking member Kanjorski for their
really terrific work on this matter. This should be the finest hour for
the Committee on Financial Services.
We have an issue where there is broad bipartisan agreement. We need
to act. We need to act now. Because without enactment before we go
home, there will be significant capacity consequences in the
availability of coverage for terrorism. The ripple effect of that
through the economy will be significant. And that is why we have to
act.
Now, under these circumstances, committee leadership undertook this
difficult assignment of creating some kind of public mechanism to wrap
around the private insurance capacity to continue to insure this risk,
a risk that has grown infinitely more grave and significant. Out of
this long, rather intense legislative process came a bill that, after
committee markup, passed by voice vote, virtually capturing all of the
members of the committee.
Now, it was recognized by committee leadership not to be the perfect
bill, that more work would be required; but it was the legislative
format for the congressional response that, I believe, would have
provided direction to the Senate and would have been the principal way
in the end we enact this legislation. Well, what happened? This work
product was taken away from the committee. It was ripped up and
rewritten. It was wrecked and brought forward.
And the irony of ironies is that now the chairman of the Committee on
Financial Services has to lead the debate for its enactment. I believe
the committee leadership deserved better than this in light of the
fair-minded effort they made to get a solution created.
There are two reasons to oppose this bill: substance and process. And
the argument as to substance, I believe, has been very well advanced by
previous speakers; and I will not reiterate that part. But I do want to
speak a bit on process.
This is one of the most technically difficult assignments this body
has undertaken, and to do it in a tight time frame makes it
particularly difficult. There are lots of ways that have been advanced
in terms of how we construct this assistance to keep terrorism coverage
available. The administration took a whack at it. They had one
approach. A bipartisan effort between Senator Dodd and Senator Gramm in
the Senate took another approach. Chairman Baker worked with Chairman
Oxley to construct an approach that, in the end, was quite a bit like
the approach taken by ranking members LaFalce and Kanjorski.
Out of all these approaches, none of them have the offending
provisions slapped on in a kind of a haphazard, almost cavalier way by
House majority leadership in bringing this form. What they have done is
thrown a red herring into this whole debate as to how we construct the
package.
I believe passage of this bill does not advance completion of the
terrorism insurance assignment; I think it makes it even more
difficult. Because rather than focusing on the technically demanding
issues before us, we are also going to be debating unrelated,
ideological points of agenda that really have no place, especially when
considering the dwindling hours we have to get this bill into place.
I believe that, in the end, we have to act; but we can best act by
rejecting the flawed proposal that has been put before us and going
back to the committee, bring their bill forward to get this on the
track that we need to go.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Virginia (Mr. Cantor), a new member of our committee.
(Mr. CANTOR asked and was given permission to revise and extend his
remarks.)
Mr. CANTOR. Mr. Speaker, I commend the gentleman from Ohio (Mr.
Oxley), chairman of the full committee; the gentleman from Louisiana
(Mr. Baker), chairman of the subcommittee; and the gentleman from New
York (Mr. LaFalce), ranking minority member, for bringing this most
critical, critical bill to the floor.
As has been said before, on September 11, thousands of innocent
Americans were killed in a savage terrorist attack that no one could
ever have imagined. This catastrophe, though, also has left the
American economy and American businesses with an insurance crisis.
Seventy percent of insurance contracts in this country expire at year's
end. As a small businessperson, I know that there are millions of
individuals out there now receiving expiration notices not knowing what
to do come year-end.
If we look at it, if there is no insurance, business owners across
America, both small and large, may all be in default of loan covenants
which require collateral to be insured against terrorist strikes.
Without this bill, there will be no such insurance.
Some individuals may fear the worst and close or put a halt to
expansion plans. We can forget about growth in our cities and towns.
What bank will loan money to build a shopping center or an office
building without insurance to protect their investments in such a
project? And then where will the jobs be without those projects?
H.R. 3210 addresses this impending crisis not by an industry bailout
but by extending credit to cover claims associated with terrorist
strikes akin to those on 9-11. Such loans will be repaid through
industry assessments so that American taxpayers will remain whole. Mr.
Speaker, I also commend both Chairman Oxley and Chairman Baker on the
very innovative way that this bill tries to provide a resolution to
this impending crisis. It does provide a fix.
And I would say we ought to support this bill because of the
substance. There are no mandates on terrorism coverage, so, therefore,
if there is a small business owner, let us say in Orange, Virginia, who
has a small ice cream shop and chooses not to pay for that particular
coverage because of the cost, that business owner ought not be made to
do so. Yet the bill also provides for protection against those who may
seek compensation in lawsuits against a terrorist strike.
Let us not put the bill on the American people; let us put the bill
on the terrorists. It is the terrorists who were responsible for the
strikes on 9-11 and will be responsible if it occurs in the future.
Mr. Speaker, I urge passage of the bill.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentleman from
California (Mr. Sherman), a distinguished member of the Committee on
Financial Services.
Mr. SHERMAN. Mr. Speaker, I am sure you have visited Rayburn 2128,
the room in which the Committee on Financial Services meets. It is a
large and beautiful room, and I would propose that we make that room
available to provide housing for the homeless. Because what went on in
that room in crafting this bill has nothing to do with the bill that
reaches the floor.
{time} 1400
Mr. Speaker, if all of our financial services bills are to be written
in the Committee on Rules on the third floor of this building, why must
people sleep out in the cold when they could be provided housing in
room 2128?
In fact, we are presented this bill on very short notice, basically
24 hours' notice, and it has so many changes from the bill that left
our committee. One of the flaws in this bill is that it provides first
dollar coverage with no deductible. What does this mean? It means that
if there is a terrorist event
[[Page H8607]]
that causes a billion dollars in damage, less one penny, comes within 1
cent of causing a billion dollars of damage, the Federal Government
does nothing.
But if instead the damage is a billion dollars, plus one penny, then
the taxpayers come forward with $900 million. Never has 1 cent mattered
so much, and that is clearly absurd.
We need instead a bill that says that the first billion dollars is
absorbed by the insurance and reinsurance industry, and only then
should taxpayer dollars be involved. What, after all, is the insurance
industry if it cannot absorb in total, with all of its companies and
all of the reinsurance companies, a billion dollars in risk? If
insurance companies cannot take the first billion of risk, then why do
they exist? They are, after all, in the risk-sharing and risk-
absorption business.
We need a bill. Many speakers who have come forward have explained
why it is so important that we pass a bill so that those who own
businesses are able to get terrorism insurance; or, rather, continue to
get the kind of insurance that they have now without an exception for
terrorist damage. That is why it is so important that those who want a
bill vote for the Democratic substitute, because that is a bill that
could be passed by both Houses, that is a bill that could be signed
into law before we adjourn. That is serious economic policy.
Instead, we have a bill with loathsome, absurd, highly partisan,
quote, tort-reform provisions; provisions which everyone knows cannot
be passed on a bipartisan basis. I would point out that they deprive
those that lose a child of any recourse at all, not one penny, to the
parents who lose their child to terrorism.
Mr. OXLEY. Mr. Speaker, I reserve the balance of my time.
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this is important legislation. It is legislation that I
want to see enacted into law before we adjourn this year. But the
substance of the bill before us and the procedure that we have used to
get here is atrocious. It is not necessary to take away victims'
rights. This bill does that. It does it in a very heavy-handed manner.
There ought to be a deductible. That is, the insurance industry
should be paying the first dollar up to a certain amount and the
Federal reimbursement payment should come in only after that. Their
bill is grossly deficient in that respect.
Mr. LaFALCE. Mr. Speaker, I yield back the balance of my time.
Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, this legislation is absolutely necessary. That is why
this committee is charged by the Speaker to produce a bill, and
produced it in virtually record time. That is why during a day-long
markup, it culminated in a voice vote for the legislation. And that is
why, frankly, the substitute that is going to be offered by the
gentleman from New York (Mr. LaFalce) contains 85-90 percent of the
bill that came out of our committee.
Let us understand that most of this debate today, at least on the
other side, has been about legal reforms, liability reforms, and not
about the specific areas that were negotiated and worked on and I think
is an excellent work product; and, in fact, solves the problem that all
of us want to solve, and that is the availability of insurance to make
certain that our economy continues to move forward. That is what all of
us have as a goal.
As we pass this bill on to the other body, it is important that the
House send a strong signal that we are prepared to meet that challenge.
This legislation, this underlying legislation, is exactly what the
patient needs to provide the kind of stability in the insurance market
that all of us desire.
Make no mistake about it, this Congress will pass this legislation,
this type of legislation, before we return home. We have no other
choice, it seems to me. If we do not, we face political peril, should
the economy start to unravel, with the unavailability of credit in this
dynamic marketplace.
Mr. Speaker, my hat is off to all of those who participated in this
great endeavor.
Mr. PAUL. Mr. Speaker, no one doubts that the government has a role
to play in compensating American citizens who are victimized by
terrorist attacks. However, Congress should not lose sight of
fundamental economic and constitutional principles when considering how
best to provide the victims of terrorist attacks just compensation. I
am afraid that H.R. 3210, the Terrorism Risk Protection Act, violates
several of those principles and therefore passage of this bill is not
in the best interests of the American people.
Under H.R. 3210, taxpayers are responsible for paying 90 percent of
the costs of a terrorist incident when the total cost of that incident
exceeds a certain threshold. While insurance companies technically are
responsible under the bill for paying back monies received from the
Treasury, the administrator of this program may defer repayment of the
majority of the subsidy in order to ``avoid the likely insolvency of
the commercial insurer,'' or avoid ``unreasonable economic disruption
and market instability.'' This language may cause administrators to
defer indefinitely the repayment of the loans, thus causing taxpayers
to permanently bear the loss. This scenario is especially likely when
one considers that ``avoid . . . likely insolvency, unreasonable
economic disruption, and market instability'' are highly subjective
standards, and that any administrator who attempts to enforce a strict
repayment schedule likely will come under heavy political pressure to
be more ``flexible'' in collecting debts owed to the taxpayers.
The drafters of H.R. 3210 claim that this creates a ``temporary''
government program. However, Mr. Speaker, what happens in three years
if industry lobbyists come to Capitol Hill to explain that there is
still a need for this program because of the continuing threat of
terrorist attacks. Does anyone seriously believe that Congress will
refuse to reauthorize this ``temporary'' insurance program or provide
some other form of taxpayer help to the insurance industry? I would
like to remind my colleagues that the federal budget is full of
expenditures for long-lasting programs that were originally intended to
be ``temporary.''
H.R. 3210 compounds the danger to taxpayers because of what
economists call the ``moral hazard'' problem. A moral hazard is created
when individuals have the costs incurred from a risky action subsidized
by a third party. In such a case individuals may engage in unnecessary
risks or fail to take steps to minimize their risks. After all, if a
third party will bear the costs of negative consequences of risky
behavior, why should individuals invest their resources in avoiding or
minimizing risk?
While no one can plan for terrorist attacks, individuals and
businesses can take steps to enhance security. For example, I think we
would all agree that industrial plants in the United States enjoy
reasonably good security. They are protected not by the local police,
but by owners putting up barbed wire fences, hiring guards with guns,
and requiring identification cards to enter. One reason private firms
put these security measures in place is because insurance companies
provide them with incentives, in the form of lower premiums, to adopt
security measures. H.R. 3210 contains no incentives for this private
activity. The bill does not even recognize the important role insurance
plays in providing incentives to minimize risks. By removing an
incentive for private parties to avoid or at least mitigate the damage
from a future terrorist attack, the government inadvertently increases
the damage that will be inflicted by future attacks.
Instead of forcing taxpayers to subsidize the costs of terrorism
insurance, Congress should consider creating a tax credit or deduction
for premiums paid for terrorism insurance, as well as a deduction for
claims and other costs borne by the insurance industry connected with
offering terrorism insurance. A tax credit approach reduces
government's control over the insurance market. Furthermore, since a
tax credit approach encourages people to devote more of their own
resources to terrorism insurance, the moral hazard problems associated
with federally funded insurance is avoided.
The version of H.R. 3210 passed by the Financial Services committee
took a good first step in this direction by repealing the tax penalty
which prevents insurance companies from properly reserving funds for
human-created catastrophes. I am disappointed that this sensible
provision was removed from the final bill. Instead, H.R. 3210 instructs
the Treasury Department to study the benefits of allowing insurers to
establish tax-free reserves to cover losses from terrorist events. The
perceived need to study the wisdom of cutting taxes while expanding the
Federal Government without hesitation demonstrates much that is wrong
with Washington.
In conclusion, Mr. Speaker, H.R. 3210 may reduce the risk to
insurance companies from future losses, but it increases the costs
incurred by American taxpayers. More significantly, by ignoring the
moral hazard problem this bill may have the unintended consequence of
increasing the losses suffered in any future terrorist attacks.
Therefore, passage of this bill is not in the long-term interests of
the American people.
[[Page H8608]]
Mr. GILMAN. Mr. Speaker, I rise today in strong support of H.R. 3210,
the Terrorism Risk Protection Act.
This legislation addresses a critical need of the insurance industry,
that has so far been overlooked by Congress in the wake of the events
of September 11.
It is a common practice for companies that serve as primary insurers
in the property and casualty field to take out secondary policies with
other companies in order to cover themselves against the possibility of
having to make large payouts on future claims.
In the wake of September 11, virtually all of the secondary insurers
have announced that they will no longer cover acts of terrorism when
the policies they have sold come up for renewal, effective January 1,
2002. The insurance industry estimates that approximately 70 percent of
the secondary policies will expire at the end of the current year.
Unless Congress takes immediate action, primary insurers will not be
able to offer coverage against terrorism in their property and casualty
accounts. Under these circumstances any future successful terrorist
attack would have a devastating impact on both the national economy and
the local economy where the attack occurs.
This legislation enlists the Federal Government to serve as a
stabilizing force in the insurance market, as well as a safety net to
cushion the economic effects of future acts of terrorism. Under this
bill, insurers would help create a pool from which funds could be drawn
to help meet future payout contingencies.
In the case where an event causes payouts to exceed $100 million, the
Federal Government would step in and assume 90 percent of the burden
with the remaining 10 percent coming from the industry. A similar
program would be put in place for large companies for an event that
exceeds $20 billion in payout costs.
Mr. Speaker, it is imperative that Congress address this immediate
need to head off what would be a catastrophic blow to the insurance
industry. American businesses need to be reassured that the insurance
industry is both financially sound and able to meet their coverage
obligations in the new terror-prone world, since September 11.
Our country was in the midst of a recession when those barbaric acts
of September 11 took place. We have all witnessed the resulting shock
waves that were sent through the economy. Recent evidence suggests that
we may finally be on the road to economic recovery. The resulting
damage from a future act of terrorism against an uninsured business
sector is too awful to contemplate.
Fortunately, this scenario is easily preventable and we in Congress
must take the necessary steps to ensure that this future does not come
to pass. Our swift passage of H.R. 3210 will serve that purpose.
I therefore strongly urge my colleagues to lend support to this vital
measure.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his
support for H.R. 3210, the Terrorism Risk Protection Act. This
legislation will help ensure that businesses are able to acquire
property and casualty insurance while still providing full taxpayer
protection against terrorist losses.
This Member would like to thank the distinguished Chairman of the
House Financial Services Committee from Ohio (Mr. Oxley) for both
introducing this legislation and for his efforts in moving this
legislation. Additional appreciation is expressed to the distinguished
gentleman from Louisiana (Mr. Baker) who played a crucial role in
drafting this legislation. On most crucial parts of this legislation
there was bipartisan cooperation and assistance led by the ranking
minority member of the Committee, the distinguished gentleman from New
York (Mr. LaFalce).
The uncertainty caused by the terrorist events on September 11 have
resulted in our attention to the possibility of severe future problems
for the insurance industry and the insured, even a crisis, from
additional severe terrorist attacks. To illustrate this, reinsurance
companies provide insurance against massive losses for insurance
companies. Many commercial reinsurance policies need to be renewed by a
December 31 deadline of this year. Since this terrorist attack, many
primary insurance companies, because they cannot receive reinsurance,
have sent notice cancellations to businesses indicating that they will
not receive coverage for losses caused by terrorist activities. If both
small and large businesses are unable to receive insurance coverage for
acts of terrorism by the end of the year, it will contribute to the
further instability of the American economy. Insurance provides a very
important element of the stability needed by businesses to continue
functioning and investing, and for bankers to continue lending to
businesses.
As a member of the House Financial Services Committee, which has
jurisdiction over the important elements of the limited Federal role in
commercial insurance, this Member supports this legislation for the
following two reasons. First, obviously it helps ensure that commercial
insurance continues to be available for businesses--and available at
affordable costs. Second, it provides necessary taxpayer protections
against possible severe terrorist losses to businesses.
Under this legislation, Federal assistance will be provided to those
commercial insurers which have suffered a significant terrorist loss
over a specific dollar threshold. The Secretary of the Treasury will
determine if there has been an industry-wide loss to the commercial
property and casualty insurance industry exceeding $1 billion due to a
terrorist act. In addition, the Secretary of the Treasury can also make
a company-specific triggering determination if industry-wide losses
exceed $100 million and the portion of those losses for the insurer
exceed both 10 percent of the company's capital surplus and net
premiums.
If one of these thresholds is reached, the Federal Government will
provide to each relevant insurance company 90 percent of the amount of
insured terrorism losses minus $5 million. This Federal cost-sharing is
capped at $100 billion.
Unlike the different Senate approaches which are being proposed, the
House legislation requires the Federal assistance to be paid back in
full by the insurance companies who suffered the terrorist loss. Under
H.R. 3210, the relevant insurance companies will be required to pay
assessments back to the Federal Government for up to $20 billion of
Federal assistance over a three year time period. Above this $20
billion threshold, up to $100 billion, in order to recoup the level of
Federal assistance, the Secretary of the Treasury will impose a
commercial policyholder surcharge.
Since the insurance companies are required to pay back the Federal
Government for the exact level of Federal assistance through both
assessments on the industry and/or commercial policyholder surcharges,
this legislation ensures that taxpayers are not liable for the Federal
cost-sharing. Therefore, this legislation is not an insurance company
bailout; it protects the American taxpayer against a big hit while
continuing to maintain insurability against terrorist attacks.
This legislation also protects taxpayers from punitive damages
against insurance companies for terrorist loses in Federal court. Since
the Federal Government is providing assistance to insurance companies
in cases of significant terrorist losses, punitive damages against
insurance companies could result in taxpayer liability. This
legislation does not limit a plaintiff's right to hold a primary
tortfeasor liable for a terrorist act. For my Nebraska constituents, it
is important to note that punitive damages are not allowed under
Nebraska state law in Nebraska state courts.
In conclusion, since this legislation balances the need of businesses
to continue to receive commercial insurance against terrorist acts at
affordable costs, with taxpayer liability protection, this Member urges
his colleagues to support H.R. 3210.
Ms. HARMAN. Mr. Speaker, I rise in reluctant opposition to the
Terrorism Risk Protection Act.
I do not disagree that the business of commercial insurance
underwriting faces difficult times ahead as we confront the threat of
terrorism against our homeland. But we have our priorities backward.
Insurance underwriters are not the only ones facing difficult times.
Since September 11, hundreds of thousands of workers have lost their
jobs because of the attacks and subsequent accelerated economic
slowdown. Indeed, I have met on several occasions with hundreds of
workers in California's 36th District whose livelihoods and futures
were suspended when they were laid off following the attacks.
Many of these workers were directly employed in the aviation
industry, which took a tremendous hit on September 11. Many thousands
more were employed at Los Angeles International Airport and in the
associated hospitality industry, which relies on business travelers and
tourists. Hundreds more were affected as the consequences of September
11 rippled through the local economy.
Mr. Speaker, these individuals and their families are my top
priorities. Last month I introduced legislation to give first
preference to qualified laid-off aviation workers for the new airport
security positions created by the Aviation Security Act. Regrettably,
that bill languishes in the Transportation and Infrastructure
Committee, though 44 of my colleagues recently joined me in writing
Transportation Secretary Norm Mineta requesting that he incorporate
this initiative in the regulations he issues to implement the new
Airline Security Act.
Aiding unemployed workers can no longer take a back seat. Indeed, the
House is still waiting for the Speaker of the House to fulfill the
promise he made at the time of the Airline Bailout Bill to bring to the
floor legislation providing relief to these individuals.
Until Congress and the Administration act to aid these unemployed
workers, I cannot in
[[Page H8609]]
good conscience support a bill that addresses one more industry,
however meritorious their claim.
Ms. SCHAKOWSKY. Mr. Speaker, I rise today in strong opposition to
H.R. 3210, the Terrorism Risk Protection Act, and in support of the
LaFalce substitute to that bill.
Once again, the House is being asked to consider legislation that
purports to address a legitimate public need but which is cloaked in
special interest giveaways that do harm to the public interest.
First, we acted to provide a $15 billion airline bailout that did
nothing to help laid-off airline workers, improve safety or even
guarantee that funds would be reinvested in improving American
airlines. Airline workers are still waiting for unemployment insurance
compensation and health care benefits. The need to help airlines and
their employees after the tragedies of September 11 was legitimate, but
the legislation we passed was a special interest giveaway that failed
to meet that need.
Second, we passed a so-called economic stimulus bill that will do
little to stimulate the economy but instead includes tax breaks for the
wealthy and for giant corporations, including refunds for taxes paid
back to 1986 and incentives to invest overseas. And, again, the needs
of laid-off workers and their families are ignored. We need to enact
economic recovery measures, but the House-passed bill is largely a
package of long-demanded tax breaks that will bring little, if any,
benefit to the vast majority of American families and small businesses.
Today, we are being asked to pass the legislation that not only
provides an unwarranted bailout to the insurance industry but actually
takes away consumer protections by making it extremely difficult for
those injured to seek full compensation. Again, there is a legitimate
concern. Although no one denies that the insurance industry has
sufficient revenues to meet its current obligations, there is a need to
address the decision of reinsurance companies to stop providing
terrorism risk coverage in the future. This problem would seem to
demand a narrow, well-considered approach. But this vehicle has served
as a magnet for companies that are trying to avoid responsibility by
limiting their payout liabilities and by preventing injured consumers
from getting their fair day in court.
As the Washington Post reported today, ``The insurance industry's
lobbying campaign for federal help covering future terrorism claims was
in full swing last month when a group representing Lloyd's of London
investors published a newsletter highlighting the `historic
opportunity' for insurers to make money after the September 11
attacks.'' This is not the history that we want to write here today.
In the event of future terrorist attacks, H.R. 3210 requires that
U.S. taxpayers pay for 90 percent of all claims, including first dollar
losses. It is simply outrageous that, as unemployed workers and their
families are waiting for federal assistance, our first priority should
be to bail out an insurance industry that is sitting on major reserves.
The LaFalce substitute, unlike the underlying bill, would require that
the industry pay a deductible of at least $5 to $10 billion annually.
The LaFalce substitute not only protects U.S. taxpayers, it ensures
that insurance companies will still have incentives to press their
policyholders to act to improve safety and security. That is why groups
like Consumer Federation of America, the National Taxpayers Union, and
Consumers Union oppose H.R. 3210 and support the LaFalce substitute.
Even more disturbing to me than the size of the potential bailout in
H.R. 3210 is the assault on the rights of victims. There is no
justification for taking away the rights of injured consumers or their
families to seek redress through our civil justice system. There is no
justification for immunizing companies from dangerous behavior. Yet,
H.R. 3210 would do just that.
H.R. 3210 would prevent future juries from awarding punitive damages.
These damages are extremely rare and used only where injuries are
caused by recklessly dangerous and irresponsible conduct. Under H.R.
3210, a security firm that hires felons, a building owner who refuses
to put in fire escapes, a construction firm that doesn't meet building
codes, or a company that fails to provide escape procedures for persons
with disabilities would be immunized from punitive damages.
H.R. 3210 also limits a jury's or judge's discretion to award non-
economic damages. If we agree to this provision, we are saying that the
loss of a child or husband and the inability to walk or have children
are injuries that are not worthy of full compensation.
Finally, H.R. 3210 provides a one-sided and unfair limitation on
victims by limiting attorney's fees. Defendants would, of course, be
free to pay their attorneys whatever they wish. But plaintiffs, who
usually rely on a contingency fee system because they lack the funds to
pay up front lawyers' fees, are hampered. As a result, victims may find
it difficult to find qualified attorneys to take what may be
complicated and costly cases to prepare.
Unlike H.R. 3210, the LaFalce substitute leaves our civil justice
system intact. It does not assault the rights of victims. And it leaves
in place the potential for damages that will encourage firms to be as
careful as possible in improving security and contingency plans.
We pray that we will not suffer from future terrorist attacks. But,
as we mourn the victims of September 11, we must not take away the
rights of any future victims or their families. Nor should we reduce
the incentives on the insurance industry and other companies to do
everything possible to prevent terrorist attacks or prepare safety
measures in case they occur. By limiting insurance industry liability,
shielding wrongdoers from liability, and reducing the ability of
victims to recover for their losses, H.R. 3210 would do far more harm
than good. It should be defeated.
Mr. CHAMBLISS. Mr. Speaker, I support H.R. 3210, the Terrorism Risk
Protection Act. We worked hard to make sure that the taxpayers' money
is protected and that we have taken care of the victims of terrorism.
The Terrorism Risk Protection Act is essential to America's economic
security. Right now, we have a problem: small insurers can be
overwhelmed by the cost of a terrorist attack; a major of insurance
contracts will expire at the end of the year, destabilizing our economy
if nothing is done; and currently, insurers have no incentive to
``write in'' terrorism coverage in their policies.
As Members of both parties have repeatedly pointed out, this bill
protects every sector of the economy--every noninsurance worker and
employer--by providing a temporary legislative backstop that will make
it possible for American companies to gain the insurance they need to
continue operating in the post-September 11 environment where threats
of terrorism still exist.
The Terrorism Risk Protection Act is a very pro-taxpayer, pro-
consumer proposal, which provides significant benefits to both
commercial industry and policyholders, while requiring relatively
little regulation.
By passing the Terrorism Risk Protection Act, today we greatly
increase the capacity of insurers to offer terrorism coverage; we
protect small and large policyholders insurers, while retaining
incentives for risk management and efficient claims processing.
However, I do have reservations on expanding the scope of the
punitive damages ban beyond simply the use of government funds by
attaching tort reform language to this legislation. Instead of limiting
punitive damages we should ensure that the wrongdoer bear the financial
burden, not an insurance company or the taxpayer. I am concerned that
the inclusion of punitive damage language would limit victims' rights
by protecting companies that fail to implement appropriate safety
measures or do not act responsibly in the face of credible threats. My
preference would have been to pass a bill without attaching the tort
reform measure.
We have worked hard over the past few days and weeks to avoid the
possibility of any economic disruption that could result from a lack of
available, affordable terrorism insurance. Today, I am proud to say
that we have worked to help provide commercial insurance for terrorism
and strengthen our economy by passing the Terrorism Risk Protection
Act.
Mr. MENENDEZ. Mr. Speaker, we could have and should have a much
stronger bill on the floor, both to protect our economy, and to protect
the victims of terrorist attacks.
Given the extraordinary circumstances, it is reasonable to provide a
Federal ``backstop'' to the insurance industry for terrorist attacks.
Developers, builders, and the people they employ need to know that
insurance is available--otherwise, important projects may come to a
halt, American commerce will be hurt, and jobs will be lost. The
problem is while the Republican bill provides a guarantee to the
insurance industry, it does not in turn require that the industry
provides the insurance when it is needed; the Democratic substitute
does.
We also need to make sure that in the event of an attack, victims can
go after any negligent parties. But the Republican bill severely limits
victims' rights--even in cases where the negligence was willful. That
is not, in my view, a defensible position.
Finally, while we are undertaking this important effort, we should
also be doing much more for the many American workers who have already
lost their jobs.
I support guaranteeing insurance against terrorism is readily
available.
I support full victims' rights.
And it is because of my belief in those principles that I must oppose
final passage, with the hope and trust that these deficiencies can be
fixed in conference.
Mr. MALONEY of Connecticut. Mr. Speaker, I want to urge my colleagues
to support final passage of this important legislation. I want to thank
Ranking Member LaFalce and Congressman Kanjorski for all their hard
work in bringing an economically vital issue to the top of Congress'
agenda.
[[Page H8610]]
Finding a solution to the impending insurance crisis is vital to our
long-term economic security. Unfortunately, the events of September 11
have made a substantial impact on the marketplace and we now face
contracting insurance and reinsurance markets. This tightening could
have a devastating effect on the economy, particularly with regard to
real estate markets, small business lending, and urban development
activities. Without insurance, banks will not lend money to developers,
businesses will be unable to get financing for new projects, and credit
will be scarce as investors will be unwilling to take on the additional
risk of not having insurance. Providing a Federal backstop is critical
to guaranteeing that insurance remains available.
Unfortunately, the bill before us today contains some very troubling
provisions that would weaken our legal system of mutual responsibility.
I want to make it clear that I will continue working to remove these
overly broad and extreme provisions from this legislation. However, as
insurance is the linchpin of our Nation's economic stability, we must
act on this important issue. Our economy depends on it.
I look forward to working with my colleagues through conference as
this bill moves forward. I am committed to developing a final
legislative product that will provide our economy with the stability
that insurance guarantees, without weakening our legal system of mutual
responsibility.
Mr. BLUMENAUER. Mr. Speaker, I rise in opposition to this bill. I
commend the Financial Services Committee on their hard work to reach a
compromise on this important issue. To maintain stability within the
insurance industry and the economy as a whole, it is essential that the
Federal Government provide a backstop for losses due to potential acts
of terrorism. It is too bad the Republican leadership and their Rules
Committee are undercutting this work.
I will not vote for a bill in which the democratic process has once
again been subverted in favor of a partisan maneuver. It risks
needlessly delaying important relief that we could approve and have on
the President's desk in a matter of hours. In fact, this is a
continuation of a pattern that's moving beyond partisanship to a point
where it is reckless. These bills have been twisted beyond recognition
of any solution reached by the original bill. First it was the Airline
Bailout, then the PATRIOT Act which passed out of the Judiciary
Committee unanimously only to be substituted with a Republican
alternative. The pattern continued with the Economic Stimulus package
and the Airline Security bill. It is unconscionable that the Republican
leadership continue to act in such a partisan manner to delay this
legislation when it is critical that Congress act quickly and in a
united fashion to stabilize our insurance industry and assure help to
those in dire need.
H.R. 3210, as amended in the Rules Committee, attempts to force
adoption of extraordinarily controversial changes in legal procedures
that have nothing to do with preserving a market for terrorism
insurance coverage. The end result is that the rights of victims and
their families to recover fair compensation would be greatly limited in
any future terrorist related incidents.
For instance, the bill seeks to ban punitive damages, which would
shield all defendants, not just insurers, even those who had been
criminally negligent. As an example, this bill would protect a building
owner from paying punitive damages who, despite numerous citations and
warnings, refused to install emergency lighting and escape routes in
his building. Residents and families of residents injured or killed
during a terrorist attack as a result of the owner's disregard for
State or local safety codes should be allowed to pursue their claims to
the full extent of the law. The bill also limits the ability of victims
to receive awards for noneconomic damages. These issues have no place
in this urgent terrorism insurance bill. Because the Republican
leadership will not allow a vote on a clean bill, I have no choice but
to vote no. I will not support the continued actions of the Republican
leadership to undercut the committee process that is essential to
effective solutions.
Mr. BAKER. Mr. Speaker, as chairman of the House Subcommittee on
Capital Markets, Insurance, and Government-Sponsored Enterprises, I
rise in strong support of the bipartisan Terrorism Risk Protection Act.
I also wish to thank Financial Services committee Chairman Oxley for
his leadership on this issue and to recognize the efforts of committee
and subcommittee Ranking Members LaFalce and Kanjorksi.
While economic uncertainty can lead to stock market volatility and
wide fluctuations in value--a phenomenon we are now witnessing daily--
uncertainty in the operation of a business can be downright halting or
fatal. This is why insurance plays such a vital role in our economy,
providing security in calamity and the promise of liquidity necessary
for the smooth functioning of the wheels of commerce.
Fortunately, property-and-casualty insurers were able to cover
obligations for the estimated $40 billion in damages related to
September 11. But that may not be the case should any subsequent and
comparably costly events take place. Worse still, the availability and
affordability of terrorism insurance itself will become increasingly
less likely. The primary cause for the terrorism coverage crunch is the
fact that reinsurance companies, which back up the insurers by helping
them spread risk, say they will not renew terrorism-related coverage by
December 31, when some 70 percent of policies expire.
Insurers and reinsurers cannot underwrite infinite risks with finite
capital. Without the ability to spread risk through reinsurers,
insurance companies face constraints against covering businesses
against acts of terrorism. Here's the result, as one magazine recently
put it: ``With no coverage, lenders won't lend, builders won't build,
and business will grind to a halt.''
With an already weakened economy, many in Congress understand that,
like it or not, the Federal Government must take action quickly to
avert such a systemic catastrophe. But there have been differences over
the scope and form of this government intervention in the marketplace,
and, it now appears, over just how urgently action is needed.
The Financial Services Committee overwhelmingly passed the House's
legislative response, H.R. 3210. Today I come before you to impress
upon you the need for passage of this important bill and why, on three
points in particular, it will be important for us to maintain the
integrity of the bill.
Time is of the essence. Commercial property and casualty insurance is
usually written on a 1- or 2-year basis, with approximately 70 percent
of reinsurance contracts up for renewal on January 1, 2002. The
potential unavailability of terrorism risk coverage for businesses
comes at precisely the time of greatest demand for the insurance.
Moreover, insurance coverage is almost universally a requirement of any
commercial lending contract. Lenders will simply not provide financing
for new or existing construction without certainty that the properties
and businesses that they are funding have adequate insurance to protect
the lenders' investment. Thus, the lack of available insurance for
terrorism risk has adverse consequences that would spread throughout
the entire economy and stifle its growth. There is a high probability
that the economy as a whole would suffer tremendously without
meaningful and affordable terrorism coverage.
To say that these policies expire on December 31 is not to say that
we, as policymakers, have until that time to take decisive action. In
fact, in many cases we have already crossed the threshold into that
time when businesses begin their search and make their arrangements to
secure coverage for next year. Even under normal circumstances this
process, in itself, takes time, typically a month or even more. We have
worked closely with the Financial Services Committee Democrats to
address many of their concerns regarding the insurance mechanism
established by the bill. Furthermore, we have cooperated with the other
committees of jurisdiction, specifically, the Judiciary and Ways
and Means Committees to ensure that this legislation represents the
best efforts of this body as a whole. I believe that the Armey bill
introduced today reflects this bipartisan achievement.
Unfortunately, the other Chamber of Congress has not even begun
serious consideration of this issue. Already, with each passing day of
congressional inactivity in providing assistance for the affordability
and availability of terrorism insurance, we run the risk of being held
accountable, and deservedly so, for fiddling while Rome burned.
We must limit government exposure to actual losses and provide timely
and efficient adjudication of claims. Acts of terrorism give rise to
very unique sets of facts and a complexity of interested parties that
is uncommon in tort law. It is essential that the administration of the
program established by this legislation is performed in a consistent
and timely manner. Additionally, the exposure of the Federal Government
as an insurer for anything other than actual losses should be avoided.
To these ends this bill creates an exclusive Federal cause of action
and limits the venues in which claims can be brought. We do not want to
see a situation like the 1993 World Trade Center bombing where cases
are just now going to trial.
H.R. 3210 also prohibits claims for punitive damages arising out of
terrorist acts and does not allow joint and several liability for
noneconomic damages caused by terrorist acts.
The sovereign immunity provisions of this bill will help ensure the
fair and prompt distribution of the enormous public and private
resources that would be needed to respond to terrorist acts of any
magnitude.
We must maintain provisions of repayment of taxpayer dollars. Unlike
all other proposals,
[[Page H8611]]
H.R. 3210 protects taxpayers, requiring insurers, when they're again
able to stand on their own two feet, to pay back over time whatever
taxpayer dollars they received during their short-term time of need.
Without this I personally don't see how any proposal could be called
anything but a bailout--an open checkbook, drawn out of taxpayer
pockets.
Paying back government assistance is neither a liberal nor a
conservative concept. Or more precisely, it's both liberal and
conservative, because it values common sense and, above all, our common
concerns of fairness for both consumers and taxpayers--two groups
rarely, if ever, afforded the opportunity to skip out on their bills.
Not surprisingly, both the Consumer Federation of America and the
Citizens Against Government Waste, two prominent grass-roots advocacy
groups, have come out in support of the ``loan-based'' over the
``giveaway'' approach to the insurance industry.
Changes in the Tax Code are our only mechanism to provide an exit
strategy for taxpayers. Again, unlike other proposals, our bill points
toward how--not just when--the Federal Government can end its market
intervention. It includes a study of tax-free reserving of insurance
funds for terrorism risk to assist the private market that, at the end
of the day, will be made healthier, stronger, and more independent than
it was when we began.
The reason we're in this bind to begin with, remember, is that
reinsurance companies, mostly located offshore in Europe, will no
longer make their pool of resources available for backing terrorism
insurers. In the long run, the strongest answer to the reinsurance
vacuum, and the surest way to avoid having the government serving that
function indefinitely, is to take away the barriers that keep American
insurers from filling it themselves. We can accomplish this quite
easily by simply deferring taxation on reserves that insurance
companies can set aside and build up exclusively for protection against
future terrorist attacks.
Hardly a ``tax break'' for insurance companies, which wouldn't be
able to use the money for any other purpose, it would serve as a
catalyst and incentive for an industry to end its own dependence on
government. What we certainly don't need is a situation in which
taxpayers unendingly subsidize an industry while it continues posting
very healthy profits.
And, if we have a plan that provides market stability without simply
giving away the taxpayers' money--one that temporarily backs insurers
without indefinitely bailing them out--what else, really, do we need?
Mr. KNOLLENBERG. Mr. Speaker, I would like to commend Chairman Oxley
and Subcommittee Chairman Richard Baker for their hard work on this
legislation.
As a former insurance agent and counselor, I understand the
challenges the insurance industry faces after the tragic events of
September 11. I believe this bill moves us in the right direction to
reach a solution before the end of the year when most of the current
policies expire.
Let's be clear--we are not bailing out the insurance industry. But we
must be equally clear that, without action, companies and individuals
will face skyrocketing premiums or have to buy policies that do not
cover terrorist events. No action risks further harm to our economy.
This bill provides a federal risk-sharing loan program to ensure the
liquidity to the industry. The federal government will pay 90 percent
of insurance claims once triggered by a terrorist event costing over
$100 million. However, it also provides flexibility to help smaller
companies who take a significant loss but do not reach that trigger
amount. These loans will be repaid over time by the industry, providing
assistance but not a bailout. The loan program sunsets after 1 year so
that Congress can revisit any unforeseen consequences of this bill and
make further changes.
I think this bill is a good starting point, and we must get started.
I urge my colleagues to pass this legislation and settle our
differences with the Senate in Conference quickly so we can get
something to the President before the end of the year.
Mr. ENGEL. Mr. Speaker, I rise today in support of the effort to
provide the insurance industry a helping hand in the aftermath of the
September 11th attacks. The insurance industry estimates that it will
have approximately $60 billion in claims as a direct result of these
events. And though the industry has the available capital to cover
these claims now, payment on future claims are in grave doubt. In fact,
many insurance companies are considering dropping this product
altogether. The damage to our Nation's economy if that were to happen
would be grievous. Construction companies and building owners would not
be able to get adequate insurance, which in turn would prevent them
from being able to get access to bonds to build and renovate their
structures.
Yet, what does the Majority bring to the floor today? Is it a bill
that helps the insurance industry? Somewhat. What else does it do? The
Republican majority is using this as a vehicle to advance one of its
long held goals--tort reform. But, instead of having a full and just
debate on tort reform, they are slipping provisions into a necessary
and important bill.
And what do they do with these provisions? They once again tell the
American people that the majority party believes people with lots of
money are more important that the average American. This bill prevents
non-economic damages from being awarded. If someone loses a spouse in a
terrorist attack, all one can expect is remuneration for lost wages.
But what about the other losses--such as companionship, emotional
support, and parenting? Sorry, the majority says, you are out of luck
there.
The insurance industry came to Congress with a sensible idea. It
asked us to adopt a system similar to that of Britain by creating a
terrorism reinsurance pool under which insurers voluntarily buy
reinsurance coverage from the government, with pooled premiums being
used to cover terrorism claims. Sounds pretty sensible to me. Instead,
this bill creates a loan program--which might help, but certainly isn't
the easiest or cleanest solution. If we can provide millions each year
for the National Flood Insurance program, why can't we do the same for
a terrorism reinsurance program.
Finally, my colleagues, I would like to take this opportunity to
mention one thing that has come to my attention regarding the clean up
of ground zero. The construction companies doing the clean up and
removal presently have no indemnity for their work. In fact, they are
still working without a written contract. Their workers are being
exposed to an extremely hazardous working environment. If we are to
provide liability protections to the airline industry and the building
owners, I urge my colleagues to move immediately to provide indemnity
protections to the construction companies. If we don't, these companies
are in danger of financial ruin and future incidents of terrorism will
have a very different response from such companies.
So, my colleagues, let's get serious about solving these problems.
Vote no on this bill and support real reinsurance reform.
Mrs. CHRISTENSEN. Mr. Speaker, I rise in support of the beleaguered
workers of this country who have been doubly affected by both the
recession that the experts now say that we have been in since last
spring and the ripple effects of September 11.
According to the Department of Labor, 415,000 Americans lost their
jobs in the month of October. Eight hundred people in my very small
district of the U.S. Virgin Islands have lost their jobs in our tourism
dependent district--an increase of over 150 percent over last year.
Travel agents, airline workers, taxi drivers, chefs and hotel service
employees will now face the holidays without jobs, without health and
other benefits in an economy that will be slow to absorb them any where
else.
Mr. Speaker, we were right to provide relief for the airlines, but we
will be remiss if we do not see the individual lives that are affected
by the loss of jobs in the downturn of our once thriving economy. It is
also right that we provide assistance to the insurance industry in the
wake of the September 11th attack. I oppose the Republican Leadership
terrorism insurance relief bill, though because it added unnecessary
and unrelated provisions to advance their partisan agenda on tort
reform. I support the LaFalce Democratic substitute, which avoids
dramatic premium increases for businesses and consumers but also
insures that industry assumes their appropriate financial
responsibility.
Mr. Speaker, let's do right by the working men and women of our
country. Let's provide relief that will help them weather this storm
until our economy rebounds.
Mr. SCOTT. Mr. Speaker, I rise in opposition to H.R. 3210.
H.R. 3210, in its present form, contains a litany of tort reform
provisions that are necessary to achieve the basic purpose of this
bill. This bill began as a bipartisan effort to provide a mechanism for
addressing the insurance risk in connection with terrorist acts, but
has ended up as yet another vehicle to enact a one-sided, tort reform
agenda, which has failed every time it has been subjected to the
regular, deliberative legislative process.
Under this bill, all victims of a future terrorist act will be
required to bring their action in federal court. Once the Secretary of
the Treasury makes a determination that a ``terrorist act'' occurred,
then all claims with any relation to that terrorist act must be brought
in federal court. There would be no opportunity for a victim to choose
to bring an action in state court, even though the state court may
otherwise have jurisdiction over the matter and even though the state
court may be more convenient or more efficient. This process will cause
unnecessary complications related to the statute of limitations, if
suit is filed in the wrong court, and will present unnecessary
questions related to what ``related to terrorism'' means in those cases
in which terrorism might have a vague connection to the cause of
action. For example, are cases involving failure to perform
[[Page H8612]]
in a contract dispute ``related to terrorism'' if the airline
disruption after September 11 is alleged to be a factor? And if a
questionable ``related to terrorism'' defense is offered, must the case
be remanded to federal court?
Worse, this bill contains radical liability limitations that are not
even limited to cases involving insurance coverage and includes other
provisions that bear little relationship to the issue of insurance. For
example, future victims of terrorism would be precluded from collecting
punitive damages--even in cases where it can be shown that the most
outrageous acts of gross negligence or intentional misconduct
contributed to the act of terrorism.
This bill would also severely limit the ability of the victims of
terrorism to collect non-economic damages. Non-economic damages include
physical impairment, disfigurement and mental anguish, and these will
be denied, whether insurance is available or not.
Further, this bill puts extreme and unprecedented limits on
plaintiff's attorney's fees. In the bill which purports to assist
insurance companies, it is important to note that insurance companies
do not pay plaintiff's attorney's fees; those fees are paid by the
plaintiff out of the recovery. Therefore, the amount the insurance
company pays is not effected by the size of the attorney's fee. The
only effect this provision might have on the insurance company is to
deny some plaintiffs the ability to hire an attorney to bring a
meritorious claim. Only meritorious claims will be effected, because
most attorneys get nothing, if there is no recovery. It is also
important to note that the bill does not limit defense attorney's
fees--which the insurance companies do pay.
There is no good reason for including these extreme tort reform
provisions that will limit the rights of victims in a bill which is
supposed to be designed to address the capacity of insurers to provide
coverage for risks from terrorism. I therefore urge my colleagues to
vote against H.R. 3210 in its current form.
Mr. BENTSEN. Mr. Speaker, regrettably I rise today in opposition to
H.R. 3210, the Terrorism Risk Protection Act. I am very concerned about
tort provisions that were added to the bill by the House Rules
Committee. As an original cosponsor of H.R. 3210, I am disappointed
that the House Rules Committee acted to rewrite this bill.
I strongly believe that we must act to ensure that terrorism
insurance is available for our nation's property owners. Without such
coverage, we endanger our nation's economy. With the current recession
which we are experiencing, I do not believe that we should jeopardize
our economy. Today, many property owners are receiving property
insurance renewal notices which specifically exclude terrorism
coverage. For many property owners, failure to purchase terrorism
insurance may jeopardize their credit and result in devastating actions
by their creditors.
I am disappointed that the underlying bill includes tort reform
provisions which are fatally flawed. As a sponsor of an amendment to
the liability provisions in this bill, I am concerned that the new
liability provisions will hurt victims of terrorism and are not
necessary for this bill. The underlying bill was introduced at the last
minute with many onerous provisions which are not reasonable and fair.
First, the liability section will preclude spouses of victims from
seeking non-economic damages when a spouse is lost to a terrorism
attack. I do not believe that the House of Representatives should be
limiting spouses of victims to collect only lost wages and no other
reparations. This is an unprecedented effort to cause economic
hardships for victims of terrorism.
I am disappointed that the House of Representatives will have to vote
today on the underlying bill which has been rewritten since it was
reported from the House Financial Services Committee. As a senior
member of the House Financial Services Committee, I offered a
critically important amendment to the liability section of this bill.
The Bentsen amendment would have protected the taxpayers by ensuring
that the government nor the insurance policy could be held liable for
either punitive damages or non-economic damages related to this
coverage. I believe it is proper to provide this protection for the
taxpayers. In order to protect consumers, my amendment ensures that
consumers can seek both punitive and non-economic damages from parties
who have committed a gross negligent act related to terrorist attacks.
I believe that the Bentsen amendment is fair and reasonable. For
example, an airline security firm should be responsible for its
employees who allow a terrorist to knowingly pass through a security
check. I also want to highlight that my amendment on tort reform was
approved on a bipartisan basis and represented the consensus of our
committee on this issue. I am disappointed that the House Rules
Committee acted to eviscerate my language.
I also want to express my support for the underlying loan structure
in the underlying bill. In fact, as an original cosponsor of H.R. 3210,
I cosponsored this bill in part because of the loan structure included
in it. I also strongly supported efforts to keep this program as a
temporary program. During consideration of this bill, I offered an
amendment that requires that this program can only be renewed on a
yearly basis. In addition, my amendment requires the Administration to
provide a report to Congress detailing why this program has been
renewed. I believe that these accountability provisions are necessary
to ensure that this program is established for a short time period. I
believe that the reinsurance market for terrorism coverage will recover
and we should act prudently.
Ms. ROYBAL-ALLARD. Mr. Speaker, I rise in opposition to H.R. 3210,
the Terrorism Risk Protection Act.
It is true that certain key industries, including insurance
companies, have been negatively impacted by the tragic events of
September 11 and legitimately deserve assistance from the American
public.
While the bill before us today provides some genuinely needed relief
for the insurance industry, unfortunately it fails in other important
ways.
First, instead of keeping the bill focused on providing a federal
``safety net'' for insurance companies in the wake of the September
11th attacks, the Republican leadership has included provisions that
limit the rights of victims to pursue legal action as a result of any
future terrorist attacks. These last-minute tort reform provisions
include a complete ban on punitive damages, limits on non-economic
damages, and caps on attorney's fees. These restrictions are not only
unwarranted and unrelated to this bill, but they will severely limit
the ability of victims to obtain any reimbursement they are due as a
result of negligence. These provisions were not included in the bi-
partisan bill approved by the Financial Services Committee and are
completely unnecessary and unrelated to the insurance relief provided
by the bill.
Next, I believe that in granting government assistance to any sector,
Congress must take positive steps to ensure that these companies follow
responsible and fair business practices by providing affordable,
quality services to the American taxpayer.
In the case of the insurance industry, companies have a
responsibility to make insurance coverage available at affordable rates
to those who need it. History indicates that it is common for insurers
to increase the cost of policies after major catastrophes, whether
these are weather-related, riot-related or other events. Therefore it
is conceivable that insurers may use the tragic events of September 11
to raise rates, withdraw from some markets, and try to shift risk onto
the government.
As data from the California Department of Insurance shows, lack of
affordable insurance is a serious problem for many communities,
especially low and moderate-income communities and communities of
color, such as in my Los Angeles-based Congressional District. When
uninsured or under-insured buildings suffer damage in these
communities, oftentimes they are not repaired or replaced. As a result,
the property owner suffer financial losses and the community is exposed
to social and economic instability. Homeowners, renters and business
owners are all at risk.
Since the taxpayers are assuming the risk to prop up the insurance
industry, Congress must put into place protections to insure that
Americans have access to affordable, high quality insurance coverage
for their homes and businesses.
Establishing requirements for insurance companies to publicly report
the availability and affordability of their policies is a key component
of these protections. Such public disclosure will inform Congress and
the American people about the fairness of various insurance policies.
In addition, the insurance industry should be required to invest in
low-income neighborhoods and minority communities. Because of the
Community Reinvestment Act, banks have been required to invest in low-
income neighborhoods and have found significantly financial
opportunities in these communities. Investments such as these are
particularly critical to struggling communities in the current
difficult economically times. However, as the data from the California
Department of Insurance and the California Reinvestment Committee
shows, insurers have essentially balked at making significant
contributions and investments in these communities. I am submitting
this data for inclusion in the Record.
Mr. Speaker, as I have stated, the bill before us is fatally flawed.
It insures that the insurance industry is protected while leaving too
many Americans with little or no assurance of either affordable,
quality insurance coverage or corporate investment in their
communities.
I urge my colleagues to reject this flawed bill and pass a measure
that insures protection for the American public not just the insurance
industry.
California Reinvestment Committee--Insurance Investment Issues
In 1999, Californians paid $81 billion in insurance
premiums. Of those premiums, $36
[[Page H8613]]
billion were for property and casualty insurance coverage.
According to the 1998 California Insurance Commissioner's
Report on Underserved Communities, only 6.43 percent of 1997
California property and casualty insurance policies were in
the 138 underserved zip codes identified by the Department
which represent 15 percent of the state's population. (This
is the most recent report available.)
In 2000, the California Organized Investment Network
(COIN), an investment unit of the California Department of
Insurance designed by insurers, had only $108 million in
investments, which represent 0.13 percent of 1999 insurance
premiums paid by Californians.
In 2000, COIN had less than $5 million in insurance
investments, which represent 0.01 percent of California
insurance premiums.
Mr. OXLEY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Nethercutt). All time for general debate
on the bill has expired.
Amendment in the Nature of a Substitute Offered by Mr. LaFalce
Mr. LaFALCE. Mr. Chairman, I offer an amendment in the nature of a
substitute.
The CHAIRMAN. The Clerk will designate the amendment in the nature of
a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr.
LaFalce:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Terrorism
Risk Protection Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Authority of Secretary of the Treasury.
Sec. 4. Submission of premium information to Secretary.
Sec. 5. Initial and subsequent triggering determinations.
Sec. 6. Federal cost-sharing for commercial insurers.
Sec. 7. Assessments.
Sec. 8. Terrorism loss repayment surcharge.
Sec. 9. Administration of assessments and surcharges.
Sec. 10. Application to self-insurance arrangements and offshore
insurers and reinsurers.
Sec. 11. Requirement to provide terrorism coverage.
Sec. 12. State preemption.
Sec. 13. Consistent State guidelines for coverage for acts of
terrorism.
Sec. 14. Consultation with State insurance regulators and NAIC.
Sec. 15. Study of potential effects of terrorism on life insurance
industry.
Sec. 16. Railroad and trucking insurance study.
Sec. 17. Study of reinsurance pool system for future acts of terrorism.
Sec. 18. Definitions.
Sec. 19. Covered period and extension of program.
Sec. 20. Regulations.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that--
(1) the terrorist attacks on the World Trade Center and the
Pentagon of September 11, 2001, resulted in a large number of
deaths and injuries, the destruction and damage to buildings,
and interruption of business operations;
(2) the attacks have inflicted possibly the largest losses
ever incurred by insurers and reinsurers in a single day;
(3) while the insurance and reinsurance industries have
committed to pay the losses arising from the September 11
attacks, the resulting disruption has created widespread
market uncertainties with regard to the risk of losses
arising from possible future terrorist attacks;
(4) such uncertainty threatens the continued availability
of United States commercial property and casualty insurance
for terrorism risk at meaningful coverage levels;
(5) the unavailability of affordable commercial property
and casualty insurance for terrorist acts threatens the
growth and stability of the United States economy, including
impeding the ability of financial services providers to
finance commercial property acquisitions and new
construction;
(6) in the past, the private insurance and reinsurance
markets have shown a remarkable resiliency in adapting to
changed circumstances;
(7) given time, the private markets will diversify and
develop risk spreading mechanisms to increase capacity and
guard against possible future losses incurred by terrorist
attacks;
(8) it is necessary to create a temporary industry risk
sharing program to ensure the continued availability of
commercial property and casualty insurance and reinsurance
for terrorism-related risks;
(9) such action is necessary to limit immediate market
disruptions, encourage economic stabilization, and facilitate
a transition to a viable market for private terrorism risk
insurance; and
(10) terrorism insurance plays an important role in the
efficient functioning of the economy and the financing of
commercial property acquisitions and new construction and,
therefore, the Congress intends to continue to monitor,
review, and evaluate the private terrorism insurance and
reinsurance marketplace to determine whether additional
action is necessary to maintain the long-term stability of
the real estate and capital markets.
SEC. 3. AUTHORITY OF SECRETARY OF THE TREASURY.
The Secretary of the Treasury shall be responsible for
carrying out a program for financial assistance for
commercial property and casualty insurers, as provided in
this Act.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO SECRETARY.
To the extent such information is not otherwise available
to the Secretary, the Secretary may require each insurer to
submit, to the Secretary or to the NAIC, a statement
specifying the net premium amount of coverage written by such
insurer under each line of commercial property and casualty
insurance sold by such insurer during such periods as the
Secretary may provide.
SEC. 5. INITIAL AND SUBSEQUENT TRIGGERING DETERMINATIONS.
(a) In General.--For purposes of this Act, a ``triggering
determination'' is a determination by the Secretary that--
(1) an act of terrorism has occurred during the covered
period; and
(2) the industry-wide losses resulting from such occurrence
or from multiple occurrences of acts of terrorism all
occurring during the covered period, exceed $100,000,000.
(b) Determinations Regarding Occurrences.--The Secretary,
after consultation with the Attorney General of the United
States and the Secretary of State, shall have the sole
authority which may not be delegated or designated to any
other officer, employee, or position, for determining
whether--
(1) an occurrence was caused by an act of terrorism; and
(2) an act of terrorism occurred during the covered period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSURERS.
(a) In General.--Pursuant to a triggering determination,
the Secretary shall provide financial assistance to
commercial insurers in accordance with this section to the
extent provided under this section to cover eligible insured
losses resulting from acts of terrorism, which shall be
repaid in accordance with subsection (g).
(b) Industry Obligation Amount.--For purposes of this
section, the industry obligation amount in connection with a
triggering determination is the following amount:
(1) Initial covered period.--In the case of a triggering
determination occurring during the covered period specified
in section 19(a), the difference between--
(A) $5,000,000,000; and
(B) the aggregate amount of industry-wide losses resulting
from the triggering events involved in any triggering
determinations preceding such triggering determination.
(2) Extended covered period.--If the Secretary exercises
the authority under section 19(b) to extend the covered
period, in the case of a triggering determination occurring
during the portion of the covered period consisting of such
extension, the difference between--
(A) $10,000,000,000; and
(B) the aggregate amount of industry-wide losses resulting
from the triggering events involved in any triggering
determinations preceding such triggering determination.
(c) Eligible Insured Losses.--For purposes of this section,
the term ``eligible insured losses'' means, with respect to a
triggering determination, any insured losses resulting from
the triggering event involved that are in excess of the
industry obligation amount for such triggering determination.
(d) Amount of Financial Assistance.--Subject to subsection
(e), with respect to a triggering determination, financial
assistance shall be made available under this section to each
commercial insurer in an amount equal to 90 percent of the
amount of the eligible insured losses of the insurer as a
result of the triggering event involved.
(e) Limitations.--
(1) Aggregate limitation.--The aggregate amount of
financial assistance provided pursuant to this section may
not exceed $100,000,000,000.
(2) Notice to congress.--The Secretary shall notify the
Congress if the amount of financial assistance provided
pursuant to this section reaches $100,000,000,000 and the
Congress shall determine the procedures for, and the source
of, any additional payments of financial assistance to cover
such additional insured losses.
(3) Default on assessments and surcharges.--The Secretary
may establish such limitations as may be necessary to ensure
that payments under this section in connection with a
triggering determination are made only to commercial insurers
that are not in default of any obligation under this section
or section 7 to pay assessments or under section 8 to collect
surcharges.
(f) Annual Limit on Individual Insurer Liability.--
(1) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Annual insurer limit.--The term ``annual insurer
limit'' means, with respect to a commercial insurer and a
program year, the amount equal to 7 percent of the aggregate
[[Page H8614]]
premium amount of all commercial property and casualty
insurance coverage, written by such insurer during the
calendar year preceding such program year, under all lines of
commercial property and casualty insurance.
(B) Limitable losses.--The term ``limitable losses'' means,
for any program year, the industry-wide losses in such
program year that do not exceed the dollar amount specified
in subsection (b)(1)(A) or (b)(2)(A), as applicable to the
program year.
(C) Program year.--The term ``program year'' means the
period beginning on the date of the enactment of this Act and
ending on January 1, 2003. If the Secretary extends the
covered period pursuant to section 20(b), each calendar year
(or portion thereof) covered by such extension shall be a
program year for purposes of this subsection.
(2) Triggering of industry assessments.--If, for any
program year, the amount of the limitable losses for such
program year that are incurred by any single commercial
insurer exceed the annual insurer limit for the commercial
insurer for such program year, the Secretary shall apportion
the amount of such excess limitable losses pursuant to
assessments under paragraph (3).
(3) Industry assessments to cover losses exceeding loss
limit.--For each program year, the Secretary shall, as soon
as practicable, determine the aggregate amount of excess
limitable losses described in paragraph (2), for all
commercial insurers. Subject to paragraph (4), the Secretary
shall assess, to each commercial insurer not described in
paragraph (2), a portion of such aggregate limitable losses
based on the proportion, written by each such commercial
insurer, of the aggregate written premium for the calendar
year preceding such program year.
(4) Operation of annual insurer limit to assessments.--The
sum of the amount of limitable losses incurred by a
commercial insurer in a program year and the aggregate amount
of an assessment under this subsection to such insurer may
not in any case exceed the annual insurer limit for the
insurer.
(5) Notice.--Upon determining the amount of the assessments
under this subsection for a program year, the Secretary
shall, as soon as practicable, provide written notice to each
commercial insurer that is subject to an assessment of the
amount of the assessment and the deadline pursuant to
paragraph (6) for payment of the assessment.
(6) Payment.--Each commercial insurer that is subject to an
assessment under this subsection shall pay to the Secretary
the amount of the assessment not later than 60 days after the
Secretary provides notice of the assessment under paragraph
(5).
(7) Distribution of assessment amounts.--Upon receiving
payment of assessments under this subsection, the Secretary
shall promptly distribute all such amounts among commercial
insurers described in paragraph (2), based on limitable
losses incurred in excess of the annual insurer limits for
such insurers. The Secretary may take such actions, including
making such adjustments and reimbursements, as may be
necessary to carry out the purposes of this subsection.
(g) Repayment.--Financial assistance made available under
this section shall be repaid through assessments under
section 7 collected by the Secretary and surcharges remitted
to the Secretary under section 8. Any such amounts collected
or remitted shall be deposited into the general fund of the
Treasury.
(h) 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.
(i) Finality of Determinations.--Any determination of the
Secretary under this section shall be final, and shall not be
subject to judicial review.
(j) Emergency Designation.--Congress designates the amount
of new budget authority and outlays in all fiscal years
resulting from this section as an emergency requirement
pursuant to section 252(e) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 901(e)). Such
amount shall be available only to the extent that a request,
that includes designation of such amount as an emergency
requirement as defined in such Act, is transmitted by the
President to Congress.
SEC. 7. ASSESSMENTS.
(a) In General.--In the case of a triggering determination,
each commercial insurer shall be subject to assessments under
this section for the purpose of repaying a portion of the
financial assistance made available under section 6 in
connection with such determination.
(b) Aggregate Assessment.--Pursuant to a triggering
determination, the Secretary shall determine the aggregate
amount (if any) to be assesseed under this section among all
commercial insurers, which shall be equal to the lesser of--
(1) the difference between--
(A) $20,000,000,000; and
(B) the dollar amount specified in paragraph (1)(A) or
(2)(A) of section 6(b), as applicable for such triggering
determination; and
(2) the amount of financial assistance paid under section 6
in connection with the triggering determination.
(c) Method and Timing.--
(1) In general.--The aggregate assessment amount in
connection with a triggering determination shall be assessed
through one or more, as may be necessary pursuant to
paragraph (3), assessments under this section.
(2) Timing.--An assessment under this section in connection
with a triggering determination shall be imposed only upon
the expiration of any 12-month period beginning after such
determination during which no other assessments under this
section have been imposed.
(3) Limitation.--The aggregate amount of any assessments
imposed under this section on any single commercial insurer
during any 12-month period shall not exceed the amount that
is equal to 3 percent of the net premium for such insurer for
such period.
(d) Allocation.--The portion of the aggregate amount of any
assessment under this section that is allocated to each
commercial insurer shall be based on the ratio that the net
premium written by such commercial insurer during the year
during which the assessment is imposed bears to the aggregate
written premium for such year, subject to section 9 and the
limitation under subsection (c)(3) of this section.
(e) Notice and Obligation to Pay.--
(1) Notice.--As soon as practicable after any triggering
determination, the Secretary shall notify each commercial
insurer in writing of an assessment under this section, which
notice shall include the amount of the assessment allocated
to such insurer.
(2) Effect of notice.--Upon notice to a commercial insurer,
the commercial insurer shall be obligated to pay to the
Secretary, not later than 60 days after receipt of such
notice, the amount of the assessment on such commercial
insurer.
(3) Failure to make timely payment.--If any commercial
insurer fails to pay an assessment under this section before
the deadline established under paragraph (2) for the
assessment, the Secretary may take either or both of the
following actions:
(A) Civil monetary penalty.--Assess a civil monetary
penalty pursuant to section 9(d) upon such insurer.
(B) Interest.--Require such insurer to pay interest, at
such rate as the Secretary considers appropriate, on the
amount of the assessment that was not paid before the
deadline established under paragraph (2).
(f) Administrative Flexibility.--
(1) Adjustment of assessments.--The Secretary may provide
for or require estimations of amounts under this section and
may provide for subsequent refunds or require additional
payments to correct such estimations, as appropriate.
(2) Deferral of contributions.--The Secretary may defer the
payment of part or all of an assessment required under this
section to be paid by a commercial insurer, but only to the
extent that the Secretary determines that such deferral is
necessary to avoid the likely insolvency of the commercial
insurer.
(3) Timing of assessments.--The Secretary shall make
adjustments regarding the timing and imposition of
assessments (including the calculation of net premiums and
aggregate written premium) as appropriate for commercial
insurers that provide commercial property and casualty
insurance on a non-calendar year basis.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) Determination of Imposition and Collection.--
(1) In general.--If, pursuant to a triggering
determination, the Secretary determines that the aggregate
amount of financial assistance provided pursuant to section 6
exceeds the amount determined pursuant to section 7(b)(1),
the Secretary shall consider and weigh the factors under
paragraph (2) to determine the extent to which a surcharge
under this section should be established.
(2) Factors.--The factors under this paragraph are--
(A) the ultimate costs to taxpayers if a surcharge under
this section is not established;
(B) the economic conditions in the commercial marketplace;
(C) the affordability of commercial insurance for small-
and medium-sized business; and
(D) such other factors as the Secretary considers
appropriate.
(3) Policyholder premium.--Any amount established by the
Secretary as a surcharge under this section shall be
established and imposed as a policyholder premium surcharge
on commercial property and casualty insurance written after
such determination, for the purpose of repaying financial
assistance made available under section 6 in connection with
such triggering determination.
(4) Collection.--The Secretary shall provide for commercial
insurers to collect surcharge amounts established under this
section and remit such amounts collected to the Secretary.
(b) Amount and Duration.--Subject to subsection (c), the
surcharge under this section shall be established in such
amount, and shall apply to commercial property and casualty
insurance written during such period, as the Secretary
determines is necessary to recover the aggregate amount of
financial assistance provided under section 6 in connection
with the triggering determination that exceeds the amount
determined pursuant to section 7(b)(1).
(c) Percentage Limitation.--The surcharge under this
section applicable to commercial property and casualty
insurance coverage may not exceed, on an annual basis, the
amount equal to 3 percent of the premium charged for such
coverage.
[[Page H8615]]
(d) Other Terms.--The surcharge under this section shall--
(1) be based on a percentage of the premium amount charged
for commercial property and casualty insurance coverage that
a policy provides; and
(2) be imposed with respect to all commercial property and
casualty insurance coverage written during the period
referred to in subsection (b).
(e) Exclusions.--For purposes of this section, commercial
property and casualty insurance does not include any
reinsurance provided to primary insurance companies.
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) Manner and Method.--
(1) In general.--Except to the extent specified in such
sections, the Secretary shall provide for the manner and
method of carrying out assessments under section 7 and
surcharges under section 8, including the timing and
procedures of making assessments and surcharges, notifying
commercial insurers of assessments and surcharge
requirements, collecting payments from and surcharges through
commercial insurers, and refunding of any excess amounts paid
or crediting such amounts against future assessments.
(2) Effect of assessments and surcharges on urban and
smaller commercial and rural areas and different lines of
insurance.--In determining the method and manner of imposing
assessments under section 7 and surcharges under section 8,
including the amount of such assessments and surcharges, the
Secretary shall take into consideration--
(A) the economic impact of any such assessments and
surcharges on commercial centers of urban areas, including
the effect on commercial rents and commercial insurance
premiums, particularly rents and premiums charged to small
businesses, and the availability of lease space and
commercial insurance within urban areas;
(B) 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
(C) the various exposures to terrorism risk for different
lines of commercial property and casualty insurance.
(b) Timing of Coverages and Assessments.--The Secretary may
adjust the timing of coverages and assessments provided under
this Act to provide for equivalent application of the
provisions of this Act to commercial insurers and policies
that are not based on a calendar year.
(c) Adjustment.--The Secretary may adjust the assessments
charged under section 7 or the percentage imposed under the
surcharge under section 8 at any time, as the Secretary
considers appropriate to protect the national interest, which
may include avoiding unreasonable economic disruption or
excessive market instability and avoiding undue burdens on
small businesses.
(d) Civil Monetary Penalty.--
(1) In general.--The Secretary may assess a civil monetary
penalty in an amount not exceeding the amount under paragraph
(2) against any commercial insurer that the Secretary
determines, on the record after opportunity for a hearing--
(A) has failed to pay an assessment under section 7 in
accordance with the requirements of, or regulations issued,
under this Act;
(B) has failed to charge, collect, or remit surcharges
under section 8 in accordance with the requirements of, or
regulations issued under, this Act;
(C) has intentionally provided to the Secretary erroneous
information regarding premium or loss amounts; or
(D) has otherwise failed to comply with the provisions of,
or the regulations issued under, this Act.
(2) Amount.--The amount under this paragraph is the greater
of $1,000,000 and, in the case of any failure to pay, charge,
collect, or remit amounts in accordance with this Act or the
regulations issued under this Act, such amount in dispute.
SEC. 10. APPLICATION TO SELF-INSURANCE ARRANGEMENTS AND
OFFSHORE INSURERS AND REINSURERS.
(a) Self-Insurance Arrangements.--The Secretary may, in
consultation with the NAIC, apply the provisions of this Act,
as appropriate, to self-insurance arrangements by
municipalities and other entities, but only if such
application is determined before the occurrence of a
triggering event and all of the provisions of this Act are
applied uniformly to such entities.
(b) Offshore Insurers and Reinsurers.--The Secretary shall
ensure that the provisions of this Act are applied as
appropriate to any offshore or non-admitted entities that
provide commercial property and casualty insurance.
SEC. 11. REQUIREMENT TO PROVIDE TERRORISM COVERAGE.
The Secretary shall require each commercial insurer to
include, in each policy for commercial property and casualty
insurance coverage made available, sold, or otherwise
provided by such insurer, coverage for insured losses
resulting from the occurrence of an act of terrorism that--
(1) does not differ materially from the terms, amounts, and
other coverage limitations applicable to losses arising from
events other than acts of terrorism;
(2) may not be eliminated, waived, or excluded, by mutual
agreement, request or consent of the policyholder, or
otherwise; and
(3) that meets any other criteria that the Secretary may
reasonably prescribe.
SEC. 12. STATE PREEMPTION.
(a) Covered Perils.--A commercial insurer shall be
considered to have complied with any State law that requires
or regulates the provision of insurance coverage for acts of
terrorism if the insurer provides coverage in accordance with
the definitions regarding acts of terrorism under this Act or
under any regulations issued by the Secretary.
(b) Rate Laws.--If any provision of any State law prevents
an insurer from increasing its premium rates in an amount
necessary to recover any assessments pursuant to section 7,
such provision is preempted only to the extent necessary to
provide for such insurer to recover such losses.
(c) File and Use.--
(1) In general.--With respect only to commercial property
and casualty insurance covering acts of terrorism, any
provision of State law that requires, as a condition
precedent to the effectiveness of rates or policies for such
insurance that is made available by an insurer licensed to
transact such business in the State, any action (including
prior approval by the State insurance regulator for such
State) other than filing of such rates and policies and
related information with such State insurance regulator is
preempted to the extent such law requires such additional
actions for such insurance coverage.
(2) Subsequent review authority.--Paragraph (1) shall not
be considered to preempt a provision of State law solely
because the law provides that rates and policies for such
insurance coverage are, upon such filing, subject to
subsequent review and action, which may include actions to
disapprove or discontinue use of such rates or policies, by
the State insurance regulator.
(3) Treatment of prior review provisions.--Any authority
for prior review and action by a State regulator preempted
under paragraph (1) shall be deemed to be authority to
conduct a subsequent review and action on such filings.
SEC. 13. CONSISTENT STATE GUIDELINES FOR COVERAGE FOR ACTS OF
TERRORISM.
(a) Sense of Congress Regarding Covered Perils.--It is the
sense of the Congress that--
(1) the NAIC, in consultation with the Secretary, should
develop appropriate definitions for acts of terrorism that
are consistent with this Act and appropriate standards for
making determinations regarding occurrences of acts of
terrorism;
(2) each State should adopt the definitions and standards
developed by the NAIC for purposes of regulating insurance
coverage made available in that State;
(3) in consulting with the NAIC, the Secretary should
advocate and promote the development of definitions and
standards that are appropriate for purposes of this Act; and
(4) after consultation with the NAIC, the Secretary should
adopt further definitions for acts of terrorism and standards
for determinations that are appropriate for this Act.
(b) Insurance Reserve Guidelines.--
(1) Sense of congress regarding adoption by states.--It is
the sense of the Congress that--
(A) the NAIC should develop appropriate guidelines for
commercial insurers and pools regarding maintenance of
reserves against the risks of acts of terrorism; and
(B) each State should adopt such guidelines for purposes of
regulating commercial insurers doing business in that State.
(2) Consideration of adoption of national guidelines.--Upon
the expiration of the 6-month period beginning on the date of
the enactment of this Act, the Secretary shall make a
determination of whether the guidelines referred to in
paragraph (1) have, by such time, been developed and adopted
by nearly all States in a uniform manner. If the Secretary
determines that such guidelines have not been so developed
and adopted, the Secretary shall consider adopting, and may
adopt, such guidelines on a national basis in a manner that
supercedes any State law regarding maintenance of reserves
against such risks.
(c) Guidelines Regarding Disclosure of Pricing and Terms of
Coverage.--
(1) Sense of congress.--It is the sense of the Congress
that the States should require, by laws or regulations
governing the provision of commercial property and casualty
insurance that includes coverage for acts of terrorism, that
the price of any such terrorism coverage, including the costs
of any terrorism related assessments or surcharges under this
Act, be separately disclosed.
(2) Adoption of national guidelines.--If the Secretary
determines that the States have not enacted laws or adopted
regulations adequately providing for the disclosures
described in paragraph (1) within a reasonable period of time
after the date of the enactment of this Act, the Secretary
shall, after consultation with the NAIC, adopt guidelines on
a national basis requiring such disclosure in a manner that
supercedes any State law regarding such disclosure.
SEC. 14. CONSULTATION WITH STATE INSURANCE REGULATORS AND
NAIC.
(a) In General.--The Secretary shall consult with the State
insurance regulators and the NAIC in carrying out this Act.
(b) Financial Assistance, Assessments, and Surcharges.--The
Secretary may take
[[Page H8616]]
such actions, including entering into such agreements and
providing such technical and organizational assistance to
insurers and State insurance regulators, as may be necessary
to provide for the distribution of financial assistance under
section 6 and the collection of assessments under section 7
and surcharges under section 8.
(c) Investigating and Auditing Claims.--The Secretary may,
in consultation with the State insurance regulators and the
NAIC, investigate and audit claims of insured losses by
commercial insurers and otherwise require verification of
amounts of premiums or losses, as appropriate.
SEC. 15. STUDY OF POTENTIAL EFFECTS OF TERRORISM ON LIFE
INSURANCE INDUSTRY.
(a) Establishment.--Not later than 30 days after the date
of enactment of this Act, the President shall establish a
commission (in this section referred to as the
``Commission'') to study and report on the potential effects
of an act or acts of terrorism on the life insurance industry
in the United States and the markets served by such industry.
(b) Membership and Operations.--
(1) Appointment.--The Commission shall consist of 7
members, as follows:
(A) The Secretary of the Treasury or the designee of the
Secretary.
(B) The Chairman of the Board of Governors of the Federal
Reserve System or the designee of the Chairman.
(C) The Assistant to the President for Homeland Security.
(D) 4 members appointed by the President, who shall be--
(i) a representative of direct underwriters of life
insurance within the United States;
(ii) a representative of reinsurers of life insurance
within the United States;
(iii) an officer of the NAIC; and
(iv) a representative of insurance agents for life
underwriters.
(2) Operations.--The chairperson of the Commission shall
determine the manner in which the Commission shall operate,
including funding, staffing, and coordination with other
governmental entities.
(c) Study.--The Commission shall conduct a study of the
life insurance industry in the United States, which shall
identify and make recommendations regarding--
(1) possible actions to encourage, facilitate, and sustain
the provision, by the life insurance industry in the United
States, of coverage for losses due to death or disability
resulting from an act or acts of terrorism, including in the
face of threats of such acts; and
(2) possible actions or mechanisms to sustain or supplement
the ability of the life insurance industry in the United
States to cover losses due to death or disability resulting
from an act or acts of terrorism in the event that--
(A) such acts significantly affect mortality experience of
the population of the United States over any period of time;
(B) such losses jeopardize the capital and surplus of the
life insurance industry in the United States as a whole; or
(C) other consequences from such acts occur, as determined
by the Commission, that may significantly affect the ability
of the life insurance industry in the United States to
independently cover such losses.
(d) Recommendations.--The Commission may make a
recommendation pursuant to subsection (c) only upon the
concurrence of a majority of the members of the Commission.
(e) Report.--Not later than 120 days after the date of
enactment of this Act, the Commission shall submit to the
House of Representatives and the Senate a report describing
the results of the study and any recommendations developed
under subsection (c).
(f) Termination.--The Commission shall terminate 60 days
after submission of the report pursuant to subsection (e).
SEC. 16. RAILROAD AND TRUCKING INSURANCE STUDY.
The Secretary of the Treasury shall conduct a study to
determine how the Federal Government can address a possible
crisis in the availability and affordability of railroad and
trucking insurance by making such insurance for acts of
terrorism available on commercially reasonable terms. Not
later than 120 days after the date of the enactment of this
Act the Secretary shall submit to the Congress a report
regarding the results and conclusions of the study.
SEC. 17. STUDY OF REINSURANCE POOL SYSTEM FOR FUTURE ACTS OF
TERRORISM.
(a) Study.--The Secretary, the Board of Governors of the
Federal Reserve System, and the Comptroller General of the
United States shall jointly conduct a study on the
advisability and effectiveness of establishing a reinsurance
pool system relating to future acts of terrorism to replace
the program provided for under this Act.
(b) Consultation.--In conducting the study under subsection
(a), the Secretary, the Board of Governors of the Federal
Reserve System, and the Comptroller General shall consult
with (1) academic experts, (2) the United Nations Secretariat
for Trade and Development, (3) representatives from the
property and casualty insurance industry, (4) representatives
from the reinsurance industry, (5) the NAIC, and (6) such
consumer organizations as the Secretary considers
appropriate.
(c) Report.--Not later than 6 months after the date of the
enactment of this Act, the Secretary, the Board of Governors
of the Federal Reserve System, and the Comptroller General
shall jointly submit a report to the Congress on the results
of the study under subsection (a).
SEC. 18. DEFINITIONS.
For purposes of this Act, the following definitions shall
apply:
(1) Act of terrorism.--
(A) In general.--The term ``act of terrorism'' means any
act that the Secretary determines meets the requirements
under subparagraph (B), as such requirements are further
defined and specified by the Secretary in consultation with
the NAIC.
(B) Requirements.--An act meets the requirements of this
subparagraph if the act--
(i) is unlawful;
(ii) causes harm to a person, property, or entity, in the
United States, or in the case of a domestic United States air
carrier or a United States flag vessel (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), in or outside the United
States;
(iii) is committed by a person or group of persons or
associations who are recognized, either before or after such
act, by the Department of State or the Secretary as an
international terrorist group or have conspired with such a
group or the group's agents or surrogates;
(iv) has as its purpose to overthrow or destabilize the
government of any country, or to influence the policy or
affect the conduct of the government of the United States or
any segment of the economy of United States, by coercion; and
(v) is not considered an act of war, except that this
clause shall not apply with respect to any coverage for
workers compensation.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insurer, any company that controls, is controlled by,
or is under common control with the insurer.
(3) Aggregate written premium.--The term ``aggregate
written premium'' means, with respect to a year, the
aggregate premium amount of all commercial property and
casualty insurance coverage written during such year under
all lines of commercial property and casualty insurance.
(4) Commercial insurer.--The term ``commercial insurer''
means any corporation, association, society, order, firm,
company, mutual, partnership, individual, aggregation of
individuals, or any other legal entity that provides
commercial property and casualty insurance. Such term
includes any affiliates of a commercial insurer.
(5) Commercial property and casualty insurance.--
(A) In general.--The term ``commercial property and
casualty insurance'' means insurance or reinsurance, or
retrocessional reinsurance, for persons or properties in the
United States against--
(i) loss of or damage to property;
(ii) loss of income or extra expense incurred because of
loss of or damage to property;
(iii) third party liability claims caused by negligence or
imposed by statute or contract, including workers
compensation; or
(iv) loss resulting from debt or default of another.
(B) Exclusions.--Such term does not include--
(i) insurance for homeowners, tenants, private passenger
nonfleet automobiles, mobile homes, or other insurance for
personal, family, or household needs;
(ii) insurance for professional liability, including
medical malpractice, errors and omissions, or directors' and
officers' liability; or
(iii) health or life insurance.
(6) Control.--A company has control over another company
if--
(A) the company directly or indirectly or acting through
one or more other persons owns, controls, or has power to
vote 25 percent or more of any class of voting securities of
the other company;
(B) the company controls in any manner the election of a
majority of the directors or trustees of the other company;
or
(C) the Secretary determines, after notice and opportunity
for hearing, that the company directly or indirectly
exercises a controlling influence over the management or
policies of the other company.
(7) Covered period.--The term ``covered period'' has the
meaning given such term in section 19.
(8) Industry-wide losses.--The term ``industry-wide
losses'' means the aggregate insured losses sustained by all
insurers from coverage written under all lines of commercial
property and casualty insurance.
(9) Insured loss.--The term ``insured loss'' means any
loss, net of reinsurance and retrocessional reinsurance,
covered by commercial property and casualty insurance.
(10) NAIC.--The term ``NAIC'' means the National
Association of Insurance Commissioners.
(11) Net premium.--The term ``net premium'' means, with
respect a commercial insurer and a year, the aggregate
premium amount collected by such commercial insurer for all
commercial property and casualty insurance coverage written
during such year under all lines of commercial property and
casualty insurance by such commercial insurer, less any
premium paid by such commercial insurer to other commercial
insurers to insure or reinsure those risks.
(12) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(13) State.--The term ``State'' means the States of the
United States, the District of
[[Page H8617]]
Columbia, the Commonwealth of Puerto Rico, the Commonwealth
of the Northern Mariana Islands, Guam, the Virgin Islands,
American Samoa, and any other territory or possession of the
United States.
(14) State insurance regulator.--The term ``State insurance
regulator'' means, with respect to a State, the principal
insurance regulatory authority of the State.
(15) Triggering determination.--The term ``triggering
determination'' has the meaning given such term in section
5(a).
(16) Triggering event.--The term ``triggering event''
means, with respect to a triggering determination, the
occurrence of an act of terrorism, or the occurrence of such
acts, that caused the insured losses resulting in such
triggering determination.
(17) United states.--The term ``United States'' means,
collectively, the States (as such term is defined in this
section).
SEC. 19. COVERED PERIOD AND EXTENSION OF PROGRAM.
(a) Covered Period.--Except to the extent provided
otherwise under subsection (b), for purposes of this Act, the
term ``covered period'' means the period beginning on the
date of the enactment of this Act and ending on January 1,
2003.
(b) Extension of Program.--If the Secretary determines that
extending the covered period is necessary to ensure the
adequate availability in the United States of commercial
property and casualty insurance coverage for acts of
terrorism, the Secretary may, subject to subsection (c),
extend the covered period by not more than two years.
(c) Report.--The Secretary may exercise the authority under
subsection (b) to extend the covered period only if the
Secretary submits a report to the Congress providing notice
of and setting forth the reasons for such extension.
SEC. 20. REGULATIONS.
The Secretary shall issue any regulations necessary to
carry out this Act.
The SPEAKER pro tempore. Pursuant to House Resolution 297, the
gentleman from New York (Mr. LaFalce) and a Member opposed each will
control 30 minutes.
The Chair recognizes the gentleman from New York (Mr. LaFalce).
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise to offer a substitute that I believe would
greatly improve the bill before us. The substitute in large part
reflects the structure of the bill before us, but it makes improvements
to the bill in three very crucial areas.
First of all, it requires the individual insurers to retain a more
significant share of initial losses, providing for a real, up-front
deductible.
Second, it requires that terrorism coverage be included with all
property and casualty insurance, eliminating the ability of insurers to
cherry-pick safer properties, while placing coverage out of the reach
of others.
Third, it eliminates the extraneous limitations on victims' recovery
rights that are not necessary to address this problem and have no place
in this bill or any bill. There will be no bill that contains these
provisions.
Let me address each of these in turn. The deductible included in my
substitute would require the insurance industry to pay the first $5
billion of insured losses in the first year, increasing to $10 billion
in the second and third years. Interestingly, the insurance industry,
the Senate, and administration negotiators said they could accept a
bill with a $10 billion deductible in the first year. My substitute has
a $5 billion deductible. The bill before us has no deductible. There
should be a deductible.
The deductible would be met in the first instance by individual
insurers who would be responsible for 100 percent of the losses
suffered by their policyholders up to a cap of 7 percent of the
insurer's premium income. This first dollar of loss retention is
critical to the maintenance of sound underwriting practices by the
insurance industry, and it will make it much easier for a private
reinsurance market to reemerge. It will also make it less likely that
the Federal Government will need to step in to cover losses. Some
events could be covered entirely by the deductible. It would keep the
Federal Government out unless it were absolutely imperative that the
Federal Government enter.
This kind of deductible has the support of a broad and diverse
coalition of taxpayer, consumer, and environmental groups, each of
which believe it is important that insurers should pay some level of
initial loss in its entirety. And the concept of a deductible of up to
$10 billion in the first year was agreed to by the Treasury Department
of the Bush administration in their conversations with the Senate.
Again, the main bill before us has no deductible. The substitute does.
We should have a deductible.
Second, to avoid the cherry-picking, my substitute, unlike the
Republican bill, would mandate terrorist coverage. This will prevent
insurers from providing terrorism coverage only on properties that are
perceived as low risk while leaving large portions of the economy
uncovered. This provision would help to ensure that terrorism coverage
is affordable by spreading the risk across the broadest possible base.
By ensuring that this coverage would be included in all property and
casualty policies, as it is today, it would help to cushion the effects
on businesses of any further terrorist attacks by eliminating the
temptation for commercial property holders and businesses to ``opt
out'' of terrorism coverage. Do not forget, property and casualty
properties today include terrorism coverage.
Finally, my bill does not limit victims' rights by denying them the
legal redress that they deserve. For reasons completely extraneous to
the current insurance crisis, the White House and the Republican
leadership are pursuing, by means of this legislation, long-sought
restrictions going back 20-30 years on the rights of victims. They seek
to minimize the compensation needed to make the victims of terrorism
whole. These restrictions on victims' rights will create disincentives
for businesses to do all that they reasonably can to prevent another
terrorist attack and make America safer.
I urge Members' support for this substitute. It is basically the
House bill, with those changes I have articulated. In the short amount
of time that we have left to address the serious threat to our economy,
I believe the substitute represents a much-improved response to meeting
our responsibilities.
Mr. Speaker, I reserve the balance of my time.
Mr. BACHUS. Mr. Speaker, I claim the time in opposition to the
amendment in the nature of a substitute.
The SPEAKER pro tempore. The gentleman from Alabama (Mr. Bachus) is
recognized for 30 minutes.
Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, there are several problems that the membership ought to
have with this amendment, things that I hope that the gentleman from
New York (Mr. LaFalce) will respond to, concerns which we have.
My first concern is that we are mandating that anyone who takes out
commercial insurance must also take out coverage for terrorism. Now, in
the towns and the cities and rural areas that I represent, there are a
lot of small businessmen who do not think that they need insurance to
ensure against terrorism.
{time} 1415
Actually, I have farmers in my district. They have chicken houses, I
would say to the gentleman from New York. Those farmers do not feel
like those chicken houses and those chickens need insurance against
terrorism. They do not believe that there is much of a possibility of a
terrorist planting a bomb in one of those chicken houses. I have a lot
of repair shops in my district that repair used automobiles. The people
that own those businesses and that pay liability insurance and take out
coverage on those businesses, they do not believe that they need to be
paying for insurance to cover that auto body shop or that beauty shop.
I have a lot of beauticians, I would say to the gentleman from New
York. I have a lot of beauticians in my district. They have a lot of
beauty shops. They really do not believe that they ought to be
compelled by the Federal Government to take out insurance to insure
against terrorists. In fact, they may not be able to afford it.
But what this substitute does, it requires anyone that takes out a
commercial policy on any business, whether it is a beauty shop, a
barber shop, an auto mechanic store, a chicken house, a small grocery
store, it requires you to take out and insure against a terrorist act.
I have a lot of businesses in my district that quite simply are having
trouble paying for the insurance that they have. There is no opt-out. I
can insure against theft, I can insure against fire, I can insure
against vandalism; but I may not want to insure against terrorism. I
may own a small
[[Page H8618]]
business. I may get a quote of $12,000 a year for basic coverage and
another $1,000 or $1,500 a year to insure against terrorism. I may say,
I don't want terrorism covered.
I would say to the gentleman from New York, it is my understanding
that his amendment, and correct me if I am wrong, but it is my
understanding that his amendment requires anyone who takes out a
commercial policy to protect their place of business, that they must
also insure against terrorism. I would stop right there and I would
reserve the balance of my time and ask the gentleman so we can have a
coherent discussion of this, is in fact he mandating that every
American that takes out insurance coverage on their place of business,
that they must insure against terrorism no matter what the cost of that
premium?
Mr. Speaker, I will reserve the balance of my time and let the
gentleman address that question.
Mr. LaFALCE. Mr. Speaker, I could have a colloquy with the gentleman
on his time, but I do not have time. If the gentleman wants to do it on
his time, I would be glad to have a colloquy.
Mr. BACHUS. I would say this to the gentleman. I will answer the
question and he can correct me if I am wrong. Section 11 of his
amendment, a requirement to provide terrorism coverage, and it says
that this coverage may not be eliminated, waived or excluded by mutual
agreement, request or consent of the policyholder or otherwise. That is
what it says. It says you cannot exclude coverage for that. It may not
be eliminated, may not be waived, may not be excluded from a commercial
policy even by mutual agreement or by request or consent of the
policyholder. That is what it says. It is the plain wording.
I would hope the gentleman did not intend to say that to every
American who has an insurance policy on a piece of property. There is
an option. The option is that you just do not get insurance. But I
think the gentleman from New York is saying if you do get insurance,
you will have to have terrorist coverage and you will have to pay for
that coverage.
Mr. Speaker, I reserve the balance of my time.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentlewoman from
Texas (Ms. Jackson-Lee).
(Ms. JACKSON-LEE of Texas asked and was given permission to revise
and extend her remarks.)
Ms. JACKSON-LEE of Texas. Mr. Speaker, quite the contrary to the
distinguished gentleman from Alabama, the LaFalce substitute spreads
the risk. What it simply does is it says that if you are a small
business, a chicken farmer, you need to make sure that insurance
companies around the world or in this Nation have the obligation to
insure you and protect you. That is what we are arguing about today.
That is why I rise today to support the LaFalce substitute and also to
say I would have liked to have supported a clean underlying bill. I
believe it is important to provide this kind of reinsurance for our
insurance companies, not for the institutions but for the people of
America.
I would also say to my colleagues, I wish I was debating resources
for those who are unemployed, particularly as we face some 500,000
individuals in the State of Texas. Additionally in my own congressional
district we have a company that is now teetering on the brink. I may
see tomorrow 3, 4, 6,000 people laid off. This House has failed in its
duty to provide unemployment insurance for those who are laid off. But
let us speak about the underlying bill and why the LaFalce substitute
is the right direction to go.
First of all, the bill that is before us denies victims' rights. It
in fact denies noneconomic damages, economic damages and punitive
damages. It indicates that if you are a plaintiff and you are impacted
by a terrorist act, you could not go into court and receive any
benefits or receive any coverage from your insurance company if you
were not physically injured. That means all the wives and husbands who
lost loved ones, who lost their husbands or wives on September 11 in
that heinous terrorist act could not recover for the pain and
suffering, for the loss of consortium. I believe that we have a better
direction to go. And in fact I am delighted that the LaFalce bill does
not have the tax provisions in it. I believe it is extremely important
that we find a way to engage the insurance companies but not give away
money.
The underlying bill provides assistance, Federal dollars, one dollar
past a billion dollars. In fact, the insurance companies said, We're
willing to pay $5 billion in losses. The LaFalce bill has $5 billion in
1 year and I think $10 billion after the 1 year. We are giving away
money in the underlying bill.
The substitute is a clean bill that directs its attention and its
energies toward the problem. What is the problem? We want to be able to
ensure that insurance companies will be able to insure Americans,
businesses, citizens of the United States in light of terrorist
attacks. And we want to do it fairly, and we want to do it
forthrightly. We do not want to deny individuals their access to the
courts where they cannot go in and secure recovery for those who have
maliciously not done their duty and therefore caused an enhanced injury
to someone such as, for example, a baggage handling company that did
not do the proper security so that something dangerous happened on the
airline.
I support the LaFalce bill because it is a straight-up answer to the
insurance problem, and it also provides for insurance for all
Americans.
Mr. Speaker, the September 11 terrorist attacks have devastated many
industries and sectors of the American economy, including the insurance
industry.
The legislation before us today, H.R. 3210, has been rushed to the
House floor because the insurance industry has stated that, while it
will be able to cover the estimated $40 billion in claims resulting
from the Sept. 11 terrorist attacks, any new and renewed policies will
not cover terrorist-inflicted damage unless the government helps cover
that unknown liability. This is an issue of great concern to Congress
and to the Nation.
While I cannot support this bill as it currently stands, I would like
to state, at the outset, that I join my colleagues in calling for swift
passage of a terrorism reinsurance bill. Such legislation is greatly
needed and Congress can make a great difference here, as we have done
in the past.
As we all know, Congress acted swiftly and deliberately in the recent
Airlines bailout plan in the amount of $15 billion to save this
important industry which was so severely devastated by the September 11
attacks. We can act with similar diligence and bi-partisan sensibility
to help this important sector of our economy as well.
This is not just an insurance industry problem. Rather, it is a
national issue because if the insurance industry cannot reinsure the
risk of further terrorist attacks, it will either increase premiums to
the detriment of consumers, or simply stop offering terrorism coverage
altogether. Furthermore, without adequate insurance coverage, lenders
will not be able to lend and new investments will not be made, creating
a credit crunch that could have devastating consequences for our
economy.
I applaud my colleagues on the Ways and Means Committee in striking
provisions that would have provided preferential tax treatment on
insurance industry reserves, and instead called for a greatly needed
study of the issue. However, I am disappointed in the partisan fiasco
in the Rules Committee which turned this once bipartisan effort
to protect the insurance industry from terrorism claims into a partisan
``tort reform'' Trojan horse.
I join my colleagues on the Judiciary Committee and those on the
Financial Services Committee who object to the inclusion of Section 15,
a tort reform provision, which would effectively ban punitive damages
in terrorism-related cases. This is absolutely unnecessary.
Additionally, it is unclear whether the bill applies to actions
brought against the insured and the insurer, or just the insurer. I
stand with those who support the position that such legislation limits
tort actions against the insurer, but not the insured.
We must also ensure that terrorism coverage is available and
affordable for all consumers and businesses, and avoid ``cherry
picking'' where companies insure ``good risks'' and leave other
segments of economy uncovered. To this end we can and should avoid that
problem by ensuring that terrorism coverage is required as part of
basic property and casualty coverage.
Finally, there is no need or justification for the tax provisions in
the bill, which unnecessarily provides the industry with a long-term
tax subsidy which could well exceed what it pays under the bill.
Instead, I lend my support to the LaFalce substitute. It includes,
for example, an industry deductible and requires each company to meet
its deductible before receiving federal assistance. It also requires
terrorism coverage as part of commercial property and casualty
insurance. It also does not limit tort actions or recoveries, and does
not contain the offensive tax provisions as does the underlying bill.
[[Page H8619]]
Also, it requires the Secretary of the Treasure, in determining
whether to establish a surcharge on policyholders, to consider the cost
to the taxpayer, economic conditions, affordability of insurance, and
other factors. And it includes studies on the impact of terrorism on
the life insurance industry and on the advisability of establishing a
terrorism reinsurance pool.
Congress can and must act to protect the most vulnerable sectors of
our economy, and those who most need assistance. The underlying bill
once held the promise of protecting the insurance industry and the
millions of Americans dependent on it. However, the version of the bill
before us today contains offensive provisions that I simply cannot in
good conscience support. As such, I urge my colleagues to vote against
the bill and to support the LaFalce substitute.
Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think we received the answer to our question, and that
is that this amendment attempts to require all Americans who own
businesses to take out terrorist coverage and to pay for that coverage.
In other words, if you have got a beauty shop, the gentleman from New
York, his amendment if it passes, you will be required to take out
terrorist insurance. If you have got a restaurant, you will be required
to take it out and to pay for it.
So I think we have our answer there. As the gentlewoman from Texas
says, we want to spread the risk to people that even may not have any
risk, may not choose to need insurance. What we are basically telling
them is, Not only do you need it, but you'll pay for it, whether you
want it or not.
Mr. Speaker, I ask unanimous consent that the gentleman from Ohio
(Mr. Oxley) be permitted to control the remainder of my time for
consideration of this amendment.
The SPEAKER pro tempore (Mr. Nethercutt). Is there objection to the
request of the gentleman from Alabama?
There was no objection.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 3 minutes to the
gentleman from Pennsylvania (Mr. Toomey).
Mr. TOOMEY. Mr. Speaker, there are several problems that I have with
the substitute that is offered by my distinguished colleague from New
York, but I want to touch on two of them in particular. One is the fact
that the substitute clearly removes from the committee bill several
vital tort reform measures which are in the base bill; and they are in
the base bill for a simple reason, for a variety of reasons, but mainly
to ensure that in the event that harm is done in a terrorist attack, we
want to see a greater share of the payment to the victims actually go
to the victims and not a huge windfall going to trial lawyers. That is
a big part of what this is about.
That is a serious flaw, but there is another one that I think may be
even a bigger flaw in this bill and that is the issue that was raised
by my colleague, the distinguished gentleman from Alabama. There is no
question, it is very clear, the substitute does impose a new Federal
mandate on business, large and small business, every business,
specifically by requiring that every commercial insurance policy carry
this terrorism provision whether or not the insured wants to buy this
provision. It is true that it only applies to commercial policies. You
could choose not to buy a commercial policy; but as we all know as a
practical matter, you cannot be in business in America today without
having a commercial insurance policy. So it really is a universal
mandate in that sense.
Think about this. At a time when thousands of businesses are losing
money, forced to lay off literally hundreds of thousands of workers in
the last several months, layoffs that are continuing today, this
substitute, if it were adopted, would force potentially unlimited
increases in costs in doing business for every business in America. It
says you have got to go out and buy terrorism insurance coverage
regardless of what kind of business you are in, regardless of where you
are located, regardless of whether or not you perceive yourself to have
any risks, and regardless of what it costs. This can only result in
more job losses.
I do not know how many folks here have actually gone through the
experience of taking their entire life savings, remortgaging their
house, borrowing money from family and friends and risking it all to
pursue the dream of owning their own business, whether that is a little
coffee shop on Tilghman Street in Allentown or a dry cleaner on
Chestnut Street in Emmaus or a bookstore in downtown Bethlehem, but I
know what that is all about. I have been through that. I think we all
know people who have been through that.
These are the people, the people who are willing to take that huge
risk to risk everything they have to launch that small business. These
are the people and their employees that I am concerned about, and I am
concerned about the adverse effect that this provision will have on
them. These are the people that are keeping our economy going. These
small businesses are the ones that are creating the few new jobs we are
creating in our economy. They are creating so many opportunities for so
many people. The cards are stacked already against the entrepreneur
starting a new business. It is the nature of a new business to have a
very risky period.
We have still a crushing tax burden on Americans. We have too much
regulation. My argument is let us not stack the deck further against
the people who are creating new businesses, running small businesses,
creating opportunity. Let us not impose this new costly mandate on
them.
Reject the substitute and support the underlying bill.
Mr. LaFALCE. Mr. Speaker, I yield 3 minutes to the gentleman from
Texas (Mr. Bentsen).
(Mr. BENTSEN asked and was given permission to revise and extend his
remarks.)
Mr. BENTSEN. Mr. Speaker, I had not intended to support the
substitute because we wrote a very good bill in the House. Again, I
want to commend the chairman and the chairman of the subcommittee as
well for the work they did. We worked very hard all day long to put out
a good bill; and I thought the approach was the right approach to take
in terms of the model, in terms of the deductible, in terms of the way
it worked. It combined the pooled premium structure, it protected the
taxpayers, it combined the deductible aspect that the administration
wanted, and it even had some liability reform, a collateral offset that
I was not particularly comfortable with but I thought was the balance
we needed because this was also a temporary measure that we were
passing, and in fact we made it as temporary as possible. Because I am
not very comfortable with us entering the marketplace right now, but I
do think it is necessary to get us into the next year so policies can
be rewritten, so we do not have the calamity that I discussed that I
think other Members are aware of. I know the gentleman from California
(Mr. Cox) was a securities lawyer before he was here, and he
understands how this works and the problems that can occur if we do not
do this.
But on the way to the floor, this bill was rewritten and I am left
with no choice but to support a substitute that otherwise quite
frankly, with all due respect to the gentleman from New York, I would
not support because I would support the underlying bill as it was
originally written.
I look at the litigation management section in this, and I see a
couple of problems. The first problem I see is the question on
noneconomic damages that are in here and there is no liability for the
defendant if the defendant actually has liability. What if you have a
spouse who does not work and is in a building that gets hit by a plane?
There are no damages that can be brought. That spouse's worth under the
court's eyes is zero dollars. I do not think any Member, whether you
are for liability reform or not, thinks that is a particularly good
idea.
{time} 1430
But the other problem in the haste to write this bill, if you read
the section on legal fees the way I read it, it applies to all
attorneys. So if defense counsel does their job and wins the case, they
can get no more than 20 percent of damages, and if damages are zero, 20
percent of zero, the last time I checked, was still zero. So if the PNC
company pays their counsel, which most counsel I know like to get paid,
they are not going to be able to pay them anything, or they are going
to be
[[Page H8620]]
subject to fines or imprisonment. So there is a flaw in the bill. I am
sure somewhere down the line it will get worked out.
But the bigger concern I have is about this is the bill we ought to
pass for the good of the economy, and what this is going to do in the
name of ``legal reform,'' which is not what this bill started out
about, is it is going to get shot down in the other body and we are
either going to be here on December 23 trying to hammer this thing out,
or December 24th, or December 25th, maybe we will take the 25th off,
the 26th, 27th, trying to work this out, when we had a very good bill
in the first place, a bill that made it explicitly clear that the
taxpayers would not be on the hook for punitive damages or non-economic
damages. But if the defendant, the building owner, the airline owner,
was liable in any way for gross negligence, they had to step up to the
plate for that liability. That is what we should be doing.
As a result, I am going to have to defy my chairman and support the
substitute, because we are left with no other choice. I hope somewhere
rationale will prevail and we can get a real bill done.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to my good friend, the
gentleman from Staten Island, New York (Mr. Fossella).
(Mr. FOSSELLA asked and was given permission to revise and extend his
remarks.)
Mr. FOSSELLA. Mr. Speaker, I thank the chairman for yielding me time.
Mr. Speaker, I happen to believe that sometimes when we are
confronted with an issue, it is best for Congress to do nothing at
times. This is not one of those times. I think we are playing with fire
if Congress does not act on passing this legislation this year as soon
as possible.
The underlying bill as presented by the chairman is the right vehicle
to proceed with. Every day that passes creates more uncertainty, thus
more risk and more instability in our economy. It is not just the
insurance companies or the reinsurers; it is the very foundation of our
Nation.
For example, right now in midtown Manhattan, there is an office
project, a major one, being contemplated. It means jobs, it means
livelihoods, it means a better quality of life for so many people.
These developers right now are having discussions with their
insurance agents. Insurance agents say, we cannot give you this
insurance because of the risk associated with a potential terrorist
attack. If that does not occur, there may not be and very likely will
not be this development project in midtown Manhattan. Hundreds of
millions of dollars will stop. That is going to take place across New
York and across the country, unless something is done.
I would urge everybody in this Chamber and the other body to come to
closure on this as soon as possible, without raising the cost of
insurance unnecessarily to small and big business owners across the
country, to work cooperatively to do what is right for the American
people; not to put the taxpayer on the hook, but to play the vital role
that government should play in this capacity, and that is to protect
against any potential terrorist attack which, by definition, is random
and terrorist in nature. Put it aside, support the underlying bill, and
let us move forward.
Mr. LaFALCE. Mr. Speaker, I yield 4 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski), the distinguished ranking member of the
Subcommittee on Capital Markets, Insurance and Government Sponsored
Enterprises.
Mr. KANJORSKI. Mr. Speaker, I speak in favor of the substitute, and
it is for a very simple reason. There are three key elements developed
in the substitute that I think are important but, more so than being
important, I think they make the bill viable so we can get something
done.
The previous speaker just indicated that it is important to get
something done, and it is. We had something that could have been done,
and suddenly some of our friends have lobbed on things called tort
reform, or revision, as I call it, changing the whole civil procedure
and rights of victims in this country, and I think it caused
unfairness.
As my friend the gentleman from Texas (Mr. Bentsen) pointed out, it
seems to me to strip out any benefit or any recovery for non-economic
damages and leaves a major part of the victims of this country without
coverage.
Now, we are fighting here to make sure real estate can go on,
insurance can be sold, business can conclude; and we are going to take
care of large entities, big investments, because they are the targets
for terrorism. But the small victims, the individual citizens who do
not measure into the definition providing the limitations in this bill
for victims' recovery, they get nothing or are restricted in their
recovery. That is nonsensical.
First of all, it is not going to go anywhere. I plead with the other
side. This bill is not going to be the bill. The Senate and White House
are in the process of writing another bill which is going to be sent
over here, and we are either going to take it or not take it in the
waning days of this session.
We have an opportunity, by adopting the substitute that the gentleman
from New York (Mr. LaFalce) has presented, to handle the three key
issues. We do provide something the White House and the Senate has
indicated they want at all times, deductibility, and the insurance
industry did not say that was bad. As a matter of fact, they were in
favor of it, $5 billion or $10 billion deductibility.
Two, doing nothing with these victims' rights or tort reform, it does
not belong here. We can have another vehicle, another debate, another
day, on that issue.
Finally, to provide insurance coverage for everyone, I am led to
understand the White House is in favor of that too, because we do not
want cherry-picking, we do not want favoritism, and we do not want to
lessen the base of those people who are going to stand behind the
premiums to pay for the terrorist occasion that occurs before it gets
to the taxpayers.
I say that we have a reasonable substitute here that, if we pass it
today, can be moved to the Senate very quickly and become the real
vehicle for reinsurance protection for terrorism in the United States.
Other than that, this is an academic, a political exercise, that will
absolutely go nowhere, and we are going to end up, if we do want
legislation, and I think it is vitally important, adopting the Senate
provisions when they are finally passed.
Mr. OXLEY. Mr. Speaker, I yield myself 30 seconds. I appreciate the
gentleman's remarks.
Let everyone understand something. The Senate and the White House
apparently have been at this for quite some time and, literally, as we
speak, they still have not got their act together. The House of
Representatives is on the floor with legislation ready to pass in the
next hour, so we have done our job.
So you can talk all you want about what the Senate and White House
are doing. We are getting the job done for the people of this country
to make certain we have insurance coverage. I think we all should be
very, very proud of that.
Mr. Speaker I yield 3\1/2\ minutes to the gentleman from California
(Mr. Cox), a valuable member of our committee.
Mr. COX. Mr. Speaker, I thank the chairman for yielding me time. I
particularly wish to thank the gentleman form Ohio (Chairman Oxley),
the gentleman from Louisiana (Chairman Baker) and the gentleman from
Wisconsin (Chairman Sensenbrenner) for putting together such an
important bill for us to move quickly in response to the events of
September 11.
This legislation will ensure that victims are compensated after a
terrorist loss if another terrorist attack or round of terrorist
attacks should occur, quickly, fairly and fully. It will continue, we
hope, the opportunity for people throughout our country to have
insurance against terrorist risks by using the resources of the Federal
Government, of the U.S. taxpayer, as a backstop. But the bill is
carefully drafted so that it will not injure taxpayers in the process.
It asks a great deal from the industry. Indeed, it asks the insurance
industry to pay the money back, so that taxpayers will not be treated
as if they are Osama bin Laden, as if they are culpable for the next
round of terrorist attacks.
The substitute, unfortunately, unravels these taxpayer protections.
It
[[Page H8621]]
asks far less of insurance companies than does the bill for which it
would be substituting. It asks much more of taxpayers and much less of
trial lawyers.
The bill that was so carefully crafted in our committee established a
Federal cause of action, to make sure that injured parties could
quickly get to court, just as we have already done in this Congress
with the victims of September 11, so they could get their money and not
have to go through an endless legal process. The substitute simply
repeals that protection so that the same-old-same-old will obtain, as
it has for the victims of the 1993 World Trade Center bombing. Hundreds
of plaintiffs have received, 8 years later, not one penny.
It puts the burden on the consumer in another way. It mandates that
consumers buy terrorist risk insurance, rather than offering consumers
a choice of high-quality coverage at a reasonable cost. Once the
Federal Government mandates that I must buy insurance, if I am the
insurer and I know the customer has to buy it, I can offer a lousy
product at a high price.
We want to put the consumers in the driver's seat. The whole point is
to make sure consumers are protected, and this substitute would repeal
that consumer protection.
It would also repeal the fair share rule that is in the bill, and
that is the protection for the innocent. If you are innocent, if you
are not a terrorist, you should not be treated as if you are one. Yet
under the legislation that would be passed in the name of the
substitute, the fair share rule would be repealed; and if you are named
in a complaint, along with Osama bin Laden who is not before the court,
then a jury in any State can say you pay the whole thing, even though
you might be only one-half of 1 percent responsible.
President Bush strongly supports the base legislation. His Secretary
of the Treasury came to the Hill and asked that we include the
litigation management provisions. It is our obligation and our
responsibility to pass the bill that was produced by the Committee on
Financial Services and by the Committee on the Judiciary staff, who
helped us with the litigation management procedures.
I urge strongly that we reject the substitute and its repeal of
consumer protections, and I urge us rather rapidly to put this bill
into law, the Oxley-Baker-Sensenbrenner base bill.
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume
to answer a few of the issues that have come up so far.
First of all, what does the administration support or not support? I
do not really think they support the basic thrust of the bill that was
reported out of committee and is before us right now. Would they sign
it? Yes, because it is not an unreasonable approach. And that is why I
was willing to go forward with it, and that is why I am not offering an
alternative with respect to the underlying approach.
But it is not the best approach we could take. The administration, in
their statement of administration policy, points that out. They really
think that it could be an administrative nightmare. They do not like
this concept of coming up with what is basically a loan that will then
have to be paid back from dollar one. They do not like that at all.
The insurance industry does not like it. In Monday's paper there was
an op-ed piece by the chairman of the board of American International
Group, and they really denounced this concept. In that op-ed piece they
said we could handle a $10 billion deductible. That is what the
chairman of AIG said in an op-ed piece in the Wall Street Journal on
Monday. And you have no deductible.
We make it easy. We just have a $5 billion deductible for the first
year, going to a $10 billion the second year, which the insurance
industry has said we could accept and we can handle. For the life of
me, I do not know why you do not have that deductible provision.
With respect to the restrictions on victims' compensation, now, yes,
the administration does support that, and it supports it strongly. But
that is like throwing red meat at them. They have wanted to limit
victims' rights wherever and whenever they could. They want to do it
with respect to a Patients' Bill of Rights, they want to do it with
respect to product liability, they want to do it wherever and whenever
they can. And it is unnecessary here and it is wrong and it is harmful.
You come up with a euphemism. Your euphemism is case management. That
is nonsense. This has nothing to do with case management. This has
everything to do with denying victims their rights that they have been
entitled to under the laws of the several States from the time that we
created the Union to the present. You want to change it.
There is something else, too. The insurance scheme we come up with,
that is temporary. That is going to be for 1, 2 or 3 years. This
restriction or elimination of victims' rights, that, you have made
permanent.
{time} 1445
So we have a temporary insurance scheme. But as I understand the
Sensenbrenner approach, that goes in and it is independent of the
duration of time of the insurance scheme and it effectively takes away
victims' rights.
Now, with respect to mandatory coverage, reasonable people can differ
on that issue. Let me be the first to admit that. But the fact of the
matter is, right now virtually every property and casualty policy on a
commercial line that I am aware of includes terrorism coverage. So we
are not talking about something new. We are talking about basically, at
least in 99 percent of the cases, continuing the status quo so that we
can spread the cost so we would minimize it for the little guy, for the
small businessperson.
What small businessperson might need it? Well, since P and C includes
business interruption insurance, the ice cream parlor at an airport
might need it. The pizza store on Pine Avenue in Niagra Falls got the
first economic injury disaster loan in the Nation. It was $10,000. But
that business had closed its doors because of the terrorist attack in
New York City, and that business could have used terrorism coverage
immediately, et cetera.
If we do not mandate it, in my judgment, and I could be wrong; this
is a negotiable item. I understand that reasonable people can differ on
this. But I think that if we do not include this, what we are saying
is, if you are rich, if you are a big corporation, if you are a Fortune
500, if you are a big real estate developer of a $1 billion building,
you will be able to afford it and buy it and pass the cost along; but
if you are a little businessman, a small businessman, a mom and pop
businessman, you will just go without coverage; and the fact that your
business in Pennsylvania was never expected to be impaired, that will
have to go without coverage.
Now, I would inquire of the chairman of the Committee on the
Judiciary, did I make a mistake on the permanency of the gentleman's
coverage?
Mr. SENSENBRENNER. Mr. Speaker, will the gentleman yield?
Mr. LaFALCE. I yield to the gentleman from Wisconsin.
Mr. SENSENBRENNER. Absolutely, the gentleman made a mistake.
Mr. LaFALCE. Okay. So it is contemporaneous.
Mr. SENSENBRENNER. Mr. Speaker, it is contemporaneous with the bill.
It is not here forever, but that is not the gentleman's only mistake;
and I will ask the gentleman from Ohio for a little time to talk about
those.
Mr. LaFALCE. Mr. Speaker, I thank the gentleman, and I stand
corrected on that issue.
Mr. Speaker, I reserve the balance of my time.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the gentleman from
Wisconsin (Mr. Sensenbrenner), the distinguished chairman of the
Committee on the Judiciary.
Mr. SENSENBRENNER. Mr. Speaker, let me blow away the smoke screen
from the litigation management provisions of this bill.
Number one, it does not take away anybody's right to sue or anybody's
right to get compensation. If there is a cause of action and the
Secretary triggers the provisions in this legislation, suits would have
to be in one court, and that would prevent a race to courthouses all
around the country to see which judge could have the trial quicker and
whoever gets the quickest trial will end up exhausting all of the money
that is available; and in courts where things move a little bit slower,
if the money is exhausted, then the plaintiff would be out of luck.
Now, secondly, what the bill does is it prohibits punitive damages,
and this
[[Page H8622]]
is exactly the way the Federal Tort Claims Act is. We are talking about
giving a limited key to the United States Treasury, and we give the
same protection to the taxpayer in this bill that we do when there is a
tort claim against the Federal Government. We also limit attorneys'
fees, also done in the Federal Tort Claims Act. So this is existing law
for claims against the Federal Government. Since the Federal Government
will be the ultimate reinsurer during this period of time, we provide
the taxpayers the same protections and the plaintiffs the same
limitations as we would if somebody got run over by a postal service
van or ended up falling out the window of a Federal building because of
a defect in construction there.
Now, it seems to me that when we are dealing with terrorism, we have
to look at the fact that people who buy terrorism insurance pay a
premium that is based upon the risk that the insurance company is
underwriting; and if they have unlimited liability when there is a
terrorist act, then those premiums are going to be so sky high as to
make that coverage either unaffordable or less affordable, particularly
to small business operators.
So, Mr. Speaker, these litigation management provisions protect the
taxpayers, protect the ratepayers of people who have to buy terrorism
coverage, and do not significantly limit the recovery that plaintiffs
could get.
Mr. LaFALCE. Mr. Speaker, I yield myself 3 minutes.
A couple of issues were addressed by the distinguished chairman of
the Committee on the Judiciary. First of all, he spoke about the
consolidation of the claims into one court. That is something that is
not unreasonable. As a matter of fact, it might be desirable to do
something like that. But then the question is, would you obliterate
portions of the laws of the many States?
What the gentleman does in his bill is he says that there should be a
Federal cause of action that shall be exclusive; and thereby he
obliterates the laws of the States, with this exception: he says in
applying the Federal cause of action, we shall look to the Federal
cause of actions in the States, but not the law of the States with
respect to damages. There, we shall just totally obliterate whatever
the laws of those States are with respect to damages and impose our
own. That is where we run into difficulties. Not that one cannot go
into court, but we just severely eliminate or restrict.
Now, we have proportionate liability as opposed to joint and several
liability. There we are obliterating the laws of the about half of the
States. We use the collateral damages as an offset; and, again, the
States are split on that; but, again, that goes to the issue of how
much economic damages an individual is able to collect. So it restricts
their rights there.
Now, with respect to punitive damages, the gentleman made the
argument, and I think it has some resonance, that the Federal taxpayer
ought not to pay for punitive damages. I can accept that. The gentleman
made an analogy to the Federal Tort Claims Act where one cannot bring
punitive damages against the Federal Government. Well, if the gentleman
would have retained within the bill the Bentsen amendment, which would
have precluded taxpayer money, that is, insurance under this scheme,
then the gentleman's argument would be true. But it is incorrect
because what the gentleman does is not just eliminate the ability to
collect damages against the Federal Government under any scheme, but
against anybody.
The gentleman eliminates the basic cause of action or possibility of
punitive damages, not just the insurance coverage for it. If the
gentleman is willing to talk about that, we might be able to come to
terms. If the gentleman's bill would do what the gentleman says it
purports to do or wishes to do, we might be able to come to agreement.
Mr. Speaker, I reserve the balance of my time.
Mr. OXLEY. Mr. Speaker, I am pleased to yield 2 minutes to the
gentlewoman from New York (Mrs. Kelly).
Mrs. KELLY. Mr. Speaker, I thank the gentleman from Ohio for yielding
me this time.
The gentleman from New York has offered a well thought-out
substitute. However, I believe we simply have different beliefs as to
how the market should operate. I believe that we should allow the
market to work out problems as much as possible.
We are here today because the reality of a war on terrorism has
knocked out the commercial property and casualty insurance industry and
put them in a crisis. To stabilize that industry, we have drafted TRPA.
Unfortunately, the Democratic substitute goes farther than I think we
should on a number of points. I want to focus on the provision in the
substitute that would mandate that property and casualty companies
provide terrorism coverage. ``Mandate.'' That is the operative word.
It is our responsibility to ensure consumers have the options to
choose from, not mandate that they are forced to comply with. Terrorism
coverage will be more expensive to all businesses, but every business
should be able to make the choice of whether they should pay for it and
take the risk.
Let us consider the cost of this mandate for things like museums,
like schools, like hospitals. A hospital in California, a hospital in
New York, most hospitals in this Nation operate on a very thin
operating edge. They are on the very edge of solvency. A sudden
increase in premiums could plunge them into oceans of red, resulting in
closure. Schools. A flower shop in Buffalo, New York, ought to have the
ability to make that choice to take that risk if they choose, not be
mandated. A museum in Katonah, New York, should have the ability to
choose. Only these entities know what their risk is. Only these
entities know what their need is. These entities ought to not be
mandated to share a risk they do not feel they have.
Small business is the strongest bulldozer pushing our economy and its
growth. We all know the margins between profitability and failure are
razor thin with most small businesses. The cost of mandated coverage
could mean the difference between more or less employment or helping
these people keep their jobs. I urge that people defeat this Democratic
substitute.
This is just one of the many reasons the Democratic substitute should
be defeated. There are others.
Give our schools, hospitals and small business the choice and join
with me in voting against the Democratic substitute.
Mr. LaFALCE. Mr. Chairman, I yield 5 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski).
Mr. KANJORSKI. Mr. Speaker, I almost hesitate rising. I know the
gentlewoman that has just spoken is a fine member of our committee and,
of course, she does not want to burden the homeowners and all of these
small business people and everything.
When we really stand back and analyze the argument, the argument is,
there is a free lunch. Now, we are talking about insurance. There is no
free lunch here. Insurance companies do not create money or assets.
They merely gather premiums, analyze what the proportionate risk will
be, the premiums cover that risk, and then they put out the money. If
we reduce the number of premium payers, we reduce the base and for the
remaining payers we accelerate the rates. It is as simple as that. It
is so simple that most States in this Union require terrorism insurance
as part of the main policy. We are not putting an extra burden on
people here. I will tell my colleagues what burden we are putting on:
if we do not have this premium base that spreads across the country for
terrorism insurance, we are going to have a 1,000 percent increase in
insurance in New York City and Los Angeles, the symbols of the country
where terrorism would attack.
Secondly, that is partially what the argument was originally in the
committee and the Secretary of the Treasury made and the White House
made when we started to put this bill together. They said, terrorism is
something that attacks America's symbols, and it is unusual and
impossible to identify liability; and maybe that is why the Federal
Government should stand in the place of that risk so that premiums do
not go crazy.
But I hope our friends from the other side are not sending a message
out to the American people that this substitute resolution is going to
increase premiums. Quite the contrary. We are
[[Page H8623]]
not going to have any effect on premiums, and premiums in this country
on liability insurance all over are going to go up and go up
precipitously. And they already have, for two reasons: not only
September 11, but because the stock market has gone down precipitously,
and the earnings generated and the income generated is no longer there,
and now they have to increase the premiums to effect a pool to pay the
risk liability.
Mr. Speaker, sometimes we treat the American people when we talk on
the floor like they are idiots, and I refer now back to the gentleman
from California who made the point that they are really worried about
the victims of the 1993 bombing because, gee, their cases are still in
litigation.
{time} 1500
It is unfortunate that it takes sometimes 7 or 8 years to get to
litigation in this country. There is a solution: do away with the right
of suing and collecting damages. From day one, they would not have had
a cause of action under this piece of legislation. So yes, we would not
tie up the courts or waste 7 or 8 years. The victim would not have a
cause of action.
I know that is not the intention the Members have. I know something
more than that. I know the Republican party historically has understood
the free market system and the basis of our civil process in this
country.
I cannot understand. Just after September 11, we are asking America,
and I do not have yet a position, but we are asking to throw away the
criminal code of the country, the protections of evidence, due process,
and go to military tribunals in the criminal sense.
Maybe I could justify in some areas that happening. Well, that tears
up 200 years of precedent and procedure in this country in the criminal
law area. Now they come on the floor and civilly they want to rip up
200 years of precedent and history because we had this one attack, when
in reality the insurance industry only came to the Congress and said,
look, we do not know how to set the rates for liability insurance. They
came to us and said, we do not know how to set the premium to create
the pool that is necessary to cover potential disasters like this. We
have no question that we can handle a $10 billion disaster without any
problem, but we would like to have something between there and $100
billion that we could not have a dysfunctional economy for a number of
years; and after that, we can solve the problem.
Everybody concedes that if the disaster is over $100 billion, the
United States is going to be there, just as it has been for every other
disaster in the country. I hope we do not let this argument fall to the
level that we are misspeaking or misrepresenting what the facts are and
what the true information is.
Neither this side of the aisle nor that side of the aisle wants to
see an increase in insurance premiums. That has already happened; it
has happened because of the economy, the stock market, and September
11.
All we are trying to do is provide a vehicle that this Congress can
pass within the next 10 days to provide a stability for the American
economy to help come out of the recession and not go further into
recession.
Everybody recognizes, all the free marketeers of the insurance
industry, that there is a role of government to be played here. We are
trying to provide that role with the least interference to the private
sector.
Mr. OXLEY. Mr. Speaker, I yield 2 minutes to the distinguished
gentleman from Florida (Mr. Weldon).
Mr. WELDON of Florida. Mr. Speaker, I thank the chairman for yielding
time to me and commend him on the skill he used in bringing this very
complex issue to the floor. As I understand it, the other body is
deeply mired in controversy and struggling on this.
I also want to compliment the subcommittee chairman, the gentleman
from Louisiana (Mr. Baker), for his work, and particularly the staff.
Mr. Speaker, this is an extremely important issue, and it is very,
very important that we pass this bill. The economic implications if we
do not get a bill signed into law before the first of the year could be
huge.
I want to just address the issue of the substitute which is at hand
right now. I certainly commend the gentleman from New York (Mr.
LaFalce) for his thoughtful attempt to work on this. It has, obviously,
some of the same features we have in our underlying bill.
However, the way it is currently drafted, I think it could force some
small businesses to pay higher premiums. It could erode the current
State regulation system. Very importantly, I think it would potentially
discourage insurance companies from using reinsurance, and I think that
would be a very bad feature of the substitute.
Mr. Speaker, I believe the sentiments expressed by the chairman of
the Committee on the Judiciary, the gentleman from Wisconsin (Mr.
Sensenbrenner), are very, very well taken. I think it really does have
the potential to encourage, in the event of another disaster, a rush to
the courthouse; that there could be winners and losers, whereas I think
the underlying bill clearly avoids that sort of thing.
I just want to underscore, if people want to sue Osama bin Laden,
there are no limits. People can go after Osama bin Laden and his assets
and take him to the cleaners, and the attorneys could walk away with 50
or 60 percent of the settlement, if that is in the contingency fee
agreement they have reached.
This is about, what are the U.S. taxpayers going to pay? I think this
is a very well thought-out bill. Vote no on the substitute and yes on
the underlying bill.
Announcement by the Speaker pro tempore
The SPEAKER pro tempore (Mr. Nethercutt). Several remarks by Members
during the course of this debate have prompted the Chair to remind
Members that it is not in order in a debate to characterize Senate
action or inaction. This prohibition includes debate that specifically
urges the Senate to take certain action.
Parliamentary Inquiry
Mr. WELDON of Florida. Mr. Speaker, I have a parliamentary inquiry.
The SPEAKER pro tempore. The gentleman will state his inquiry.
Mr. WELDON of Florida. Mr. Speaker, is it correct that no matter how
much inaction there is in the other body, we still cannot talk about
it?
The SPEAKER pro tempore. The gentleman fails to state a parliamentary
inquiry.
Mr. OXLEY. Mr. Speaker, I yield 4 minutes to the gentleman from
Louisiana (Mr. Baker), the chairman of the subcommittee.
Mr. BAKER. Mr. Speaker, I thank the gentleman for yielding time to
me.
Mr. Speaker, I think it is important at the close of debate on this
important substitute to go through quickly the elements that are of
concern to those of us looking for appropriate resolution on the
question of terrorism insurance.
First, mandatory coverage. Think about it for a moment. The property
and casualty premium will now include an undisclosed terrorism premium.
How do we know how that pricing was done? How will we make a judgment
as to whether or not it is appropriate, given the risk we think we
perceive to our business interests from a terrorist attack?
Under H.R. 3210, we have a separate pricing of the terrorism premium
so we can see it off to the side, as against the property and casualty
premium, which we can compare with last year's. And so we clearly
identify; we do not mandate. They can shop, the taxpayer can make the
decision, the consumer can make the decision, Where do I go, and
further, Do I really need terrorism insurance?
Second, with regard to the first $5 billion worth of loss, there has
been some suggestion that there is no deductible, no payment by the
industry under our approach, and that their approach, having a $5
billion deductible is somehow going to fix that problem.
There is no mechanism in the bill for distributing that $5 billion
worth of loss across the industry. So if there are two, three, four,
five big companies who take the $5 billion hit, they absorb that hit
unfairly against all other companies. There is no mechanism to
distribute the loss across all companies. Translation: small businesses
get hit.
They attempt to spread the risk, however, by having a complicated
process that equals 7 percent of gross premium collected. When we read
through it and understand what they are trying to do here, they do not
recognize that
[[Page H8624]]
a direct insurance company who insures our business turns around and
lays off part of that risk to the reinsurance industry. When we lay off
that risk, we have to give them the premium. But we are going to set
the criteria by which they get taxpayer assistance on 7 percent of the
total premium.
To translate that: small business gets nailed. This is not a good
approach. It is not a sound approach. Under H.R. 3210, taxpayers are
protected first, small businesses are protected second. We help the
claimants by making sure that liquidity is provided to the insurance
company to help the victims of a heinous act in a timely and prompt
manner. It is the only way in which we should proceed.
Finally, with regard to the contentious issue of liability reform, it
really is very simple: we are using taxpayer money to help avert an
economic calamity as the result of an act of terrorism. The modest
reforms contained in this bill limit the amount of money that will go
to the trial lawyer.
If we are trying to help people in times of real duress and crisis,
is that an unreasonable thing to do? Should we not make sure that
taxpayer dollars get to the pocket to which they were intended? I think
it highly appropriate to do so.
If Members want a bill that says that we are going to respond to a
crisis without creating unnecessary bureaucracy; we are going to do it
quickly; we are going to make sure if we extend the credit of taxpayer
dollars, that they get the money back; we are going to give the
Secretary of the Treasury the ability to administer the program to make
sure we do not disrupt a fragile economy by saying, If this does not
make sense, Secretary of the Treasury, you have the right to administer
to the best economic interests of the citizens of this country and
collect the repayment later, but collect it you must.
Now, if Members want a bill that will ensure that big insurance
companies, as opposed to small, get helped; that trial lawyers get more
money out of the taxpayer; and that there is no guarantee of taxpayer
repayment, the substitute is the plan.
But if Members want to help victims of heinous acts of violence in a
timely, prompt, professional, accountable manner in which taxpayer
resources will be repaid, in which only those who need it receive the
assistance, the underlying H.R. 3210 is a piece of work that is not
perfect, but it is good. We will be back next year to change it. I am
sure the market will tell us the changes we need to make. But failing
to act today is the most irresponsible act one could engage in.
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me just make a few points. First of all, I very much
want a bill. I think it is important. I have attempted to work in good
faith with the members of the opposition, with the administration, to
come up with a good bill. I look forward to working in good faith in
the days ahead. I hope it will be the days ahead, rather than the weeks
ahead, that we will be able to come to an accord.
Secondly, I do think that there should be a deductible, and there is
not one in the gentleman's bill; there is in mine. I think the
gentleman from Louisiana (Mr. Baker) inadvertently made a mistake. We
do have an assessment mechanism. No company would have to pay a
deductible above 7 percent of net premiums, and we use basically the
same mechanism that they use. That certainly is our intent.
With respect to the mandatory coverage, maybe I made a political
mistake in offering that, but I think that substantively I am right.
Why? Because I cannot get over the 8 years that I chaired the Committee
on Small Business. I cannot get over the 4 to 6 years that I was
chairman of a small business subcommittee, when I had countless
hearings on the problems that small business had with insurance.
Take product liability insurance. We had not an unavailability
problem; we had an unaffordability problem. There were periods when
product liability insurance was so unaffordable that it was tantamount
to unavailable. Therefore, the only way we can ensure that terrorism
insurance would not become so unconscionably, astronomically
unaffordable for the small business men and women of America is to make
sure that we continue in the future what we have experienced in the
past, that is, that terrorism coverage has been part of all P&C
policies. That is the way the world has worked historically; we simply
want to continue that. So I think that substantively we ought to wind
up there.
On the issue of victims' compensation, we have to resolve this. There
will be no bill if we go forward with the gentleman's provisions. But
there is a case for consolidation. There is a case to be made that the
taxpayers should not pay for punitive damages. If we could come to an
accord there, we can do what is necessary. We can remove that Damoclean
sword that is hanging over the head of the economy.
Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
The SPEAKER pro tempore. The gentleman is recognized for the
remaining 3\1/2\ minutes.
(Mr. OXLEY asked and was given permission to revise and extend his
remarks.)
Mr. OXLEY. Mr. Speaker, this has been a very good debate, and first
of all, let me thank members of our committee on both sides of the
aisle and their respective staffs for what I think will turn out to be
a historic legislative product that we have been able to put together.
The chairman of the subcommittee, the gentleman from Louisiana (Mr.
Baker), has done yeoman's work in this area and deserves a great deal
of credit. My friend, the gentleman from New York (Mr. LaFalce), as
well as his ranking member, Mr. Kanjorski, have also performed
admirably.
Mr. Speaker, this is a historic moment for a new committee. We have
faced issues like anti-money laundering and attended a bill-signing
ceremony at the White House just 3 weeks ago. Now we come to this
difficult issue, the reinsurance issue, something we did not ask for,
something that happened to America after September 11; but this
committee stepped up. We were asked by the Speaker to produce
legislation, and I am very proud of the product that we put together
over a difficult issue, and it is complicated.
{time} 1515
I am particularly pleased that the substitute that the gentleman from
New York (Mr. LaFalce) offered has so much in common with the
underlying bill. The post-event assessment and surcharge systems are
largely the same. Both bills have a $100 million lower trigger, and the
idea to protect the taxpayers is clearly inherent in both pieces of
legislation.
I would, however, disagree with my friend from New York in regard to
the statement he made on the deductible. The summary of the substitute
provided to the Committee on Rules says that this 7 percent per company
deductible is based on net premiums. That is simply not true. The
substitute language actually bases the 7 percent deductible on
aggregate premiums. This, of course, penalizes insurers for using
reinsurance.
We do not need to be in the business of penalizing insurance
companies to provide reinsurance. That is how the system works. As a
matter of fact, if my colleagues can imagine a world on September 11
where domestic insurance companies did have not the ability to
reinsure, imagine what kind of losses the industry would have taken and
imagine what that would have brought to us today.
Indeed, this bill ultimately, when passed, will encourage the growth
of reinsurance, and it may be early on that these companies, these
domestic companies, will essentially have to reinsure themselves. They
cannot go offshore, but I guarantee my colleagues that it will not be
long before the reinsurance market offshore, the reinsurers offshore,
have to go into the largest market in the world. They cannot afford to
stay on the sidelines.
It is one thing on September 12 to announce that they are not going
to provide reinsurance coverage for terrorism, but my guess is the
American economy, the American people, the American insurance
companies, will find a way to provide the kind of coverage for their
consumers and their customers and their insurers. When they do that,
the reinsurance folks will be running back to try to get back in this
game, and that is what this bill is all about.
[[Page H8625]]
This is a temporary bill. This is not forever. Even the legal reforms
are not forever. They are part of this legislation. So let us defeat
the substitute, let us vote for final passage, and let us go on forward
to get legislation for the American people.
Mr. CONYERS. Mr. Speaker, I rise in strong support of the substitute
and in opposition to the base bill. I do so because the legislation was
hijacked by the Rules Committee, which turned a bipartisan insurance
relief bill into yet another vehicle to enact a one-sided ``tort
reform'' agenda.
First and foremost, the base text totally eliminates punitive
damages. If this passes, Congress would be saying to the future victims
of terrorism that the most outrageous acts of gross negligence or
intentional misconduct that lead to an act of terrorism are totally
immune from punitive damages. Thus, if a baggage screening firm hires a
known terrorist who allows a weapon to slip on board a plane, this bill
would protect that company from liability.
The base bill also federalizes each and every action involving
terrorism, throwing more than 200 years of respect for federalism out
the window. Even worse, the liability provisions bear little
relationship to the issue of insurance. As a matter of fact, they would
apply to cases where the negligent party may have no insurance coverage
whatsoever. The bill even takes away all judicial review relating to
the bureaucratic decision as to whether terrorism caused the injury, an
unprecedented and very likely unconstitutional limitation on victims'
rights.
The underlying bill also would limit the ability of the victims of
terrorism to collect non-economic damages. This says to innocent
victims that damages from loss of consortium can be ignored and damages
for victims who lose a limb or are forced to bear excruciating pain for
the remainder of their lives are not as important as lost wages. Why
Congress would want to prevent a grieving wife from obtaining monetary
relief is beyond me, but that is exactly what this bill does.
The bill goes on and on--comprising a veritable wish list of
liability limitations. It mandates collateral source offsets, forcing
victims to choose between seeking money from charities and pursuing a
grossly negligent party in court. It caps attorneys' fees without
providing any comparable limitation on defendant's fees. Amazingly, the
legislation would criminalize the fee cap, subjecting lawyers to jail
time. The bill also eliminates pre-judgment interest, which takes away
any incentive for negligent parties to reach pre-trial settlements. All
of these harmful provisions are being proposed in the complete absence
of hearings or any committee consideration.
If enacted, the tort provisions would constitute the most radical and
one-sided liability limitations ever. I urge the Members to vote
``yes'' on the substitute, and ``no'' on final passage.
Liability Limitation Provisions in H.R. 3210, the ``Terrorism Risk
Protection Act''
(Prepared by the Democratic Staff of the House Judiciary Committee)
Section 15 of H.R. 3210, the ``Terrorism Risk Protection
Act,'' proposes new and unnecessary tort reforms that would
be harmful to victims of terrorism. Specifically, the bill
federalizes all terrorism liability cases, prohibits judicial
review of decisions to federalize such cases, eliminates
punitive damages, limits the amount of non-economic damages
for which defendants (not just insurers or reinsurers) are
liable, mandates collateral source offsets, and imposes caps
on attorneys' fees. The following is a section-by-section of
H.R. 3210, Section 15.
Section 15. Litigation Management.
Subsection (a). Federal Cause of Action for Claims Relating
to Terrorist Acts.
Section 15(a)(1)--In General: provides that, if the
Secretary of the Treasury decides there has been one or more
acts of terrorism, ``there shall exist a Federal cause of
action, which, except as provided in subsection (b), shall be
the exclusive remedy for claims arising out of, relating to,
or resulting from such acts of terrorism.'' This is a
broadly-written provision that would limit victims' rights in
every conceivable civil action--state or Federal--involving
terrorism, even if the insurer is not a party to the action.
In addition, the critical term ``act of terrorism'' is
undefined within the text of the legislation and thus grants
too much latitude to the Secretary to deem an event an ``act
of terrorism'' and allow wrongdoers to benefit from this
section.
Section 15(a)(2)--Effect of Determination: provides that
the Secretary's determinations under section 15(a)(1) shall
not be subject to judicial review and shall take effect upon
publication in the Federal Register. This provision raises
two significant concerns. First, it is likely
unconstitutional because the Constitution has been held to
provide for judicial review of actions by the Executive.
Second, denying judicial review of the Secretary's decisions
would grant the Secretary wide latitude to make
determinations about what events would constitute ``acts of
terrorism,'' such that--as before--a hoax or practical joke
could be designated an ``act of terrorism.''
Section 15(a)(3)--Substantive Law: states that an action
under this section is governed by the law and choice of law
principles of the state in which the terrorism occurred.
Section 15(a)(4)--Jurisdiction: provides that the Judicial
Panel on Multi-district Litigation will designate one court
and that court will have exclusive jurisdiction on all cases
arising out of a particular terrorist event.
Section 15(a)(5)--Limits on Damages: provides a number of
limits on damages in actions brought for damages in
connection with any type of civil action related to
terrorism, not just those pertaining to commercial property
and casualty insurance. These limitations on their face apply
in every conceivable action--state or Federal--involving
terrorism. In fact, the current version of the bill is worse
than that reported by the Financial Services Committee
because the earlier bill limited damages only in cases
involving commercial property or casualty insurance; the
current bill applies to any action related to terrorism,
regardless of whether an insurance claim is involved.
Section 15(a)(5)(A): would prohibit punitive damages and
pre-judgment interest. Punitive damages are monetary damages
awarded to plaintiffs in civil actions when a defendant's
conduct has been found to flagrantly violate a plaintiff's
rights. The standard for awarding punitive damages is set at
the state level, but they are generally allowed only in cases
of wanton, willful, reckless or malicious conduct. These
damages are used to deter and punish particularly egregious
conduct. Eliminating punitive damages totally undermines the
deterrent and punishment function of the tort law. The threat
of meaningful punitive damages is a major deterrent to
wrongdoing, and eliminating punitive damages would severely
undercut their deterrent value since reckless or malicious
defendants could find it more cost effective to continue
their callous behavior and risk paying small punitive damage
awards. This means baggage screening firms would be protected
from liability if they hired incompetent employees or
deliberately failed to check for weapons and a terrorist act
resulted.
Pre-judgment interest liability is an added incentive to
move the judicial process along because a delay would result
in a penalty of added interest to the judgment. Without the
threat of added interest payments, attorneys for defendants
may be prone to delay proceedings because the real dollar
value of a judgment amount would be reduced, making the
judgment the same no matter how long the process. Limiting
interest would unfairly affect the judgment award collected
by the victims and leave them vulnerable to a delayed
judicial process.
Section 15(a)(5)(B): provides that a defendant will only be
liable for non-economic damages in direct proportion to the
percentage of the defendant's responsibility for the victim's
harm and prohibits plaintiffs from recovering such non-
economic damages unless the plaintiff suffered physical harm.
This would alter common law rule of joint and several
liability between defendants. Under the traditional rule,
where more than one defendant is found liable, each defendant
is held liable for the full amount of the damages. The
justification for this is that it is better that a wrongdoer
who can afford to do so pay more than its share, rather than
an innocent victim obtain less than full recovery. Also, a
defendant who pays more than its share of damages can seek
contribution from the other defendants. By holding each
defendant responsible only for its percentage of
responsibility, this section would supersede state law by
eliminating joint and several liability for non-economic
damages in these actions. Also, the prohibition on non-
economic damages unless physical harm is suffered raises
significant concerns. Essentially, a spouse who suffers loss
of consortium could not recover any non-economic damages.
This is an unprecedented limitation on victims' rights.
In addition, this provision would shift non-economic costs
from wrongdoers to victims and discriminate against groups
less likely to establish significant economic damages, such
as women, children, minorities, seniors, and the poor. It is
unconscionable to put more value on the loss of a job than on
the loss of a limb, loss of the ability to have children,
disfigurement, or other forms of non-economic harms. Also,
eliminating joint and several liability for non-economic
harms would discourage settlements and thus increase case
loads and litigation costs.
Section 15(a)(6)--Collateral Sources: requires that, for
compensation of loss related to terrorism, a plaintiff's
recovery must be offset by any funds received pursuant to any
emergency or disaster relief program or any other collateral
source. There are two problems with this provision. First, a
reduction of a victim's award due to collateral source
compensation would result in wrongdoers escaping their
responsibility. This legislation subtracts any other
potential sources of recovery the victim may have from any
damages the wrongdoer should pay. Losses caused by negligence
or wrongdoing would be shifted from liable defendants to the
government, private insurers, or disaster relief
organizations who made the ``collateral source'' payment.
Second, the provision is too overreaching. The effect would
be to require any funding given to the plaintiff, whether it
be from health insurance payment or funds from a voluntary
organization, be used to offset relief payments made
[[Page H8626]]
by culpable defendants. Under this provision, funds received
by a victim from the Red Cross must be used to offset relief
payments and reduce a wrongdoer's liability.
Section 15(a)(7)--Attorney Fees: provides that attorneys'
fees shall be limited to twenty percent of either the damages
ordered by a court or any court-approved settlement under
this section. Any attorney who charges or receives fees in
excess of twenty percent shall be fined not more than $2,000,
imprisoned not more than on year, or both. Fee caps, which
apply only to victims, result in less access to justice for
lower-income populations. A payment ceiling or fee cap limits
the economic incentive for attorneys to take on complex or
difficult-to-prove claims under the contingency fee system;
in turn, this would make it much more difficult for lower-
income populations to secure good representation. Moreover,
the threat of imprisonment is without precedent and could
deter attorneys from providing assistance.
Section 15(b)--Exclusion: provides that nothing in section
15 shall limit the liability of a person who attempts to
commit, commits, participates, or is engaged in a conspiracy
to commit an act of terrorism.
Section 15(c)--Right of Subrogation: provides that the
United States has the right of subrogation with respect to
any claim it paid under this section.
Section 15(d)--Relationship to Other Laws: states that
nothing in section 15 shall affect either any party's
contractual right to arbitrate a dispute, or any provision of
the Air Transportation Safety and System Stabilization Act of
2001 (Pub. L. No. 107-42).
Section 15(e)--Satisfaction of Judgments from Frozen Assets
of Terrorists, Terrorist Organizations, and State Sponsors of
Terrorism
Section 15(e)(1)--In General: provides that, in any case in
which a person obtains a judgment against a terrorist party,
the frozen assets of that terrorist party or of any agency or
instrumentality of that party shall be available for
satisfaction of the judgment. This provision removes foreign
sovereign immunity and is designed to ensure that victims of
terrorism receive the compensation they are owed, even if the
defendant is a foreign state.
Section 15(e)(2)--Presidential Waiver: states that the
President, on an asset-by-asset basis, can waive the
requirements of subsection 15(e)(1) for any property subject
to the Vienna Convention on Diplomatic Relations or the
Vienna Convention on Consular Relations. This waiver
authority vitiates the protections for victims of state-
sponsored terrorism provided for in subsection 15(e)(1). If
the President can waive unilaterally any judgment for a
victim, then victims could easily receive no compensation for
their claims.
Mr. BAKER. Mr. Speaker, let me begin by aligning myself with the
statement of Chairman Oxley regarding the LaFalce substitute. The
LaFalce substitute has many of the same components of H.R. 3210 because
H.R. 3210 represents, in large part, the cooperative efforts of
Chairman Oxley, Ranking Member LaFalce, Mr. Kanjorski and me. However,
the differences in the substitute from H.R. 3210 demonstrate exactly
where Chairman Oxley and I diverge from our Democratic colleagues. The
LaFalce substitute includes provisions that we simply would not agree
to, which is why I urge my colleagues to vote ``no.''
First, the amendment is anti-consumer in that it mandates commercial
property and casualty insurers to include terrorism risk coverage on
all policies on the same terms and amounts as their other commercial
coverage. This precludes businesses from creating risk management
solutions that meet their particular needs. For instance, many small
businesses may not feel that their size, location or exposure merits
the additional cost of terrorism insurance--but they would have to pay
for it regardless under the LaFalce proposal. By further example, the
LaFalce plan would not permit a business to buy only standard
commercial property and casualty coverage from one insurer and
terrorism coverage from another if there is a pricing advantage in
doing so. The plan also denies the insured the ability to self-insure
for a certain amount of terrorism risk or to purchase multiple layers
of terrorism coverage.
In addition to the problems that mandated coverage creates for
consumers, it also unnecessarily preempts state law on form regulation
by having the Federal government mandate the terms and conditions of
coverage. The certainty provided by the exposure limits in our Bill and
the assessment system in our Bill provides the proper incentives for
commercial property and casualty insurers to provide terrorism risk
coverage.
Another problem with the LaFalce substitute is that the insurance
mechanism that it creates does not effectively spread risk, prevent
gaming, provide adequate protections to small insurers, or encourage
the spreading of risk through reinsurance. While both Bills require
that industry pay the first $5 billion in losses due to terrorism in
the first year and the first $10 billion in subsequent years, the
LaFalce plan does not effectively spread this risk throughout the
industry. By having a $5 billion deductible with no provision of how
these losses are calculated or paid, his plan competitively
disadvantages small insurance companies who would not be able to absorb
the tremendous losses that would be incurred by those small insurers
before the industry assistance kicks in.
To try to respond to the small insurer disadvantage, the LaFalce plan
has an individual insurance company exposure limit of 7 percent of
gross premium--not net premium as stated in his summary. This is a very
important point in that gross premium numbers do not give credit to the
insurer for the reinsurance that it has purchased. Thus, before federal
assistance kicks in, the insurer would have to suffer losses equaling
over 7 percent of its gross premium even though it has already spread
much of the risk that it cannot cover to reinsurers. The result:
insurers are not able to write as much insurance and assistance will
not kick in for them until they have already been put into financial
duress.
Additionally, the LaFalce plan encourages gaming of the system.
Insurers will delay claims and loss reports for months or years so that
they occur after the industry deductible is reached. That way, they
avoid having to absorb any of the losses themselves. Our plan does
provide first dollar coverage once the triggers are met to prevent such
gaming; and while the LaFalce plan does not require the industry to
retain any losses after his proposal starts to provide assistance, our
Bill always requires that the insurer absorb at least 10 percent of the
losses at all times, regardless of federal assistance.
Finally, the LaFalce substitute strips out the sovereign immunity
provisions of H.R. 3210. Acts of terrorism give rise to very unique
sets of facts and a complexity of interested parties that is uncommon
in tort law. In the administration of the program established by this
Act, it is essential that there is consistency and timely response.
Multiple state forums awarding immense damage awards underwritten by
federally supported insurance companies would result in a patchwork of
inconsistent state court decisions all over the country that would
impede the effective and fair implementation of this program. The lack
of limited federal forums for claims would result in the kinds of
tragic delays in the prompt compensation of victims as we have seen in
other mass tort cases, such as the 1993 WTC bombing where cases are
just now coming to trial.
Equally as important are the prohibitions on punitive damage awards
and joint and several liability for losses caused by terrorist attacks.
Acts of terrorism differ fundamentally from other losses that the tort
system is designed to deal with in that the overwhelmingly culpable
party, the terrorists, will either not be before the court or their
assets will be limited or unreachable. To subject effected parties of a
terrorism attack and the United States taxpayer to punitive damage
awards for the acts of suicidal and maniacal terrorists is a poor
allocation of limited resources and simply unfair to the group of
victims as a whole. Furthermore, to suggest that an effected party that
is found to be 1 percent at fault for a negligent omission of some
minor sort could be held responsible for 100 percent of damages due to
a terrorist attack is beyond reason.
I strongly urge a ``no'' vote on this amendment.
The SPEAKER pro tempore (Mr. Nethercutt). All time for debate on the
amendment in the nature of a substitute has expired.
Pursuant to House Resolution 297, the previous question is ordered on
the bill, as amended, and on the amendment offered by the gentleman
from New York (Mr. LaFalce).
The question is on the amendment in the nature of a substitute
offered by the gentleman from New York (Mr. LaFalce).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. LaFALCE. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The vote was taken by electronic device, and there were--yeas 197,
nays 222, not voting 14, as follows:
[Roll No. 462]
YEAS--197
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeGette
[[Page H8627]]
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Frank
Gephardt
Gilman
Gonzalez
Gordon
Graham
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson (IL)
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
LaTourette
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Lynch
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Mink
Mollohan
Moore
Morella
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Reyes
Rivers
Rodriguez
Roemer
Ross
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Terry
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Woolsey
Wu
Wynn
NAYS--222
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Boyd
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Coble
Collins
Combest
Costello
Cox
Cramer
Crane
Crenshaw
Culberson
Cunningham
Davis, Jo Ann
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Goode
Goodlatte
Goss
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Harman
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Jenkins
John
Johnson (CT)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Kleczka
Knollenberg
Kolbe
LaHood
Largent
Larson (CT)
Latham
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stark
Stearns
Stenholm
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Young (AK)
Young (FL)
NOT VOTING--14
Carson (IN)
Chambliss
Cooksey
Cubin
Davis, Tom
DeFazio
Ford
Frost
Miller, George
Quinn
Rangel
Rothman
Wexler
Wolf
{time} 1541
Messrs. SIMMONS, THOMAS, SMITH of Texas, GUTKNECHT, and Ms. HARMAN
changed their vote from ``yea'' to ``nay.''
Messrs. BERRY, OWENS, and PHELPS changed their vote from ``nay'' to
``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.
Mr. TOM DAVIS of Virginia. Mr. Speaker, I would like the record to
show that I was right at the door when the vote closed. My colleague,
the gentleman from Virginia (Mr. Wolf), and I were in a meeting with
the Director of OMB in the Cannon office building. Had I been present,
I would have voted no.
Mr. WOLF. Mr. Speaker, I too was in the meeting with the Director of
OMB. Had I been present, I would have voted no.
The SPEAKER pro tempore (Mr. Nethercutt). The question is on the
engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. LaFalce
Mr. LaFALCE. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. LaFALCE. Yes, I am opposed, and the National Taxpayers Union is
opposed to the bill in its current form.
The SPEAKER pro tempore. The Clerk will report the motion.
The Clerk read as follows:
Mr. LaFalce moves to recommit the bill H.R. 3210 to the
Committee on Financial Service with instructions to report
the same back to the House forthwith with the following
amendments:
Strike section 15 of the bill (relating to litigation
management).
At the end of section 6 of the bill (relating to federal
cost-sharing for commercial insurers), add the following new
subsection:
(g) Requirement.--Notwithstanding any other provision of
this Act, the Secretary may not provide financial assistance
under this section to any commercial insurer unless the
commercial insurer provides to the Secretary such assurances,
as the Secretary shall by regulation require, that such
insurance company will comply with the regulations issued
pursuant to section 7(i).
At the end of section 7 of the bill (relating to
assessments), add the following new subsection:
(i) Prohibition of Pass-Through.--The Secretary shall, by
regulation, prohibit any commercial insurer from including in
any premiums or other charges for property and casualty
insurance coverage any amounts to cover any costs
attributable to any assessment under this section (including
the payment of any such assessment and costs of financing
such payment).
{time} 1545
Mr. LaFALCE (during the reading). Mr. Speaker, I ask unanimous
consent that the motion to recommit be considered as read and printed
in the Record.
The SPEAKER pro tempore (Mr. Nethercutt). Is there objection to the
request of the gentleman from New York?
There was no objection.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
York (Mr. LaFalce) is recognized for 5 minutes in support of his motion
to recommit.
Mr. LaFALCE. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me make the following points. The National Taxpayers
Union not only requests a ``no'' vote on final passage of the bill,
they will be scoring final passage of the bill as it stands. I just
want to make Members aware of that.
Second, what is in the motion to recommit takes the House bill as it
is right now, two changes, one, a deletion. It deletes all of the tort
provisions. Number two, an addition. It would prevent the insurance
industry from passing through the costs of repaying the Federal
assistance granted under the bill to its customers. Those are the only
two changes. We cut out the tort provisions, and we prevent the pass-
through of costs.
Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts
(Mr. Delahunt) to speak to these issues.
Mr. DELAHUNT. Mr. Speaker, the provision that was added by the
Committee on Rules last night which would limit relief for the victims
of terrorist attacks by immunizing wrongdoers in advance from the
consequences of their own negligence and reckless conduct, has nothing
whatsoever to do with stabilizing the insurance market, nothing to do
with ensuring that people would be able to secure insurance against
future acts of terrorism. It does not belong in the bill. The motion to
recommit, as the ranking member alluded to, would delete it; and it
would leave us basically with the bill reported out with strong
bipartisan support from the Committee on Financial Services.
[[Page H8628]]
If we are genuinely concerned about preventing an insurance crisis,
we should agree to this motion and pass a clean bill. Let us not try to
rewrite the fundamental rules of the civil justice system late at night
without thoughtful and considerate debate. Note that the Committee on
Rules' provision would prohibit the courts from awarding punitive
damages in cases arising out of terrorist incidents no matter how
outrageous the underlying conduct.
For example, even for private airport security contractors who
wantonly, recklessly, maliciously hired convicted felons, failed to
perform background checks, there would be no punitive damages. Even for
landlords who deliberately ignore safety codes and fail to install
escape routes in their buildings, there would be no punitive damages.
Nobody wants to hold parties responsible if they bear no blame, but
this provision lets them off the hook, even if they knowingly engage in
conduct that puts our fellow citizens at risk.
Mr. Speaker, I would hope that the motion to recommit would prevail,
and I urge support for the motion.
Mr. LaFALCE. Mr. Speaker, I yield 2 minutes to the gentleman from
Pennsylvania (Mr. Kanjorski), a member of the Subcommittee on Capital
Markets, Insurance and Government Sponsored Enterprises.
Mr. KANJORSKI. Mr. Speaker, I support the motion to recommit because
it is certainly in the first provision cleaning up the tort reform
provisions, which would go a long way in moving the process along to a
final conclusion.
A second provision in the bill allows, of course, for restrictions to
pass through. As I understand the concept, rather than allowing
insurance companies to keep their profit scales and just pass a rate
increase on to the customers, even though they have profits that could
afford the cost of those losses, they first would have to look at their
profits before there is a pass-through.
The purpose of this motion to recommit is to put a bill together that
is more tenable for action in the Senate and eventually to pass this
House. I urge my colleagues on both sides to reexamine their conscience
and put the real issue at stake, the need for reinsurance in this
country, a good underlying bill that was structured to accomplish that,
and to do it in a bipartisan way.
Mr. LaFALCE. Mr. Speaker, I yield back the balance of my time.
Mr. OXLEY. Mr. Speaker, I rise in opposition to the motion to
recommit.
The SPEAKER pro tempore. The gentleman from Ohio (Mr. Oxley) is
recognized for 5 minutes in opposition to the motion to recommit.
Mr. OXLEY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, in addition to striking the litigation management
sections, the motion to recommit imposes price controls on the
insurance industry. We can attempt to regulate rates, but we cannot
force insurance companies to offer coverage; and States with rate
regulation have less competition and higher prices for consumers. Only
if we want less insurance availability and higher prices would we vote
for this motion to recommit.
Our bill, H.R. 3210, forces the industry, not the taxpayers, to bear
the ultimate cost of the terrorist attack. That is what this bill is
all about. The bipartisan bill passed out of committee on voice vote
allows insurers to price it into future policies.
The motion to recommit says that not only are insurers responsible
for spreading terrorist costs, but we are going to force them into
insolvency. Why should insurers be punished and not allowed to rebuild
their reserves? They should be allowed to reinsure themselves,
particularly in light of the fact that the reinsurance industry has
gotten out of the business.
These price controls proposed are bad for consumers, bad for
policyholders and bad for our national economy.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Wisconsin (Mr. Sensenbrenner), the chairman of the Committee on
the Judiciary.
Mr. SENSENBRENNER. Mr. Speaker, I rise in strong opposition to the
motion to recommit which would strip from the bill vital litigation
management provisions. Without these provisions, the bill would
threaten untold numbers of businesses with the loss of capital and
credit simply because they might be named in a lawsuit related to a
terrorist attack.
Nearly identical litigation management provisions were passed by the
House by a vote of 286-139 to cover lawsuits related to the September
11 attacks. Without these provisions, anyone could be on the hook for
all damages caused by a terrorist attack, running into billions of
dollars, even when they share only 1 percent of the responsibility of
the losses and the terrorists share the remaining 99 percent.
If any defendant, even those just marginally involved in such a
minuscule portion of any injuries could be made to pay the full amount
of noneconomic damages caused by a massive terrorist attack, hundreds
of legitimate businesses would be thrown into bankruptcy.
Again, existing tort rules are designed to deal with the typical
slip-and-fall case. They may properly apply when the primary cause of
an injury is excessive water on the floor of a grocery store, but
surely that cannot be true when the primary cause is a suicidal
fanatic, motivated by the deepest hatred of America and using weapons
of mass destruction intended to kill as many innocent people as
possible. If anyone can convince me that a slippery floor is the moral
equivalent of a terrorist, I will vote for the gentleman's motion
myself.
Mr. Speaker, Congress has already recognized this in passing the
liability protection provisions governing lawsuits relating to the
September 11 attacks. Without the litigation management provisions, no
limits would be placed on the fees of attorneys bringing cases against
Americans and their businesses, even when the primary cause of injury
is a terrorist.
Without the provisions which allow courts the discretion to keep
attorneys' fees reasonable, a few war profiteers can turn attacks that
result in multibillion-dollar losses into private jackpots for
themselves, that are paid for by the U.S. taxpayers.
Mr. Speaker, I urge all Members to oppose this motion to recommit and
ensure equitable compensation to victims while protecting the American
economy and the taxpayer.
Mr. OXLEY. Mr. Speaker, I yield the balance of my time to the
gentleman from North Dakota (Mr. Pomeroy).
Mr. POMEROY. Mr. Speaker, I had hoped the motion to recommit would
offer us the opportunity to fix this bill. I believe the bill is
flawed, and I will be voting against it. Unfortunately, minority
leadership staff has fouled up, in my opinion, the motion to recommit.
I will be voting against the motion to recommit, and voting against the
bill as well.
Mr. OXLEY. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Recorded Vote
Mr. LaFALCE. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 173,
noes 243, not voting 17, as follows:
[Roll No. 463]
AYES--173
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Berkley
Berman
Berry
Bishop
Blagojevich
Bonior
Borski
Boswell
Boyd
Brady (PA)
Brown (OH)
Capps
Capuano
Cardin
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (IL)
DeGette
Delahunt
DeLauro
Dicks
Dingell
Doggett
Doyle
Edwards
Engel
Eshoo
Evans
Farr
Fattah
Filner
Frank
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E.B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
[[Page H8629]]
LaTourette
Lee
Levin
Lewis (GA)
Lipinski
Luther
Lynch
Maloney (CT)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Mink
Mollohan
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pastor
Payne
Pelosi
Phelps
Rahall
Reyes
Rivers
Rodriguez
Ross
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Solis
Strickland
Stupak
Tauscher
Taylor (MS)
Thompson (MS)
Thurman
Tierney
Towns
Traficant
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Woolsey
Wynn
NOES--243
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bentsen
Bereuter
Biggert
Bilirakis
Blumenauer
Blunt
Boehlert
Bonilla
Bono
Boozman
Brady (TX)
Brown (FL)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Coble
Collins
Combest
Cox
Cramer
Crane
Crenshaw
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Deutsch
Diaz-Balart
Dooley
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Etheridge
Everett
Ferguson
Flake
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
Kilpatrick
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Larson (CT)
Latham
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lofgren
Lucas (KY)
Lucas (OK)
Maloney (NY)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moore
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pascrell
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Pomeroy
Portman
Price (NC)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Roemer
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Spratt
Stark
Stearns
Stenholm
Stump
Sununu
Sweeney
Tancredo
Tanner
Tauzin
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Wu
Young (AK)
Young (FL)
NOT VOTING--17
Boehner
Boucher
Carson (IN)
Chambliss
Cooksey
Cubin
DeFazio
Ford
Frost
Greenwood
Johnson (CT)
Lowey
Miller, George
Quinn
Rangel
Rothman
Wexler
{time} 1618
Mr. ROEMER and Mr. MORAN of Virginia changed their vote from ``aye''
to ``no.''
Mr. CARSON of Oklahoma changed his vote from ``no'' to ``aye.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. Nethercutt). The question is on passage
of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Mr. LaFALCE. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The vote was taken by electronic device, and there were--ayes 227,
noes 193, not voting 13, as follows:
[Roll No. 464]
AYES--227
Aderholt
Akin
Armey
Bachus
Baker
Ballenger
Barcia
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Boozman
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Clement
Coble
Collins
Combest
Cox
Cramer
Crane
Crenshaw
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Dooley
Doolittle
Dreier
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Fletcher
Foley
Forbes
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (OH)
Hall (TX)
Hansen
Hart
Hastings (WA)
Hayes
Hayworth
Herger
Hilleary
Hobson
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hyde
Isakson
Issa
Istook
Jenkins
John
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Larson (CT)
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Maloney (CT)
Manzullo
Matheson
McCrery
McHugh
McKeon
Mica
Miller, Dan
Miller, Gary
Miller, Jeff
Moran (KS)
Moran (VA)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pence
Peterson (PA)
Pickering
Pitts
Pombo
Portman
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Stearns
Stenholm
Stump
Sununu
Sweeney
Tanner
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Towns
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins (OK)
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)
NOES--193
Abercrombie
Ackerman
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (OK)
Clay
Clayton
Clyburn
Condit
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Doyle
Duncan
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Flake
Frank
Gephardt
Gonzalez
Green (TX)
Gutierrez
Harman
Hastings (FL)
Hefley
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Luther
Lynch
Maloney (NY)
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McInnis
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Mollohan
Moore
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Paul
Payne
Pelosi
Peterson (MN)
Petri
Phelps
Platts
Pomeroy
Price (NC)
Rahall
Reyes
Rivers
Rodriguez
Roemer
Ross
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schaffer
Schakowsky
Schiff
Scott
Serrano
Sherman
Shows
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Strickland
Stupak
Tancredo
Tauscher
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watson (CA)
Watt (NC)
Waxman
Weiner
Woolsey
Wu
Wynn
[[Page H8630]]
NOT VOTING--13
Boucher
Carson (IN)
Chambliss
Cooksey
Cubin
DeFazio
Ford
Frost
Lowey
Quinn
Rangel
Rothman
Wexler
{time} 1637
Mr. CROWLEY changed his vote from ``aye'' to ``no.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________