[Congressional Record Volume 147, Number 164 (Friday, November 30, 2001)]
[Senate]
[Pages S12255-S12259]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRAMM (for himself, Mr. Enzi, Mr. Bennett, Mr. Bunning, 
        and Mr. Allard):
  S. 1751. A bill to promote the stabilization of the economy by 
encouraging financial institutions to continue to support economic 
development, including development in urban areas, through the 
provision of affordable insurance coverage against acts of terrorism, 
and for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. GRAMM. Mr. President, today I am joined by Senators Enzi, 
Bennett, Bunning, and Allard, in introducing the Terrorism Risk 
Insurance Act of 2001. This legislation will effectively, and in a 
straightforward way, address a crisis before us.
  The crisis of which I speak is, like a tidal wave, currently away 
from the shore. Its movement is little noticed until it reaches the 
shore, when its consequences will be disastrous. That is, the 
consequences will be disastrous unless we prepare for them now. This 
legislation will do that.
  Tidal waves are started by major seismic, earth shaking events. The 
earth shaking event that set this tidal wave in motion took place on 
September 11. Our Nation has responded admirably to the very visible 
problems caused by that day. We need to act just as admirably and 
effectively to address this hidden wave.
  This hidden wave nearing our shores is the unavailability to 
terrorism risk insurance, an unavailability that will strike a little 
more than one month from now. Already we are receiving signs from all 
across the country that terrorism risk insurance is becoming increasing 
hard to get, in many cases it is not available at all even today. That 
is because insurance companies have to be able to estimate and measure 
risk in order to be able to provide for it, in order to be able to 
spread the risk, and to do that so that the insurance is affordable. 
Right now, in the short term, they cannot do that. If they cannot do 
that, they cannot offer the coverage without jeopardizing the solvency 
of their companies and the value of all their other insurance policies.
  I want to make it clear that the problem before us is not one of the 
weakness of our insurance industry. It is a strong and vibrant 
industry. The industry needs no help, no bail out, no government 
assistance. And our bill would not give them any assistance, not one 
penny. Our bill addresses the needs of the insurance customers, the 
customers who, without this short term program, will not be able to 
find affordable insurance coverage against terrorism risks.
  What does that mean for the economy? It means that without insurance, 
banks will not make loans where there is an uncovered risk, a risk that 
what they are lending the money for might be destroyed or harmed by a 
terrorist. It means that simple, ordinary, everyday business 
transactions that rely upon the security of underlying insurance 
coverage will not take place. That means that, without this 
legislation, come January 1 and the weeks leading up to it a brand new 
weight will be placed upon our economic recovery just as it starts to 
get going.
  Will the insurance industry be able to figure out how to price this 
coverage? Yes. But history tells us that they will not figure it out 
right away. It will take a few months, maybe a couple of years.
  The legislation we are introducing today is a program that will work 
to solve this problem in the mean time. It has been put together in 
close consultation with industry, with the consumers of insurance 
products and with the insurance companies. It has been put together in 
close consultation with the White House and the Treasury Department, 
and it enjoys their support.
  This bill will not create any new, forever government program. It is 
short term in structure and intent. It is limited in its extent. It is 
designed to force the insurance industry to develop its own capacity to 
handle this new risk in a shortened period of time. From our 
discussions with the industry, with the state regulators, with 
insurance consumers, we believe that the industry will be up to the 
task.
  Central to our proposal is that this legislation would not provide 
one penny of federal assistance to the insurance industry. No insurance 
company will get a penny out of this program. All of the benefits of 
this program would go to victims of terrorist activities.
  The structure of our program is, for a two-year period that may be 
extended by the Secretary of the Treasury for only one additional year, 
to divide the terrorism risk with industry. We say to industry, here, 
you take the first risk. It is all yours. But we will define what that 
initial risk is so that you can price it. We will put limits on it. We 
will, for the period of this program, take over the currently unknown 
risk, the cataclysmic risk, while you develop the means for dealing 
with that new risk as well, as the industry always has.
  Under our program, in the first two years, the industry has sole 
responsibility for the first $10 billion of risk from terrorist events. 
The industry then has ten percent of the risk above that to encourage 
them to manage and become familiar with managing the catastrophic risk, 
while the Federal Government will carry ninety percent of that 
catastrophic risk. If a third year is added, then the industry will 
have the sole responsibility for the first $20 billion of risk.
  I believe that this is the most effective way not only to deal with 
this tidal wave approaching our shores but in fact to ward it off. The 
program is simple and understandable. The program does not have the 
victims of terrorism paying any extra premiums to the government for 
the coverage provided by the government. We don't make the suffering 
pay yet again. But we also do not expose the taxpayer to liability for 
frivolous lawsuits that might follow a terrorist event.
  With the Federal Government providing this insurance benefit, we do 
not also want to open the Treasury doors to frivolous or predatory 
litigation. But these limitations are narrow, and they are limited to 
the life of the program. They end when the Federal program ends. The 
limitations are similar to the limitations in place today against 
lawsuits brought against the federal government. We cannot expose the 
taxpayer to punitive damages at

[[Page S12256]]

the same time that he is providing generous assistance to the victims 
of terrorism.
  There are a few things that we need to do before adjournment of the 
Congress this year. I believe that this legislation, that addresses 
this very serious problem, should be on that sort list of things that 
we need to do.
  I ask that the text of the bill and a summary of its highlights be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1751

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

     SECTION. 1. SHORT TITLE.

       This Act may be cited as the ``Terrorism Risk Insurance Act 
     of 2001''.

     SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSE.

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

     SEC. 3. DEFINITIONS.

       In this Act, the following definitions shall apply:
       (1) Act of terrorism.--
       (A) Certification.--The term ``act of terrorism'' means any 
     act that is certified by the Secretary, in concurrence with 
     the Secretary of State, and the Attorney General of the 
     United States--
       (i) to be a violent act or an act that is dangerous to--
       (I) human life;
       (II) property; or
       (III) infrastructure;
       (ii) to have resulted in damage within the United States, 
     or outside of the United States in the case of an air carrier 
     described in paragraph (3)(A)(ii); and
       (iii) to have been committed by an individual or 
     individuals acting on behalf of any foreign person or foreign 
     interest, as part of an effort to coerce the civilian 
     population of the United States or to influence the policy or 
     affect the conduct of the United States Government by 
     coercion.
       (B) Limitation.--No act or event shall be certified by the 
     Secretary as an act of terrorism if--
       (i) the act or event is committed in the course of a war 
     declared by the Congress; or
       (ii) losses resulting from the act or event, in the 
     aggregate, do not exceed $5,000,000.
       (C) Determinations final.--Any certification of, or 
     determination not to certify, an act or event as an act of 
     terrorism under this paragraph shall be final, and shall not 
     be subject to judicial review.
       (2) Business interruption coverage.--The term ``business 
     interruption coverage''--
       (A) means coverage of losses for temporary relocation 
     expenses and ongoing expenses, including ordinary wages, 
     where--
       (i) there is physical damage to the business premises of 
     such magnitude that the business cannot open for business;
       (ii) there is physical damage to other property that 
     totally prevents customers or employees from gaining access 
     to the business premises; or
       (iii) the Federal, State, or local government shuts down an 
     area due to physical or environmental damage, thereby 
     preventing customers or employees from gaining access to the 
     business premises; and
       (B) does not include lost profits, other than in the case 
     of a small business concern (as defined in section 3 of the 
     Small Business Act (15 U.S.C. 632) and applicable regulations 
     hereunder) in any case described in clause (i), (ii), or 
     (iii) of subparagraph (A).
       (3) Insured loss.--The term ``insured loss''--
       (A) means any loss resulting from an act of terrorism that 
     is covered by any type of commercial or personal property and 
     casualty insurance policy or endorsement, including business 
     interruption coverage, issued by a participating insurance 
     company if such loss--
       (i) occurs within the United States; or
       (ii) occurs to an air carrier (as defined in section 40102 
     of title 49, United States Code), regardless of where the 
     loss occurs; and
       (B) does not include any loss covered by any type of life 
     or health insurance policy.
       (4) Participating insurance company.--The term 
     ``participating insurance company'' means any insurance 
     company, including any subsidiary or affiliate thereof
       (A) that--
       (i) is licensed or admitted to engage in the business of 
     providing primary insurance in any State; or
       (ii) is not so licensed or admitted, if it is an eligible 
     surplus line carrier listed on the Quarterly Listing of Alien 
     Insurers of the National Association of Insurance 
     Commissioners, or any successor thereto;
       (B) that offers in all of its property and casualty 
     insurance policies, coverage for insured losses;
       (C) that offers property and casualty insurance coverage 
     for insured losses that does not differ materially from the 
     terms, amounts, and other coverage limitations applicable to 
     losses arising from events other than acts of terrorism; and
       (D) that meets any other criteria that the Secretary may 
     reasonably prescribe.
       (5) Person.--The term ``person'' means any individual, 
     business or nonprofit entity (including those organized in 
     the form of a partnership, limited liability company, 
     corporation, or association), trust or estate, or a State or 
     political subdivision of a State or other governmental unit.
       (6) Program.--The term ``Program'' means the Terrorism 
     Insured Loss Shared Compensation Program established by this 
     Act.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (8) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Commonwealth of the Northern Mariana 
     Islands, American Samoa, Guam, and each of the United States 
     Virgin Islands.
       (9) United states.--The term ``United States'' means all 
     States of the United States.

     SEC. 4. TERRORISM INSURED LOSS SHARED COMPENSATION PROGRAM.

       (a) Establishment of Program.--
       (1) In general.--There is established in the Department of 
     the Treasury the Terrorism Insured Loss Shared Compensation 
     Program.
       (2) Authority of the secretary.--Notwithstanding any other 
     provision of State or Federal law, the Secretary shall 
     administer the Program, and shall pay the Federal share of 
     compensation for insured losses in accordance with subsection 
     (c).
       (b) Conditions for Federal Payments.--No payment may be 
     made by the Secretary under subsection (c), unless--
       (1) a policyholder that suffers an insured loss, or a 
     person acting on behalf of that policyholder, files a claim 
     with a participating insurance company;
       (2) at the time of offer, purchase, and renewal of each 
     policy covering an insured loss, the participating insurance 
     company provides, as soon as practicable following the date 
     of enactment of this Act, clear and conspicuous disclosure in 
     the policy to the policyholder of the premium charged for 
     insured losses covered by the Program and the Federal share 
     of compensation for insured losses under the Program;
       (3) the participating insurance company processes the claim 
     for the insured loss in accordance with its standard business 
     practices, and any reasonable procedures that the Secretary 
     may prescribe; and
       (4) the participating insurance company submits to the 
     Secretary, in accordance with such reasonable procedures as 
     the Secretary may establish--
       (A) a claim for payment of the Federal share of 
     compensation for insured losses under the Program;
       (B) written verification and certification--
       (i) of the underlying claim; and
       (ii) of all payments made to policyholders for insured 
     losses; and

[[Page S12257]]

       (C) certification of its compliance with the provisions of 
     this subsection.
       (c) Shared Insurance Loss Coverage.--
       (1) Federal share.--Subject to the limitations in paragraph 
     (2), the Federal share of compensation under the Program, to 
     be paid by the Secretary, shall be--
       (A) for insured losses resulting from an act of terrorism 
     occurring during the period beginning on the date of 
     enactment of this Act and ending on December 31, 2002, 90 
     percent of the aggregate amount of all such losses in excess 
     of $10,000,000,000;
       (B) for insured losses resulting from an act of terrorism 
     occurring during the period beginning on January 1, 2003 and 
     ending on December 31, 2003, 90 percent of the aggregate 
     amount of all such losses in excess of $10,000,000,000; and
       (C) if the Program is extended in accordance with section 
     6, for insured losses resulting from an act of terrorism 
     occurring during the period beginning on January 1, 2004 and 
     ending on December 31, 2004, 90 percent of the aggregate 
     amount of all such losses in excess of $20,000,000,000.
       (2) Cap on annual liability.--Notwithstanding paragraph 
     (1), or any other provision of Federal or State law, if the 
     aggregate insured losses exceed $100,000,000,000 during any 
     period referred to in subparagraphs (A) and (B) of paragraph 
     (1) (or the period referred to in subparagraph (C) of 
     paragraph (1) if the Program is extended in accordance with 
     section 6)--
       (A) the Secretary shall not make any payment under this Act 
     for any portion of the amount of such losses that exceeds 
     $100,000,000,000; and
       (B) participating insurance companies shall not be liable 
     for the payment of any portion of the amount that exceeds 
     $100,000,000,000.
       (3) Notice to congress.--The Secretary shall notify the 
     Congress if estimated or actual aggregate insured losses 
     exceed $100,000,000,000 in any period described in paragraph 
     (1), and the Congress shall determine the procedures for and 
     the source of any such excess payments.
       (4) 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.
       (5) Determinations final.--Any determination of the 
     Secretary under this subsection shall be final, and shall not 
     be subject to judicial review.
       (d) Funding.--
       (1) Payment authority.--This Act constitutes payment 
     authority in advance of appropriation Acts and represents the 
     obligation of the Federal Government to provide for the 
     Federal share of compensation for insured losses under the 
     Program.
       (2) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as may be 
     necessary to pay the administrative expenses of the Program.

     SEC. 5. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

       (a) General Authority.--The Secretary shall have the powers 
     and authorities necessary to carry out the Program, including 
     authority--
       (1) to investigate and audit all claims under the Program; 
     and
       (2) to prescribe regulations and procedures to implement 
     the Program.
       (b) Interim Rules and Procedures.--The Secretary shall 
     issue interim final rules or procedures specifying the manner 
     in which--
       (1) participating insurance companies may file, verify, and 
     certify claims under the Program;
       (2) the Secretary shall publish or otherwise publicly 
     announce the applicable percentage of insured losses to be 
     paid by participating insurance companies and the Federal 
     share of compensation for insured losses under the Program;
       (3) the Federal share of compensation for insured losses 
     will be paid under the Program, including payments based on 
     estimates of or actual aggregate insured losses;
       (4) the Secretary may, at any time, seek repayment from or 
     reimburse any participating insurance company, based on 
     estimates of insured losses under the Program, to effectuate 
     the insured loss sharing schedule and limitations contained 
     in section 4;
       (5) participating insurance companies that incur insured 
     losses shall pay their pro rata share of insured losses in 
     accordance with the schedule and limitations contained in 
     section 4; and
       (6) the Secretary will determine any final netting of 
     payments for actual insured losses under the Program, 
     including payments owed to the Federal Government from any 
     participating insurance company and any Federal share of 
     compensation for insured losses owed to any participating 
     insurance company, to effectuate the insured loss sharing 
     schedule and limitations contained in section 4.
       (c) Subrogation Rights.--The United States shall have the 
     right of subrogation with respect to any payment made by the 
     United States under the Program.
       (d) Contracts for Services.--The Secretary may employ 
     persons or contract for services as may be necessary to 
     implement the Program.
       (e) Civil Penalties.--The Secretary may assess civil money 
     penalties for violations of this Act or any rule, regulation, 
     or order issued by the Secretary under this Act relating to 
     the submission of false or misleading information for 
     purposes of the Program, or any failure to repay any amount 
     required to be reimbursed under regulations or procedures 
     described in section 5(b). The authority granted under this 
     subsection shall continue during any period in which the 
     Secretary's authority under section 6(d) is in effect.

     SEC. 6. TERMINATION OF PROGRAM; DISCRETIONARY EXTENSION.

       (a) Termination of Program.--
       (1) In general.--The Program shall terminate, on December 
     31, 2003, unless the Secretary--
       (A) determines, after considering the report and finding 
     required by this section, that the Program should be extended 
     for one additional year, until December 31, 2004; and
       (B) promptly notifies the Congress of such determination 
     and the reasons therefore.
       (2) Determination final.--The determination of the 
     Secretary under paragraph (1) shall be final, and shall not 
     be subject to judicial review.
       (3) Termination after extension.--If the Program is 
     extended under paragraph (1), this Act is repealed, and the 
     Program shall terminate, on December 31, 2004.
       (b) Report to Congress.--Not later than 18 months after the 
     date of enactment of this Act, the Secretary shall submit a 
     report to Congress--
       (1) regarding--
       (A) the availability of insurance coverage for acts of 
     terrorism;
       (B) the affordability of such coverage, including the 
     effect of such coverage on premiums; and
       (C) the capacity of the insurance industry to absorb future 
     losses resulting from acts of terrorism, taking into account 
     the profitability of the insurance industry; and
       (2) that considers--
       (A) the impact of the Program on each of the factors 
     described in paragraph (1); and
       (B) the probable impact on such factors and on the United 
     States economy if the Program terminates on December 31, 
     2003.
       (c) Finding Required.--A determination under subsection (a) 
     to extend the Program shall be based on a finding by the 
     Secretary that--
       (1) widespread market uncertainties continue to disrupt the 
     ability of insurance companies to price insurance coverage 
     for losses resulting from acts of terrorism, thereby 
     resulting in the continuing unavailability of affordable 
     insurance for consumers; and
       (2) extending the Program for an additional year would 
     likely encourage economic stabilization and facilitate a 
     transition to a viable market for private terrorism risk 
     insurance.
       (d) Continuing Authority to Pay or Adjust Compensation.--
     Following the termination of the Program under subsection 
     (a), the Secretary may take such actions as may be necessary 
     to ensure payment, reimbursement, or adjustment of 
     compensation for insured losses arising out of any act of 
     terrorism occurring during the period in which the Program 
     was in effect under this Act and as to which a determination 
     has been made in accordance with the provisions of section 4 
     and regulations promulgated thereunder.
       (e) Study and Report on Scope of the Program.--
       (1) Study.--The Secretary, after consultation with the 
     National Association of Insurance Commissioners, 
     representatives of the insurance industry, and other experts 
     in the insurance field, shall conduct a study of the 
     potential effects of acts of terrorism on the availability of 
     life insurance and other lines of insurance coverage.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall submit a report to 
     the Congress on the results of the study conducted under 
     paragraph (1).

     SEC. 7 PRESERVATION OF STATE LAW.

       Nothing in this Act shall affect the jurisdiction or 
     regulatory authority of the insurance commissioner (or any 
     agency or office performing like functions) of any State over 
     any participating insurance company or other person--
       (1) except as specifically provided in this Act; and
       (2) except that--
       (A) the definition of the term ``act of terrorism'' in 
     section 3 shall be the exclusive definition for purposes of 
     compensation for insured losses under this Act, and shall 
     preempt any provision of State law that is inconsistent with 
     that definition, to the extent that such provision of law 
     would otherwise apply to any insurance policy relating to 
     terrorism risk in the United States;
       (B) during the period beginning on the date of enactment of 
     this Act and ending on December 31, 2002, rates for terrorism 
     risk insurance covered by this Act and filed with any State 
     shall not be subject to prior approval or a waiting period, 
     under any law of a State that would otherwise be applicable, 
     except that nothing in this Act affects the ability of any 
     State to invalidate a rate as excessive, inadequate, or 
     unfairly discriminatory; and
       (C) during the period beginning on the date of enactment of 
     this Act and for so long as the Program is in effect as 
     provided in Section 6 (including any period during which the 
     Secretary's authority under Section 6(d) is in effect), books 
     and records of any participating insurance company shall be 
     provided, or caused to be provided, to the Secretary or his 
     designee upon request by the Secretary or his designee 
     notwithstanding any provision of the laws of any State 
     prohibiting or limiting such access.

     SEC. 8. SENSE OF THE CONGRESS.

       It is the sense of the Congress that the insurance industry 
     should build capacity and

[[Page S12258]]

     aggregate risk to provide affordable property and casualty 
     coverage for terrorism risk.

     SEC. 9. PROCEDURES FOR CIVIL ACTIONS.

       (a) Federal Cause of Action.--There shall exist a Federal 
     cause of action for property damage, personal injury, or 
     death arising out of or resulting from an act of terrorism, 
     which shall be the exclusive cause of action and remedy for 
     claims for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism. All State 
     causes of action of any kind for property damage, personal 
     injury, or death otherwise available arising out of or 
     resulting from an act of terrorism, are hereby preempted, 
     except as provided in subsection (f).
       (b) Governing Law.--The substantive law for decision in an 
     action for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism under this 
     section shall be derived from the law, including applicable 
     choice of law principles, of the State, or States determined 
     to be required by the district court assigned under 
     subsection (c), unless such law is inconsistent with or 
     otherwise preempted by Federal law.
       (c) Federal Jurisdiction.--
       (1) In general.--Notwithstanding any other provision of 
     law, not later than 90 days after the occurrence of an act of 
     terrorism, the Judicial Panel on Multidistrict Litigation 
     shall assign a single Federal district court to conduct 
     pretrial and trial proceedings in all pending and future 
     civil actions for property damage, personal injury, or death 
     arising out of or resulting from that act of terrorism.
       (2) Selection criteria.--The Judicial Panel on 
     Multidistrict Litigation shall select and assign the district 
     court under paragraph (1) based on the convenience of the 
     parties and the just and efficient conduct of the 
     proceedings.
       (3) Jurisdiction.--The district court assigned by the 
     Judicial Panel on Multidistrict Litigation shall have 
     original and exclusive jurisdiction over all actions under 
     paragraph (1). For purposes of personal jurisdiction, the 
     district court assigned by the Judicial Panel on 
     Multidistrict Litigation shall be deemed to sit in all 
     judicial districts in the United States.
       (4) Transfer of cases filed in other federal courts.--Any 
     civil action for property damage, personal injury, or death 
     arising out of or resulting from an act of terrorism that is 
     filed in a Federal district court other than the Federal 
     district court assigned by the Judicial Panel on 
     Multidistrict Litigation under paragraph (1) shall be 
     transferred to the Federal district court so assigned.
       (5) Removal of cases filed in state courts.--Any civil 
     action for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism that is filed in 
     a State court shall be removable to the Federal district 
     court assigned by the Judicial Panel on Multidistrict 
     Litigation under paragraph (1).
       (d) Approval of Settlements.--Any settlement between the 
     parties of a civil action described in this section for 
     property damage, personal injury, or death arising out of or 
     resulting from an act of terrorism shall be subject to prior 
     approval by the Secretary after consultation with the 
     Attorney General.
       (e) Limitation on Damages.--Punitive or exemplary damages 
     shall not be available in any civil action subject to this 
     section.
       (f) Claims Against Terrorists.--Nothing in this section 
     shall in any way limit the ability of any plaintiff to seek 
     any form of recovery from any person, government or other 
     entity that was a participant in, or aider and abettor of, 
     any act of terrorism.
       (g) Offset--In determining the amount of money damages 
     available under this section, the court shall offset any 
     compensation or benefits received or entitled to be received 
     by the plaintiff or plaintiffs from any collateral source, 
     including the United States or any Federal agency thereof, in 
     response to or as a result of the act of terrorism.
       (h) Effective Period.--This section shall apply only to 
     actions for property damage, personal injury, or death 
     arising out of or resulting from acts of terrorism that occur 
     during the effective period of the Program, including, if 
     applicable, any extension period under section 6.

     SEC. 10. REPEAL OF THE ACT.

       This Act shall be repealed at the close of business on the 
     termination date of the Program under section 6(a), but the 
     provisions of this section shall not be construed as 
     preventing the Secretary from taking, or causing to be taken, 
     such actions under sections 4(c)(4), (5), sections 5(a)(1), 
     (c), (e), section 6(d), and section 9(d) of this Act and 
     applicable regulations promulgated thereunder. Further, the 
     provisions of this section shall not be construed as 
     preventing the availability of funding under section 4(d) 
     during any period in which the Secretary's authority under 
     section 6(d) is in effect.
                                  ____


       Key Provisions of the Terrorism Risk Insurance Act of 2001

       All property and casualty policyholders are covered, 
     including those insured under workers compensation policies 
     and those with business interruption coverage.
       Federal tax dollars will be paid as compensation to insured 
     victims of terrorist attacks, not to insurance companies.
       The insurance industry would fully cover losses arising 
     from certified acts of terrorism, up to $10 billion in each 
     year. The government will provide compensation for 90 percent 
     of losses exceeding $10 billion, with the insurance industry 
     continuing to pay for 10 percent of the losses.
       The program is temporary, expiring after two years. The 
     Treasury Secretary has the option to extend the program for 
     one additional year.
       The Secretary of the Treasury, in concurrence with the 
     Secretary of State and the Attorney General, will determine 
     whether an event qualifies as a terrorist attack.
       In order for property and casualty insurers to participate 
     in the program, insurers are required to offer terrorism 
     coverage to all of their policyholders under terms that are 
     consistent with their other property and casualty policies.
       Insurance companies are required to disclose to customers 
     which portion of their premiums they are paying for terrorism 
     risk coverage, apart from other property and casualty 
     coverages.
       Careful, narrow restrictions on lawsuit liability are 
     included to protect taxpayer funds from being exposed to 
     opportunistic, predatory assaults on the U.S. Treasury.
       The State system of insurance regulation is preserved with 
     very few exceptions. First, the definition of an ``act of 
     terrorism'' under the bill will become the definition in 
     every state. Also, the small number of states that require 
     pre-approval of rate will be restrained from doing so far 
     terrorism risk coverage during the first year. This does not, 
     however, preempt a state insurance regulatory's ability to 
     review and revise the rates once they are in effect. Finally, 
     the Secretary of the Treasury would have access to the books 
     and records of participating insurers in all States.

  Mr. ENZI. Mr. President, today I join with Senators Gramm, Bunning, 
and Bennett in introducing legislation that provides a temporary 
public-private partnership for terrorism insurance in the wake of the 
September 11 attacks. This bill provides a joint partnership between 
insurance companies and the Federal Government for the next 3 years in 
cases of terrorist attacks.
  September 11 has proven to be the most expensive disaster to ever 
take place on American soil. With cost estimates ranging from $40 to 
$60 billion, the attacks have drained the capital reserves of some of 
the largest insurance companies in the world. In addition, as we know 
all too well, the risk for future attacks is very high. In the absence 
of this legislation, the insurance industry would be unable to pay the 
potentially extraordinary costs, and the Federal Government would 
likely be responsible for the entire costs. This is preemptive 
legislation.
  I believe this legislation strikes the right balance between what the 
responsibilities should be between the insurance industry and the 
Federal Government. In each of the first 2 years, the insurance 
industry is responsible for the first $10 billion of any attack. By 
placing a $10 billion initial retention for the insurance industry, we 
ensure that the Federal Government does not get involved unless it is 
absolutely necessary.
  After that, we agree the Federal Government should pay 90 percent of 
the remaining costs up to a $100 billion threshold. After the first 2 
years, the Secretary of the Treasury will decide whether the industry 
is prepared to once again begin offering this type of coverage. If he 
believes they are not prepared, he may extend the program for 1 
additional year.
  This legislation also includes special provisions for small 
businesses which might be affected by terrorist attacks. A small 
business that is located in a building that is destroyed requires 
different treatment than a global corporation. Whereas a large, 
multinational corporation has offices all over the world with different 
lines of revenue, a small business could be eliminated by a single 
incident that would likely destroy all their equipment, possibly kill 
personnel, and virtually make it impossible for the business to 
continue. This bill allows for small businesses to recover lost profits 
and receive funding for business interruptions due to an attack.
  I am sure that many of my colleagues have heard from their State 
insurance regulators the same as I have. My State insurance 
commissioner informs me that few, if any, of the new policies being 
submitted for next year's coverage offer terrorism insurance. With 
insurance being primarily regulated by the States, this has caused a 
backlog of filings from being approved and paperwork is quickly 
accumulating at the State level. We must act quickly to alleviate this 
backlog that will lead to uncertainty in the marketplace.
  The legislation also includes very targeted liability provisions. 
These

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provisions are extremely narrow and directed only at this specific 
program. Without these limitations, we would open the Federal 
Government's checkbook to every trial lawyer in America, and the 
American taxpayers would have unlimited liability. The trial lawyers 
were committed to not pursuing frivolous claims that resulted from 
September 11, and I certainly hope that they would continue their 
commitment if America is attacked again.
  In closing, I would only like to add that I believe the insurance 
industry should be commended for the way in which they've handled the 
September 11 crisis. Despite losing many employees in the bombing, they 
were one of the first groups at the front of the line offering their 
assistance and support for the victims. To my knowledge, not a single 
company has attempted to withhold payment from this disaster. They have 
been most cooperative in working through the myriad proposals that have 
been circulated and their support has expedited this process.
  I look forward to working with my colleagues to move this legislation 
before we adjourn.
                                 ______