59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–318 

TERRORISM RISK INSURANCE REVISION AND EXTENSION 

ACT OF 2007 

SEPTEMBER 6, 2007.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

together with 

ADDITIONAL AND DISSENTING VIEWS 

[To accompany H.R. 2761] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2761) to extend the Terrorism Insurance Program of the 

Department of the Treasury, and for other purposes, having considered the same, reports favorably thereon with an amendment and 

recommends that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 19 

Background and Need for Legislation .................................................................... 19 

Hearings ................................................................................................................... 23 

Committee Consideration ........................................................................................ 25 

Committee Votes ...................................................................................................... 25 

Committee Oversight Findings ............................................................................... 31 

Performance Goals and Objectives ......................................................................... 31 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 32 

Committee Cost Estimate ....................................................................................... 32 

Congressional Budget Office Estimate ................................................................... 32 

Federal Mandates Statement ................................................................................. 42 

Advisory Committee Statement .............................................................................. 42 

Constitutional Authority Statement ...................................................................... 42 


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Applicability to Legislative Branch ........................................................................ 42 

Earmark Identification ............................................................................................ 42 

Exchange of Committee Correspondence ............................................................... 43 

Section-by-Section Analysis of the Legislation ...................................................... 44 

Changes in Existing Law Made by the Bill, as Reported ..................................... 49 

Additional and Dissenting Views ........................................................................... 88 

AMENDMENT

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Terrorism Risk Insurance Revision and Extension 

Act of 2007’’. 

SEC. 2. TERMINATION OF PROGRAM. 

Subsection (a) of section 108 of the Terrorism Risk Insurance Act of 2002 (15 

U.S.C. 6701 note) is amended by striking ‘‘December 31, 2007’’ and inserting ‘‘December 31, 2022’’. 

SEC. 3. REVISION OF TERRORISM INSURANCE PROGRAM. 

(a) IN GENERAL.—The Terrorism Risk Insurance Act of 2002 is amended— (1) by striking sections 101, 102, and 103 and inserting the following new sections: 

‘‘SEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE. 

‘‘(a) FINDINGS.—The Congress finds that— ‘‘(1) the ability of businesses and individuals to obtain property and casualty 

insurance at reasonable and predictable prices, in order to spread the risk of 

both routine and catastrophic loss, is critical to economic growth, urban development, and the construction and maintenance of public and private housing, as 

well as to the promotion of United States exports and foreign trade in an increasingly interconnected world; ‘‘(2) property and casualty insurance firms are important financial institutions, the products of which allow mutualization of risk and the efficient use 

of financial resources and enhance the ability of the economy to maintain stability, while responding to a variety of economic, political, environmental, and 

other risks with a minimum of disruption; ‘‘(3) the ability of the insurance industry to cover the unprecedented financial 

risks presented by potential acts of terrorism in the United States can be a 

major factor in the recovery from terrorist attacks, while maintaining the stability of the economy; ‘‘(4) widespread financial market uncertainties have arisen following the terrorist attacks of September 11, 2001, including the absence of information from 

which financial institutions can make statistically valid estimates of the probability and cost of future terrorist events, and therefore the size, funding, and 

allocation of the risk of loss caused by such acts of terrorism; ‘‘(5) a decision by property and casualty insurers to deal with such uncertainties, either by terminating property and casualty coverage for losses arising 

from terrorist events, or by radically escalating premium coverage to compensate for risks of loss that are not readily predictable, could seriously hamper 

ongoing and planned construction, property acquisition, and other business 

projects, generate a dramatic increase in rents, and otherwise suppress economic activity; ‘‘(6) the United States Government should coordinate with insurers to provide 

financial compensation to insured parties for losses from acts of terrorism, contributing to the stabilization of the United States economy in a time of national 

crisis, and periodically assess the ability of the financial services industry to develop the systems, mechanisms, products, and programs necessary to create a 

viable financial services market for private terrorism risk insurance that will 

lessen the financial participation of the United States Government; ‘‘(7) in addition to a terrorist attack on the United States using conventional 

means or weapons, there is and continues to be a potential threat of a terrorist 

attack involving the use of unconventional means or weapons, such as nuclear, 

biological, chemical, or radiological agents; 

‘‘(8) as nuclear, biological, chemical, or radiological acts of terrorism (known 

as NBCR terrorism) present a threat of loss of life, injury, disease, and property 

damage potentially unparalleled in scope and complexity by any prior event, 

natural or man-made, the Federal Government’s responsibility in providing for 

and preserving national economic security calls for a strong Federal role in ensuring financial compensation and economic recovery in the event of such an 

attack; 


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‘‘(9) a report issued by the Government Accountability Office in September 

2006 concluded that ‘any purely market-driven expansion of coverage’ for NBCR 

terrorism risk is ‘highly unlikely in the foreseeable future’, and the September 

2006 report from the President’s Working Group on Financial Markets concluded that reinsurance for NBCR terrorist events is virtually unavailable and 

that ‘[g]iven the general reluctance of insurance companies to provide coverage 

for these types of risks, there may be little potential for future market development’; 

‘‘(10) group life insurance companies are important financial institutions 

whose products make life insurance coverage affordable for millions of Americans and often serve as their only life insurance benefit; 

‘‘(11) the group life insurance industry, in the event of a severe act of terrorism, is vulnerable to insolvency because high concentrations of covered employees work in the same locations, because primary group life insurers do not 

exclude conventional and NBCR terrorism risks while most catastrophic reinsurance does exclude such terrorism risks, and because a large-scale loss of life 

would fall outside of actuarial expectations of death; and 

‘‘(12) the United States Government should provide temporary financial compensation to insured parties, contributing to the stabilization of the United 

States economy in a time of national crisis, while the financial services industry 

develops the systems, mechanisms, products, and programs necessary to create 

a viable financial services market for private terrorism risk insurance. 

‘‘(b) PURPOSE.—The purpose of this title is to establish a temporary Federal program that provides for a transparent system of shared public and private compensation for insured losses resulting from acts of terrorism, in order to—

‘‘(1) protect consumers by addressing market disruptions and ensure the continued widespread availability and affordability of property and casualty insurance and group life insurance for all types of terrorism risk, including conventional terrorism risk and nuclear, biological, chemical, and radiological terrorism risk; 

‘‘(2) allow for a transitional period for the private markets to stabilize, resume 

pricing of such insurance, and build capacity to absorb any future losses, while 

preserving State insurance regulation and consumer protections (unless otherwise preempted by this Act); and 

‘‘(3) provide finite liability limits for terrorism insurance losses for insurers 

and the United States Government. 

‘‘SEC. 102. DEFINITIONS. 

‘‘In this title, the following definitions shall apply: 

‘‘(1) ACT OF TERRORISM.—

‘‘(A) CERTIFICATION.—The term ‘act of terrorism’ means any act that is 

certified by the Secretary, in concurrence with the Secretary of State, the 

Secretary of Homeland Security, and the Attorney General of the United 

States—

‘‘(i) to be an act of terrorism; 

‘‘(ii) to be a violent act or an act that is dangerous to—

‘‘(I) human life; 

‘‘(II) property; or 

‘‘(III) infrastructure; 

‘‘(iii) to have resulted in damage within the United States, or outside 

of the United States in the case of—

‘‘(I) an air carrier or vessel described in paragraph (9)(B); or 

‘‘(II) the premises of a United States mission; and 

‘‘(iv) to have been committed by an individual or individuals as part 

of an effort to coerce the civilian population of the United States or to 

influence the policy or affect the conduct of the United States Government by coercion. 

‘‘(B) LIMITATION.—No act shall be certified by the Secretary as an act of 

terrorism if—

‘‘(i) the act is committed as part of the course of a war declared by 

the Congress, except that this clause shall not apply with respect to 

any coverage for workers’ compensation; or 

‘‘(ii) property and casualty insurance and group life insurance losses 

resulting from the act, in the aggregate, do not exceed $5,000,000. 

‘‘(C) CERTIFICATION OF ACT OF NBCR TERRORISM.—Upon certification of an 

act of terrorism, the Secretary, in concurrence with the Secretary of State, 

the Secretary of Homeland Security, and the Attorney General of the 

United States, shall determine whether the act of terrorism meets the definition of NBCR terrorism in this section. If such determination is that the 


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act does meet such definition, the Secretary shall further certify such act 

of terrorism as an act of NBCR terrorism. ‘‘(D) DETERMINATIONS FINAL.—Any certification of, or determination not 

to certify, an act as an act of terrorism or as an act of NBCR terrorism 

under this paragraph shall be final, and shall not be subject to judicial review. ‘‘(E) NONDELEGATION.—The Secretary may not delegate or designate to 

any other officer, employee, or person, any determination under this paragraph of whether, during the effective period of the Program, an act of terrorism, including an act of NBCR terrorism, has occurred. ‘‘(2) AFFILIATE.—The term ‘affiliate’ means, with respect to an insurer, any 

entity that controls, is controlled by, or is under common control with the insurer. ‘‘(3) AMOUNT AT RISK.—The term ‘amount at risk’ means face amount less 

statutory policy reserves for group life insurance issued by any insurer for insurance against losses occurring at the locations described in subparagraph (A) 

of paragraph (9). ‘‘(4) CONTROL.—An entity has ‘control’ over another entity, if— ‘‘(A) the entity directly or indirectly or acting through 1 or more other 

persons owns, controls, or has power to vote 25 percent or more of any class 

of voting securities of the other entity; 

‘‘(B) the entity controls in any manner the election of a majority of the 

directors or trustees of the other entity; or 

‘‘(C) the Secretary determines, after notice and opportunity for hearing, 

that the entity directly or indirectly exercises a controlling influence over 

the management or policies of the other entity; except that for purposes of 

any proceeding under this subparagraph, there shall be a presumption that 

any entity which directly or indirectly owns, controls, or has power to vote 

less than 5 percent of any class of voting securities of another entity does 

not have control over that entity. 

‘‘(5) COVERED LINES.—The term ‘covered lines’ means property and casualty 

insurance and group life insurance, as defined in this section. 

‘‘(6) DIRECT EARNED PREMIUM.—The term ‘direct earned premium’ means a direct earned premium for property and casualty insurance issued by any insurer 

for insurance against losses occurring at the locations described in subparagraph (A) of paragraph (9). 

‘‘(7) EXCESS INSURED LOSS.—The term ‘excess insured loss’ means, with respect to a Program Year, any portion of the amount of insured losses during 

such Program Year that exceeds the cap on annual liability under section 

103(e)(2)(A). 

‘‘(8) GROUP LIFE INSURANCE.—The term ‘group life insurance’ means an insurance contract that provides life insurance coverage, including term life insurance coverage, universal life insurance coverage, variable universal life insurance coverage, and accidental death coverage, or a combination thereof, for a 

number of individuals under a single contract, on the basis of a group selection 

of risks, but does not include ‘Corporate Owned Life Insurance’ or ‘Business 

Owned Life Insurance,’ each as defined under the Internal Revenue Code of 

1986, or any similar product, or group life reinsurance or retrocessional reinsurance. 

‘‘(9) INSURED LOSS.—

‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), the term ‘insured loss’ means any loss resulting from an act of terrorism (including an 

act of war, in the case of workers’ compensation) that is covered by primary 

or excess property and casualty insurance, or group life insurance to the extent of the amount at risk, issued by an insurer, if such loss—

‘‘(i) occurs within the United States; or 

‘‘(ii) occurs to an air carrier (as defined in section 40102 of title 49, 

United States Code), to a United States flag vessel (or a vessel based 

principally in the United States, on which United States income tax is 

paid and whose insurance coverage is subject to regulation in the 

United States), regardless of where the loss occurs, or at the premises 

of any United States mission. 

‘‘(B) LIMITATION FOR GROUP LIFE INSURANCE.—Such term shall not include any losses of an insurer resulting from coverage of any single certificate holder under any group life insurance coverages of the insurer to the 

extent such losses are not compensated under the Program by reason of section 103(e)(1)(D). 

‘‘(10) INSURER.—The term ‘insurer’ means any entity, including any affiliate 

thereof—


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‘‘(A) that is—

‘‘(i) licensed or admitted to engage in the business of providing primary or excess insurance, or group life insurance, in any State; 

‘‘(ii) not licensed or admitted as described in clause (i), if it is an eligible surplus line carrier listed on the Quarterly Listing of Alien Insurers 

of the NAIC, or any successor thereto; 

‘‘(iii) approved for the purpose of offering property and casualty insurance by a Federal agency in connection with maritime, energy, or 

aviation activity; 

‘‘(iv) a State residual market insurance entity or State workers’ compensation fund; or 

‘‘(v) any other entity described in section 103(f), to the extent provided in the rules of the Secretary issued under section 103(f); 

‘‘(B) that receives direct earned premiums for any type of commercial 

property and casualty insurance coverage, or, in the case of group life insurance, that receives direct premiums, other than in the case of entities described in sections 103(d) and 103(f); and 

‘‘(C) that meets any other criteria that the Secretary may reasonably prescribe. 

‘‘(11) INSURER DEDUCTIBLE.—The term ‘insurer deductible’ means—

‘‘(A) for the Transition Period, the value of an insurer’s direct earned premiums over the calendar year immediately preceding the date of enactment 

of this Act, multiplied by 1 percent; 

‘‘(B) for Program Year 1, the value of an insurer’s direct earned premiums 

over the calendar year immediately preceding Program Year 1, multiplied 

by 7 percent; 

‘‘(C) for Program Year 2, the value of an insurer’s direct earned premiums 

over the calendar year immediately preceding Program Year 2, multiplied 

by 10 percent; 

‘‘(D) for Program Year 3, the value of an insurer’s direct earned premiums over the calendar year immediately preceding Program Year 3, multiplied by 15 percent; 

‘‘(E) for Program Year 4, the value of an insurer’s direct earned premiums 

over the calendar year immediately preceding Program Year 4, multiplied 

by 17.5 percent; 

‘‘(F) for Program Year 5, the value of an insurer’s direct earned premiums 

over the calendar year immediately preceding Program Year 5, multiplied 

by 20 percent; 

‘‘(G) for each additional Program Year—

‘‘(i) with respect to property and casualty insurance, the value of an 

insurer’s direct earned premiums over the calendar year immediately 

preceding such Program Year, multiplied by 20 percent; and 

‘‘(ii) with respect to group life insurance, the value of an insurer’s 

amount at risk over the calendar year immediately preceding such Program Year, multiplied by 0.0351 percent; 

‘‘(H) notwithstanding subparagraphs (A) through (G), for the Transition 

Period or any Program Year, if an insurer has not had a full year of operations during the calendar year immediately preceding such Period or Program Year, such portion of the direct earned premiums with respect to 

property and casualty insurance, and such portion of the amounts at risk 

with respect to group life insurance, of the insurer as the Secretary determines appropriate, subject to appropriate methodologies established by the 

Secretary for measuring such direct earned premiums and amounts at risk; 

‘‘(I) notwithstanding subparagraphs (A) through (H) and (J), in the case 

of any act of NBCR terrorism, for any additional Program Year—

‘‘(i) with respect to property and casualty insurance, the value of an 

insurer’s direct earned premiums over the calendar year immediately 

preceding such Program Year, multiplied by a percentage, which—

‘‘(I) for the second additional Program Year, shall be 3.5 percent; 

and 

‘‘(II) for each succeeding Program Year thereafter, shall be 50 

basis points greater than the percentage applicable to the preceding additional Program Year; and 

‘‘(ii) with respect to group life insurance, the value of an insurer’s 

amount at risk over the calendar year immediately preceding such Program Year, multiplied by a percentage, which—

‘‘(I) for the first additional Program Year, shall be 0.00614 percent; and 


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‘‘(II) for each succeeding Program Year thereafter, shall be 0.088 

basis point greater than the percentage applicable to the preceding 

additional Program Year; and ‘‘(J) notwithstanding subparagraph (G)(i), if aggregate industry insured losses resulting from a certified act of terrorism exceed $1,000,000,000, for 

any insurer that sustains insured losses resulting from such act of terrorism, the value of such insurer’s direct earned premiums over the calendar year immediately preceding the Program Year, multiplied by a percentage, which— ‘‘(i) for the first additional Program Year shall be 5 percent; 

‘‘(ii) for each additional Program Year thereafter, shall be 50 basis 

points greater than the percentage applicable to the preceding additional Program Year, except that if an act of terrorism occurs during 

any additional Program Year that results in aggregate industry insured 

losses exceeding $1,000,000,000, the percentage for the succeeding additional Program Year shall be 5 percent and the increase under this 

clause shall apply to additional Program Years thereafter; 

except that for purposes of determining under this subparagraph whether 

aggregate industry insured losses exceed $1,000,000,000, the Secretary may 

combine insured losses resulting from two or more certified acts of terrorism occurring during such Program Year in the same geographic area 

(with such area determined by the Secretary), in which case such insurer 

shall be permitted to combine insured losses resulting from such acts of terrorism for purposes of satisfying its insurer deductible under this subparagraph; and except that the insurer deductible under this subparagraph 

shall apply only with respect to compensation of insured losses resulting 

from such certified act, or combined certified acts, and that for purposes of 

compensation of any other insured losses occurring in the same Program 

Year, the insurer deductible determined under subparagraph (G)(i) or (I) 

shall apply. 

‘‘(12) NAIC.—The term ‘NAIC’ means the National Association of Insurance 

Commissioners. 

‘‘(13) NBCR TERRORISM.—The term ‘NBCR terrorism’ means an act of terrorism that involves nuclear, biological, chemical, or radiological reactions, releases, or contaminations, to the extent any insured losses result from any such 

reactions, releases, or contaminations. 

‘‘(14) PERSON.—The term ‘person’ means any individual, business or nonprofit 

entity (including those organized in the form of a partnership, limited liability 

company, corporation, or association), trust or estate, or a State or political subdivision of a State or other governmental unit. 

‘‘(15) PROGRAM.—The term ‘Program’ means the Terrorism Insurance Program established by this title. 

‘‘(16) PROGRAM YEARS.—

‘‘(A) TRANSITION PERIOD.—The term ‘Transition Period’ means the period 

beginning on the date of enactment of this Act and ending on December 31, 

2002. 

‘‘(B) PROGRAM YEAR 1.—The term ‘Program Year 1’ means the period beginning on January 1, 2003 and ending on December 31, 2003. 

‘‘(C) PROGRAM YEAR 2.—The term ‘Program Year 2’ means the period beginning on January 1, 2004 and ending on December 31, 2004. 

‘‘(D) PROGRAM YEAR 3.—The term ‘Program Year 3’ means the period beginning on January 1, 2005 and ending on December 31, 2005. 

‘‘(E) PROGRAM YEAR 4.—The term ‘Program Year 4’ means the period beginning on January 1, 2006 and ending on December 31, 2006. 

‘‘(F) PROGRAM YEAR 5.—The term ‘Program Year 5’ means the period beginning on January 1, 2007 and ending on December 31, 2007. 

‘‘(G) ADDITIONAL PROGRAM YEAR.—The term ‘additional Program Year’

means any additional one-year period after Program Year 5 during which 

the Program is in effect, which period shall begin on January 1 and end 

on December 31 of the same calendar year. 

‘‘(17) PROPERTY AND CASUALTY INSURANCE.—The term ‘property and casualty 

insurance’—

‘‘(A) means commercial lines of property and casualty insurance, including excess insurance, workers’ compensation insurance, and directors and 

officers liability insurance; and 

‘‘(B) does not include—

‘‘(i) Federal crop insurance issued or reinsured under the Federal 

Crop Insurance Act (7 U.S.C. 1501 et seq.), or any other type of crop 

or livestock insurance that is privately issued or reinsured; 


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‘‘(ii) private mortgage insurance (as that term is defined in section 2 

of the Homeowners Protection Act of 1998 (12 U.S.C. 4901)) or title insurance; 

‘‘(iii) financial guaranty insurance issued by monoline financial guaranty insurance corporations; 

‘‘(iv) insurance for medical malpractice; 

‘‘(v) health or life insurance, including group life insurance; 

‘‘(vi) flood insurance provided under the National Flood Insurance Act 

of 1968 (42 U.S.C. 4001 et seq.); 

‘‘(vii) reinsurance or retrocessional reinsurance; 

‘‘(viii) commercial automobile insurance; 

‘‘(ix) burglary and theft insurance; 

‘‘(x) surety insurance; or 

‘‘(xi) professional liability insurance. 

‘‘(18) SECRETARY.—The term ‘Secretary’ means the Secretary of the Treasury. 

‘‘(19) STATE.—The term ‘State’ means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 

Northern Mariana Islands, American Samoa, Guam, each of the United States 

Virgin Islands, and any territory or possession of the United States. 

‘‘(20) UNITED STATES.—The term ‘United States’ means the several States, 

and includes the territorial sea and the continental shelf of the United States, 

as those terms are defined in the Violent Crime Control and Law Enforcement 

Act of 1994 (18 U.S.C. 2280, 2281). 

‘‘(21) RULE OF CONSTRUCTION FOR DATES.—With respect to any reference to 

a date in this title, such day shall be construed—

‘‘(A) to begin at 12:01 a.m. on that date; and 

‘‘(B) to end at midnight on that date. 

‘‘SEC. 103. TERRORISM INSURANCE PROGRAM. 

‘‘(a) ESTABLISHMENT OF PROGRAM.—

‘‘(1) IN GENERAL.—There is established in the Department of the Treasury the 

Terrorism Insurance Program. 

‘‘(2) AUTHORITY OF THE SECRETARY.—Notwithstanding any other provision of 

State or Federal law, the Secretary shall administer the Program, and shall pay 

the Federal share of compensation for insured losses in accordance with subsection (e). 

‘‘(3) MANDATORY PARTICIPATION.—Each entity that meets the definition of an 

insurer under this title shall participate in the Program. 

‘‘(4) NBCR EXEMPTION FOR CERTAIN INSURERS.—Notwithstanding the requirements of paragraph (3): 

‘‘(A) ELIGIBILITY.—Upon request, the Secretary may provide an exemption 

from the requirements of subparagraph (B) of subsection (c)(1) in the Program to an entity that otherwise meets the definition of an insurer under 

this title if—

‘‘(i) such insurer’s direct earned premium is less than $50,000,000 in 

the calendar year immediately preceding the current additional Program Year; and 

‘‘(ii) the Secretary makes the determination set forth in subparagraph 

(D). 

‘‘(B) INSURER GROUP.—For purposes of subparagraph (A)(i), the direct 

earned premium of any insurer shall include the direct earned premiums 

of every affiliate of that insurer. 

‘‘(C) INFORMATION AND CONSULTATION.—Any insurer requesting an exemption pursuant to this paragraph shall provide any information the Secretary may require to establish its eligibility for the exemption. In developing standards for evaluating eligibility for the exemption under this paragraph, the Secretary shall consult with the NAIC. 

‘‘(D) DETERMINATION.—In making any determination regarding eligibility 

for exemption under this paragraph, the Secretary shall consult with the 

insurance commissioner of the State or other appropriate State regulatory 

authority where the insurer is domiciled and determine whether the insurer has demonstrated that it would become insolvent if it were required, 

in the event of an act of NBCR terrorism, to satisfy—

‘‘(i) its deductible and maximum applicable share above the deductible pursuant to sections 102(11)(I) and 103(e)(1)(B), respectively, for 

such act of NBCR terrorism resulting in aggregate industry insured 

losses above the trigger established in section 103(e)(1)(C); or 


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‘‘(ii) its maximum payment obligations for insured losses for such act 

of NBCR terrorism resulting in aggregate industry insured losses below 

the trigger established in section 103(e)(1)(C). 

‘‘(E) WORKERS’ COMPENSATION AND OTHER COMPULSORY INSURANCE LAW.—

In granting an exemption under this paragraph, the Secretary shall not approve any request for exemption with regard to State workers’ compensation insurance or other compulsory insurance law requiring coverage of the 

risks described in subparagraph (B) of subsection (c)(1). 

‘‘(F) EXEMPTION PERIOD.—

‘‘(i) IN GENERAL.—Any exemption granted to an insurer by the Secretary under this paragraph shall have a duration of not longer than 

2 years. 

‘‘(ii) EXTENSION.—Notwithstanding clause (i), the Secretary may, 

upon application by an insurer granted an exemption under this paragraph, extend such exemption for additional periods of not longer than 

2 years. 

‘‘(b) CONDITIONS FOR FEDERAL PAYMENTS.—No payment may be made by the Secretary under this section with respect to an insured loss that is covered by an insurer, unless—

‘‘(1) the person that suffers the insured loss, or a person acting on behalf of 

that person, files a claim with the insurer; 

‘‘(2) the insurer provides clear and conspicuous disclosure to the policyholder 

of the premium charged for insured losses covered by the Program (including 

the additional premium, if any, charged for the coverage for insured losses resulting from acts of NBCR terrorism as made available pursuant to subsection 

(c)(1)(B)) and the Federal share of compensation for insured losses under the 

Program—

‘‘(A) in the case of any policy that is issued before the date of enactment 

of this Act, not later than 90 days after that date of enactment; 

‘‘(B) in the case of any policy that is issued within 90 days of the date 

of enactment of this Act, at the time of offer, purchase, and renewal of the 

policy; and 

‘‘(C) in the case of any policy that is issued more than 90 days after the 

date of enactment of this Act, on a separate line item in the policy, at the 

time of offer, purchase, and renewal of the policy; 

‘‘(3) the insurer processes the claim for the insured loss in accordance with 

appropriate business practices, and any reasonable procedures that the Secretary may prescribe; and 

‘‘(4) the insurer submits to the Secretary, in accordance with such reasonable 

procedures as the Secretary may establish—

‘‘(A) a claim for payment of the Federal share of compensation for insured 

losses under the Program; 

‘‘(B) written certification—

‘‘(i) of the underlying claim; and 

‘‘(ii) of all payments made for insured losses; and 

‘‘(C) certification of its compliance with the provisions of this subsection. 

‘‘(c) MANDATORY AVAILABILITY.—

‘‘(1) AVAILABILITY OF COVERAGE FOR INSURED LOSSES.—Subject to paragraph 

(3), during each Program Year, each entity that meets the definition of an insurer under section 102 shall make available—

‘‘(A) in all of its insurance policies for covered lines, coverage for insured 

losses that does not differ materially from the terms, amounts, and other 

coverage limitations applicable to losses arising from events other than acts 

of terrorism; and 

‘‘(B) in insurance policies for covered lines for which the coverage described in subparagraph (A) is provided, exceptions to the pollution and nuclear hazard exclusions of such policies that render such exclusions inapplicable only as to insured losses arising from acts of NBCR terrorism. 

‘‘(2) ALLOWABLE EXCLUSIONS IN OTHER COVERAGE.—Subject to paragraph (3) 

and notwithstanding any other provision of Federal or State law, including any 

State workers’ compensation and other compulsory insurance law, if a person 

elects not to purchase an insurance policy with the coverage described in paragraph (1)—

‘‘(A) an insurer may exclude coverage for all losses from acts of terrorism 

including acts of NBCR terrorism, except for State workers’ compensation 

and other compulsory insurance law requiring coverage of the risks described in subsection (c)(1) (unless permitted by State law); or 


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‘‘(B) an insurer may offer other options for coverage that differ materially 

from the terms, amounts, and other coverage limitations applicable to 

losses arising from events other than acts of terrorism; 

except that nothing in this paragraph shall affect paragraph (4). 

‘‘(3) APPLICABILITY FOR NBCR TERRORISM.—Notwithstanding any other provision of this Act, paragraphs (1)(B) and (2) shall apply, beginning upon January 

1, 2009, with respect to coverage for acts of NBCR terrorism, that is purchased 

or renewed on or after such date. 

‘‘(4) AVAILABILITY OF LIFE INSURANCE WITHOUT REGARD TO LAWFUL FOREIGN

TRAVEL.—During each Program Year, each entity that meets the definition of 

an insurer under section 102 shall make available, in all of its life insurance 

policies issued after the date of the enactment of the Terrorism Risk Insurance 

Revision and Extension Act of 2007 under which the insured person is a citizen 

of the United States or an alien lawfully admitted for permanent residence in 

the United States, coverage that neither considers past, nor precludes future, 

lawful foreign travel by the person insured, and shall not decline such coverage 

based on past or future, lawful foreign travel by the person insured or charge 

a premium for such coverage that is excessive and not based on a good faith 

actuarial analysis, except that an insurer may decline or, upon inception or renewal of a policy, limit the amount of coverage provided under any life insurance policy based on plans to engage in future lawful foreign travel to occur 

within 12 months of such inception or renewal of the policy but only if, at time 

of application—

‘‘(A) such declination is based on, or such limitation applies only with respect to, travel to a foreign destination—

‘‘(i) for which the Director of the Centers for Disease Control and Prevention of the Department of Health and Human Services has issued 

a highest level alert or warning, including a recommendation against 

non-essential travel, due to a serious health-related condition; 

‘‘(ii) in which there is an ongoing military conflict involving the 

armed forces of a sovereign nation other than the nation to which the 

insured person is traveling; or 

‘‘(iii)(I) that the insurer has specifically designated in the terms of 

the life insurance policy at the inception of the policy or at renewal, as 

applicable; and 

‘‘(II) with respect to which the insurer has made a good-faith determination that—

‘‘(aa) a serious unlawful situation exists which is ongoing; and 

‘‘(bb) the credibility of information by which the insurer can 

verify the death of the insured person is compromised; and 

‘‘(B) in the case of any limitation of coverage, such limitation is specifically stated in the terms of the life insurance policy at the inception of the 

policy or at renewal, as applicable. 

‘‘(d) STATE RESIDUAL MARKET INSURANCE ENTITIES.—

‘‘(1) IN GENERAL.—The Secretary shall issue regulations, as soon as practicable after the date of enactment of this Act, that apply the provisions of this 

title to State residual market insurance entities and State workers’ compensation funds. 

‘‘(2) TREATMENT OF CERTAIN ENTITIES.—For purposes of the regulations issued 

pursuant to paragraph (1)—

‘‘(A) a State residual market insurance entity that does not share its profits and losses with private sector insurers shall be treated as a separate 

insurer; and 

‘‘(B) a State residual market insurance entity that shares its profits and 

losses with private sector insurers shall not be treated as a separate insurer, and shall report to each private sector insurance participant its share 

of the insured losses of the entity, which shall be included in each private 

sector insurer’s insured losses. 

‘‘(3) TREATMENT OF PARTICIPATION IN CERTAIN ENTITIES.—Any insurer that 

participates in sharing profits and losses of a State residual market insurance 

entity shall include in its calculations of premiums any premiums distributed 

to the insurer by the State residual market insurance entity. 

‘‘(e) INSURED LOSS SHARED COMPENSATION.—

‘‘(1) FEDERAL SHARE.—

‘‘(A) CONVENTIONAL TERRORISM.—Except as provided in subparagraph 

(B), the Federal share of compensation under the Program to be paid by the 

Secretary for insured losses of an insurer during any additional Program 

Year shall be equal to the sum of—


ycherry on PRODPC74 with REPORTS
10 

‘‘(i) 85 percent of that portion of the amount of such insured losses 

that—‘‘(I) exceeds the applicable insurer deductible required to be paid 

during such Program Year; and ‘‘(II) based upon pro rata determinations pursuant to paragraph 

(2)(B), does not result in aggregate industry insured losses during 

such Program Year exceeding $100,000,000,000; and ‘‘(ii) 100 percent of the insured losses of the insurer that, based upon 

pro rata determinations pursuant to paragraph (2)(B), result in aggregate industry insured losses during such Program Year exceeding 

$100,000,000,000, up to the limit under paragraph (2)(A). ‘‘(B) NBCR TERRORISM.— ‘‘(i) AMOUNT OF COMPENSATION.—The Federal share of compensation 

under the Program to be paid by the Secretary for insured losses of an 

insurer resulting from NBCR terrorism during any additional Program 

Year shall be equal to the sum of— ‘‘(I) the amount of qualified NBCR losses (as such term is defined 

in clause (ii)) of the insurer, multiplied by a percentage based on 

the aggregate industry qualified NBCR losses for the Program 

Year, which percentage shall be— ‘‘(aa) 85 percent of such aggregate industry qualified NBCR 

losses of less than $10,000,000,000; 

‘‘(bb) 87.5 percent of such aggregate industry qualified NBCR 

losses between $10,000,000,000 and $20,000,000,000; 

‘‘(cc) 90 percent of such aggregate industry qualified NBCR 

losses between $20,000,000,000 and $40,000,000,000; 

‘‘(dd) 92.5 percent of such aggregate industry qualified 

NBCR losses of between $40,000,000,000 and $60,000,000,000; 

and 

‘‘(ee) 95 percent of such aggregate industry qualified NBCR 

losses of more than $60,000,000,000; 

and shall be prorated per insurer based on each insurer’s percentage of the aggregate industry qualified NBCR losses for such additional Program Year; and 

‘‘(II) 100 percent of the insured losses of the insurer resulting 

from NBCR terrorism that, based upon pro rata determinations 

pursuant to paragraph (2)(B), result in aggregate industry insured 

losses during such Program Year exceeding $100,000,000,000, up to 

the limit under paragraph (2)(A). 

‘‘(ii) QUALIFIED NBCR LOSSES.—For purposes of this subparagraph, 

the term ‘qualified NBCR losses’ means, with respect to insured losses 

of an insurer resulting from NBCR terrorism during an additional Program Year, that portion of the amount of such insured losses that—

‘‘(I) exceeds the applicable insurer deductible required to be paid 

during such Program Year; and 

‘‘(II) based upon pro rata determinations pursuant to paragraph 

(2)(B), does not result in aggregate industry insured losses during 

such Program Year exceeding $100,000,000,000. 

‘‘(C) PROGRAM TRIGGER.—In the case of a certified act of terrorism occurring after March 31, 2006, no compensation shall be paid by the Secretary 

under subsection (a), unless the aggregate industry insured losses resulting 

from such certified act of terrorism exceed $50,000,000, except that if a certified act of terrorism occurs for which resulting aggregate industry insured 

losses exceed $1,000,000,000, the applicable amount for any subsequent certified act of terrorism shall be the amount specified in section 102(1)(B)(ii). 

‘‘(D) LIMITATION ON COMPENSATION FOR GROUP LIFE INSURANCE.—Notwithstanding any other provision of this Act, the Federal share of compensation under the Program paid by the Secretary for insured losses of an 

insurer resulting from coverage of any single certificate holder under any 

group life insurance coverages of the insurer may not during any additional 

Program Year exceed $1,000,000. 

‘‘(E) PROHIBITION ON DUPLICATIVE COMPENSATION.—The Federal share of 

compensation for insured losses under the Program shall be reduced by the 

amount of compensation provided by the Federal Government to any person 

under any other Federal program for those insured losses. 

‘‘(2) CAP ON ANNUAL LIABILITY.—

‘‘(A) IN GENERAL.—Notwithstanding paragraph (1) or any other provision 

of Federal or State law, including any State workers’ compensation or other 

compulsory insurance law, if the aggregate amount of the Federal share of 


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11 

compensation to be paid to all insurers pursuant to paragraph (1) exceeds 

$100,000,000,000, during any additional Program Year (until such time as 

the Congress may act otherwise with respect to such losses)—

‘‘(i) the Secretary shall not make any payment under this title for any 

portion of the amount of the aggregate insured losses during such Program Year for which the Federal share exceeds $100,000,000,000; and 

‘‘(ii) no insurer that has met its insurer deductible shall be liable for 

the payment of any portion of the aggregate insured losses during such 

Program Year that exceeds $100,000,000,000. 

‘‘(B) INSURER SHARE.—For purposes of subparagraph (A), the Secretary 

shall determine the pro rata share of insured losses to be paid by each insurer that incurs insured losses under the Program. 

‘‘(C) CLAIMS ALLOCATIONS.—The Secretary shall, by regulation, provide 

for insurers to allocate claims payments for insured losses under applicable 

insurance policies in any case described in subparagraph (A). Such regulations shall include provisions for payment, for the purpose of addressing 

emergency needs of applicable individuals affected by an act of terrorism, 

of a portion of claims for insured losses promptly upon filing of such claims. 

‘‘(3) LIMITATION ON INSURER FINANCIAL RESPONSIBILITY.—

‘‘(A) LIMITATION.—Notwithstanding any other provision of Federal or 

State law, including any State workers’ compensation or other compulsory 

insurance law, an insurer’s financial responsibility for insured losses from 

acts of terrorism shall be limited to its applicable insurer deductible and 

its applicable share of insured losses that exceed its applicable insurer deductible, subject to the requirements of paragraph (2). 

‘‘(B) FEDERAL REIMBURSEMENT.—Notwithstanding any other provision of 

Federal or State law, the Secretary shall—

‘‘(i) reimburse insurers for any payment of excess insured losses 

made prior to publication of any notification pursuant to paragraph 

(4)(A); 

‘‘(ii) reimburse insurers for any payment of excess insured losses occurring on or after the date of any notification pursuant to paragraph 

(4)(A), but only to the extent that—

‘‘(I) such payment is ordered by a court pursuant to subparagraph (C) of this paragraph or is directed by State law, notwithstanding this paragraph, or by Federal law; 

‘‘(II) such payment is limited to compensating insurers for their 

payment of excess insured losses and does not include punitive 

damages, or litigation or other costs; and 

‘‘(III) the insurer has made a good-faith effort to defend against 

any claims for such payment; and 

‘‘(iii) have the right to intervene in any legal proceedings relating to 

such claims specified in clause (ii)(III). 

‘‘(C) FEDERAL COURT JURISDICTION.—

‘‘(i) CONDITIONS.—All claims relating to or arising out of an insurer’s 

financial responsibility for insured losses from acts of terrorism under 

this paragraph shall be within the original and exclusive jurisdiction of 

the district courts of the United States, in accordance with the procedures established in subparagraph (D), if the Secretary certifies that 

the following conditions have been met, or that there is a reasonable 

likelihood that the following conditions may be met: 

‘‘(I) The aggregate amount of the Federal share of compensation 

to be paid to all insurers pursuant to paragraph (1) exceeds 

$100,000,000,000, pursuant to paragraph (2); and 

‘‘(II) the insurer has paid its applicable insurer deductible and its 

pro rata share of insured losses determined pursuant to paragraph 

(2)(B). 

‘‘(ii) REMOVAL OF STATE COURT ACTIONS.—If the Secretary certifies 

that conditions set forth in subclauses (I) and (II) of clause (i) have 

been met, all pending State court actions that relate to or arise out of 

an insurer’s financial responsibility for insured losses from acts of terrorism under this paragraph shall be removed to a district court of the 

United States in accordance with subparagraph (D). 

‘‘(D) VENUE.—For each certification made by the Secretary pursuant to 

subparagraph (C)(i), not later than 90 days after the Secretary’s determination the Judicial Panel on Multidistrict Litigation shall designate one district court or, if necessary, multiple district courts of the United States that 

shall have original and exclusive jurisdiction over all actions for any claim 


ycherry on PRODPC74 with REPORTS
12 

relating to or arising out of an insurer’s financial responsibility for insured 

losses from acts of terrorism under this paragraph. ‘‘(4) NOTICES REGARDING LOSSES AND ANNUAL LIABILITY CAP.— ‘‘(A) APPROACHING CAP.—If the Secretary determines estimated or actual 

aggregate Federal compensation to be paid pursuant to paragraph (1) 

equals or exceeds $80,000,000,000 during any Program Year, the Secretary 

shall promptly provide notification in accordance with subparagraph (D)— ‘‘(i) of such estimated or actual aggregate Federal compensation to be 

paid; ‘‘(ii) of the likelihood that such aggregate Federal compensation to be paid for such Program Year will equal or exceed $100,000,000,000; and ‘‘(iii) that, pursuant to paragraph (2)(A)(ii), insurers are not required 

to make payments of excess insured losses. ‘‘(B) EVENT LIKELY TO CAUSE LOSSES TO EXCEED CAP.—If any act of terrorism occurs that the Secretary determines is likely to cause estimated or 

actual aggregate Federal compensation to be paid pursuant to paragraph 

(1) to exceed $100,000,000,000 during any Program Year, the Secretary 

shall, not later than 10 days after such act, provide notification in accordance with subparagraph (D)— ‘‘(i) of such estimated or actual aggregate Federal compensation to be 

paid; and 

‘‘(ii) that, pursuant to paragraph (2)(A)(ii), insurers are not required 

to make payments for excess insured losses. 

‘‘(C) EXCEEDING CAP.—If the Secretary determines estimated or actual aggregate Federal compensation to be paid pursuant to paragraph (1) equals 

or exceeds $100,000,000,000 during any Program Year—

‘‘(i) the Secretary shall promptly provide notification in accordance 

with subparagraph (D)—

‘‘(I) of such estimated or actual aggregate Federal compensation 

to be paid; and 

‘‘(II) that, pursuant to paragraph (2)(A)(ii), insurers are not required to make payments for excess insured losses unless the Congress provides for payments for excess insured losses pursuant to 

clause (ii) of this subparagraph; and 

‘‘(ii) the Congress shall determine the procedures for and the source 

of any payments for such excess insured losses. 

‘‘(D) PARTIES NOTIFIED.—Notification is provided in accordance with this 

subparagraph only if notification is provided—

‘‘(i) to the Congress, in writing; and 

‘‘(ii) to insurers, by causing such notice to be published in the Federal 

Register. 

‘‘(E) DETERMINATIONS.—The Secretary shall make determinations regarding estimated and actual aggregate Federal compensation to be paid 

promptly after any act of terrorism as may be necessary to comply with this 

paragraph. 

‘‘(F) MANDATORY DISCLOSURE FOR INSURANCE CONTRACTS.—All policies for 

property and casualty insurance and group life insurance shall be deemed 

to contain a provision to the effect that no insurer that has met its applicable insurer deductible and its applicable share of insured losses that exceed 

its applicable insurer deductible but are not compensated pursuant to paragraph (1), shall be obligated to pay for any portion of excess insured loss. 

Notwithstanding the preceding sentence, insurers shall include a disclosure 

in their policies detailing the maximum level of Government assistance and 

the applicable insurer share. 

‘‘(5) FINAL NETTING.—The Secretary shall have sole discretion to determine 

the time at which claims relating to any insured loss or act of terrorism shall 

become final. 

‘‘(6) DETERMINATIONS FINAL.—Any determination of the Secretary under this 

subsection shall be final, unless expressly provided, and shall not be subject to 

judicial review. 

‘‘(7) INSURANCE MARKETPLACE AGGREGATE RETENTION AMOUNT.—For purposes 

of paragraph (8), the insurance marketplace aggregate retention amount shall 

be—

‘‘(A) for the period beginning on the first day of the Transition Period and 

ending on the last day of Program Year 1, the lesser of—

‘‘(i) $10,000,000,000; and 

‘‘(ii) the aggregate amount, for all insurers, of insured losses during 

such period; 

‘‘(B) for Program Year 2, the lesser of—


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13 

‘‘(i) $12,500,000,000; and 

‘‘(ii) the aggregate amount, for all insurers, of insured losses during 

such Program Year; ‘‘(C) for Program Year 3, the lesser of— ‘‘(i) $15,000,000,000; and 

‘‘(ii) the aggregate amount, for all insurers, of insured losses during 

such Program Year; ‘‘(D) for Program Year 4, the lesser of— ‘‘(i) $25,000,000,000; and 

‘‘(ii) the aggregate amount, for all insurers, of insured losses during 

such Program Year; ‘‘(E) for Program Year 5, the lesser of— ‘‘(i) $27,500,000,000; and 

‘‘(ii) the aggregate amount, for all insurers, of insured losses during 

such Program Year; and ‘‘(F) for each additional Program Year— ‘‘(i) for property and casualty insurance, the lesser of— ‘‘(I) $27,500,000,000; and 

‘‘(II) the aggregate amount, for all such insurance, of insured 

losses during such Program Year; and ‘‘(ii) for group life insurance, the lesser of—

‘‘(I) $5,000,000,000; and 

‘‘(II) the aggregate amount, for all such insurance, of insured 

losses during such Program Year. 

‘‘(8) RECOUPMENT OF FEDERAL SHARE.—

‘‘(A) MANDATORY RECOUPMENT AMOUNT.—For purposes of this paragraph, 

the mandatory recoupment amount for each of the Program Years referred 

to in subparagraphs (A) through (F) of paragraph (7) shall be the difference 

between—

‘‘(i) the applicable insurance marketplace aggregate retention amount 

under paragraph (7) for such Program Year; and 

‘‘(ii) the aggregate amount, for all applicable insurers (pursuant to 

subparagraph (E)), of insured losses during such Program Year that are 

not compensated by the Federal Government because such losses—

‘‘(I) are within the insurer deductible for the insurer subject to 

the losses; or 

‘‘(II) are within the portion of losses of the insurer that exceed 

the insurer deductible, but are not compensated pursuant to paragraph (1). 

‘‘(B) NO MANDATORY RECOUPMENT IF UNCOMPENSATED LOSSES EXCEED APPLICABLE INSURANCE MARKETPLACE RETENTION.—Notwithstanding subparagraph (A), if the aggregate amount of uncompensated insured losses referred to in clause (ii) of such subparagraph for any Program Year referred 

to in any of subparagraphs (A) through (F) of paragraph (7) is greater than 

the applicable insurance marketplace aggregate retention amount under 

paragraph (7) for such Program Year, the mandatory recoupment amount 

shall be $0. 

‘‘(C) MANDATORY ESTABLISHMENT OF SURCHARGES TO RECOUP MANDATORY

RECOUPMENT AMOUNT.—The Secretary shall collect, for repayment of the 

Federal financial assistance provided in connection with all acts of terrorism (or acts of war, in the case of workers’ compensation) occurring during any of the Program Years referred to in any of subparagraphs (A) 

through (F) of paragraph (7), terrorism loss risk-spreading premiums in an 

amount equal to any mandatory recoupment amount for such Program 

Year. 

‘‘(D) DISCRETIONARY RECOUPMENT OF REMAINDER OF FINANCIAL ASSISTANCE.—To the extent that the amount of Federal financial assistance provided exceeds any mandatory recoupment amount, the Secretary may—

‘‘(i) recoup, through terrorism loss risk-spreading premiums, such additional amounts; or 

‘‘(ii) submit a report to the Congress identifying such amounts that 

the Secretary believes cannot be recouped, based on—

‘‘(I) the ultimate costs to taxpayers of no additional recoupment; 

‘‘(II) the economic conditions in the commercial marketplace, including the capitalization, profitability, and investment returns of 

the insurance industry and the current cycle of the insurance markets; 

‘‘(III) the affordability of commercial insurance for small- and 

medium-sized businesses; and 


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14 

‘‘(IV) such other factors as the Secretary considers appropriate. ‘‘(E) SEPARATE RECOUPMENT.—‘‘The Secretary shall provide that— ‘‘(i) any recoupment under this paragraph of amounts paid for Federal financial assistance for insured losses for property and casualty insurance shall be applied to property and casualty insurance policies; 

and ‘‘(ii) any recoupment under this paragraph of amounts paid for Federal financial assistance for insured losses for group life insurance shall 

be applied to group life insurance policies. ‘‘(9) POLICY SURCHARGE FOR TERRORISM LOSS RISK-SPREADING PREMIUMS.— ‘‘(A) POLICYHOLDER PREMIUM.—Subject to paragraph (8)(E), any amount 

established by the Secretary as a terrorism loss risk-spreading premium 

shall—

‘‘(i) be imposed as a policyholder premium surcharge on property and 

casualty insurance policies and group life insurance policies in force 

after the date of such establishment; ‘‘(ii) begin with such period of coverage during the year as the Secretary determines appropriate; and ‘‘(iii) be based on— ‘‘(I) a percentage of the premium amount charged for property 

and casualty insurance coverage under the policy; and 

‘‘(II) a percentage of the amount at risk for group life insurance 

coverage under the policy. 

‘‘(B) COLLECTION.—The Secretary shall provide for insurers to collect terrorism loss risk-spreading premiums and remit such amounts collected to 

the Secretary. 

‘‘(C) PERCENTAGE LIMITATION.—A terrorism loss risk-spreading premium 

may not exceed, on an annual basis—

‘‘(i) with respect to property and casualty insurance, the amount 

equal to 3 percent of the premium charged under the policy; and 

‘‘(ii) with respect to group life insurance, the amount equal to 0.0053 

percent of the amount at risk under the policy. 

‘‘(D) ADJUSTMENT FOR URBAN AND SMALLER COMMERCIAL AND RURAL

AREAS AND DIFFERENT LINES OF INSURANCE.—

‘‘(i) ADJUSTMENTS.—In determining the method and manner of imposing terrorism loss risk-spreading premiums, including the amount of 

such premiums, the Secretary shall take into consideration—

‘‘(I) the economic impact on commercial centers of urban areas, 

including the effect on commercial rents and commercial insurance 

premiums, particularly rents and premiums charged to small businesses, and the availability of lease space and commercial insurance within urban areas; 

‘‘(II) the risk factors related to rural areas and smaller commercial centers, including the potential exposure to loss and the likely 

magnitude of such loss, as well as any resulting cross-subsidization 

that might result; and 

‘‘(III) the various exposures to terrorism risk for different lines 

of insurance. 

‘‘(ii) RECOUPMENT OF ADJUSTMENTS.—Any mandatory recoupment 

amounts not collected by the Secretary because of adjustments under 

this subparagraph shall be recouped through additional terrorism loss 

risk-spreading premiums. 

‘‘(E) TIMING OF PREMIUMS.—The Secretary may adjust the timing of terrorism loss risk-spreading premiums to provide for equivalent application 

of the provisions of this title to policies that are not based on a calendar 

year, or to apply such provisions on a daily, monthly, or quarterly basis, 

as appropriate. 

‘‘(f) CAPTIVE INSURERS AND OTHER SELF-INSURANCE ARRANGEMENTS.—The Secretary may, in consultation with the NAIC or the appropriate State regulatory authority, apply the provisions of this title, as appropriate, to other classes or types 

of captive insurers and other self-insurance arrangements by municipalities and 

other entities (such as workers’ compensation self-insurance programs and State 

workers’ compensation reinsurance pools), but only if such application is determined 

before the occurrence of an act of terrorism in which such an entity incurs an insured loss and all of the provisions of this title are applied comparably to such entities. 

‘‘(g) REINSURANCE TO COVER EXPOSURE.—

‘‘(1) OBTAINING COVERAGE.—This title may not be construed to limit or prevent insurers from obtaining reinsurance coverage for insurer deductibles or inVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6621 E:\HR\OC\HR318.XXX HR318

ycherry on PRODPC74 with REPORTS
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sured losses retained by insurers pursuant to this section, nor shall the obtaining of such coverage affect the calculation of such deductibles or retentions. ‘‘(2) LIMITATION ON FINANCIAL ASSISTANCE.—The amount of financial assistance provided pursuant to this section shall not be reduced by reinsurance paid 

or payable to an insurer from other sources, except that recoveries from such 

other sources, taken together with financial assistance for the Transition Period 

or a Program Year provided pursuant to this section, may not exceed the aggregate amount of the insurer’s insured losses for such period. If such recoveries 

and financial assistance for the Transition Period or a Program Year exceed 

such aggregate amount of insured losses for that period and there is no agreement between the insurer and any reinsurer to the contrary, an amount in excess of such aggregate insured losses shall be returned to the Secretary.’’; 

(2) in section 104(a)— (A) in paragraph (1), by striking ‘‘and’’ at the end; 

(B) in paragraph (2), by striking the period and inserting ‘‘; and’’; and 

(C) by adding at the end the following new paragraph: ‘‘(3) during the 90-day period beginning upon the certification of any act of 

terrorism, to issue such regulations as the Secretary considers necessary to 

carry out this Act without regard to the notice and comment provisions of section 553 of title 5, United States Code.’’; 

(3) in section 104, by adding at the end the following new subsection: 

‘‘(h) ANNUAL ADJUSTMENT.—

‘‘(1) IN GENERAL.—Notwithstanding any other provision of this title, the Secretary shall adjust, for the second additional Program Year and for each additional Program Year thereafter, based upon the percentage change in an appropriate index during the 12-month period preceding such Program Year, each of 

the following amounts (as such amount may have been previously adjusted): 

‘‘(A) The dollar amount in section 102(1)(B)(ii) (relating to act of terrorism). 

‘‘(B) The dollar amount in section 102(11)(J) (relating to aggregate industry insured losses in a previously impacted area). 

‘‘(C) The dollar amounts in subparagraphs (A) and (B) of section 103(e)(1) 

(relating to limitation on Federal share). 

‘‘(D) The dollar amounts in section 103(e)(1)(C) (relating to Program trigger). 

‘‘(E) The dollar amount in section 103(e)(1)(D) (relating to limitation on 

group life insurance compensation). 

‘‘(F) The dollar amounts in section 103(e)(2) (relating to cap on annual liability). 

‘‘(G) The dollar amounts in section 103(e)(3)(C) (relating to limitation on 

insurer financial liability). 

‘‘(H) The dollar amounts in section 103(e)(4) (relating to notices regarding 

losses and annual liability cap). 

‘‘(I) The dollar amounts in section 103(e)(7) (relating to insurance marketplace aggregate retention amount). 

‘‘(J) The dollar amounts in section 109(b)(1)(C) (relating to membership 

of Commission on Terrorism Insurance Risk). 

‘‘(2) PUBLICATION.—The Secretary shall make the dollar amounts for each additional Program Year, as adjusted pursuant to this subsection, publicly available in a timely manner.’’; 

(4) in section 106(a)(2)—

(A) in subparagraph (B), by striking ‘‘and’’ at the end; 

(B) by redesignating subparagraph (C) as subparagraph (F); and 

(C) by inserting after subparagraph (B) the following new subparagraphs: 

‘‘(C) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007 and ending on 

December 31, 2008, rates and forms for property and casualty insurance, 

and group life insurance, required by this title and providing coverage except for NBCR terrorism that are filed with any State shall not be subject 

to prior approval or a waiting period under any law of a State that would 

otherwise be applicable, except that nothing in this title affects the ability 

of any State to invalidate a rate as excessive, inadequate, or unfairly discriminatory, and, with respect to forms, where a State has prior approval 

authority, it shall apply to allow subsequent review of such forms; 

‘‘(D) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007, and ending on 

December 31, 2009, forms for property and casualty insurance, and group 

life insurance, covered by this title and providing coverage for NBCR terrorism that are filed with any State, to the extent of the addition of such 


ycherry on PRODPC74 with REPORTS
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coverage for NBCR terrorism and where such coverage was not previously 

required, shall not be subject to prior approval or waiting period under any 

law of a State that would otherwise be applicable; 

‘‘(E) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007, and ending on 

December 31, 2010, rates for property and casualty insurance, and group 

life insurance, covered by this title and providing coverage for NBCR terrorism that are filed with any State, to the extent of the addition of such 

coverage for NBCR terrorism and where such coverage was not previously 

required, shall not be subject to prior approval or waiting period under any 

law of a State that would otherwise be applicable, except that nothing in 

this title affects the ability of any State to invalidate a rate as inadequate 

or unfairly discriminatory; and’’; 

(5) in section 106, by adding at the end the following new subsection: 

‘‘(c) RULE OF CONSTRUCTION REGARDING INSURER COORDINATION.—Nothing in this 

Act shall be construed to prohibit, restrict, or otherwise limit an insurer from entering into an arrangement with another insurer to make available coverage for any 

portion of insured losses to fulfill the requirements of section 103(c). The Secretary 

shall develop, in consultation with the NAIC, minimum financial solvency standards 

and other standards the Secretary determines appropriate with respect to such arrangements. Nothing in this subsection shall be construed to establish any legal 

partnership.’’; and 

(6) in section 108(c)(1), by striking ‘‘paragraph (4), (5), (6), (7), or (8)’’ and inserting ‘‘paragraph (5), (6), (7), (8), or (9)’’. 

(b) REGULATIONS ON CLAIMS ALLOCATIONS.—The Secretary of the Treasury shall 

issue the regulations referred to in subparagraph (C) of section 103(e)(2) of the Terrorism Risk Insurance Act of 2002, as amended by subsection (a)(1) of this section, 

and to carry out subparagraph (B) of such section 103(e)(2), not later than the expiration of the 120-day period beginning upon the date of the enactment of this Act. 

(c) REGULATIONS ON NBCR EXEMPTIONS.—The Secretary of the Treasury shall 

issue the regulations to carry out paragraph (4) of section 103(a) of the Terrorism 

Risk Insurance Act of 2002, as amended by subsection (a)(1) of this section, not later 

than the expiration of the 180-day period beginning upon the date of the enactment 

of this Act. 

SEC. 4. TERRORISM BUY-DOWN FUND. 

The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—

(1) by inserting after section 106 the following new section: 

‘‘SEC. 106A. TERRORISM BUY-DOWN FUND. 

‘‘(a) ESTABLISHMENT.—The Secretary shall establish a Terrorism Buy-Down Fund 

(in this section referred to as the ‘Fund’) that shall make available additional terrorism coverage for the insured losses of insurers, which shall be available for purchase by insurers on a voluntary basis. 

‘‘(b) PURCHASE OF DEDUCTIBLE, CO-SHARE, AND TRIGGER BUY-DOWN COVERAGE.—

‘‘(1) IN GENERAL.—An insurer may purchase deductible, co-share, and pre-trigger buy-down coverage (in this section referred to as ‘buy-down coverage’) 

through the Fund by making an election, in advance, to treat some or all of the 

premiums it has disclosed pursuant to section 103(b)(2) as fee charges for the 

Program imposed by the Secretary and remitting such amounts to the Fund. 

‘‘(2) LIMITS.—An insurer may not purchase buy-down coverage in an amount 

greater than the lesser of—

‘‘(A) the highest amount specified in section 103(e)(1)(C); and 

‘‘(B) the insurer’s one-in-one-hundred-year risk exposure to acts of terrorism. 

‘‘(c) BUY-DOWN COVERAGE.—The Fund shall provide the buy-down coverage to an 

insurer for losses for acts of terrorism, without application of the insurer deductible 

and in addition to any otherwise payable Federal share of compensation pursuant 

to section 103(e). 

‘‘(d) BUILD-UP.—The buy-down coverage that shall be payable to an insurer for 

qualifying losses shall be the aggregate of the insurer’s buy-down coverage premiums plus interest accrued on such amounts. 

‘‘(e) USE BY INSURERS.—

‘‘(1) QUALIFYING LOSSES.—For the purpose of this section, qualifying losses 

are insured losses by an insurer that are not excess losses and that do not include amounts for which Federal financial assistance pursuant to section 103(e) 

is received, notwithstanding any limits otherwise applicable regarding section 

103(e)(1)(C) (regarding program triggers) or section 102(11) (regarding insurer 

deductibles). 


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17 

‘‘(2) USE OF BUY-DOWN COVERAGE.—An insurer may use any buy-down coverage payments received under subsection (f) to satisfy—

‘‘(A) the applicable insurer deductibles for the insurer; 

‘‘(B) the portion of the insurer’s losses that exceed the insurer deductible 

but are not compensated by the Federal share; and 

‘‘(C) the insurer’s obligations to pay for insured losses if the Program trigger under section 103(e)(1)(C) is not satisfied. 

‘‘(3) BUY-DOWN COVERAGE DOES NOT REDUCE FEDERAL CO-SHARE.—The receipt 

by an insurer of buy-down coverage under this section for insured losses shall 

not be considered with respect to calculating the insurer’s insured losses with 

respect to the insurer’s deductible and eligibility for Federal financial assistance 

pursuant to section 103(e). 

‘‘(4) INSOLVENCY.—An insurer may sell its rights to buy-down coverage from 

the Fund to another insurer as part of or to avoid an insolvency or as part of 

a merger, sale, or major reorganization. 

‘‘(f) PAYMENT OF BUY-DOWN COVERAGE.—The Fund shall pay the qualifying losses 

of an insurer purchasing buy-down coverage up to the amount described in subsection (d). 

‘‘(g) GOVERNMENT BORROWING.—The Secretary may borrow the funds from the 

Fund to offset, in whole or in part, the Federal share of compensation provided to 

all insurers under the Program, except that—

‘‘(1) the Fund shall always immediately provide any buy-down coverage payments required under subsection (f); and 

‘‘(2) any such amounts borrowed must be replenished with appropriate interest. 

‘‘(h) RISK-SHARING MECHANISMS.—The Secretary shall establish voluntary risksharing mechanisms for insurers purchasing buy-down coverage from the Fund to 

pool their reinsurance purchases and otherwise share terrorism risk. 

‘‘(i) TERMINATION.—Upon termination of the Program under section 108, and subject to the Secretary’s continuing authority under section 108(b) to adjust claims in 

satisfaction under the Program, the Secretary shall provide that the Fund shall become a privately-operated mutual terrorism reinsurance company owned by the insurers that have submitted buy-down coverage premiums in proportion to such premiums minus any buy-down coverage payments received.’’; and 

(2) in the table of contents in section 1(b), by inserting after the item relating 

to section 106 the following new item: 

‘‘Sec. 106A. Terrorism Buy-Down Fund.’’. 

SEC. 5. ANALYSIS AND STUDY. 

(a) ANALYSIS OF MARKET CONDITIONS.—Section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking subsection (e) and 

inserting the following: 

‘‘(e) ANALYSIS OF MARKET CONDITIONS FOR TERRORISM RISK INSURANCE.—

‘‘(1) IN GENERAL.—The Secretary, in consultation with the NAIC, representatives of the insurance industry, representatives of the securities industry, and 

representatives of policyholders, shall perform an analysis regarding the longterm availability and affordability of insurance for terrorism risk in the private 

marketplace, including coverage for—

‘‘(A) property and casualty insurance; 

‘‘(B) group life insurance; 

‘‘(C) workers’ compensation; 

‘‘(D) nuclear, biological, chemical, and radiological events; and 

‘‘(E) commercial real estate. 

‘‘(2) BIENNIAL REPORTS.—The Secretary shall submit biennial reports to the 

Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate, on its findings 

pursuant to the analysis conducted under paragraph (1). The first such report 

shall be submitted not later than the expiration of the 24-month period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and 

Extension Act of 2007. 

‘‘(3) TESTIMONY.—Upon submission of each biennial report under paragraph 

(2), the Secretary shall provide oral testimony to the Committee on Financial 

Services of the House of Representatives and Committee on Banking, Housing, 

and Urban Affairs of the United States Senate regarding the report and the 

analysis under this subsection for which the report is submitted.’’. 

(b) COMMISSION ON TERRORISM RISK INSURANCE.—Title I of the Terrorism Risk 

Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—

(1) by adding at the end the following new section: 


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18 

‘‘SEC. 109. COMMISSION ON TERRORISM RISK INSURANCE. 

‘‘(a) ESTABLISHMENT.—There is hereby established the Commission on Terrorism 

Risk Insurance (in this section referred to as the ‘Commission’). ‘‘(b) MEMBERSHIP.— ‘‘(1) The Commission shall consist of 21 members, as follows: ‘‘(A) The Secretary of the Treasury or the designee of the Secretary. 

‘‘(B) One member who is a State insurance commissioner, designated by 

the NAIC. ‘‘(C) 15 members, who shall be appointed by the President, who shall include—

‘‘(i) a representative of group life insurers; 

‘‘(ii) a representative of property and casualty insurers with direct earned premium of $1,000,000,000 or less; ‘‘(iii) a representative of property and casualty insurers with direct earned premium of more than $1,000,000,000; ‘‘(iv) a representative of multiline insurers; 

‘‘(v) a representative of independent insurance agents; 

‘‘(vi) a representative of insurance brokers; 

‘‘(vii) a policyholder representative; 

‘‘(viii) a representative of the survivors of the victims of the attacks 

of September 11, 2001; 

‘‘(ix) a representative of the reinsurance industry; 

‘‘(x) a representative of workers’ compensation insurers; 

‘‘(xi) a representative from the commercial mortgage-backed securities industry; 

‘‘(xii) a representative from a nationally recognized statistical rating 

organization; 

‘‘(xiii) a real estate developer; 

‘‘(xiv) a representative of workers’ compensation insurers created by 

State legislatures, selected in consultation with the American Association of State Compensation Insurance Funds from among its members; 

and 

‘‘(xv) a representative from the commercial real estate brokerage industry or the commercial property management industry. 

‘‘(D) Four members, who shall serve as liaisons to the Congress, who shall 

include two members jointly selected by the Chairman and Ranking Member of the Committee on Financial Services of the House of Representatives 

and two members jointly selected by the Chairman and Ranking Member 

of the Committee on Banking, Housing, and Urban Affairs of the Senate. 

‘‘(2) SECRETARY.—The Program Director of the Terrorism Risk Insurance Act 

of the Department of the Treasury shall serve as Secretary of the Commission. 

The Secretary of the Commission shall determine the manner in which the 

Commission shall operate, including funding and staffing. 

‘‘(c) DUTIES.—

‘‘(1) IN GENERAL.—The Commission shall identify and make recommendations 

regarding—

‘‘(A) possible actions to encourage, facilitate, and sustain provision by the 

private insurance industry in the United States of affordable coverage for 

losses due to an act or acts of terrorism; 

‘‘(B) possible actions or mechanisms to sustain or supplement the ability 

of the insurance industry in the United States to cover losses resulting from 

acts of terrorism in the event that—

‘‘(i) such losses jeopardize the capital and surplus of the insurance industry in the United States as a whole; or 

‘‘(ii) other consequences from such acts occur, as determined by the 

Commission, that may significantly affect the ability of the insurance 

industry in the United States to cover such losses independently; and 

‘‘(C) possible actions to significantly reduce the Federal role in covering 

losses resulting from acts of terrorism. 

‘‘(2) EVALUATIONS.—In identifying and making the recommendations required 

under paragraph (1), the Commission shall specifically evaluate the utility and 

viability of proposals aimed at improving the availability of insurance against 

terrorism risk in the private marketplace. 

‘‘(3) INITIAL MEETING.—The Commission shall hold its first meeting during the 

3-month period that begins 15 months after the date of the enactment of the 

Terrorism Risk Insurance Revision and Extension Act of 2007. 

‘‘(4) REPORTS.—

‘‘(A) CONTENTS.—The Commission shall submit two reports to the Congress that—


ycherry on PRODPC74 with REPORTS
19 

‘‘(i) evaluate and make recommendations regarding whether there is 

a need for a Federal terrorism risk insurance program; 

‘‘(ii) if so, include a specific, detailed recommendation for the replacement of the Program under this title; and 

‘‘(iii) include the identifications, evaluations, and recommendations 

required under paragraphs (1) and (2). 

‘‘(B) TIMING.—The first report required under subparagraph (A) shall be 

submitted before the expiration of the 60-month period beginning on the 

date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007. The second such report shall be submitted before the expiration of the 96-month period beginning upon such date of enactment.’’; and 

(2) in the table of contents in section 1(b), by inserting after the item relating 

to section 108 the following new item: 

‘‘Sec. 109. Commission on Terrorism Risk Insurance.’’. 

SEC. 6. APPLICABILITY. 

The amendments made by this Act shall apply beginning on January 1, 2008. The 

provisions of the Terrorism Risk Insurance Act of 2002, as in effect on the day before the date of the enactment of this Act, shall apply through the end of December 

31, 2007. 

PURPOSE AND SUMMARY

H.R. 2761, the Terrorism Risk Insurance Revision and Extension 

Act of 2007, is intended to extend the Terrorism Risk Insurance 

Act of 2002 (TRIA) for a second time to ensure the continued availability of terrorism insurance coverage, limit market disruptions, 

encourage economic development and growth, and maintain the 

economic security of the United States. 

In the aftermath of the terrorist attacks on September 11, 2001, 

TRIA initially was designed as a three-year program to provide a 

Federal backstop to the insurance industry through a system of 

shared public and private compensation for insured losses resulting 

from acts of terrorism. However, the developing private marketplace for terrorism insurance coverage was not sufficiently robust 

to obviate the need for TRIA. Congress therefore acted in late 2005 

to pass the Terrorism Risk Insurance Extension Act (TRIEA), 

which extended TRIA for an additional two years until December 

31, 2007. 

H.R. 2761, as reported, would further extend TRIA beyond its 

current expiration date of December 31, 2007 for an additional 15- 

year period. H.R. 2761 would also make several revisions to the existing program, such as expanding the availability of terrorism insurance to protect against nuclear, biological, chemical, or radiological (NBCR) events; adding group life insurance as a line covered by the program; and covering domestic terrorism events. 

BACKGROUND AND NEED FOR LEGISLATION

Prior to the events of September 11, 2001, insurers generally did 

not exclude terrorism losses from their insurance policies. After the 

2001 attacks that caused more than $35 billion of insured losses, 

however, reinsurers and insurers reassessed their terrorism exposure as a result of depleted surpluses and uncertainty over the 

likelihood and severity of future terrorist attacks. Many of them 

withdrew outright from the marketplace and placed developers and 

those with mortgages in a difficult position. To avoid technical default on their loan contracts, borrowers needed insurance against 

terrorism, but the private market for terrorism insurance coverage 

was initially extremely limited. 


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20 

Congress enacted TRIA to make terrorism insurance coverage 

more widely available, with the Federal government sharing the 

risk of loss from future terrorist attacks with the insurance industry for a fixed period of time while the market readjusted and 

transitioned towards providing additional coverage. TRIA mandated insurer participation in the Terrorism Insurance Program 

and required that insurers make available terrorism coverage in all 

covered commercial property and casualty insurance policies. 

While the initial TRIA did help address an economic need, the 

private marketplace did not recover as quickly as many had hoped. 

As a result, Congress enacted TRIEA in late 2005 to extend TRIA 

for an additional two years until December 31, 2007. This extension left much of the original TRIA program intact, but raised industry retention and insurer deductible levels, increased the event 

‘‘trigger’’ of losses before requiring Federal involvement, and pared 

back the insurance lines covered by the program. 

Despite the two-year extension by TRIEA, the terrorism insurance marketplace remains tenuous, according to many experts, and 

there remains a strong need for TRIA. At a June 21, 2007 hearing 

before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises (‘‘Capital Markets Subcommittee’’), 

a number of witnesses testified in support of a long-term or permanent extension of TRIA. At the same hearing, the Superintendent 

of the New York Insurance Department testified that the private 

sector will not offer terrorism insurance without TRIA. Also, a witness testifying on behalf of Independent Insurance Agents & Brokers of America expressed concern that insurance companies, particularly small and monoline insurers, may not continue to write 

terrorism risk insurance if the Federal backstop expires. Moreover, 

rating agencies that evaluate the solvency of insurers have already 

begun to ask what steps the companies will take to mitigate their 

potential exposures if the Program expires. While insurers and reinsurers have worked to improve their modeling and pricing systems, they remain uncertain with regard to their ability to reliably 

price the coverage for traditional terrorism events like bombing a 

building using conventional means. 

Furthermore, terrorism insurance remains in short supply in 

places like lower Manhattan, as the developers of the new World 

Trade Center noted at a hearing before the Capital Markets Subcommittee on March 5, 2007. Insurers also report having limited 

capital available to cover terrorism losses. While the President’s 

Working Group on Financial Markets (PWG) observed in its September 2006 report that the availability and affordability of terrorism risk insurance has improved, it also noted that any prediction of the potential degree of long-term development of the terrorism risk insurance market is difficult. 

Additional factors call for an extension of TRIA. From an economic perspective, terrorism insurance is a sector likely to experience market failure. Participants in the terrorism insurance marketplace have access to imperfect information, which hampers their 

decisions about whether to buy the product and how to price the 

product. The government’s classification of information related to 

terrorism for national security purposes further contributes to the 

difficulties that insurers and insureds face when assessing risk. 

Other factors contributing to market failure include a limited numVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00020 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

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ber of terrorism reinsurance providers and the virtual inability of 

insurers to alter a contract’s terms or cancel a policy. TRIA and 

TRIEA have helped to overcome some of these economic difficulties, 

but the private marketplace in the United States is not yet mature 

enough to handle the risk without some type of assistance. Finally, 

the private marketplace cannot prevent or defend against acts of 

terrorism, and the private marketplace should not be expected to 

provide for recovery from acts of terrorism by itself. Providing economic security against acts of terrorism is a matter of national defense and national security, which is a uniquely governmental 

function. There is thus a strong need to extend TRIA. 

Moreover, in the period since TRIA’s enactment, the insurance 

markets and the economy have continued to grow. Aggregate industry direct earned premiums for TRIA-covered lines in 2002 were 

approximately $130 billion and in 2006 were approximately $170 

billion for those same TRIA-covered lines. As a result, there is a 

corresponding need to modestly grow the program beyond its current cap of $100 billion in aggregate insured losses. 

Also, while TRIA only covers acts of terrorism committed on behalf of a foreign person or foreign interest, experience has shown 

that the distinction between foreign and domestic terrorism may be 

artificial. Witnesses at hearings before the Subcommittee have 

noted that post-TRIA events such as the London Underground 

bombing and the thwarted attack on John F. Kennedy Airport have 

demonstrated both the meaninglessness and the practical difficulty 

of making this distinction. 

TRIA to date has not applied to group life insurance. After the 

2005 extension of TRIA, the PWG analyzed the group life marketplace and found that ‘‘group life insurance still appears to be widely available in the private market and there has not been any impact on cost to policyholders.’’ Indeed, the group life industry has 

maintained capacity. However, group life carriers face potential insolvency should a terrorist event affect a large group of insureds. 

Group life insurance is not written and priced with anticipation 

that an entire group would file claims in the same year. Moreover, 

terrorism reinsurance availability has greatly decreased since the 

events of September 11, 2001, and now has higher deductibles, 

more exclusions, and smaller overall coverage limits. It is important to the economic security of America’s workers and their families that group life carriers remain solvent and capable of paying 

claims after a terrorist event. 

Additionally, the metric used for the inclusion of group life in 

TRIA should be economically fair to group life insurers and their 

policyholders. If group life recoupment were based on premium, individuals with smaller policies and policies with higher work-related risks (e.g., roofers) will be assessed the most even though 

they are not necessarily at higher risk. Arguably, they may be at 

a slightly lower risk, since terrorists are more likely to select 

‘‘white collar’’ targets. Moreover, group life premiums are not consistent across product lines. Therefore, if deductibles were based on 

premiums, group life insurers will meet their deductible at different levels depending on their mix of business. 

In addition, many now fear NBCR terrorist attacks. For instance, 

according to testimony at a hearing before the Capital Markets 

Subcommittee on June 21, 2007, a 2005 survey of 85 non-proliferaVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

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tion and national security experts led by Senator Richard Lugar 

put the likelihood of a nuclear attack somewhere in the world within the next ten years at 20% and the likelihood of a radiological 

attack at 40%. The same testimony noted that the national terrorism insurance programs in France and the United Kingdom provide NBCR coverage. 

The insurance market for NBCR terrorism coverage in the 

United States, however, is virtually non-existent. In fact, witnesses 

before the Subcommittee testified that NBCR terrorism exposures 

are essentially uninsurable without a Federal government program. These NBCR threats are distinctly different from those hazards that are predictable, measurable in dollar terms, and unlikely 

to result in catastrophic losses. As currently structured, TRIA only 

covers NBCR losses to the extent that insurers provide the coverage, such as in the case of workers’ compensation. Difficulties in 

modeling and pricing, however, have resulted in most insurers generally not offering coverage to protect against NBCR terrorism. 

Some have referred to this gap in the nation’s economic security 

plan as an Achilles’ heel. 

Moreover, the risk of an NBCR terrorism event is essentially uninsurable absent a Federal government program. A September 

2006 Government Accountability Office report entitled ‘‘Terrorism 

Insurance: Measuring and Predicting Losses from Unconventional 

Weapons Is Difficult, but Some Industry Exposure Exists’’ found 

that ‘‘any purely market-driven expansion of coverage’’ for NBCR 

terrorism risk is ‘‘highly unlikely in the foreseeable future.’’ Similarly, the 2006 PWG report also noted that reinsurance for NBCR 

terrorism events is virtually unavailable and observed that ‘‘[g]iven 

the general reluctance of insurance companies to provide coverage 

for these types of risks, there may be little potential for future market development.’’

Although the United States has avoided major terrorist attacks 

since 2001, recent attacks in London, Madrid, and Glasgow make 

it clear that the threat of terrorism will remain a national concern 

for the foreseeable future. As such, there is a need to extend the 

Federal backstop before the expiration of TRIEA at the end of 2007 

to ensure continued availability of terrorism insurance coverage, 

address the gap in NBCR coverage, and remove the artificial distinction between foreign and domestic acts of terrorism. These actions, among others, would allow commercial property owners, developers, and lenders to obtain the insurance needed to protect 

their property, comply with mortgage covenants, and acquire 

project financing. They would also promote economic growth and 

stability as our nation maintains vigilance against the threat of future terrorist attacks at home. 

The Committee received the following correspondence: 

COALITION TO INSURE AGAINST TERRORISM, 

Washington DC, July 30, 2007. 

Hon. BARNEY FRANK, 

Chairman, House Financial Services Committee, 

Rayburn House Office Building, Washington, DC. 

DEAR CHAIRMAN FRANK: The Coalition to Insure Against Terrorism (CIAT), a broad-based coalition of business insurance policyholders representing a significant segment of the nation’s GDP, 


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23 

strongly endorses H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act (TRIREA) of 2007 introduced by Representative Michael Capuano and others that would extend and improve 

the Terrorism Risk Insurance Extension Act (TRIEA). As the principal consumers of this vital insurance coverage, CIAT thanks you 

for your long-standing support and leadership on the issue of terrorism risk insurance. 

The current federal terrorism risk insurance program has been 

a tremendous success. TRIEA has helped keep the economy going 

in the face of continued terrorist threats by allowing businesses 

across America to secure this commercially necessary product, saving countless jobs in the process. Moreover, it serves as an important tool to minimize the severe economic disruption that almost 

certainly will occur from a future terrorist attack. 

With TRIEA’s expiration looming at the end of 2007, CIAT earlier this year outlined a number of key enhancements to the program that we believe need to be part of any extension legislation. 

CIAT is pleased that H.R. 2761 includes these key provisions. 

Most important to policyholders are four provisions. First, the 

program’s term would be extended to ten years. We applaud H.R. 

2761 for recognizing that such an extension affords policyholders 

with the certainty necessary for long-term projects and economic 

activity to move forward. With this in mind, CIAT strongly supports the amendment to be offered by Rep. Peter King to extend 

the program to fifteen years. 

Second, H.R. 2761 would give businesses an important new option to purchase insurance for catastrophic non-conventional terrorism risks—the types of risks our government warns us about repeatedly—by making available to policyholders insurance against 

weapons of mass destruction—so-called NBCR risks—under ‘‘same 

terms and conditions’’ as ‘‘conventional’’ risks. 

Third, this legislation would eliminate the distinction between 

foreign and domestic acts. As the London bombings and the foiled 

Kennedy Airport plot demonstrate, we must be prepared for ‘‘homegrown’’ terrorism as well as threats from abroad. 

Fourth, H.R. 2761 would lower substantially the program’s trigger level which will encourage smaller insurers, currently unable 

to participate in the program, to return to the terrorism risk insurance marketplace, thereby providing policyholders with a wider 

choice of insurance options. 

Lastly, there is an additional issue of importance to CIAT. CIAT 

strongly opposes any increase in the ‘‘recoupment’’ provision contained in TRIEA. We consider any increase above the current 

amount to be an excessive burden on the victims of terrorism and 

has the potential to be a lengthy drag on the economy in the aftermath of the next terrorist attack. 

CIAT thanks you for taking a significant step towards securing 

the economy against terrorism risk by scheduling this mark-up. 

Sincerely, 

THE COALITION TO INSURE AGAINST TERRORISM. 

HEARINGS

The Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises of the Committee on Financial ServVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

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ices held three hearings to examine the need for legislation, the 

policy options for legislation, and the legislation itself. 

The Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing on March 5, 2007, entitled ‘‘The Need to Extend the Terrorism Risk Insurance Act.’’ The 

following witnesses testified: The Honorable Charles E. Schumer, 

United States Senator; The Honorable Michael R. Bloomberg, 

Mayor of New York City; Mr. Eric R. Dinallo, Acting Superintendent, New York Insurance Department; Dr. Roger W. Ferguson, Chairman, Swiss Re America Holding Corporation; Mr. 

John N. Lieber, Senior Vice President, World Trade Center Properties, LLC; Mr. Stephen L. Green, Chief Executive Officer, SL 

Green Realty Corporation; Mr. Steven K. Graves, Chief Operating 

Officer, Principal Real Estate Investors; Mr. Edmund F. Kelly, 

Chairman, President and Chief Executive Officer, Liberty Mutual 

Group; Mr. Warren Heck, CPCU, President & CEO, Greater New 

York Mutual Insurance Company; and Mr. Donald J. Bailey, Chief 

Executive Officer, Willis NA. 

The Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing on April 24, 2007, entitled ‘‘Policy Options for Extending the Terrorism Risk Insurance 

Act.’’ The following witnesses testified: Mr. Leonard W. Cotton, 

Vice Chairman, Centerline Capital Group; Mr. Brian E. Dowd, 

Chief Executive Officer, Insurance—North America, ACE Group; 

Mr. Vincent T. Donnelly, President and Chief Executive Officer, 

PMA Insurance Group; Mr. Thomas R. Watjen, President and Chief 

Executive Officer, Unum Group; Mr. Joseph P. Ditchman, Jr., Partner, Colliers Ostendorff Morris, on behalf of the National Association of REALTORS; and Ms. Janice M. Abraham, President and 

Chief Executive Officer, United Educators. 

The Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing on June 21, 2007, entitled ‘‘Examining a Legislative Solution to Extend and Revise the 

Terrorism Risk Insurance Act.’’ The following witnesses testified: 

The Honorable David G. Nason, Assistant Secretary for Financial 

Institutions, U.S. Department of the Treasury; The Honorable Eric 

R. Dinallo, Superintendent, New York Insurance Department; The 

Honorable Marc Racicot, Chief Executive Officer and President, 

American Insurance Association; Mr. Christopher J. Nassetta, 

President and Chief Executive Officer, Host Hotels & Resorts, Inc. 

and Chairman, The Real Estate Roundtable, on behalf of the Coalition to Insure Against Terrorism; Ms. Jill M. Dalton, Managing Director, Global Property & Multinational Practice, Marsh, Inc., on 

behalf of the Council of Insurance Agents and Brokers; Ms. Sharon 

Emek, Ph.D., C.I.C., Partner, CBS Coverage Group, Inc., on behalf 

of the Independent Insurance Agents & Brokers of America; Mr. 

Warren Heck, CPCU, Chairman and Chief Executive Officer, 

Greater New York Mutual Insurance Company, on behalf of the 

National Association of Mutual Insurance Companies and the Property Casualty Insurance Association of America; Dr. Howard 

Kunreuther, Ph.D., Cecilia Yen Koo Professor of Decision Sciences 

& Public Policy, Co-Director Risk Management and Decision Processes Center, Wharton School, University of Pennsylvania; Mr. 

Frank Nutter, President, Reinsurance Association of America; and 


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25 

Mr. Dennis W. Smith, President and Chief Executive Officer, Missouri Employers Mutual Insurance. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on August 1, 2007, and ordered H.R. 2761, Terrorism Risk Insurance Revision and Extension Act of 2007, as amended, favorably reported 

to the House by a record vote of 49 yeas and 20 nays. Previously, 

the Subcommittee on Capital Markets, Insurance, and Government 

Sponsored Enterprises met in open session on July 24, 2007, and 

ordered H.R. 2761, as amended, forwarded to the Full Committee 

with a favorable recommendation by a record vote of 26 yeas and 

17 nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Frank to report the bill, as amended, to the House with a favorable 

recommendation was agreed to by a record vote of 49 yeas and 20 

nays (Record vote No. FC–66). The names of Members voting for 

and against follow: 

RECORD VOTE NO. FC–66 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... X ........... ............. Mr. Baker ............................. ........... X .............

Ms. Waters ............................ X ........... ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... X ........... ............. Mr. Castle ............................ ........... X .............

Mr. Gutierrez ......................... X ........... ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... X ........... ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ X ........... ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ X ........... ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ X ........... ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... X ........... ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. X ........... ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... X ........... ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... X ........... ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ X ........... ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... X ........... ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ ........... X .............

Mr. Lynch .............................. X ........... ............. Mr. Hensarling ..................... ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Scott ............................... X ........... ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Mr. Cleaver ........................... X ........... ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... X ........... ............. Mr. Pearce ............................ ........... X .............

Ms. Moore (WI) ...................... X ........... ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Price (GA) ...................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. X ........... ............. Mr. McHenry ......................... X ........... .............

Mr. Ellison ............................. X ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Wilson ............................. X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Marchant ....................... ........... X .............

Mr. Murphy ............................ X ........... ............. Mr. McCotter ........................ ........... X .............

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. X ........... .............

Mr. Marshall ......................... ........... X .............


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26 

RECORD VOTE NO. FC–66—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Boren .............................. X ........... .............

The following amendments to the amendment in the nature of a 

substitute recommended by the Subcommittee on Capital Markets, 

Insurance, and Government Sponsored Enterprises were decided by 

record votes. The names of Members voting for and against follow: 

An amendment by Mr. Putnam, No. 5, inserting an 8+2 year extension of the program, was not agreed to by a record vote of 26 

yeas and 39 nays (Record vote No. FC–63): 

RECORD VOTE NO. FC–63 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... ........... X .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite (FL) .......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Pearce ............................ X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... ........... ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. McCotter ........................ X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... ........... .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. King (N.Y.), No. 6, extending the program 

by 15 years, was agreed to by a record vote of 39 yeas and 30 nays 

(Record vote No. FC–64): 

RECORD VOTE NO. FC–64 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... ........... X ............. Mr. Baker ............................. ........... X .............

Ms. Waters ............................ X ........... ............. Ms. Pryce (OH) ..................... ........... X .............


ycherry on PRODPC74 with REPORTS
27 

RECORD VOTE NO. FC–64—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mrs. Maloney ......................... X ........... ............. Mr. Castle ............................ ........... X .............

Mr. Gutierrez ......................... X ........... ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... X ........... ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ X ........... ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ X ........... ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ X ........... ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... X ........... ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. X ........... ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... X ........... ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ X ........... ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... X ........... ............. Mrs. Capito .......................... ........... X .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ ........... X .............

Mr. Lynch .............................. X ........... ............. Mr. Hensarling ..................... ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Scott ............................... X ........... ............. Ms. Brown-Waite (FL) .......... ........... X .............

Mr. Green .............................. X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Mr. Cleaver ........................... X ........... ............. Mr. Gerlach .......................... ........... X .............

Ms. Bean ............................... X ........... ............. Mr. Pearce ............................ ........... X .............

Ms. Moore (WI) ...................... X ........... ............. Mr. Neugebauer .................... ........... X .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Price (GA) ...................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Hodes .............................. X ........... ............. Mr. McHenry ......................... X ........... .............

Mr. Ellison ............................. X ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Putnam .......................... ........... X .............

Mr. Mahoney (FL) .................. X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Wilson ............................. X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Marchant ....................... ........... X .............

Mr. Murphy ............................ X ........... ............. Mr. McCotter ........................ ........... X .............

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. X ........... .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. X ........... .............

An amendment by Mr. Garrett, No. 10, regarding a revised 5 

percent deductible, was agreed to by a record vote of 42 yeas and 

27 nays (Record vote No. FC–65): 

RECORD VOTE NO. FC–65 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... X ........... ............. Mr. Baker ............................. X ........... .............

Ms. Waters ............................ X ........... ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... X ........... ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite) (FL) ......... X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............


ycherry on PRODPC74 with REPORTS
28 

RECORD VOTE NO. FC–65—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Cleaver ........................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Bean ............................... X ........... ............. Mr. Pearce ............................ X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Price (GA) ...................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Klein ............................... X ........... ............. Mr. Putnam .......................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. McCotter ........................ X ........... .............

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... X ........... .............

Mr. Boren .............................. X ........... .............

The following other amendments were also considered by the 

Committee: 

An amendment in the nature of a substitute recommended by the 

Subcommittee on Capital Markets, Insurance, and Government 

Sponsored Enterprises, making various technical and substantive 

changes, as amended, was agreed to by a voice vote. 

The following amendments to the amendment in the nature of a 

substitute were considered: 

An amendment by Mr. Frank, No. 1, a manger’s amendment 

making various technical and substantive changes, was agreed to 

by a voice vote. 

An amendment by Mr. Manzullo, No. 2, providing for NBCR 

small insurer exemption, was agreed to by a voice vote. 

An amendment by Mr. Clay, No. 3, including farm owners’ multiple peril insurance, was agreed to by a voice vote. 

An amendment by Mr. Marchant, No. 4, inserting a rule of construction regarding insurer coordination, was agreed to by a voice 

vote. 

An amendment by Ms. Brown-Waite, No. 7, requiring an annual 

adjustment, was agreed to by a voice vote. 

An amendment by Mrs. Bachmann, No. 8, regarding discretionary recoupment, was agreed to by a voice vote. 

An amendment by Mr. Garrett, No. 9, regarding a 5 per cent deductible, was not agreed to. 

On Tuesday, July 24, 2007, the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises met in 

open session and ordered H.R. 2761, as amended, forwarded to the 

Full Committee with a favorable recommendation, by a record vote 

of 26 yeas and 17 nays (Record vote No. CM–4). The names of 

Members voting for and against follow: 

RECORD VOTE NO. CM–4 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Kanjorski ......................... X ........... ............. Ms. Pryce .............................. ........... X .............

Mr. Ackerman ........................ X ........... ............. Mr. Baker ............................. ........... X .............

Mr. Sherman ......................... X ........... ............. Mr. Shays ............................. X ........... .............

Mr. Meeks ............................. X ........... ............. Mr. Gillmor ........................... X ........... .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Castle ............................ ........... X .............

Mr. Capuano ......................... X ........... ............. Mr. King ............................... X ........... .............


ycherry on PRODPC74 with REPORTS
29 

RECORD VOTE NO. CM–4—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Hinojosa .......................... X ........... ............. Mr. Lucas ............................. ........... ........... .............

Mrs. McCarthy ....................... X ........... ............. Mr. Manzullo ........................ ........... X .............

Mr. Baca ............................... ........... ........... ............. Mr. Royce ............................. ........... X .............

Mr. Lynch .............................. ........... ........... ............. Ms. Capito ............................ ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Putnam .......................... ........... X .............

Mr. Scott ............................... X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Ms. Vela ́zquez ....................... X ........... ............. Ms. Brown-Waite .................. ........... X .............

Ms. Bean ............................... X ........... ............. Mr. Feeney ............................ ........... ........... .............

Ms. Moore ............................. X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Gerlach .......................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Hodes .............................. X ........... ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Mahoney ......................... X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Murphy ............................ X ........... ............. Mr. Marchant ....................... ........... X .............

Mr. Donnelly .......................... X ........... ............. Mr. McCotter ........................ ........... X .............

Mr. Wexler ............................. X ........... ............. Mr. Bachus, ex officio .......... ........... ........... .............

Mr. Marshall ......................... ........... ........... .............

Mr. Boren .............................. X ........... .............

Mr. Frank, ex officio ............. ........... ........... .............

During the Subcommittee markup, the following amendments 

were disposed of by record votes. The names of Members voting for 

and against follow: 

An amendment by Mr. Garrett, No. 1f, Section 2 changing of 

date, was not agreed to by a record vote of 14 yeas and 29 nays 

(Record vote No. CM–1): 

RECORD VOTE NO. CM–1 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Kanjorski ......................... ........... X ............. Ms. Pryce .............................. ........... X .............

Mr. Ackerman ........................ ........... X ............. Mr. Baker ............................. X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. Shays ............................. ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Capuano ......................... ........... X ............. Mr. King ............................... ........... X .............

Mr. Hinojosa .......................... ........... X ............. Mr. Lucas ............................. ........... ........... .............

Mrs. McCarthy ....................... ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Royce ............................. X ........... .............

Mr. Lynch .............................. ........... ........... ............. Ms. Capito ............................ ........... X .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Scott ............................... ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Feeney ............................ ........... ........... .............

Ms. Moore ............................. ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Gerlach .......................... ........... X .............

Mr. Sires ............................... ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney ......................... ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X ............. Mr. McCotter ........................ X ........... .............

Mr. Wexler ............................. ........... X ............. Mr. Bachus, ex officio .......... ........... ........... .............

Mr. Marshall ......................... ........... ........... .............

Mr. Boren .............................. ........... X .............

Mr. Frank, ex officio ............. ........... ........... .............

An amendment by Mr. Putnam, No. 1g, striking section 2 and inserting new section setting new termination dates, was not agreed 


ycherry on PRODPC74 with REPORTS
30 

to by a record vote of 18 yeas and 25 nays (Record vote No. CM– 2): 

RECORD VOTE NO. CM–2 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Kanjorski ......................... ........... X ............. Ms. Pryce .............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Baker ............................. X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. Shays ............................. ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Capuano ......................... ........... X ............. Mr. King ............................... ........... X .............

Mr. Hinojosa .......................... ........... X ............. Mr. Lucas ............................. ........... ........... .............

Mrs. McCarthy ....................... ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Royce ............................. X ........... .............

Mr. Lynch .............................. ........... ........... ............. Ms. Capito ............................ X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Scott ............................... ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Feeney ............................ ........... ........... .............

Ms. Moore ............................. ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney ......................... ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X ............. Mr. McCotter ........................ X ........... .............

Mr. Wexler ............................. ........... X ............. Mr. Bachus, ex officio .......... ........... ........... .............

Mr. Marshall ......................... ........... ........... .............

Mr. Boren .............................. ........... X .............

Mr. Frank, ex officio ............. ........... ........... .............

An amendment by Mrs. Bachmann, No. 1h, requiring full 

recoupment of Federal financial assistance share, was not agreed 

to by a record vote of 19 yeas and 24 nays (Record vote No. CM–

3): 

RECORD VOTE NO. CM–3 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Kanjorski ......................... ........... X ............. Ms. Pryce .............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Baker ............................. X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Capuano ......................... ........... X ............. Mr. King ............................... ........... X .............

Mr. Hinojosa .......................... ........... X ............. Mr. Lucas ............................. ........... ........... .............

Mrs. McCarthy ....................... ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Royce ............................. X ........... .............

Mr. Lynch .............................. ........... ........... ............. Ms. Capito ............................ X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Scott ............................... ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Feeney ............................ ........... ........... .............

Ms. Moore ............................. ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney ......................... ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X ............. Mr. McCotter ........................ X ........... .............

Mr. Wexler ............................. ........... X ............. Mr. Bachus, ex officio .......... ........... ........... .............


ycherry on PRODPC74 with REPORTS
31 

RECORD VOTE NO. CM–3—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Marshall ......................... ........... ........... .............

Mr. Boren .............................. ........... X .............

Mr. Frank, ex officio ............. ........... ........... .............

During the Subcommittee markup, the following amendments 

were also considered: 

An amendment by Mr. Kanjorski, No. 1, a manager’s amendment 

in the nature of a substitute, was agreed to, as amended, by a voice 

vote. 

An amendment by Ms. Pryce, No. 1a, striking Section 2 and inserting new termination dates for NBCR, was not agreed to by a 

voice vote. 

An amendment by Mr. Ackerman, No. 1b, including the Secretary of Homeland Security in certification for acts of terrorism 

and acts of NBCR terrorism, was agreed to by a voice vote. 

An amendment by Mr. Baker, No. 1c, regarding rates and disallowed claims at State level may go to Federal court, was withdrawn. 

An amendment by Mr. Manzullo, No. 1d, regarding NBCR makeavailable exceptions for small businesses, was withdrawn. 

An amendment by Mr. Marchant, No. 1e, to allow NBCR insurance partnering, was withdrawn. 

An amendment by Mr. Baker, No. 1i, striking ‘‘in the same previously impacted areas’’ and ‘‘in the same impacted areas’’, was 

agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 2761, the ‘‘Terrorism Risk Insurance Revision and Extension Act of 2007,’’ is intended to extend the Terrorism Risk Insurance Act of 2002 (TRIA) to ensure the continued availability of terrorism insurance coverage, limit market disruptions, encourage 

economic development and growth, and maintain the economic security of the United States. As reported, H.R. 2761 would further 

extend TRIA beyond its current expiration date of December 31, 

2007 for an additional 15-year period. H.R. 2761 would also make 

several revisions to the existing program, such as expanding the 

availability of insurance to protect against nuclear, biological, 

chemical, or radiological (NBCR) events; adding group life insurance as a line covered by the program; and covering domestic terrorism events. 


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32 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate of the Director of the Congressional Budget Office pursuant to section 402 of 

the Congressional Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

SEPTEMBER 6, 2007. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2761, the Terrorism Risk 

Insurance Revision and Extension Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

PETER ORSZAG. 

Enclosure. 

H.R. 2761—Terrorism Risk Insurance Revision and Extension Act 

of 2007 

Summary: H.R. 2761 would extend the Terrorism Risk Insurance 

Act (TRIA) for 15 years—through calendar year 2022. The bill also 

would add group life insurance to the lines of coverage included 

under the program and would require insurers to make coverage 

available to property and casualty and group life insurance policyholders for losses resulting from domestic terrorism and, after January 1, 2009, terrorism involving nuclear, biological, chemical, and 

radioactive (NBCR) materials. 

Enacted in 2002, TRIA requires insurance firms that sell commercial property and casualty insurance to offer clients insurance 

coverage for damages caused by foreign terrorist attacks. Under 

TRIA, the federal government would help insurers cover losses in 

the event of a terrorist attack under certain conditions, and would 

also impose assessments on the insurance industry to recover all 

or a portion of the federal payments. The program is set to expire 

at the end of calendar year 2007. 

There is no reliable way to predict how much insured damage 

terrorists might cause in any specific year. Rather, CBO’s estimate 


ycherry on PRODPC74 with REPORTS
33 

of the cost of financial assistance provided under H.R. 2761 represents an expected value of payments from the program—a 

weighted average that reflects industry experts’ opinions of various 

outcomes ranging from zero damages up to very large damages resulting from possible future terrorist attacks. The expected value 

can be thought of as the amount of an insurance premium that 

would be necessary to just offset the government’s losses from providing this insurance, although firms do not pay any premium for 

the federal assistance offered by TRIA. 

On this basis, CBO estimates that enacting H.R. 2761 would in- crease direct spending by $3.7 billion over the 2008–2012 period and by $10.4 billion over the 2008–2017 period. An additional $13.7 

billion would be spent after 2017. 

Under H.R. 2761, the Department of the Treasury would be directed to recoup some or all of the costs of providing financial assistance through taxes imposed on insurance firms (surcharges). 

Over many years, CBO expects that an increase in spending for financial assistance would be largely offset (on a cash basis) by a 

corresponding increase in governmental receipts (i.e., revenues) depending on the amount of insured losses. We assume, however, 

that the Secretary of the Treasury would not impose any surcharges until two years after federal assistance is provided and 

that those amounts would be collected over many years. Thus, CBO 

estimates that enacting the recoupment provision of H.R. 2761 

would increase governmental receipts by about $100 million over 

the 2008–2012 period and by $2.0 billion over the 2008–2017 period, net of income and payroll tax offsets. 

Considering both the direct spending and revenue impacts of the 

bill, CBO estimates that enacting H.R. 2761 would increase budget 

deficits or decrease surpluses by $200 million in 2008, $3.5 billion 

over the 2008–2012 period, and $8.4 billion over the 2008–2017 period. 

H.R. 2761 would extend and impose intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform 

Act (UMRA). CBO estimates that the aggregate costs of complying 

with those mandates would not exceed the annual thresholds established by UMRA ($66 million for intergovernmental mandates 

and $131 million for private-sector mandates in 2007, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2761 is shown in Table 1. The costs of this 

legislation fall within budget function 370 (commerce and housing 

credit). 

TABLE 1.—ESTIMATED BUDGETARY IMPACT OF H.R. 2761, THE TERRORISM RISK INSURANCE 

REVISION AND EXTENSION ACT OF 2007 

By fiscal year, in billions of dollars—

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008– 2012 

2008– 2017 

CHANGES IN DIRECT SPENDING 

Estimated Budget Authority .. 0.2 0.5 0.8 1.0 1.1 1.2 1.3 1.4 1.4 1.5 3.6 10.4 

Estimated Outlays ................. 0.2 0.5 0.8 1.0 1.1 1.2 1.3 1.4 1.4 1.5 3.6 10.4 

CHANGES IN REVENUES 

Estimated Revenues .............. 0 0 * * 0.1 0.2 0.3 0.4 0.4 0.6 0.1 2.0 


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TABLE 1.—ESTIMATED BUDGETARY IMPACT OF H.R. 2761, THE TERRORISM RISK INSURANCE 

REVISION AND EXTENSION ACT OF 2007—Continued 

By fiscal year, in billions of dollars—

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008– 2012 

2008– 2017 

NET IMPACT 

Estimated Change in the 

Deficit or Surplus 1 ............ ¥0.2 ¥0.5 ¥0.8 ¥1.0 ¥1.0 ¥1.0 ¥1.0 ¥1.0 ¥1.0 ¥0.9 ¥3.5 ¥8.4 

Note: * = less than $50 million. 

1 Negative numbers indicate an increase in the deficit or a decrease in the surplus. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

2761 will be enacted before the end of calendar year 2007. We estimate that enacting H.R. 2761 would increase direct spending by 

$10.4 billion and would increase governmental revenues by $2.0 

billion over the 2008–2017 period. While this estimate reflects 

CBO’s best judgment on the basis of available information, the cost 

of this federal program is a function of inherently unpredictable future terrorist attacks. As such, actual costs are likely to vary significantly from the estimated amounts. Such costs could be either 

higher or lower than the expected-value estimates provided for 

each year. 

Terrorism Risk Insurance Act under current law 

Enacted in 2002 and reauthorized in 2005, the Terrorism Risk 

Insurance Act provides financial assistance to commercial property 

and casualty insurers for losses above certain thresholds caused by 

terrorist attacks by individuals acting on behalf of foreign interests. 

For such assistance to be provided, the Secretary of the Treasury 

must certify that a terrorist attack has occurred in the United 

States or other specified locations. TRIA is currently set to expire 

on December 31, 2007. 

TRIA does not require commercial property and casualty insurance policies to cover losses from terrorist attacks committed by a 

domestic interest or those involving nuclear, biological, chemical, or 

radioactive materials. If an insurer and a policyholder choose to include losses from terrorist attacks involving NBCR materials in a 

policy, TRIA would cover a portion of the losses resulting from 

those risks. 

For the Secretary of the Treasury to certify a terrorist attack, insured damages resulting from the attack must exceed $5 million. 

Financial assistance becomes available to insurers suffering losses 

from a certified attack once the industry’s aggregate insured losses 

from that attack exceed $100 million (in 2007). Once that $100 million threshold is exceeded, participating insurance companies that 

suffer losses are responsible for paying claims up to a deductible 

amount based on the premiums they collected for covered lines in 

the calendar year preceding a certified attack. In 2007, the deductible is 20 percent of such premiums. 

After meeting their individual deductibles for damage claims, insurers and the federal government would each pay a portion of the 

loss above the deductible (the federal government would pay 85 

percent of insured losses in 2007, individual insurers, 15 percent) 

up to total losses of $100 billion. The law does not address about 

how losses above the $100 billion cap would be handled. 


ycherry on PRODPC74 with REPORTS
35 

The Secretary of the Treasury is authorized to recover payments 

made by the federal government through taxes in the form of surcharges paid by the insurance industry and purchasers of commercial property and casualty insurance. The Secretary is required to 

recoup federal payments to the extent that the total amount paid 

by the insurance industry including the deductible is less than the 

industry ‘‘retention amount’’ specified in law, which represents the 

total liability of the property and casualty insurance industry in 

the event of a certified attack. In 2007, that amount is $27.5 billion. 

Modifications to TRIA under H.R. 2761 

H.R. 2761 would extend TRIA for 15 years, through December 

31, 2022. The bill also would add group life insurance to the lines 

of insurance covered by the program and would eliminate the distinction between foreign and domestic terrorist attacks. TRIA 

would now cover attacks by either foreign or domestic interests. 

Further, both commercial property and casualty insurance policies 

and group life insurance policies would be required to offer coverage for losses from terrorist attacks involving NBCR materials. 

Currently, such coverage is typically excluded from property and 

casualty insurance policies, other than workers’ compensation policies, but is generally covered by group life insurance policies. 

H.R. 2761 would lower the threshold for financial assistance from 

$100 million in insured damages from a certified attack to $50 million; further, if a certified attack caused insured damages to exceed 

$1 billion, the threshold would be set at $5 million in subsequent 

years. 

As in current law, an insurer suffering losses as a result of an 

attack would pay claims up to a specified deductible. For losses incurred by property and casualty insurers, H.R. 2761 would set different deductible limits based on the cause of the loss (conventional 

vs. NBCR attack) based on the premiums collected by each insurer 

in the calendar year preceding an attack. For insurers providing 

group life coverage, deductibles under H.R. 2761 would be based on 

the insurer’s amount at risk—that is, the face value of life insurance policies not including any additional cash value—and also on 

the cause of the loss. 

Likewise, H.R. 2761 would continue the payment-sharing process 

that exists under current law. Insurers and the federal government 

would each pay a portion of the loss over the deductible. For most 

types of attacks, the federal government’s portion would remain 85 

percent of insured losses up to the $100 billion limit for each year 

of the 15-year extension. In the case of losses caused by an attack 

using NBCR materials, however, the federal share would be based 

on the amount of total losses, starting at 85 percent and rising to 

as high as 95 percent, up to the $100 billion limit. Table 2 shows 

a breakdown of the industry deductible and federal cost-sharing 

limits. 

Direct spending 

By extending financial assistance to certain commercial insurers 

for future acts of terrorism against insured private property, enacting H.R. 2761 would expose the federal government to potentially 

large liabilities for 15 more years (2008 through 2022). For any 


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36 

particular year, the amount of insured damage caused by terrorists 

could range from zero to many billions of dollars. CBO’s estimate 

of the cost of this program reflects how much, on average, the government could be expected to pay to insurers and recover from the 

industry over the 2008–2017 period. 

The following sections describe our method for estimating the expected value of financial assistance under H.R. 2761 and explain 

how we convert that cost to annual estimates of spending. 

TABLE 2.—DEDUCTIBLE AND FEDERAL SHARE LIMITS UNDER H.R. 2761 

DEDUCTIBLE 

Percent of Direct Earned Premiums 

Property and Casualty Insurance: 

Attack Using Conventional Materials.

Losses Less Than $1 Billion .................................. 20.0 

Losses in Excess of $1 Billion 1 ............................. 5.0 

Attack Using NBCR Materials 1 ....................................... 3.5 

Percent of Amount at Risk 

Group Life Insurance: 

Attack Using Conventional Materials .............................. .03510 

Attack Using NBCR Materials 2 ....................................... .00614 

FEDERAL SHARE OF COVERED LOSSES OVER DEDUCTIBLE 

Percent of Losses (Up to $100 Billion) 

Attack Using Conventional Materials ....................................... 85.0 

Attack Using NBCR Materials: 

Losses Less Than $10 Billion ......................................... 85.5 

Losses Between $10 Billion and $20 Billion .................. 87.5 

Losses Between $20 Billion and $40 Billion .................. 90.0 

Losses Between $40 Billion and $60 Billion .................. 92.5 

Losses Between $60 Billion and $100 Billion ................ 95.0 

1 Increasing by 0.5 percent per year. 

2 Increasing by .00088 percent each year. 

Estimating the Expected Cost of Federal Assistance. For this estimate, CBO discussed the concepts involved in estimating insured 

losses with industry actuaries and reviewed models used by firms 

to set premiums for the terrorism component of property and casualty insurance and group life insurance that they offer. State insurance regulators generally require such premiums to be grounded in a widely accepted model of expected losses from covered 

events. After the terrorist attacks on September 11, 2001, the insurance industry began efforts to set premiums for insurance coverage for terrorist events using such models. 

Although estimating losses associated with terrorist events is difficult because of the lack of meaningful historical data, the insurance industry has experience setting premiums for catastrophic 

events—namely, natural disasters. Setting premiums for hurricanes and earthquakes, for example, involves determining areas 

that could sustain damage, the value of the losses that could result 

from various types of events with different levels of severity, and 

the frequency of such events. 

Similarly, estimating premiums for losses resulting from terrorist 

attacks involves judgments regarding potential targets and the frequency of such attacks. Because there is a very limited history of 

terrorist attacks in the United States, many of the parameters 

needed by the insurance industry to set premiums are based on expert opinion regarding terrorist activities and capabilities rather 

than on historical data. 


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1 Industry losses on September 11, 2001, are estimated to be about $36 billion (in 2006 dollars), including about $30 billion in losses in New York City that would have qualified for coverage under TRIA had the law been in effect on that date. 

Estimating potential insured losses. Based on discussions with insurers and information provided by the insurance industry, CBO 

estimates that the expected or average annual loss subject to TRIA 

coverage under H.R. 2761 would be about $2.6 billion (in 2007 dollars). This estimate incorporates industry expectations of the probabilities of terrorist attacks, encompassing the possibility of attacks 

that result in enormous loss of life and property damage, as well 

as a significant likelihood that no such attacks would occur in any 

given year. This estimate also reflects our expectation that some 

portion of losses from terrorism would not be covered by TRIA because some policyholders would choose not to purchase insurance 

coverage for terrorism risks. 

Our estimate of expected annual losses covered by TRIA under H.R. 2761 includes less than $100 million for the inclusion of group 

life insurance policies and around $200 million for the inclusion of 

coverage for domestic terrorism. The estimate also includes about $1 billion in additional expected 

losses resulting from a provision in the bill that would require insurance policies to include coverage for losses resulting from terrorist attacks involving NBCR materials. Under current law, insurers are not required to offer this coverage, although if an insurer 

and a policyholder voluntarily agree to include this coverage in a 

policy, TRIA would cover some of those losses. 

Based on information provided by the industry, it appears that 

only a small amount of coverage is currently in place for losses resulting from terrorist attacks involving NBCR materials as compared to coverage for losses involving conventional weapons. Thus, 

under current law the government’s exposure to losses resulting 

from terrorist attacks involving NBCR materials is relatively small, 

except in the workers’ compensation line, where no exclusions are 

allowed. 

Enacting the legislation could potentially expose firms offering 

NBCR coverage and the federal government to much higher losses 

than under current law. Our estimate of losses assumes that the 

coverage for terrorism losses caused by attacks using NBCR materials would increase three-fold over current coverage levels. However, we expect that coverage for such losses will remain far lower 

than coverage for losses resulting from more conventional methods. 

CBO’s estimate assumes that, in most years, losses from terrorist 

attacks covered by TRIA would cost less than $2.6 billion. We expect that there is a significant chance that no terrorist attacks that 

would be covered by TRIA would occur in a given year. Since enactment of TRIA, no covered events have occurred; it is unclear 

whether no such attacks were planned or attempted, or whether 

some were prevented by law enforcement and other security measures. Although the risk of a terrorist attack with many lives lost 

and substantial property damage still remains, based on industry 

models, CBO assumes for this estimate that attacks causing losses 

similar in scale to those sustained on September 11, 2001, in New 

York City are likely to occur very rarely.1

Determining the federal share of insured losses. Federal payments under TRIA would be lower than expected losses from terVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00037 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

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rorist attacks because TRIA places limits on eligibility for federal 

assistance and requires that insurers pay a share of covered losses. 

CBO took account of these requirements to calculate federal spending for any given amount of insured losses from future terrorist attacks. 

First, because federal payments under TRIA would be capped at 

$100 billion per event, we excluded costs for potential losses above 

that level. In addition, H.R. 2761 would set the minimum losses 

that would trigger federal payments under TRIA at $50 million. 

Second, we accounted for the share of losses that would be paid 

by affected insurers in the event of a covered attack. Before the 

federal government would make any payments under TRIA, an insurer incurring losses would first pay claims up to a deductible 

amount. The bill would set different deductible levels for property 

and casualty insurers and for group life insurers. 

The total amount of claims paid by insurers below the deductible 

amount could range from a few million dollars to several billion 

dollars, depending on how many insurers provide coverage for 

losses resulting from a particular terrorist attack. In addition, the 

value of each individual insurer’s deductibles would vary greatly 

across the industry. For this estimate, CBO considered a range of 

possibilities regarding the share of federal assistance, based on industry data regarding estimated insurers’ deductibles under H.R. 

2167. The range encompasses the possibility that an attack would 

affect only a few insurers with relatively small deductibles or several insurers with relatively large deductibles. CBO expects that 

insured losses below a few hundred million dollars would most likely be covered by insurers’ deductibles and therefore would not result in a significant increase in federal spending. 

Finally, once affected insurers have paid claims up to their 

deductibles, the federal government would share a portion of the 

losses above the deductible with each insurer. 

Under H.R. 2761, for losses sustained by both property and casualty and group life insurers, the federal government’s share of 

claims above the deductible would be at least 85 percent of total 

losses up to the $100 billion limit covered by the program. In the 

case of losses resulting from an attack using NBCR materials, the 

federal government’s share would increase, based on total losses, to 

as much as 95 percent of losses above the deductible. 

After taking into account maximum limits, deductibles, and the 

insurers’ share of payments above the deductible, CBO estimates 

that enacting H.R. 2761 would increase direct spending by about 

$24 billion over the full life of the program before taking into account any revenues from surcharges on policyholders. Actual 

spending would be spread out over many years and most such costs 

would eventually be recovered through surcharges imposed on policyholders. 

Taken another way, if the Secretary of the Treasury were authorized to collect premiums for the program, CBO estimates that the 

Secretary would need to charge, on average, about $1.6 billion per 

year to fully compensate the government for the projected average 

annual loss due to terrorist attacks under H.R. 2761. The bill, however, would not authorize any charges prior to a certified attack. 

Similarly, the bill does not contain an explicit requirement for the 


ycherry on PRODPC74 with REPORTS
39 

Secretary to recoup interest that would accrue on amounts outstanding. 

Timing of Federal Spending. To estimate federal spending for 

this program on a cash basis, CBO used information from insurance experts on historical rates of payment for property and casualty claims following catastrophic events. Based on such information, CBO estimates that outlays under H.R. 2761 would total 

about $3.7 billion over the 2008–2012 period, an additional $6.7 billion over the 2013–2017 period, and about $13.7 billion after 2017. 

In general, following a catastrophic loss, it takes many years to 

complete insurance payments because of disputes over the value of 

covered losses by property and business owners. For this estimate, 

we assumed that financial assistance to insurers would be paid 

over several years, with most of the spending occurring within the 

first five years following an insurable event. 

Revenues 

Enacting H.R. 2761 would affect federal receipts by authorizing 

the Secretary of the Treasury to impose taxes in the form of surcharges on policyholders to recover the amount of federal payments 

made under the program, with certain limitations. CBO estimates 

that this provision would increase revenues by about $100 million 

over the 2008–2012 period and $2.0 billion over the 2008–2017 period. Surcharges could continue for many years beyond 2017. 

In addition, another provision of the bill would allow insurers to 

set aside a portion of premiums charged for terrorism coverage in 

a reserve fund set up in the Department of the Treasury. Amounts 

held in the reserve fund would be used by the Secretary of the 

Treasury, in the event of a certified attack, to pay certain deductible and copayment liabilities of the insurers incurring losses that 

had allocated premiums to the reserve fund. 

Surcharges. If a terrorist attack were to require the government 

to provide financial assistance, H.R. 2761 would require the Secretary of the Treasury to recoup some or all of that cost through 

taxes paid by the insurance industry and purchasers of commercial 

property and casualty and group life insurance. The Secretary 

would be required to recover the difference between the total 

amount paid by the insurance industry for deductibles and the industry’s share of payments over the deductible and the industry retention amount (the maximum aggregate loss to be paid by the insurance industry), which would be set at $27.5 billion for property 

and casualty insurers and $5 billion for group life insurers. 

The Secretary would have discretion in determining whether to 

recover the full amount of financial assistance provided under the 

program. Should the Secretary determine that amounts above the 

industry retention amount cannot be recovered, the Congress 

would be notified as to the determination and provided with an 

analysis of the effect of that determination on taxpayers, the economy, and the burdens on small- and medium-sized businesses. For 

this estimate, CBO assumes that the Secretary would not seek to 

recover financial assistance provided above the industry retention 

amount and would not collect interest on outstanding amounts. 

Under TRIA, the recoupment of financial assistance would be accomplished by assessing each insurer based on its portion of aggregate property and casualty premiums or the amount at risk for 


ycherry on PRODPC74 with REPORTS
40 

group life insurance policies for the preceding calendar year. Surcharges would apply to insurance sold following a terrorist attack 

that necessitated federal assistance; each property and casualty insurance company’s surcharge would be limited to 3 percent of its 

aggregate premiums, and each group life insurance company’s surcharge would be limited to 0.0053 percent of its amount at risk. 

H.R. 2761 would direct the Secretary to impose surcharges for as 

long as necessary to recover the financial assistance provided by 

the federal government (at least up to the industry retention 

amount). Thus, the government could collect surcharges for many 

years, depending on the amount of financial assistance. CBO estimates that surcharges resulting from a 15-year extension of TRIA 

would total $23.6 billion—but that recovery would extend well past 

2017. 

Timing and Tax Offset. The bill would allow the Secretary to reduce annual charges after considering the effect on taxpayers, the 

economy, or burdens on small- and medium-sized businesses. 

Therefore, if annual losses were very high, we expect that the Secretary would limit annual collections by spreading them over many 

years. CBO assumes that the Secretary would not impose surcharges until two years after federal assistance is provided and 

that it would take more than 10 years to recover the costs of any 

financial assistance provided under H.R. 2761. Thus, we estimate 

that surcharges would total $2.6 billion over the next 10 years and 

that an additional $21.0 billion would be collected after 2017. 

Those gross collections would be partially offset by a loss of receipts from income and payroll taxes. Consistent with standard 

procedures for estimating the revenue impact of indirect business 

taxes, CBO reduced the gross revenue impact of the insurance surcharges by 25 percent to reflect offsetting effects on income and 

payroll tax receipts. On balance, CBO estimates that H.R. 2167 

would increase revenues by a total of $2.0 billion over the next 10 

years and that an additional $15.7 billion will be collected after 

2017, net of income and payroll tax offsets. 

Terrorism Buy-Down Fund. Section 4 of H.R. 2761 would establish a Terrorism Buy-Down Fund into which a property and casualty insurer could elect to contribute premiums it collects for terrorism insurance. The premiums deposited in the fund in the 

Treasury would be available to the Secretary of the Treasury, in 

the event of a certified terrorist attack, to satisfy the insurer’s deductible amounts as well as the portion of the insurer’s losses that 

exceed the deductible but are not included in the federal share. 

Because the tax implications of the fund are unclear, the Joint 

Committee on Taxation has not yet prepared an estimate of its potential revenue impact. 

Intergovernmental and private-sector impact: H.R. 2761 would 

extend and expand mandates contained in the Terrorism Risk Insurance Act. Those mandates would: 

• Require that certain insurers offer terrorism insurance, including insurance for nuclear, biological, chemical, and radiological attacks; 

• Require that certain insurers and their policyholders repay the 

federal government for the cost of assistance (in the form of assessments and surcharges); and 

• Preempt state laws regulating insurance. 


ycherry on PRODPC74 with REPORTS
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CBO estimates that the aggregate costs of complying with those 

mandates would not exceed the annual thresholds established by 

UMRA ($66 million for intergovernmental mandates and $131 million for private-sector mandates in 2007, adjusted annually for inflation). 

REQUIREMENT TO OFFER INSURANCE

Current law requires that through calendar year 2007, certain 

insurance companies offer terrorism insurance as part of a property 

and casualty insurance policy. H.R. 2761 would extend that requirement to offer terrorism insurance through calendar year 2022. 

The bill also would add group life insurance to the lines of coverage 

included under the program and would require insurers to make 

coverage available to property, casualty, and group life insurance 

policyholders for losses resulting from domestic terrorism and, after 

January 1, 2009, terrorism involving NBCR materials. Also, in 

some cases, the bill would restrict insurers’ ability to underwrite 

policies based on lawful international travel. According to industry 

representatives, the direct cost to continue making terrorism insurance available under property, casualty, and group life insurance 

policies would be minimal. Furthermore, the bill would require only 

that firms offer terrorism insurance, including NBCR terrorism insurance; they would set their own premium rates and policyholders 

could choose whether or not to purchase such insurance. In the 

event of a certified attack with costs that exceeded deductible requirements, insurers who offer such terrorism insurance would receive federal payments that would help finance claims payments. 

REPAYMENT OF ASSISTANCE

The bill would require the Secretary of the Treasury to recoup 

the costs of financial assistance provided to certain insurers 

through assessments paid by the insurance industry and surcharges paid by purchasers of commercial property, casualty and 

group life insurance. This requirement to repay the federal government for financial assistance received would be both an intergovernmental and private-sector mandate under UMRA because both 

state and local governments and private entities are providers and 

purchasers of insurance. 

Specifically, the bill would require commercial property, casualty, 

and group life insurers, as well as self-insured risk pools, to pay 

back through assessments a portion of the financial assistance provided by the federal government. Taken individually, some insurers 

might benefit from the financial assistance while others might face 

only the cost of the assessment. CBO cannot predict how these 

costs and benefits would be distributed among private and public 

insurers. However, for that group as a whole, the cost of the assessment would be no greater than the financial assistance received, so 

the net cost of this mandate would be zero. 

In addition, the bill would require purchasers of commercial 

property, casualty, and group life insurance to repay, in the form 

of a surcharge, federal assistance provided to certain insurers. CBO 

estimates that the expected value of the surcharges paid by policyholders would total about $200 million over the next five years. 

The surcharge would be a mandate on both private-sector purchasers and state and local governments (in their capacity as purVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00041 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

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chasers of insurance). For purchasers as a group, the cost of the 

surcharges would be no greater than the financial assistance received. However, some purchasers would receive a direct benefit 

under the bill that would at least partially offset those costs, while 

other purchasers would not. 

PREEMPTION OF STATE LAW

The bill also would preempt some state laws that regulate insurance. Based on information from state insurance regulators, CBO 

estimates that the cost to states of extending these preemptions 

would be minimal. 

Estimate prepared by: Federal Costs: Susan Willie; Impact on 

State, Local, and Tribal Governments: Elizabeth Cove; Impact on 

the Private Sector: Paige Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Assistant Director for 

Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 2761 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 


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43 

EXCHANGE OF COMMITTEE CORRESPONDENCE

CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, COMMITTEE ON THE JUDICIARY, 

Washington, DC, September 4, 2007. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR CHAIRMAN FRANK: In recognition of the desire to expedite 

consideration of H.R. 2761, the ‘‘Terrorism Risk Insurance Revision 

Act of 2007,’’ the Committee on the Judiciary agrees to wavie consideration of the bill. 

There are several provisions contained in H.R. 2761 that implicate the rule X jurisdiction of the Committee on the Judiciary. In 

addition to reauthorizing a number of provisions in the Terrorism 

Risk Insurance Act of 2002, the legislation also adds new litigation 

management and judicial review and venue provisions. 

The Committee takes this action with the understanding that by 

foregoing consideration of H.R. 2761 at this time, the Committee on 

the Judiciary does not waive any jurisdiction over subject matter 

contained in this or similar legislation. The Commitee also reserves 

the right to seek appointment of an appropriate number of conferees to any House-Senate conference involving this legislation, 

and requests your support if such a request is made. 

I would appreciate your including this letter in your Committee’s 

report for H.R. 2761, or in the Congressional Record during consideration of the bill on the House floor. 

Thank you for your attention to this matter. 

Sincerely, 

JOHN CONYERS, JR., 

Chairman. 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, DC, September 4, 2007. 

Hon. JOHN CONYERS, 

Chairman, Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR CHAIRMAN CONYERS: Thank you for your letter agreeing to 

waive consideration by the Committee on the Judiciary of H.R. 

2761, the ‘‘Terrorism Risk Insurance Revision Act of 2007.’’ The 

Committee on Financial Services has ordered this bill reported, and 

the House will be considering it shortly. 

I want to cofirm our mutural understanding with respect to the 

consideration of this bill. I acknowledge that portions of the bill as 

reported fall within the jurisdiction of the Committee on the Judiciary and I appreciate your cooperation in moving the bill to the 

House floor expeditiously. I further agree that your decision to not 

to proceed with a markup on this bill will not prejudice the Committee on the Judiciary with respect to its prerogatives on this or 

similar legislation. I would support your request for conferees on 

those provisions within your jurisdiction in the event of a HouseSenate conference. 


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44 

I will include this exchange of correspondence in the Committee 

report, or in the Congressional Record during consideration of the 

bill. Thank you again for your assistance. 

BARNEY FRANK, 

Chairman. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section establishes the short title of the bill as the ‘‘Terrorism Risk Insurance Revision and Extension Act of 2007’’

(TRIREA). 

Section 2. Termination of program 

This section extends the Terrorism Risk Insurance Act of 2002 

(TRIA) until December 31, 2022. 

Section 3. Revision of Terrorism Insurance Program 

This section amends TRIA to extend and revise the Terrorism Insurance Program (the Program), replacing sections 101, 102, and 

103. 

TRIA Section 101. Congressional findings and purpose 

This section amends the findings and purposes of TRIA to reflect 

the inclusion of group life insurance and enhanced coverage of 

NBCR terrorism risk in the Program and to clarify that the Program provides finite liability limits for insurers and the Federal 

government. 

TRIA Section 102. Definitions 

This section establishes definitions for the following terms: ‘‘act 

of terrorism,’’ ‘‘affiliate,’’ ‘‘amount at risk,’’ ‘‘control,’’ ‘‘covered lines,’’ ‘‘direct earned premium,’’ ‘‘excess insured loss,’’ ‘‘group life insurance,’’ ‘‘insured loss,’’ ‘‘insurer,’’ ‘‘insurer deductible,’’ ‘‘NAIC,’’

‘‘NBCR terrorism,’’ ‘‘person,’’ ‘‘program,’’ ‘‘program years,’’ ‘‘property 

and casualty insurance,’’ ‘‘Secretary,’’ ‘‘State,’’ and ‘‘United States.’’

In particular, TRIREA revises the definition of an ‘‘act of terrorism’’ to eliminate the requirement that such act be committed 

by individuals acting on behalf of foreign interests, thus covering 

acts of domestic terrorism. The definition of ‘‘control’’ is also revised 

to conform to the definition in the Bank Holding Company Act. 

Group life insurance is added as a covered line. Farm owners multiple peril insurance is no longer excluded from the definition of 

property and casualty insurance. A new definition is added for 

NBCR terrorism and the definition of ‘‘act of terrorism’’ is revised 

to include certification by the Secretary of Treasury (Secretary) of 

acts of NBCR terrorism. The concurrence of the Secretary of Homeland Security, in addition to the Secretary of State and the Attorney General, is required to certify an act of terrorism or an act of 

NBCR terrorism. However, nothing in this Act generally or in the 

Secretary’s certification authority specifically shall be interpreted 

to affect or change in any way an insurer’s contractual obligations 

to a policyholder under a lawful insurance contract. Certification of 

an act of terrorism as an act of NBCR terrorism does not mean 

that all insured losses are NBCR losses. Policyholders that do not 


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45 

have NBCR coverage may still be covered under their insurance 

contracts in these instances. 

The ‘‘insurer deductible’’ definition is amended to fix the deductible for acts of conventional terrorism at 20% of an insurer’s direct 

earned premiums for property and casualty insurance and at 

0.0351% of an insurer’s amount at risk for group life insurance. For 

acts of NBCR terrorism, the insurer deductible starts at 3.5% in 

the second additional Program Year and increases by 50 basis 

points each succeeding Program Year for property and casualty insurance, and starts at 0.00614% in the second additional Program 

Year and increases by 0.088 basis point each succeeding Program 

Year for group life insurance. 

For an act of terrorism resulting in aggregate industry insured losses exceeding $1 billion, the deductible for property and casualty 

insurance that would apply to insurers affected by that particular 

$1 billion or greater act of terrorism decreases to the following percentage: 5% if such act occurs in first additional Program Year, and 

increasing by 50 basis points each additional Program Year (i.e., 

5.5% if such act occurs in the second additional Program Year and 

6% if such act occurs in the third additional Program Year). However, such percentage will reset to 5% in the additional Program 

Year immediately following a $1 billion or greater act of terrorism, 

and starts increasing again by 50 basis points each additional Program Year. The Secretary may combine multiple acts of terrorism 

in the same Program Year in the same geographic area for determining whether the $1 billion threshold has been exceeded. For 

purposes of section 102(11)(J), regardless of the different 

deductibles that may apply to an insurer from multiple acts of terrorism in a given Program Year, an insurer’s total payment obligation with respect to its deductible in a given Program Year is not 

intended to exceed 20% of its direct earned premiums from the previous calendar year. 

TRIA Section 103. Terrorism Insurance Program 

This section continues the Program in the Treasury Department 

and makes a number of improvements to the terrorism backstop. 

Insurers are required to offer coverage for losses resulting from 

acts of terrorism 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 offer coverage for 

losses resulting from acts of NBCR terrorism in a similar manner 

after a short transition period. This section further provides exceptions to pollution and nuclear hazard exclusions for losses from acts 

of NBCR terrorism if NBCR coverage is purchased. If a person 

elects not to purchase an insurance policy providing such coverage, 

an insurer may exclude coverage for all losses from acts of terrorism (including acts of NBCR terrorism), except for workers’ compensation and other compulsory insurance law prohibiting such exclusions, or may offer other options for coverage that differ materially from the terms, amounts, and other coverage limitations applicable to losses arising from events other than acts of terrorism Section 103(c)(1)(B) extends the ‘‘make available’’ requirement for policyholders that have been provided coverage under subparagraph 

(A) to include the availability of exceptions to pollution and nuclear 

hazard exclusions that would negate those exclusions only as to 


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46 

losses from acts of NBCR terrorism. Section 103(c)(1)(B) provides 

certainty to both parties to an insurance contract and is intended 

to require insurers that have policies of insurance with pollution 

and nuclear hazard exclusions to make available a clear exception 

to those exclusions for acts of NBCR terrorism upon the payment 

of an appropriate premium, and is intended to confirm to policyholders that do not purchase the available exceptions to those exclusions that the exclusions continue to apply as written to acts of 

NBCR terrorism and that the policies of insurance do not cover 

losses arising out of acts of NBCR terrorism unless the policyholder 

and insurer otherwise agree to cover such losses. The requirement 

to make available coverage for acts of NBCR terrorism applies beginning on January 1, 2009. 

Insurers offering life insurance are required to offer coverage 

that neither considers past nor precludes future lawful foreign 

travel and are prohibited from declining such coverage based on 

past or future lawful foreign travel or charging a premium that is 

excessive and not based on a good faith actuarial analysis, except 

an insurer may decline or limit coverage based on plans to engage 

in future lawful foreign travel within 12 months under certain enumerated circumstances. 

The Secretary, in consultation with the National Association of 

Insurance Commissioners (NAIC), may exempt insurers with less 

than $50 million in direct earned premiums for TRIA-covered lines 

from complying with the requirement to make NBCR coverage 

available if such insurers demonstrate they would become insolvent 

in the event of certain acts of NBCR terrorism. The exemption 

would be for 2 years, and insurers may apply for additional 2-year 

extensions. 

For acts of conventional terrorism, the total Federal share of insured loss compensation is 85% of the aggregate industry insured 

losses that exceed the applicable insurer deductibles but do not exceed $100 billion during a Program Year, plus 100% of the aggregate industry insured losses that exceed $100 billion, but only up 

to the $100 billion cap on total Federal compensation. The Secretary will determine the pro rata share of insured losses to be 

paid by each insurer that incurs insured losses under the Program. 

For acts of NBCR terrorism, the total Federal share of insured 

loss compensation is 85% of the aggregate industry qualified NBCR 

losses of less than $10 billion, 87.5% of the aggregate industry 

qualified NBCR losses between $10 billion and $20 billion, 90% of 

the aggregate industry qualified NBCR losses between $20 billion 

and $40 billion, 92.5% of the aggregate industry qualified NBCR 

losses between $40 billion and $60 billion, and 95% of the aggregate industry qualified NBCR losses above $60 billion. The Federal 

share will be prorated per insurer based on each insurer’s percentage of the aggregate industry qualified NBCR losses for each additional Program Year. 

The minimum size of a terrorist event required to trigger any potential Federal assistance is set at $50 million, except the trigger 

will decrease to $5 million if a certified act of terrorism occurs for 

which resulting aggregate industry insured losses exceed $1 billion. 

The Federal share of insured loss compensation for any single certificate holder under any group life insurance coverage may not exceed $1 million. 


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47 

The cap on the annual liability of the Federal government is set at $100 billion; that is, the aggregate amount of the Federal share 

of compensation to be paid to all insurers will not exceed $100 billion. In addition, an insurer that has met its insurer deductible will 

not be liable for the payment of any portion of the aggregate insured losses in a year that exceed $100 billion. 

If the Secretary determines that estimated or actual aggregate Federal compensation equals or exceeds $80 billion, the Secretary 

must promptly provide notification to Congress and insurers. The 

Secretary must also give notice when estimated or actual aggregate 

Federal compensation equals or exceeds $100 billion and within ten 

days of an act of terrorism that is likely to pierce the $100 billion 

cap on Federal compensation. The Secretary will reimburse insurers for: (1) any payment for portions of aggregate insured losses 

that exceed $100 billion made before the Secretary provides notice 

at $80 billion in Federal compensation; and (2) any payment for 

portions of aggregate insured losses that exceed $100 billion made 

after such notice, but only to the extent that such payment is ordered by a court, such payment does not include punitive damages 

or litigation or other costs, and the insurer made a good-faith effort 

to defend against any claims for such payment. The Secretary has 

the right to intervene in any legal proceedings related to such 

claims. 

Federal courts will have original and exclusive jurisdiction over 

claims relating to or arising out of the limitation on an insurer’s 

financial responsibility for insured losses from acts of terrorism set 

forth in paragraph 103(e)(3), if the Secretary certifies that the $100 

billion cap on Federal compensation has been or is likely to have 

been exceeded, and the insurer has paid, or is likely to pay, its deductible and pro rata share of insured losses. In the event of such 

certification, all pending State court actions relating to or arising 

out of such limitation on an insurer’s financial responsibility set 

forth in paragraph 103(e)(3) will be removed to the Federal district 

court, or courts, chosen by the Judicial Panel on Multidistrict Litigation. 

The insurance marketplace aggregate retention amount is set at 

the lesser of $27.5 billion and the aggregate amount of property 

and casualty insured losses for property and casualty insurance, 

and the lesser of $5 billion and the aggregate amount of group life 

insured losses for group life insurance. The Secretary is granted 

emergency rulemaking powers during the 90-day period beginning 

upon the certification of any act of terrorism. The Secretary will 

adjust each year, based on the percentage change in an appropriate 

index, certain enumerated dollar amounts in TRIA, including the 

trigger and the Program cap. It is intended that the dollar amounts 

be indexed to inflation. 

Between the enactment of TRIREA and December 31, 2008, the 

rates and forms for coverage of acts of conventional terrorism will 

not be subject to prior approval or waiting period requirement 

under State law, except that a State may invalidate a rate as excessive, inadequate, or unfairly discriminatory and a State that 

had prior approval authority over forms may conduct subsequent 

review of such forms. Between the enactment of TRIREA and December 31, 2009, forms for coverage of acts of NBCR terrorism (to 

the extent of the addition of such coverage and where such covVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00047 Fmt 6659 Sfmt 6602 E:\HR\OC\HR318.XXX HR318

ycherry on PRODPC74 with REPORTS
48 

erage was not previously required) will not be subject to prior approval or waiting period requirement under State law. Between the 

enactment of TRIREA and December 31, 2010, rates for coverage 

of acts of NBCR terrorism (to the extent of the addition of such coverage and where such coverage was not previously required) will 

not be subject to prior approval or waiting period requirement 

under State law, except a State may invalidate a rate as inadequate or unfairly discriminatory. 

An insurer is not prohibited, restricted, or otherwise limited from 

entering into an arrangement with another insurer to make available coverage for any portion of insured losses to fulfill the mandatory make-available requirements under section 103(c). It is not intended, however, that an insurer could fulfill all of its requirements 

under section 103(c) solely by entering into an arrangement to have 

another insurer make available coverage that would otherwise only 

fulfill part of such requirements. For example, an insurer may not 

consider its requirement under section 103(c)(1)(B) (NBCR coverage) fulfilled by simply arranging to have another insurer make 

available coverage for acts of conventional terrorism pursuant to 

section 103(c)(1)(A). 

Section 4. Terrorism Buy-Down Fund 

This section directs the Secretary to establish a Terrorism BuyDown Fund (the Fund) that allows insurers to voluntarily reserve 

with the Federal government for their insured losses. An insurer 

may purchase deductible, co-share, or pre-trigger buy-down coverage by making an advance election to treat some or all of the premiums it has disclosed under the Program as fee charges imposed 

by the Secretary and remitting such amounts to the Fund. Such 

buy-down coverage does not reduce the Federal co-share. However, 

an insurer may not purchase coverage in an amount greater than 

the lesser of (a) the program trigger or (b) the insurer’s one-in-onehundred-year risk exposure to acts of terrorism. 

An insurer may sell its rights to buy-down coverage from the 

Fund to another insurer as part of or to avoid insolvency or as part 

of a sale, merger, or major reorganization. The Secretary may borrow funds from the Fund to offset the Federal share of compensation provided to all insurers under the Program. The Secretary 

shall establish voluntary risk-sharing mechanisms for insurers participating in the Fund to pool their reinsurance purchases and 

share terrorism risk. Upon termination of the Program, the Fund 

shall become a privately-operated mutual terrorism reinsurance 

company owned by the insurers that submitted buy-down coverage 

premiums. 

Section 5. Analysis and Study 

This section requires the Secretary, in consultation with the 

NAIC, representatives of the insurance industry, representatives of 

the securities industry, and representatives of policyholders, to 

analyze the long-term availability and affordability of private terrorism risk insurance. The Secretary will submit biennial reports 

to and, upon submission of each such report, testify before Congress. The Secretary will submit the first such report within two 

years of enactment of TRIREA. 


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49 

This section also establishes a Commission on Terrorism Risk Insurance. The 21-member Commission will consist of the Secretary 

or the Secretary’s designee; a State insurance commissioner designated by the NAIC; 15 members appointed by the President, including a representative of group life insurers, property and casualty insurers with direct earned premium of $1 billion or less, 

property and casualty insurers with direct earned premium of more 

than $1 billion, multi-line insurers, independent insurance agents, 

insurance brokers, policyholders, the survivors of the victims of the 

September 11, 2001 terrorist attacks, the reinsurance industry, 

workers’ compensation insurers, the commercial mortgage-backed 

securities industry, a nationally recognized statistical rating organization, a real estate developer, workers’ compensation insurers 

created by State legislatures, and the commercial real estate brokerage industry or the commercial property management industry; 

and four members who will serve as liaisons to Congress, two of 

whom shall be jointly selected by the Chairman and Ranking Member of the Committee and two jointly selected by the Chairman and 

Ranking Member of the Committee on Banking, Housing, and 

Urban Affairs of the Senate. 

The Commission will make recommendations to encourage the 

private insurance industry to provide affordable terrorism insurance in the United States and significantly reduce the Federal role 

in covering losses resulting from acts of terrorism. The Commission 

will specifically evaluate the utility and viability of proposals aimed 

at improving the availability of terrorism insurance in the private 

marketplace. The Commission will submit two reports to Congress 

that evaluate and make recommendations regarding the need for 

a Federal terrorism risk insurance program and include the Commission’s recommendations for encouraging the growth of private 

marketplace for terrorism insurance and reducing the Federal role. 

The Commission will submit the first report within five years of enactment of TRIREA and the second report within eight years of 

TRIREA enactment. 

Section 6. Applicability 

This section provides that the provisions of TRIA, as amended, 

will continue to apply through the end of December 31, 2007, and 

the amendments made by TRIREA will apply beginning on January 1, 2008. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TERRORISM RISK INSURANCE ACT OF 2002 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) * * * 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as 

follows: 

Sec. 1. Short title; table of contents. 


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50 

TITLE I—TERRORISM INSURANCE PROGRAM 

Sec. 101. Congressional findings and purpose. 

* * * * * * * 

Sec. 106A. Terrorism Buy-Down Fund. 

* * * * * * * 

Sec. 109. Commission on Terrorism Risk Insurance. 

* * * * * * * 

TITLE I—TERRORISM INSURANCE 

PROGRAM 

øSEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE. 

ø(a) FINDINGS.—The Congress finds that—

ø(1) the ability of businesses and individuals to obtain property and casualty insurance at reasonable and predictable 

prices, in order to spread the risk of both routine and catastrophic loss, is critical to economic growth, urban development, and the construction and maintenance of public and private housing, as well as to the promotion of United States exports and foreign trade in an increasingly interconnected 

world; 

ø(2) property and casualty insurance firms are important financial institutions, the products of which allow mutualization 

of risk and the efficient use of financial resources and enhance 

the ability of the economy to maintain stability, while responding to a variety of economic, political, environmental, and other 

risks with a minimum of disruption; 

ø(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; 

ø(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; 

ø(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 

ø(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 


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51 

create a viable financial services market for private terrorism 

risk insurance. 

ø(b) PURPOSE.—The purpose of this title is to establish a temporary Federal program that provides for a transparent system of 

shared public and private compensation for insured losses resulting 

from acts of terrorism, in order to—

ø(1) protect consumers by addressing market disruptions and 

ensure the continued widespread availability and affordability 

of property and casualty insurance for terrorism risk; and 

ø(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. 

øSEC. 102. DEFINITIONS. 

øIn this title, the following definitions shall apply: 

ø(1) ACT OF TERRORISM.—

ø(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—

ø(i) to be an act of terrorism; 

ø(ii) to be a violent act or an act that is dangerous 

to—

ø(I) human life; 

ø(II) property; or 

ø(III) infrastructure; 

ø(iii) to have resulted in damage within the United 

States, or outside of the United States in the case of—

ø(I) an air carrier or vessel described in paragraph (5)(B); or 

ø(II) the premises of a United States mission; 

and 

ø(iv) 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. 

ø(B) LIMITATION.—No act shall be certified by the Secretary as an act of terrorism if—

ø(i) the act is committed as part of the course of a 

war declared by the Congress, except that this clause 

shall not apply with respect to any coverage for workers’ compensation; or 

ø(ii) property and casualty insurance losses resulting from the act, in the aggregate, do not exceed 

$5,000,000. 

ø(C) DETERMINATIONS FINAL.—Any certification of, or determination not to certify, an act as an act of terrorism 

under this paragraph shall be final, and shall not be subject to judicial review. 

ø(D) NONDELEGATION.—The Secretary may not delegate 

or designate to any other officer, employee, or person, any 

determination under this paragraph of whether, during 


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52 

the effective period of the Program, an act of terrorism has 

occurred. 

ø(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect to 

an insurer, any entity that controls, is controlled by, or is 

under common control with the insurer. 

ø(3) CONTROL.—An entity has ‘‘control’’ over another entity, 

if—

ø(A) the entity directly or indirectly or acting through 1 

or more other persons owns, controls, or has power to vote 

25 percent or more of any class of voting securities of the 

other entity; 

ø(B) the entity controls in any manner the election of a 

majority of the directors or trustees of the other entity; or 

ø(C) the Secretary determines, after notice and opportunity for hearing, that the entity directly or indirectly exercises a controlling influence over the management or 

policies of the other entity. 

ø(4) DIRECT EARNED PREMIUM.—The term ‘‘direct earned premium’’ means a direct earned premium for property and casualty insurance issued by any insurer for insurance against 

losses occurring at the locations described in subparagraphs 

(A) and (B) of paragraph (5). 

ø(5) INSURED LOSS.—The term ‘‘insured loss’’ means any loss 

resulting from an act of terrorism (including an act of war, in 

the case of workers’ compensation) that is covered by primary 

or excess property and casualty insurance issued by an insurer 

if such loss—

ø(A) occurs within the United States; or 

ø(B) occurs to an air carrier (as defined in section 40102 

of title 49, United States Code), to a United States flag 

vessel (or a vessel based principally in the United States, 

on which United States income tax is paid and whose insurance coverage is subject to regulation in the United 

States), regardless of where the loss occurs, or at the 

premises of any United States mission. 

ø(6) INSURER.—The term ‘‘insurer’’ means any entity, including any affiliate thereof—

ø(A) that is—

ø(i) licensed or admitted to engage in the business 

of providing primary or excess insurance in any State; 

ø(ii) not licensed or admitted as described in clause 

(i), if it is an eligible surplus line carrier listed on the 

Quarterly Listing of Alien Insurers of the NAIC, or 

any successor thereto; 

ø(iii) approved for the purpose of offering property 

and casualty insurance by a Federal agency in connection with maritime, energy, or aviation activity; 

ø(iv) a State residual market insurance entity or 

State workers’ compensation fund; or 

ø(v) any other entity described in section 103(f), to 

the extent provided in the rules of the Secretary 

issued under section 103(f); 

ø(B) that receives direct earned premiums for any type 

of commercial property and casualty insurance coverage, 


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53 

other than in the case of entities described in sections 

103(d) and 103(f); and 

ø(C) that meets any other criteria that the Secretary 

may reasonably prescribe. 

ø(7) INSURER DEDUCTIBLE.—The term ‘‘insurer deductible’’ means—

ø(A) for the Transition Period, the value of an insurer’s 

direct earned premiums over the calendar year immediately preceding the date of enactment of this Act, multiplied by 1 percent; 

ø(B) for Program Year 1, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 1, multiplied by 7 percent; 

ø(C) for Program Year 2, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 2, multiplied by 10 percent; 

ø(D) for Program Year 3, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 3, multiplied by 15 percent; 

ø(E) for Program Year 4, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 4, multiplied by 17.5 percent; 

ø(F) for Program Year 5, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 5, multiplied by 20 percent; and 

ø(G) notwithstanding subparagraphs (A) through (F), for 

the Transition Period or any Program Year, if an insurer 

has not had a full year of operations during the calendar 

year immediately preceding such Period or Program Year, 

such portion of the direct earned premiums of the insurer 

as the Secretary determines appropriate, subject to appropriate methodologies established by the Secretary for 

measuring such direct earned premiums. 

ø(8) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners. 

ø(9) 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. 

ø(10) PROGRAM.—The term ‘‘Program’’ means the Terrorism 

Insurance Program established by this title. 

ø(11) PROGRAM YEARS.—

ø(A) TRANSITION PERIOD.—The term ‘‘Transition Period’’

means the period beginning on the date of enactment of 

this Act and ending on December 31, 2002. 

ø(B) PROGRAM YEAR 1.—The term ‘‘Program Year 1’’

means the period beginning on January 1, 2003 and ending on December 31, 2003. 

ø(C) PROGRAM YEAR 2.—The term ‘‘Program Year 2’’ means the period beginning on January 1, 2004 and ending on December 31, 2004. 

ø(D) PROGRAM YEAR 3.—The term ‘‘Program Year 3’’

means the period beginning on January 1, 2005 and ending on December 31, 2005. 


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54 

ø(E) PROGRAM YEAR 4.—The term ‘‘Program Year 4’’ means the period beginning on January 1, 2006 and ending on December 31, 2006. 

ø(F) PROGRAM YEAR 5.—The term ‘‘Program Year 5’’ means the period beginning on January 1, 2007 and ending on December 31, 2007. 

ø(12) PROPERTY AND CASUALTY INSURANCE.—The term ‘‘property and casualty insurance’’—

ø(A) means commercial lines of property and casualty insurance, including excess insurance, workers’ compensation insurance, and directors and officers liability insurance; and 

ø(B) does not include— ø(i) Federal crop insurance issued or reinsured 

under the Federal Crop Insurance Act (7 U.S.C. 1501 

et seq.), or any other type of crop or livestock insurance that is privately issued or reinsured; 

ø(ii) private mortgage insurance (as that term is defined in section 2 of the Homeowners Protection Act of 

1998 (12 U.S.C. 4901)) or title insurance; 

ø(iii) financial guaranty insurance issued by 

monoline financial guaranty insurance corporations; 

ø(iv) insurance for medical malpractice; 

ø(v) health or life insurance, including group life insurance; 

ø(vi) flood insurance provided under the National 

Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.); 

ø(vii) reinsurance or retrocessional reinsurance; 

ø(viii) commercial automobile insurance; 

ø(ix) burglary and theft insurance; 

ø(x) surety insurance; 

ø(xi) professional liability insurance; or 

ø(xii) farm owners multiple peril insurance. 

ø(13) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury. 

ø(14) STATE.—The term ‘‘State’’ means any State of the 

United States, the District of Columbia, the Commonwealth of 

Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, each of the United States Virgin Islands, and any territory or possession of the United 

States. 

ø(15) UNITED STATES.—The term ‘‘United States’’ means the 

several States, and includes the territorial sea and the continental shelf of the United States, as those terms are defined 

in the Violent Crime Control and Law Enforcement Act of 1994 

(18 U.S.C. 2280, 2281). 

ø(16) RULE OF CONSTRUCTION FOR DATES.—With respect to 

any reference to a date in this title, such day shall be construed—

ø(A) to begin at 12:01 a.m. on that date; and 

ø(B) to end at midnight on that date. 

øSEC. 103. TERRORISM INSURANCE PROGRAM. 

ø(a) ESTABLISHMENT OF PROGRAM.—

ø(1) IN GENERAL.—There is established in the Department of 

the Treasury the Terrorism Insurance Program. 


ycherry on PRODPC74 with REPORTS
55 

ø(2) AUTHORITY OF THE SECRETARY.—Notwithstanding any 

other provision of State or Federal law, the Secretary shall administer the Program, and shall pay the Federal share of compensation for insured losses in accordance with subsection (e). 

ø(3) MANDATORY PARTICIPATION.—Each entity that meets the 

definition of an insurer under this title shall participate in the 

Program. 

ø(b) CONDITIONS FOR FEDERAL PAYMENTS.—No payment may be 

made by the Secretary under this section with respect to an insured loss that is covered by an insurer, unless—

ø(1) the person that suffers the insured loss, or a person acting on behalf of that person, files a claim with the insurer; 

ø(2) the insurer provides clear and conspicuous disclosure 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—

ø(A) in the case of any policy that is issued before the 

date of enactment of this Act, not later than 90 days after 

that date of enactment; 

ø(B) in the case of any policy that is issued within 90 

days of the date of enactment of this Act, at the time of 

offer, purchase, and renewal of the policy; and 

ø(C) in the case of any policy that is issued more than 

90 days after the date of enactment of this Act, on a separate line item in the policy, at the time of offer, purchase, 

and renewal of the policy; 

ø(3) the insurer processes the claim for the insured loss in 

accordance with appropriate business practices, and any reasonable procedures that the Secretary may prescribe; and 

ø(4) the insurer submits to the Secretary, in accordance with 

such reasonable procedures as the Secretary may establish—

ø(A) a claim for payment of the Federal share of compensation for insured losses under the Program; 

ø(B) written certification—

ø(i) of the underlying claim; and 

ø(ii) of all payments made for insured losses; and 

ø(C) certification of its compliance with the provisions of 

this subsection. 

ø(c) MANDATORY AVAILABILITY.—During each Program Year, each 

entity that meets the definition of an insurer under section 102—

ø(1) shall make available, in all of its property and casualty 

insurance policies, coverage for insured losses; and 

ø(2) shall make available 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. 

ø(d) STATE RESIDUAL MARKET INSURANCE ENTITIES.—

ø(1) IN GENERAL.—The Secretary shall issue regulations, as 

soon as practicable after the date of enactment of this Act, that 

apply the provisions of this title to State residual market insurance entities and State workers’ compensation funds. 

ø(2) TREATMENT OF CERTAIN ENTITIES.—For purposes of the 

regulations issued pursuant to paragraph (1)—


ycherry on PRODPC74 with REPORTS
56 

ø(A) a State residual market insurance entity that does 

not share its profits and losses with private sector insurers 

shall be treated as a separate insurer; and 

ø(B) a State residual market insurance entity that 

shares its profits and losses with private sector insurers 

shall not be treated as a separate insurer, and shall report 

to each private sector insurance participant its share of 

the insured losses of the entity, which shall be included in 

each private sector insurer’s insured losses. 

ø(3) TREATMENT OF PARTICIPATION IN CERTAIN ENTITIES.— Any insurer that participates in sharing profits and losses of 

a State residual market insurance entity shall include in its 

calculations of premiums any premiums distributed to the insurer by the State residual market insurance entity. 

ø(e) INSURED LOSS SHARED COMPENSATION.—

ø(1) FEDERAL SHARE.—

ø(A) IN GENERAL.—The Federal share of compensation 

under the Program to be paid by the Secretary for insured 

losses of an insurer during the Transition Period and each 

Program Year through Program Year 4 shall be equal to 

90 percent, and during Program Year 5 shall be equal to 

85 percent, of that portion of the amount of such insured 

losses that exceeds the applicable insurer deductible required to be paid during such Transition Period or such 

Program Year. 

ø(B) PROGRAM TRIGGER.—In the case of a certified act of 

terrorism occurring after March 31, 2006, no compensation 

shall be paid by the Secretary under subsection (a), unless 

the aggregate industry insured losses resulting from such 

certified act of terrorism exceed— ø(i) $50,000,000, with respect to such insured losses 

occurring in Program Year 4; or 

ø(ii) $100,000,000, with respect to such insured 

losses occurring in Program Year 5. 

ø(C) PROHIBITION ON DUPLICATIVE COMPENSATION.—The 

Federal share of compensation for insured losses under the 

Program shall be reduced by the amount of compensation 

provided by the Federal Government to any person under 

any other Federal program for those insured losses. 

ø(2) CAP ON ANNUAL LIABILITY.—

ø(A) IN GENERAL.—Notwithstanding paragraph (1) or 

any other provision of Federal or State law, if the aggregate insured losses exceed $100,000,000,000, during the 

period beginning on the first day of the Transition Period 

and ending on the last day of Program Year 1, or during 

any of Program Years 2 through 5 (until such time as the 

Congress may act otherwise with respect to such losses)—

ø(i) the Secretary shall not make any payment 

under this title for any portion of the amount of such 

losses that exceeds $100,000,000,000; and 

ø(ii) no insurer that has met its insurer deductible 

shall be liable for the payment of any portion of that 

amount that exceeds $100,000,000,000. 

ø(B) INSURER SHARE.—For purposes of subparagraph (A), 

the Secretary shall determine the pro rata share of insured 


ycherry on PRODPC74 with REPORTS
57 

losses to be paid by each insurer that incurs insured losses 

under the Program. 

ø(3) NOTICE TO CONGRESS.—The Secretary shall notify the 

Congress if estimated or actual aggregate insured losses exceed 

$100,000,000,000 during the period beginning on the first day 

of the Transition Period and ending on the last day of Program 

Year 1, or during any of Program Years 2 through 5, and the 

Congress shall determine the procedures for and the source of 

any payments for such excess insured losses. 

ø(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. 

ø(5) DETERMINATIONS FINAL.—Any determination of the Secretary under this subsection shall be final, unless expressly 

provided, and shall not be subject to judicial review. 

ø(6) INSURANCE MARKETPLACE AGGREGATE RETENTION

AMOUNT.—For purposes of paragraph (7), the insurance marketplace aggregate retention amount shall be—

ø(A) for the period beginning on the first day of the 

Transition Period and ending on the last day of Program 

Year 1, the lesser of—

ø(i) $10,000,000,000; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such period; 

ø(B) for Program Year 2, the lesser of—

ø(i) $12,500,000,000; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such Program Year; 

ø(C) for Program Year 3, the lesser of—

ø(i) $15,000,000,000; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such Program Year; 

ø(D) for Program Year 4, the lesser of—

ø(i) $25,000,000,000; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such Program Year; and 

ø(E) for Program Year 5, the lesser of—

ø(i) $27,500,000,000; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such Program Year. 

ø(7) RECOUPMENT OF FEDERAL SHARE.—

ø(A) MANDATORY RECOUPMENT AMOUNT.—For purposes 

of this paragraph, the mandatory recoupment amount for 

each of the periods referred to in subparagraphs (A) 

through (E) of paragraph (6) shall be the difference between—

ø(i) the insurance marketplace aggregate retention 

amount under paragraph (6) for such period; and 

ø(ii) the aggregate amount, for all insurers, of insured losses during such period that are not compensated by the Federal Government because such 

losses—

ø(I) are within the insurer deductible for the insurer subject to the losses; or 


ycherry on PRODPC74 with REPORTS
58 

ø(II) are within the portion of losses of the insurer that exceed the insurer deductible, but are 

not compensated pursuant to paragraph (1). 

ø(B) NO MANDATORY RECOUPMENT IF UNCOMPENSATED

LOSSES EXCEED INSURANCE MARKETPLACE RETENTION.—

Notwithstanding subparagraph (A), if the aggregate 

amount of uncompensated insured losses referred to in 

clause (ii) of such subparagraph for any period referred to 

in any of subparagraphs (A) through (E) of paragraph (6) 

is greater than the insurance marketplace aggregate retention amount under paragraph (6) for such period, the mandatory recoupment amount shall be $0. 

ø(C) MANDATORY ESTABLISHMENT OF SURCHARGES TO RECOUP MANDATORY RECOUPMENT AMOUNT.—The Secretary 

shall collect, for repayment of the Federal financial assistance provided in connection with all acts of terrorism (or 

acts of war, in the case of workers compensation) occurring 

during any of the periods referred to in any of subparagraphs (A) through (E) of paragraph (6), terrorism loss 

risk-spreading premiums in an amount equal to any mandatory recoupment amount for such period. 

ø(D) DISCRETIONARY RECOUPMENT OF REMAINDER OF FINANCIAL ASSISTANCE.—To the extent that the amount of 

Federal financial assistance provided exceeds any mandatory recoupment amount, the Secretary may recoup, 

through terrorism loss risk-spreading premiums, such additional amounts that the Secretary believes can be recouped, based on—

ø(i) the ultimate costs to taxpayers of no additional 

recoupment; 

ø(ii) the economic conditions in the commercial marketplace, including the capitalization, profitability, and 

investment returns of the insurance industry and the 

current cycle of the insurance markets; 

ø(iii) the affordability of commercial insurance for 

small- and medium-sized businesses; and 

ø(iv) such other factors as the Secretary considers 

appropriate. 

ø(8) POLICY SURCHARGE FOR TERRORISM LOSS RISK-SPREADING

PREMIUMS.—

ø(A) POLICYHOLDER PREMIUM.—Any amount established 

by the Secretary as a terrorism loss risk-spreading premium shall—

ø(i) be imposed as a policyholder premium surcharge 

on property and casualty insurance policies in force 

after the date of such establishment; 

ø(ii) begin with such period of coverage during the 

year as the Secretary determines appropriate; and 

ø(iii) be based on a percentage of the premium 

amount charged for property and casualty insurance 

coverage under the policy. 

ø(B) COLLECTION.—The Secretary shall provide for insurers to collect terrorism loss risk-spreading premiums 

and remit such amounts collected to the Secretary. 


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59 

ø(C) PERCENTAGE LIMITATION.—A terrorism loss riskspreading premium (including any additional amount included in such premium on a discretionary basis pursuant 

to paragraph (7)(D)) may not exceed, on an annual basis, 

the amount equal to 3 percent of the premium charged for 

property and casualty insurance coverage under the policy. 

ø(D) ADJUSTMENT FOR URBAN AND SMALLER COMMERCIAL

AND RURAL AREAS AND DIFFERENT LINES OF INSURANCE.— ø(i) ADJUSTMENTS.—In determining the method and 

manner of imposing terrorism loss risk-spreading premiums, including the amount of such premiums, the 

Secretary shall take into consideration— ø(I) the economic impact on commercial centers 

of urban areas, including the effect on commercial 

rents and commercial insurance premiums, particularly rents and premiums charged to small 

businesses, and the availability of lease space and 

commercial insurance within urban areas; 

ø(II) the risk factors related to rural areas and 

smaller commercial centers, including the potential exposure to loss and the likely magnitude of 

such loss, as well as any resulting cross-subsidization that might result; and 

ø(III) the various exposures to terrorism risk for 

different lines of insurance. 

ø(ii) RECOUPMENT OF ADJUSTMENTS.—Any mandatory recoupment amounts not collected by the Secretary because of adjustments under this subparagraph shall be recouped through additional terrorism 

loss risk-spreading premiums. 

ø(E) TIMING OF PREMIUMS.—The Secretary may adjust 

the timing of terrorism loss risk-spreading premiums to 

provide for equivalent application of the provisions of this 

title to policies that are not based on a calendar year, or 

to apply such provisions on a daily, monthly, or quarterly 

basis, as appropriate. 

ø(f) CAPTIVE INSURERS AND OTHER SELF-INSURANCE ARRANGE- MENTS.—The Secretary may, in consultation with the NAIC or the 

appropriate State regulatory authority, apply the provisions of this 

title, as appropriate, to other classes or types of captive insurers 

and other self-insurance arrangements by municipalities and other 

entities (such as workers’ compensation self-insurance programs 

and State workers’ compensation reinsurance pools), but only if 

such application is determined before the occurrence of an act of 

terrorism in which such an entity incurs an insured loss and all of 

the provisions of this title are applied comparably to such entities. 

ø(g) REINSURANCE TO COVER EXPOSURE.—

ø(1) OBTAINING COVERAGE.—This title may not be construed 

to limit or prevent insurers from obtaining reinsurance coverage for insurer deductibles or insured losses retained by insurers pursuant to this section, nor shall the obtaining of such 

coverage affect the calculation of such deductibles or retentions. 

ø(2) LIMITATION ON FINANCIAL ASSISTANCE.—The amount of 

financial assistance provided pursuant to this section shall not 


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60 

be reduced by reinsurance paid or payable to an insurer from 

other sources, except that recoveries from such other sources, 

taken together with financial assistance for the Transition Period or a Program Year provided pursuant to this section, may 

not exceed the aggregate amount of the insurer’s insured losses 

for such period. If such recoveries and financial assistance for 

the Transition Period or a Program Year exceed such aggregate amount of insured losses for that period and there is no 

agreement between the insurer and any reinsurer to the contrary, an amount in excess of such aggregate insured losses 

shall be returned to the Secretary. 

ø(h) GROUP LIFE INSURANCE STUDY.— ø(1) STUDY.—The Secretary shall study, on an expedited 

basis, whether adequate and affordable catastrophe reinsurance for acts of terrorism is available to life insurers in the 

United States that issue group life insurance, and the extent 

to which the threat of terrorism is reducing the availability of 

group life insurance coverage for consumers in the United 

States. 

ø(2) CONDITIONAL COVERAGE.—To the extent that the Secretary determines that such coverage is not or will not be reasonably available to both such insurers and consumers, the 

Secretary shall, in consultation with the NAIC— ø(A) apply the provisions of this title, as appropriate, to 

providers of group life insurance; and 

ø(B) provide such restrictions, limitations, or conditions 

with respect to any financial assistance provided that the 

Secretary deems appropriate, based on the study under 

paragraph (1). 

ø(i) STUDY AND REPORT.— ø(1) STUDY.—The Secretary, after consultation with the 

NAIC, 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, including personal 

lines. 

ø(2) REPORT.—Not later than 9 months 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. 101. CONGRESSIONAL FINDINGS AND PURPOSE. 

(a) FINDINGS.—The Congress finds that—

(1) the ability of businesses and individuals to obtain property and casualty insurance at reasonable and predictable 

prices, in order to spread the risk of both routine and catastrophic loss, is critical to economic growth, urban development, 

and the construction and maintenance of public and private 

housing, as well as to the promotion of United States exports 

and foreign trade in an increasingly interconnected world; 

(2) property and casualty insurance firms are important financial institutions, the products of which allow mutualization 

of risk and the efficient use of financial resources and enhance 

the ability of the economy to maintain stability, while responding to a variety of economic, political, environmental, and other 

risks with a minimum of disruption; 


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61 

(3) the ability of the insurance industry to cover the unprecedented financial risks presented by potential acts of terrorism 

in the United States can be a major factor in the recovery from 

terrorist attacks, while maintaining the stability of the economy; 

(4) widespread financial market uncertainties have arisen following the terrorist attacks of September 11, 2001, including 

the absence of information from which financial institutions 

can make statistically valid estimates of the probability and 

cost of future terrorist events, and therefore the size, funding, 

and allocation of the risk of loss caused by such acts of terrorism; 

(5) a decision by property and casualty insurers to deal with 

such uncertainties, either by terminating property and casualty 

coverage for losses arising from terrorist events, or by radically 

escalating premium coverage to compensate for risks of loss that 

are not readily predictable, could seriously hamper ongoing and 

planned construction, property acquisition, and other business 

projects, generate a dramatic increase in rents, and otherwise 

suppress economic activity; 

(6) the United States Government should coordinate with insurers to provide financial compensation to insured parties for 

losses from acts of terrorism, contributing to the stabilization of 

the United States economy in a time of national crisis, and periodically assess the ability of the financial services industry to 

develop the systems, mechanisms, products, and programs necessary to create a viable financial services market for private 

terrorism risk insurance that will lessen the financial participation of the United States Government; 

(7) in addition to a terrorist attack on the United States 

using conventional means or weapons, there is and continues to 

be a potential threat of a terrorist attack involving the use of 

unconventional means or weapons, such as nuclear, biological, 

chemical, or radiological agents; 

(8) as nuclear, biological, chemical, or radiological acts of terrorism (known as NBCR terrorism) present a threat of loss of 

life, injury, disease, and property damage potentially unparalleled in scope and complexity by any prior event, natural or 

man-made, the Federal Government’s responsibility in providing for and preserving national economic security calls for a 

strong Federal role in ensuring financial compensation and economic recovery in the event of such an attack; 

(9) a report issued by the Government Accountability Office in 

September 2006 concluded that ‘‘any purely market-driven expansion of coverage’’ for NBCR terrorism risk is ‘‘highly unlikely in the foreseeable future’’, and the September 2006 report 

from the President’s Working Group on Financial Markets concluded that reinsurance for NBCR terrorist events is virtually 

unavailable and that ‘‘[g]iven the general reluctance of insurance companies to provide coverage for these types of risks, 

there may be little potential for future market development’’; 

(10) group life insurance companies are important financial 

institutions whose products make life insurance coverage affordable for millions of Americans and often serve as their only life 

insurance benefit; 


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62 

(11) the group life insurance industry, in the event of a severe 

act of terrorism, is vulnerable to insolvency because high concentrations of covered employees work in the same locations, because primary group life insurers do not exclude conventional 

and NBCR terrorism risks while most catastrophic reinsurance 

does exclude such terrorism risks, and because a large-scale loss 

of life would fall outside of actuarial expectations of death; and 

(12) the United States Government should provide temporary 

financial compensation to insured parties, contributing to the 

stabilization of the United States economy in a time of national 

crisis, while the financial services industry develops the systems, mechanisms, products, and programs necessary to create 

a viable financial services market for private terrorism risk insurance. 

(b) PURPOSE.—The purpose of this title is to establish a temporary 

Federal program that provides for a transparent system of shared 

public and private compensation for insured losses resulting from 

acts of terrorism, in order to—

(1) protect consumers by addressing market disruptions and 

ensure the continued widespread availability and affordability 

of property and casualty insurance and group life insurance for 

all types of terrorism risk, including conventional terrorism risk 

and nuclear, biological, chemical, and radiological terrorism 

risk; 

(2) allow for a transitional period for the private markets to 

stabilize, resume pricing of such insurance, and build capacity 

to absorb any future losses, while preserving State insurance 

regulation and consumer protections (unless otherwise preempted by this Act); and 

(3) provide finite liability limits for terrorism insurance losses 

for insurers and the United States Government. 

SEC. 102. DEFINITIONS. 

In this title, the following definitions shall apply: 

(1) ACT OF TERRORISM.—

(A) CERTIFICATION.—The term ‘‘act of terrorism’’ means 

any act that is certified by the Secretary, in concurrence 

with the Secretary of State, the Secretary of Homeland Security, and the Attorney General of the United States—

(i) to be an act of terrorism; 

(ii) to be a violent act or an act that is dangerous 

to—

(I) human life; 

(II) property; or 

(III) infrastructure; 

(iii) to have resulted in damage within the United 

States, or outside of the United States in the case of—

(I) an air carrier or vessel described in paragraph (9)(B); or 

(II) the premises of a United States mission; and 

(iv) to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or 

affect the conduct of the United States Government by 

coercion. 


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(B) LIMITATION.—No act shall be certified by the Secretary as an act of terrorism if—

(i) the act is committed as part of the course of a war 

declared by the Congress, except that this clause shall 

not apply with respect to any coverage for workers’

compensation; or 

(ii) property and casualty insurance and group life 

insurance losses resulting from the act, in the aggregate, do not exceed $5,000,000. 

(C) CERTIFICATION OF ACT OF NBCR TERRORISM.—Upon 

certification of an act of terrorism, the Secretary, in concurrence with the Secretary of State, the Secretary of Homeland Security, and the Attorney General of the United 

States, shall determine whether the act of terrorism meets 

the definition of NBCR terrorism in this section. If such determination is that the act does meet such definition, the 

Secretary shall further certify such act of terrorism as an 

act of NBCR terrorism. 

(D) DETERMINATIONS FINAL.—Any certification of, or determination not to certify, an act as an act of terrorism or 

as an act of NBCR terrorism under this paragraph shall 

be final, and shall not be subject to judicial review. 

(E) NONDELEGATION.—The Secretary may not delegate or 

designate to any other officer, employee, or person, any determination under this paragraph of whether, during the 

effective period of the Program, an act of terrorism, including an act of NBCR terrorism, has occurred. 

(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect to an 

insurer, any entity that controls, is controlled by, or is under 

common control with the insurer. 

(3) AMOUNT AT RISK.—The term ‘‘amount at risk’’ means face 

amount less statutory policy reserves for group life insurance 

issued by any insurer for insurance against losses occurring at 

the locations described in subparagraph (A) of paragraph (9). 

(4) CONTROL.—An entity has ‘‘control’’ over another entity, 

if—

(A) the entity directly or indirectly or acting through 1 or 

more other persons owns, controls, or has power to vote 25 

percent or more of any class of voting securities of the other 

entity; 

(B) the entity controls in any manner the election of a 

majority of the directors or trustees of the other entity; or 

(C) the Secretary determines, after notice and opportunity 

for hearing, that the entity directly or indirectly exercises a 

controlling influence over the management or policies of the 

other entity; except that for purposes of any proceeding 

under this subparagraph, there shall be a presumption that 

any entity which directly or indirectly owns, controls, or 

has power to vote less than 5 percent of any class of voting 

securities of another entity does not have control over that 

entity. 

(5) COVERED LINES.—The term ‘‘covered lines’’ means property 

and casualty insurance and group life insurance, as defined in 

this section. 


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64 

(6) DIRECT EARNED PREMIUM.—The term ‘‘direct earned premium’’ means a direct earned premium for property and casualty insurance issued by any insurer for insurance against 

losses occurring at the locations described in subparagraph (A) 

of paragraph (9). 

(7) EXCESS INSURED LOSS.—The term ‘‘excess insured loss’’ means, with respect to a Program Year, any portion of the 

amount of insured losses during such Program Year that exceeds the cap on annual liability under section 103(e)(2)(A). 

(8) GROUP LIFE INSURANCE.—The term ‘‘group life insurance’’ means an insurance contract that provides life insurance coverage, including term life insurance coverage, universal life insurance coverage, variable universal life insurance coverage, 

and accidental death coverage, or a combination thereof, for a 

number of individuals under a single contract, on the basis of 

a group selection of risks, but does not include ‘‘Corporate 

Owned Life Insurance’’ or ‘‘Business Owned Life Insurance,’’ each as defined under the Internal Revenue Code of 1986, or 

any similar product, or group life reinsurance or retrocessional 

reinsurance. 

(9) INSURED LOSS.— (A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘‘insured loss’’ means any loss resulting from 

an act of terrorism (including an act of war, in the case of 

workers’ compensation) that is covered by primary or excess 

property and casualty insurance, or group life insurance to 

the extent of the amount at risk, issued by an insurer, if 

such loss—(i) occurs within the United States; or 

(ii) occurs to an air carrier (as defined in section 

40102 of title 49, United States Code), to a United 

States flag vessel (or a vessel based principally in the 

United States, on which United States income tax is 

paid and whose insurance coverage is subject to regulation in the United States), regardless of where the loss 

occurs, or at the premises of any United States mission. 

(B) LIMITATION FOR GROUP LIFE INSURANCE.—Such term 

shall not include any losses of an insurer resulting from 

coverage of any single certificate holder under any group 

life insurance coverages of the insurer to the extent such 

losses are not compensated under the Program by reason of 

section 103(e)(1)(D). 

(10) INSURER.—The term ‘‘insurer’’ means any entity, including any affiliate thereof—

(A) that is—

(i) licensed or admitted to engage in the business of 

providing primary or excess insurance, or group life insurance, in any State; 

(ii) not licensed or admitted as described in clause 

(i), if it is an eligible surplus line carrier listed on the 

Quarterly Listing of Alien Insurers of the NAIC, or any 

successor thereto; 

(iii) approved for the purpose of offering property 

and casualty insurance by a Federal agency in connection with maritime, energy, or aviation activity; 


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65 

(iv) a State residual market insurance entity or State 

workers’ compensation fund; or 

(v) any other entity described in section 103(f), to the 

extent provided in the rules of the Secretary issued 

under section 103(f); 

(B) that receives direct earned premiums for any type of 

commercial property and casualty insurance coverage, or, 

in the case of group life insurance, that receives direct premiums, other than in the case of entities described in sections 103(d) and 103(f); and 

(C) that meets any other criteria that the Secretary may 

reasonably prescribe. 

(11) INSURER DEDUCTIBLE.—The term ‘‘insurer deductible’’

means—

(A) for the Transition Period, the value of an insurer’s direct earned premiums over the calendar year immediately 

preceding the date of enactment of this Act, multiplied by 

1 percent; 

(B) for Program Year 1, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 1, multiplied by 7 percent; 

(C) for Program Year 2, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 2, multiplied by 10 percent; 

(D) for Program Year 3, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 3, multiplied by 15 percent; 

(E) for Program Year 4, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 4, multiplied by 17.5 percent; 

(F) for Program Year 5, the value of an insurer’s direct 

earned premiums over the calendar year immediately preceding Program Year 5, multiplied by 20 percent; 

(G) for each additional Program Year—

(i) with respect to property and casualty insurance, 

the value of an insurer’s direct earned premiums over 

the calendar year immediately preceding such Program 

Year, multiplied by 20 percent; and 

(ii) with respect to group life insurance, the value of 

an insurer’s amount at risk over the calendar year immediately preceding such Program Year, multiplied by 

0.0351 percent; 

(H) notwithstanding subparagraphs (A) through (G), for 

the Transition Period or any Program Year, if an insurer 

has not had a full year of operations during the calendar 

year immediately preceding such Period or Program Year, 

such portion of the direct earned premiums with respect to 

property and casualty insurance, and such portion of the 

amounts at risk with respect to group life insurance, of the 

insurer as the Secretary determines appropriate, subject to 

appropriate methodologies established by the Secretary for 

measuring such direct earned premiums and amounts at 

risk; 


ycherry on PRODPC74 with REPORTS
66 

(I) notwithstanding subparagraphs (A) through (H) and 

(J), in the case of any act of NBCR terrorism, for any additional Program Year— (i) with respect to property and casualty insurance, 

the value of an insurer’s direct earned premiums over 

the calendar year immediately preceding such Program 

Year, multiplied by a percentage, which— (I) for the second additional Program Year, shall 

be 3.5 percent; and 

(II) for each succeeding Program Year thereafter, 

shall be 50 basis points greater than the percentage applicable to the preceding additional Program Year; and 

(ii) with respect to group life insurance, the value of 

an insurer’s amount at risk over the calendar year immediately preceding such Program Year, multiplied by 

a percentage, which— (I) for the first additional Program Year, shall 

be 0.00614 percent; and 

(II) for each succeeding Program Year thereafter, 

shall be 0.088 basis point greater than the percentage applicable to the preceding additional Program Year; and 

(J) notwithstanding subparagraph (G)(i), if aggregate industry insured losses resulting from a certified act of terrorism exceed $1,000,000,000, for any insurer that sustains 

insured losses resulting from such act of terrorism, the 

value of such insurer’s direct earned premiums over the calendar year immediately preceding the Program Year, multiplied by a percentage, which— (i) for the first additional Program Year shall be 5 

percent; 

(ii) for each additional Program Year thereafter, 

shall be 50 basis points greater than the percentage applicable to the preceding additional Program Year, except that if an act of terrorism occurs during any additional Program Year that results in aggregate industry 

insured losses exceeding $1,000,000,000, the percentage 

for the succeeding additional Program Year shall be 5 

percent and the increase under this clause shall apply 

to additional Program Years thereafter; 

except that for purposes of determining under this subparagraph whether aggregate industry insured losses exceed 

$1,000,000,000, the Secretary may combine insured losses 

resulting from two or more certified acts of terrorism occurring during such Program Year in the same geographic 

area (with such area determined by the Secretary), in 

which case such insurer shall be permitted to combine insured losses resulting from such acts of terrorism for purposes of satisfying its insurer deductible under this subparagraph; and except that the insurer deductible under 

this subparagraph shall apply only with respect to compensation of insured losses resulting from such certified act, 

or combined certified acts, and that for purposes of compensation of any other insured losses occurring in the same 


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67 

Program Year, the insurer deductible determined under 

subparagraph (G)(i) or (I) shall apply. 

(12) NAIC.—The term ‘‘NAIC’’ means the National Association of Insurance Commissioners. 

(13) NBCR TERRORISM.—The term ‘‘NBCR terrorism’’ means 

an act of terrorism that involves nuclear, biological, chemical, 

or radiological reactions, releases, or contaminations, to the extent any insured losses result from any such reactions, releases, 

or contaminations. 

(14) PERSON.—The term ‘‘person’’ means any individual, business or nonprofit entity (including those organized in the form 

of a partnership, limited liability company, corporation, or association), trust or estate, or a State or political subdivision of 

a State or other governmental unit. 

(15) PROGRAM.—The term ‘‘Program’’ means the Terrorism 

Insurance Program established by this title. 

(16) PROGRAM YEARS.—

(A) TRANSITION PERIOD.—The term ‘‘Transition Period’’

means the period beginning on the date of enactment of this 

Act and ending on December 31, 2002. 

(B) PROGRAM YEAR 1.—The term ‘‘Program Year 1’’

means the period beginning on January 1, 2003 and ending on December 31, 2003. 

(C) PROGRAM YEAR 2.—The term ‘‘Program Year 2’’

means the period beginning on January 1, 2004 and ending on December 31, 2004. 

(D) PROGRAM YEAR 3.—The term ‘‘Program Year 3’’

means the period beginning on January 1, 2005 and ending on December 31, 2005. 

(E) PROGRAM YEAR 4.—The term ‘‘Program Year 4’’

means the period beginning on January 1, 2006 and ending on December 31, 2006. 

(F) PROGRAM YEAR 5.—The term ‘‘Program Year 5’’ means 

the period beginning on January 1, 2007 and ending on 

December 31, 2007. 

(G) ADDITIONAL PROGRAM YEAR.—The term ‘‘additional 

Program Year’’ means any additional one-year period after 

Program Year 5 during which the Program is in effect, 

which period shall begin on January 1 and end on December 31 of the same calendar year. 

(17) PROPERTY AND CASUALTY INSURANCE.—The term ‘‘property and casualty insurance’’—

(A) means commercial lines of property and casualty insurance, including excess insurance, workers’ compensation 

insurance, and directors and officers liability insurance; 

and 

(B) does not include—

(i) Federal crop insurance issued or reinsured under 

the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.), 

or any other type of crop or livestock insurance that is 

privately issued or reinsured; 

(ii) private mortgage insurance (as that term is defined in section 2 of the Homeowners Protection Act of 

1998 (12 U.S.C. 4901)) or title insurance; 


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68 

(iii) financial guaranty insurance issued by monoline 

financial guaranty insurance corporations; 

(iv) insurance for medical malpractice; 

(v) health or life insurance, including group life insurance; 

(vi) flood insurance provided under the National 

Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.); 

(vii) reinsurance or retrocessional reinsurance; 

(viii) commercial automobile insurance; 

(ix) burglary and theft insurance; 

(x) surety insurance; or 

(xi) professional liability insurance. 

(18) SECRETARY.—The term ‘‘Secretary’’ means the Secretary 

of the Treasury. 

(19) STATE.—The term ‘‘State’’ means any State of the United 

States, the District of Columbia, the Commonwealth of Puerto 

Rico, the Commonwealth of the Northern Mariana Islands, 

American Samoa, Guam, each of the United States Virgin Islands, and any territory or possession of the United States. 

(20) UNITED STATES.—The term ‘‘United States’’ means the 

several States, and includes the territorial sea and the continental shelf of the United States, as those terms are defined in 

the Violent Crime Control and Law Enforcement Act of 1994 

(18 U.S.C. 2280, 2281). 

(21) RULE OF CONSTRUCTION FOR DATES.—With respect to any 

reference to a date in this title, such day shall be construed— (A) to begin at 12:01 a.m. on that date; and 

(B) to end at midnight on that date. 

SEC. 103. TERRORISM INSURANCE PROGRAM. 

(a) ESTABLISHMENT OF PROGRAM.— (1) IN GENERAL.—There is established in the Department of 

the Treasury the Terrorism Insurance Program. 

(2) AUTHORITY OF THE SECRETARY.—Notwithstanding any 

other provision of State or Federal law, the Secretary shall administer the Program, and shall pay the Federal share of compensation for insured losses in accordance with subsection (e). 

(3) MANDATORY PARTICIPATION.—Each entity that meets the 

definition of an insurer under this title shall participate in the 

Program. 

(4) NBCR EXEMPTION FOR CERTAIN INSURERS.—Notwithstanding the requirements of paragraph (3): 

(A) ELIGIBILITY.—Upon request, the Secretary may provide an exemption from the requirements of subparagraph 

(B) of subsection (c)(1) in the Program to an entity that otherwise meets the definition of an insurer under this title 

if—

(i) such insurer’s direct earned premium is less than 

$50,000,000 in the calendar year immediately preceding the current additional Program Year; and 

(ii) the Secretary makes the determination set forth 

in subparagraph (D). 

(B) INSURER GROUP.—For purposes of subparagraph 

(A)(i), the direct earned premium of any insurer shall include the direct earned premiums of every affiliate of that 

insurer. 


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69 

(C) INFORMATION AND CONSULTATION.—Any insurer requesting an exemption pursuant to this paragraph shall 

provide any information the Secretary may require to establish its eligibility for the exemption. In developing standards for evaluating eligibility for the exemption under this 

paragraph, the Secretary shall consult with the NAIC. 

(D) DETERMINATION.—In making any determination regarding eligibility for exemption under this paragraph, the 

Secretary shall consult with the insurance commissioner of 

the State or other appropriate State regulatory authority 

where the insurer is domiciled and determine whether the 

insurer has demonstrated that it would become insolvent if 

it were required, in the event of an act of NBCR terrorism, 

to satisfy—

(i) its deductible and maximum applicable share 

above the deductible pursuant to sections 102(11)(I) 

and 103(e)(1)(B), respectively, for such act of NBCR 

terrorism resulting in aggregate industry insured losses 

above the trigger established in section 103(e)(1)(C); or 

(ii) its maximum payment obligations for insured 

losses for such act of NBCR terrorism resulting in aggregate industry insured losses below the trigger established in section 103(e)(1)(C). 

(E) WORKERS’ COMPENSATION AND OTHER COMPULSORY

INSURANCE LAW.—In granting an exemption under this 

paragraph, the Secretary shall not approve any request for 

exemption with regard to State workers’ compensation insurance or other compulsory insurance law requiring coverage of the risks described in subparagraph (B) of subsection (c)(1). 

(F) EXEMPTION PERIOD.—

(i) IN GENERAL.—Any exemption granted to an insurer by the Secretary under this paragraph shall have 

a duration of not longer than 2 years. 

(ii) EXTENSION.—Notwithstanding clause (i), the Secretary may, upon application by an insurer granted an 

exemption under this paragraph, extend such exemption for additional periods of not longer than 2 years. 

(b) CONDITIONS FOR FEDERAL PAYMENTS.—No payment may be 

made by the Secretary under this section with respect to an insured 

loss that is covered by an insurer, unless—

(1) the person that suffers the insured loss, or a person acting 

on behalf of that person, files a claim with the insurer; 

(2) the insurer provides clear and conspicuous disclosure to 

the policyholder of the premium charged for insured losses covered by the Program (including the additional premium, if any, 

charged for the coverage for insured losses resulting from acts 

of NBCR terrorism as made available pursuant to subsection 

(c)(1)(B)) and the Federal share of compensation for insured 

losses under the Program—

(A) in the case of any policy that is issued before the date 

of enactment of this Act, not later than 90 days after that 

date of enactment; 


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(B) in the case of any policy that is issued within 90 days 

of the date of enactment of this Act, at the time of offer, 

purchase, and renewal of the policy; and 

(C) in the case of any policy that is issued more than 90 

days after the date of enactment of this Act, on a separate 

line item in the policy, at the time of offer, purchase, and 

renewal of the policy; 

(3) the insurer processes the claim for the insured loss in accordance with appropriate business practices, and any reasonable procedures that the Secretary may prescribe; and 

(4) the insurer submits to the Secretary, in accordance with 

such reasonable procedures as the Secretary may establish—

(A) a claim for payment of the Federal share of compensation for insured losses under the Program; 

(B) written certification—

(i) of the underlying claim; and 

(ii) of all payments made for insured losses; and 

(C) certification of its compliance with the provisions of 

this subsection. 

(c) MANDATORY AVAILABILITY.—

(1) AVAILABILITY OF COVERAGE FOR INSURED LOSSES.—Subject to paragraph (3), during each Program Year, each entity 

that meets the definition of an insurer under section 102 shall 

make available—

(A) in all of its insurance policies for covered lines, coverage for insured losses that does not differ materially from 

the terms, amounts, and other coverage limitations applicable to losses arising from events other than acts of terrorism; and 

(B) in insurance policies for covered lines for which the 

coverage described in subparagraph (A) is provided, exceptions to the pollution and nuclear hazard exclusions of such 

policies that render such exclusions inapplicable only as to 

insured losses arising from acts of NBCR terrorism. 

(2) ALLOWABLE EXCLUSIONS IN OTHER COVERAGE.—Subject to 

paragraph (3) and notwithstanding any other provision of Federal or State law, including any State workers’ compensation 

and other compulsory insurance law, if a person elects not to 

purchase an insurance policy with the coverage described in 

paragraph (1)—

(A) an insurer may exclude coverage for all losses from 

acts of terrorism including acts of NBCR terrorism, except 

for State workers’ compensation and other compulsory insurance law requiring coverage of the risks described in 

subsection (c)(1) (unless permitted by State law); or 

(B) an insurer may offer other options for coverage that 

differ materially from the terms, amounts, and other coverage limitations applicable to losses arising from events 

other than acts of terrorism; 

except that nothing in this paragraph shall affect paragraph 

(4). 

(3) APPLICABILITY FOR NBCR TERRORISM.—Notwithstanding 

any other provision of this Act, paragraphs (1)(B) and (2) shall 

apply, beginning upon January 1, 2009, with respect to covVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00070 Fmt 6659 Sfmt 6603 E:\HR\OC\HR318.XXX HR318

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erage for acts of NBCR terrorism, that is purchased or renewed 

on or after such date. 

(4) AVAILABILITY OF LIFE INSURANCE WITHOUT REGARD TO

LAWFUL FOREIGN TRAVEL.—During each Program Year, each entity that meets the definition of an insurer under section 102 

shall make available, in all of its life insurance policies issued 

after the date of the enactment of the Terrorism Risk Insurance 

Revision and Extension Act of 2007 under which the insured 

person is a citizen of the United States or an alien lawfully admitted for permanent residence in the United States, coverage 

that neither considers past, nor precludes future, lawful foreign 

travel by the person insured, and shall not decline such coverage based on past or future, lawful foreign travel by the person insured or charge a premium for such coverage that is excessive and not based on a good faith actuarial analysis, except 

that an insurer may decline or, upon inception or renewal of a 

policy, limit the amount of coverage provided under any life insurance policy based on plans to engage in future lawful foreign 

travel to occur within 12 months of such inception or renewal 

of the policy but only if, at time of application— (A) such declination is based on, or such limitation applies only with respect to, travel to a foreign destination— (i) for which the Director of the Centers for Disease 

Control and Prevention of the Department of Health 

and Human Services has issued a highest level alert or 

warning, including a recommendation against non-essential travel, due to a serious health-related condition; 

(ii) in which there is an ongoing military conflict involving the armed forces of a sovereign nation other 

than the nation to which the insured person is traveling; or 

(iii)(I) that the insurer has specifically designated in 

the terms of the life insurance policy at the inception 

of the policy or at renewal, as applicable; and 

(II) with respect to which the insurer has made a 

good-faith determination that—

(aa) a serious unlawful situation exists which is 

ongoing; and 

(bb) the credibility of information by which the 

insurer can verify the death of the insured person 

is compromised; and 

(B) in the case of any limitation of coverage, such limitation is specifically stated in the terms of the life insurance 

policy at the inception of the policy or at renewal, as applicable. 

(d) STATE RESIDUAL MARKET INSURANCE ENTITIES.—

(1) IN GENERAL.—The Secretary shall issue regulations, as 

soon as practicable after the date of enactment of this Act, that 

apply the provisions of this title to State residual market insurance entities and State workers’ compensation funds. 

(2) TREATMENT OF CERTAIN ENTITIES.—For purposes of the 

regulations issued pursuant to paragraph (1)— (A) a State residual market insurance entity that does 

not share its profits and losses with private sector insurers 

shall be treated as a separate insurer; and 


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72 

(B) a State residual market insurance entity that shares 

its profits and losses with private sector insurers shall not 

be treated as a separate insurer, and shall report to each 

private sector insurance participant its share of the insured 

losses of the entity, which shall be included in each private 

sector insurer’s insured losses. 

(3) TREATMENT OF PARTICIPATION IN CERTAIN ENTITIES.—Any 

insurer that participates in sharing profits and losses of a State 

residual market insurance entity shall include in its calculations of premiums any premiums distributed to the insurer by 

the State residual market insurance entity. 

(e) INSURED LOSS SHARED COMPENSATION.—

(1) FEDERAL SHARE.—

(A) CONVENTIONAL TERRORISM.—Except as provided in 

subparagraph (B), the Federal share of compensation under 

the Program to be paid by the Secretary for insured losses 

of an insurer during any additional Program Year shall be 

equal to the sum of—

(i) 85 percent of that portion of the amount of such 

insured losses that—

(I) exceeds the applicable insurer deductible required to be paid during such Program Year; and 

(II) based upon pro rata determinations pursuant to paragraph (2)(B), does not result in aggregate industry insured losses during such Program 

Year exceeding $100,000,000,000; and 

(ii) 100 percent of the insured losses of the insurer 

that, based upon pro rata determinations pursuant to 

paragraph (2)(B), result in aggregate industry insured 

losses during such Program Year exceeding 

$100,000,000,000, up to the limit under paragraph 

(2)(A). 

(B) NBCR TERRORISM.— (i) AMOUNT OF COMPENSATION.—The Federal share 

of compensation under the Program to be paid by the 

Secretary for insured losses of an insurer resulting 

from NBCR terrorism during any additional Program 

Year shall be equal to the sum of—

(I) the amount of qualified NBCR losses (as such 

term is defined in clause (ii)) of the insurer, multiplied by a percentage based on the aggregate industry qualified NBCR losses for the Program 

Year, which percentage shall be—

(aa) 85 percent of such aggregate industry 

qualified NBCR losses of less than 

$10,000,000,000; 

(bb) 87.5 percent of such aggregate industry 

qualified NBCR losses between 

$10,000,000,000 and $20,000,000,000; 

(cc) 90 percent of such aggregate industry 

qualified NBCR losses between 

$20,000,000,000 and $40,000,000,000; 

(dd) 92.5 percent of such aggregate industry 

qualified NBCR losses of between 

$40,000,000,000 and $60,000,000,000; and 


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73 

(ee) 95 percent of such aggregate industry 

qualified NBCR losses of more than 

$60,000,000,000; 

and shall be prorated per insurer based on each 

insurer’s percentage of the aggregate industry 

qualified NBCR losses for such additional Program Year; and 

(II) 100 percent of the insured losses of the insurer resulting from NBCR terrorism that, based 

upon pro rata determinations pursuant to paragraph (2)(B), result in aggregate industry insured 

losses during such Program Year exceeding 

$100,000,000,000, up to the limit under paragraph 

(2)(A). 

(ii) QUALIFIED NBCR LOSSES.—For purposes of this 

subparagraph, the term ‘‘qualified NBCR losses’’

means, with respect to insured losses of an insurer resulting from NBCR terrorism during an additional 

Program Year, that portion of the amount of such insured losses that—

(I) exceeds the applicable insurer deductible required to be paid during such Program Year; and 

(II) based upon pro rata determinations pursuant to paragraph (2)(B), does not result in aggregate industry insured losses during such Program 

Year exceeding $100,000,000,000. 

(C) PROGRAM TRIGGER.—In the case of a certified act of 

terrorism occurring after March 31, 2006, no compensation 

shall be paid by the Secretary under subsection (a), unless 

the aggregate industry insured losses resulting from such 

certified act of terrorism exceed $50,000,000, except that if 

a certified act of terrorism occurs for which resulting aggregate industry insured losses exceed $1,000,000,000, the applicable amount for any subsequent certified act of terrorism shall be the amount specified in section 

102(1)(B)(ii). 

(D) LIMITATION ON COMPENSATION FOR GROUP LIFE IN- SURANCE.—Notwithstanding any other provision of this 

Act, the Federal share of compensation under the Program 

paid by the Secretary for insured losses of an insurer resulting from coverage of any single certificate holder under 

any group life insurance coverages of the insurer may not 

during any additional Program Year exceed $1,000,000. 

(E) PROHIBITION ON DUPLICATIVE COMPENSATION.—The 

Federal share of compensation for insured losses under the 

Program shall be reduced by the amount of compensation 

provided by the Federal Government to any person under 

any other Federal program for those insured losses. 

(2) CAP ON ANNUAL LIABILITY.— (A) IN GENERAL.—Notwithstanding paragraph (1) or any 

other provision of Federal or State law, including any State 

workers’ compensation or other compulsory insurance law, 

if the aggregate amount of the Federal share of compensation to be paid to all insurers pursuant to paragraph (1) exceeds $100,000,000,000, during any additional Program 


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74 

Year (until such time as the Congress may act otherwise 

with respect to such losses)— (i) the Secretary shall not make any payment under 

this title for any portion of the amount of the aggregate 

insured losses during such Program Year for which the 

Federal share exceeds $100,000,000,000; and 

(ii) no insurer that has met its insurer deductible 

shall be liable for the payment of any portion of the aggregate insured losses during such Program Year that 

exceeds $100,000,000,000. 

(B) INSURER SHARE.—For purposes of subparagraph (A), 

the Secretary shall determine the pro rata share of insured 

losses to be paid by each insurer that incurs insured losses 

under the Program. 

(C) CLAIMS ALLOCATIONS.—The Secretary shall, by regulation, provide for insurers to allocate claims payments for 

insured losses under applicable insurance policies in any 

case described in subparagraph (A). Such regulations shall 

include provisions for payment, for the purpose of addressing emergency needs of applicable individuals affected by 

an act of terrorism, of a portion of claims for insured losses 

promptly upon filing of such claims. 

(3) LIMITATION ON INSURER FINANCIAL RESPONSIBILITY.— (A) LIMITATION.—Notwithstanding any other provision of 

Federal or State law, including any State workers’ compensation or other compulsory insurance law, an insurer’s 

financial responsibility for insured losses from acts of terrorism shall be limited to its applicable insurer deductible 

and its applicable share of insured losses that exceed its applicable insurer deductible, subject to the requirements of 

paragraph (2). 

(B) FEDERAL REIMBURSEMENT.—Notwithstanding any 

other provision of Federal or State law, the Secretary 

shall—

(i) reimburse insurers for any payment of excess insured losses made prior to publication of any notification pursuant to paragraph (4)(A); 

(ii) reimburse insurers for any payment of excess insured losses occurring on or after the date of any notification pursuant to paragraph (4)(A), but only to the extent that—

(I) such payment is ordered by a court pursuant 

to subparagraph (C) of this paragraph or is directed by State law, notwithstanding this paragraph, or by Federal law; 

(II) such payment is limited to compensating insurers for their payment of excess insured losses 

and does not include punitive damages, or litigation or other costs; and 

(III) the insurer has made a good-faith effort to 

defend against any claims for such payment; and 

(iii) have the right to intervene in any legal proceedings relating to such claims specified in clause 

(ii)(III). 

(C) FEDERAL COURT JURISDICTION.—


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75 

(i) CONDITIONS.—All claims relating to or arising out 

of an insurer’s financial responsibility for insured 

losses from acts of terrorism under this paragraph 

shall be within the original and exclusive jurisdiction 

of the district courts of the United States, in accordance with the procedures established in subparagraph 

(D), if the Secretary certifies that the following conditions have been met, or that there is a reasonable likelihood that the following conditions may be met: 

(I) The aggregate amount of the Federal share of 

compensation to be paid to all insurers pursuant to 

paragraph (1) exceeds $100,000,000,000, pursuant 

to paragraph (2); and 

(II) the insurer has paid its applicable insurer 

deductible and its pro rata share of insured losses 

determined pursuant to paragraph (2)(B). 

(ii) REMOVAL OF STATE COURT ACTIONS.—If the Secretary certifies that conditions set forth in subclauses 

(I) and (II) of clause (i) have been met, all pending 

State court actions that relate to or arise out of an insurer’s financial responsibility for insured losses from 

acts of terrorism under this paragraph shall be removed to a district court of the United States in accordance with subparagraph (D). 

(D) VENUE.—For each certification made by the Secretary 

pursuant to subparagraph (C)(i), not later than 90 days 

after the Secretary’s determination the Judicial Panel on 

Multidistrict Litigation shall designate one district court 

or, if necessary, multiple district courts of the United States 

that shall have original and exclusive jurisdiction over all 

actions for any claim relating to or arising out of an insurer’s financial responsibility for insured losses from acts of 

terrorism under this paragraph. 

(4) NOTICES REGARDING LOSSES AND ANNUAL LIABILITY CAP.—

(A) APPROACHING CAP.—If the Secretary determines estimated or actual aggregate Federal compensation to be paid 

pursuant to paragraph (1) equals or exceeds 

$80,000,000,000 during any Program Year, the Secretary 

shall promptly provide notification in accordance with subparagraph (D)— (i) of such estimated or actual aggregate Federal 

compensation to be paid; 

(ii) of the likelihood that such aggregate Federal 

compensation to be paid for such Program Year will 

equal or exceed $100,000,000,000; and 

(iii) that, pursuant to paragraph (2)(A)(ii), insurers 

are not required to make payments of excess insured 

losses. 

(B) EVENT LIKELY TO CAUSE LOSSES TO EXCEED CAP.—If 

any act of terrorism occurs that the Secretary determines is 

likely to cause estimated or actual aggregate Federal compensation to be paid pursuant to paragraph (1) to exceed 

$100,000,000,000 during any Program Year, the Secretary 

shall, not later than 10 days after such act, provide notification in accordance with subparagraph (D)—


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76 

(i) of such estimated or actual aggregate Federal 

compensation to be paid; and 

(ii) that, pursuant to paragraph (2)(A)(ii), insurers 

are not required to make payments for excess insured 

losses. 

(C) EXCEEDING CAP.—If the Secretary determines estimated or actual aggregate Federal compensation to be paid 

pursuant to paragraph (1) equals or exceeds 

$100,000,000,000 during any Program Year— (i) the Secretary shall promptly provide notification 

in accordance with subparagraph (D)— (I) of such estimated or actual aggregate Federal 

compensation to be paid; and 

(II) that, pursuant to paragraph (2)(A)(ii), insurers are not required to make payments for excess 

insured losses unless the Congress provides for 

payments for excess insured losses pursuant to 

clause (ii) of this subparagraph; and 

(ii) the Congress shall determine the procedures for 

and the source of any payments for such excess insured 

losses. 

(D) PARTIES NOTIFIED.—Notification is provided in accordance with this subparagraph only if notification is provided—

(i) to the Congress, in writing; and 

(ii) to insurers, by causing such notice to be published in the Federal Register. 

(E) DETERMINATIONS.—The Secretary shall make determinations regarding estimated and actual aggregate Federal compensation to be paid promptly after any act of terrorism as may be necessary to comply with this paragraph. 

(F) MANDATORY DISCLOSURE FOR INSURANCE CONTRACTS.—All policies for property and casualty insurance 

and group life insurance shall be deemed to contain a provision to the effect that no insurer that has met its applicable insurer deductible and its applicable share of insured 

losses that exceed its applicable insurer deductible but are 

not compensated pursuant to paragraph (1), shall be obligated to pay for any portion of excess insured loss. Notwithstanding the preceding sentence, insurers shall include a 

disclosure in their policies detailing the maximum level of 

Government assistance and the applicable insurer share. 

(5) FINAL NETTING.—The Secretary shall have sole discretion 

to determine the time at which claims relating to any insured 

loss or act of terrorism shall become final. 

(6) DETERMINATIONS FINAL.—Any determination of the Secretary under this subsection shall be final, unless expressly provided, and shall not be subject to judicial review. 

(7) INSURANCE MARKETPLACE AGGREGATE RETENTION

AMOUNT.—For purposes of paragraph (8), the insurance marketplace aggregate retention amount shall be— (A) for the period beginning on the first day of the Transition Period and ending on the last day of Program Year 

1, the lesser of— (i) $10,000,000,000; and 


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77 

(ii) the aggregate amount, for all insurers, of insured 

losses during such period; 

(B) for Program Year 2, the lesser of— (i) $12,500,000,000; and 

(ii) the aggregate amount, for all insurers, of insured 

losses during such Program Year; 

(C) for Program Year 3, the lesser of— (i) $15,000,000,000; and 

(ii) the aggregate amount, for all insurers, of insured 

losses during such Program Year; 

(D) for Program Year 4, the lesser of— (i) $25,000,000,000; and 

(ii) the aggregate amount, for all insurers, of insured 

losses during such Program Year; 

(E) for Program Year 5, the lesser of— (i) $27,500,000,000; and 

(ii) the aggregate amount, for all insurers, of insured 

losses during such Program Year; and 

(F) for each additional Program Year— (i) for property and casualty insurance, the lesser 

of— (I) $27,500,000,000; and 

(II) the aggregate amount, for all such insurance, of insured losses during such Program Year; 

and 

(ii) for group life insurance, the lesser of— (I) $5,000,000,000; and 

(II) the aggregate amount, for all such insurance, of insured losses during such Program Year. 

(8) RECOUPMENT OF FEDERAL SHARE.—

(A) MANDATORY RECOUPMENT AMOUNT.—For purposes of 

this paragraph, the mandatory recoupment amount for 

each of the Program Years referred to in subparagraphs (A) 

through (F) of paragraph (7) shall be the difference between—

(i) the applicable insurance marketplace aggregate 

retention amount under paragraph (7) for such Program Year; and 

(ii) the aggregate amount, for all applicable insurers 

(pursuant to subparagraph (E)), of insured losses during such Program Year that are not compensated by 

the Federal Government because such losses—

(I) are within the insurer deductible for the insurer subject to the losses; or 

(II) are within the portion of losses of the insurer 

that exceed the insurer deductible, but are not compensated pursuant to paragraph (1). 

(B) NO MANDATORY RECOUPMENT IF UNCOMPENSATED

LOSSES EXCEED APPLICABLE INSURANCE MARKETPLACE RE- TENTION.—Notwithstanding subparagraph (A), if the aggregate amount of uncompensated insured losses referred to in 

clause (ii) of such subparagraph for any Program Year referred to in any of subparagraphs (A) through (F) of paragraph (7) is greater than the applicable insurance marketplace aggregate retention amount under paragraph (7) for 


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such Program Year, the mandatory recoupment amount 

shall be $0. 

(C) MANDATORY ESTABLISHMENT OF SURCHARGES TO RECOUP MANDATORY RECOUPMENT AMOUNT.—The Secretary 

shall collect, for repayment of the Federal financial assistance provided in connection with all acts of terrorism (or 

acts of war, in the case of workers’ compensation) occurring 

during any of the Program Years referred to in any of subparagraphs (A) through (F) of paragraph (7), terrorism loss 

risk-spreading premiums in an amount equal to any mandatory recoupment amount for such Program Year. 

(D) DISCRETIONARY RECOUPMENT OF REMAINDER OF FINANCIAL ASSISTANCE.—To the extent that the amount of 

Federal financial assistance provided exceeds any mandatory recoupment amount, the Secretary may—

(i) recoup, through terrorism loss risk-spreading premiums, such additional amounts; or 

(ii) submit a report to the Congress identifying such 

amounts that the Secretary believes cannot be recouped, based on—

(I) the ultimate costs to taxpayers of no additional recoupment; 

(II) the economic conditions in the commercial 

marketplace, including the capitalization, profitability, and investment returns of the insurance industry and the current cycle of the insurance markets; 

(III) the affordability of commercial insurance 

for small- and medium-sized businesses; and 

(IV) such other factors as the Secretary considers 

appropriate. 

(E) SEPARATE RECOUPMENT.—‘‘The Secretary shall provide that—

(i) any recoupment under this paragraph of amounts 

paid for Federal financial assistance for insured losses 

for property and casualty insurance shall be applied to 

property and casualty insurance policies; and 

(ii) any recoupment under this paragraph of 

amounts paid for Federal financial assistance for insured losses for group life insurance shall be applied to 

group life insurance policies. 

(9) POLICY SURCHARGE FOR TERRORISM LOSS RISK-SPREADING

PREMIUMS.—

(A) POLICYHOLDER PREMIUM.—Subject to paragraph 

(8)(E), any amount established by the Secretary as a terrorism loss risk-spreading premium shall—

(i) be imposed as a policyholder premium surcharge 

on property and casualty insurance policies and group 

life insurance policies in force after the date of such establishment; 

(ii) begin with such period of coverage during the 

year as the Secretary determines appropriate; and 

(iii) be based on—


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79 

(I) a percentage of the premium amount charged 

for property and casualty insurance coverage 

under the policy; and 

(II) a percentage of the amount at risk for group 

life insurance coverage under the policy. 

(B) COLLECTION.—The Secretary shall provide for insurers to collect terrorism loss risk-spreading premiums and 

remit such amounts collected to the Secretary. 

(C) PERCENTAGE LIMITATION.—A terrorism loss riskspreading premium may not exceed, on an annual basis—

(i) with respect to property and casualty insurance, 

the amount equal to 3 percent of the premium charged 

under the policy; and 

(ii) with respect to group life insurance, the amount 

equal to 0.0053 percent of the amount at risk under the 

policy. 

(D) ADJUSTMENT FOR URBAN AND SMALLER COMMERCIAL

AND RURAL AREAS AND DIFFERENT LINES OF INSURANCE.—

(i) ADJUSTMENTS.—In determining the method and 

manner of imposing terrorism loss risk-spreading premiums, including the amount of such premiums, the 

Secretary shall take into consideration—

(I) the economic impact on commercial centers of 

urban areas, including the effect on commercial 

rents and commercial insurance premiums, particularly rents and premiums charged to small 

businesses, and the availability of lease space and 

commercial insurance within urban areas; 

(II) the risk factors related to rural areas and 

smaller commercial centers, including the potential 

exposure to loss and the likely magnitude of such 

loss, as well as any resulting cross-subsidization 

that might result; and 

(III) the various exposures to terrorism risk for 

different lines of insurance. 

(ii) RECOUPMENT OF ADJUSTMENTS.—Any mandatory 

recoupment amounts not collected by the Secretary because of adjustments under this subparagraph shall be 

recouped through additional terrorism loss risk-spreading premiums. 

(E) TIMING OF PREMIUMS.—The Secretary may adjust the 

timing of terrorism loss risk-spreading premiums to provide 

for equivalent application of the provisions of this title to 

policies that are not based on a calendar year, or to apply 

such provisions on a daily, monthly, or quarterly basis, as 

appropriate. 

(f) CAPTIVE INSURERS AND OTHER SELF-INSURANCE ARRANGEMENTS.—The Secretary may, in consultation with the NAIC or the 

appropriate State regulatory authority, apply the provisions of this 

title, as appropriate, to other classes or types of captive insurers and 

other self-insurance arrangements by municipalities and other entities (such as workers’ compensation self-insurance programs and 

State workers’ compensation reinsurance pools), but only if such application is determined before the occurrence of an act of terrorism 


ycherry on PRODPC74 with REPORTS
80 

in which such an entity incurs an insured loss and all of the provisions of this title are applied comparably to such entities. 

(g) REINSURANCE TO COVER EXPOSURE.— (1) OBTAINING COVERAGE.—This title may not be construed to 

limit or prevent insurers from obtaining reinsurance coverage 

for insurer deductibles or insured losses retained by insurers 

pursuant to this section, nor shall the obtaining of such coverage affect the calculation of such deductibles or retentions. 

(2) LIMITATION ON FINANCIAL ASSISTANCE.—The amount of financial assistance provided pursuant to this section shall not 

be reduced by reinsurance paid or payable to an insurer from 

other sources, except that recoveries from such other sources, 

taken together with financial assistance for the Transition Period or a Program Year provided pursuant to this section, may 

not exceed the aggregate amount of the insurer’s insured losses 

for such period. If such recoveries and financial assistance for 

the Transition Period or a Program Year exceed such aggregate 

amount of insured losses for that period and there is no agreement between the insurer and any reinsurer to the contrary, an 

amount in excess of such aggregate insured losses shall be returned to the Secretary. 

SEC. 104. 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; 

øand¿ 

(2) to prescribe regulations and procedures to effectively administer and implement the Program, and to ensure that all 

insurers and self-insured entities that participate in the Program are treated comparably under the Programø.¿; and 

(3) during the 90-day period beginning upon the certification 

of any act of terrorism, to issue such regulations as the Secretary considers necessary to carry out this Act without regard 

to the notice and comment provisions of section 553 of title 5, 

United States Code. 

* * * * * * * 

(h) ANNUAL ADJUSTMENT.— (1) IN GENERAL.—Notwithstanding any other provision of this 

title, the Secretary shall adjust, for the second additional Program Year and for each additional Program Year thereafter, 

based upon the percentage change in an appropriate index during the 12-month period preceding such Program Year, each of 

the following amounts (as such amount may have been previously adjusted): 

(A) The dollar amount in section 102(1)(B)(ii) (relating to 

act of terrorism). 

(B) The dollar amount in section 102(11)(J) (relating to 

aggregate industry insured losses in a previously impacted 

area). 

(C) The dollar amounts in subparagraphs (A) and (B) of 

section 103(e)(1) (relating to limitation on Federal share). 

(D) The dollar amounts in section 103(e)(1)(C) (relating 

to Program trigger). 


ycherry on PRODPC74 with REPORTS
81 

(E) The dollar amount in section 103(e)(1)(D) (relating to 

limitation on group life insurance compensation). 

(F) The dollar amounts in section 103(e)(2) (relating to 

cap on annual liability). 

(G) The dollar amounts in section 103(e)(3)(C) (relating 

to limitation on insurer financial liability). 

(H) The dollar amounts in section 103(e)(4) (relating to 

notices regarding losses and annual liability cap). 

(I) The dollar amounts in section 103(e)(7) (relating to insurance marketplace aggregate retention amount). 

(J) The dollar amounts in section 109(b)(1)(C) (relating 

to membership of Commission on Terrorism Insurance 

Risk). 

(2) PUBLICATION.—The Secretary shall make the dollar 

amounts for each additional Program Year, as adjusted pursuant to this subsection, publicly available in a timely manner. 

* * * * * * * 

SEC. 106. PRESERVATION PROVISIONS. 

(a) STATE LAW.—Nothing in this title shall affect the jurisdiction 

or regulatory authority of the insurance commissioner (or any 

agency or office performing like functions) of any State over any insurer or other person—

(1) except as specifically provided in this title; and 

(2) except that—

(A) * * * 

(B) during the period beginning on the date of enactment 

of this Act and ending on December 31, 2003, rates and 

forms for terrorism risk insurance covered by this title 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 title 

affects the ability of any State to invalidate a rate as excessive, inadequate, or unfairly discriminatory, and, with 

respect to forms, where a State has prior approval authority, it shall apply to allow subsequent review of such 

forms; øand¿ 

(C) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007 and ending on December 31, 2008, rates 

and forms for property and casualty insurance, and group 

life insurance, required by this title and providing coverage 

except for NBCR terrorism that are filed with any State 

shall not be subject to prior approval or a waiting period 

under any law of a State that would otherwise be applicable, except that nothing in this title affects the ability of any 

State to invalidate a rate as excessive, inadequate, or unfairly discriminatory, and, with respect to forms, where a 

State has prior approval authority, it shall apply to allow 

subsequent review of such forms; 

(D) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007, and ending on December 31, 2009, forms 

for property and casualty insurance, and group life insurance, covered by this title and providing coverage for NBCR 


ycherry on PRODPC74 with REPORTS
82 

terrorism that are filed with any State, to the extent of the 

addition of such coverage for NBCR terrorism and where 

such coverage was not previously required, shall not be 

subject to prior approval or waiting period under any law 

of a State that would otherwise be applicable; 

(E) during the period beginning on the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007, and ending on December 31, 2010, rates 

for property and casualty insurance, and group life insurance, covered by this title and providing coverage for NBCR 

terrorism that are filed with any State, to the extent of the 

addition of such coverage for NBCR terrorism and where 

such coverage was not previously required, shall not be 

subject to prior approval or waiting period under any law 

of a State that would otherwise be applicable, except that 

nothing in this title affects the ability of any State to invalidate a rate as inadequate or unfairly discriminatory; and 

ø(C)¿ (F) 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 108, including authority in 

subsection 108(b), books and records of any insurer that 

are relevant to the Program shall be provided, or caused 

to be provided, to the Secretary, upon request by the Secretary, notwithstanding any provision of the laws of any 

State prohibiting or limiting such access. 

* * * * * * * 

(c) RULE OF CONSTRUCTION REGARDING INSURER COORDINATION.—Nothing in this Act shall be construed to prohibit, restrict, 

or otherwise limit an insurer from entering into an arrangement 

with another insurer to make available coverage for any portion of 

insured losses to fulfill the requirements of section 103(c). The Secretary shall develop, in consultation with the NAIC, minimum financial solvency standards and other standards the Secretary determines appropriate with respect to such arrangements. Nothing in 

this subsection shall be construed to establish any legal partnership. 

SEC. 106A. TERRORISM BUY-DOWN FUND. 

(a) ESTABLISHMENT.—The Secretary shall establish a Terrorism 

Buy-Down Fund (in this section referred to as the ‘‘Fund’’) that 

shall make available additional terrorism coverage for the insured 

losses of insurers, which shall be available for purchase by insurers 

on a voluntary basis. 

(b) PURCHASE OF DEDUCTIBLE, CO-SHARE, AND TRIGGER BUYDOWN COVERAGE.—

(1) IN GENERAL.—An insurer may purchase deductible, coshare, and pre-trigger buy-down coverage (in this section referred to as ’buy-down coverage’) through the Fund by making 

an election, in advance, to treat some or all of the premiums it 

has disclosed pursuant to section 103(b)(2) as fee charges for 

the Program imposed by the Secretary and remitting such 

amounts to the Fund. 

(2) LIMITS.—An insurer may not purchase buy-down coverage 

in an amount greater than the lesser of—

(A) the highest amount specified in section 103(e)(1)(C); 

and 


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83 

(B) the insurer’s one-in-one-hundred-year risk exposure to 

acts of terrorism. 

(c) BUY-DOWN COVERAGE.—The Fund shall provide the buy-down 

coverage to an insurer for losses for acts of terrorism, without application of the insurer deductible and in addition to any otherwise 

payable Federal share of compensation pursuant to section 103(e). 

(d) BUILD-UP.—The buy-down coverage that shall be payable to 

an insurer for qualifying losses shall be the aggregate of the insurer’s buy-down coverage premiums plus interest accrued on such 

amounts. 

(e) USE BY INSURERS.— (1) QUALIFYING LOSSES.—For the purpose of this section, 

qualifying losses are insured losses by an insurer that are not 

excess losses and that do not include amounts for which Federal financial assistance pursuant to section 103(e) is received, 

notwithstanding any limits otherwise applicable regarding section 103(e)(1)(C) (regarding program triggers) or section 102(11) 

(regarding insurer deductibles). 

(2) USE OF BUY-DOWN COVERAGE.—An insurer may use any 

buy-down coverage payments received under subsection (f) to 

satisfy—

(A) the applicable insurer deductibles for the insurer; 

(B) the portion of the insurer’s losses that exceed the insurer deductible but are not compensated by the Federal 

share; and 

(C) the insurer’s obligations to pay for insured losses if 

the Program trigger under section 103(e)(1)(C) is not satisfied. 

(3) BUY-DOWN COVERAGE DOES NOT REDUCE FEDERAL COSHARE.—The receipt by an insurer of buy-down coverage under 

this section for insured losses shall not be considered with respect to calculating the insurer’s insured losses with respect to 

the insurer’s deductible and eligibility for Federal financial assistance pursuant to section 103(e). 

(4) INSOLVENCY.—An insurer may sell its rights to buy-down 

coverage from the Fund to another insurer as part of or to avoid 

an insolvency or as part of a merger, sale, or major reorganization. 

(f) PAYMENT OF BUY-DOWN COVERAGE.—The Fund shall pay the 

qualifying losses of an insurer purchasing buy-down coverage up to 

the amount described in subsection (d). 

(g) GOVERNMENT BORROWING.—The Secretary may borrow the 

funds from the Fund to offset, in whole or in part, the Federal share 

of compensation provided to all insurers under the Program, except 

that—

(1) the Fund shall always immediately provide any buy-down 

coverage payments required under subsection (f); and 

(2) any such amounts borrowed must be replenished with appropriate interest. 

(h) RISK-SHARING MECHANISMS.—The Secretary shall establish 

voluntary risk-sharing mechanisms for insurers purchasing buydown coverage from the Fund to pool their reinsurance purchases 

and otherwise share terrorism risk. 

(i) TERMINATION.—Upon termination of the Program under section 108, and subject to the Secretary’s continuing authority under 


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84 

section 108(b) to adjust claims in satisfaction under the Program, 

the Secretary shall provide that the Fund shall become a privatelyoperated mutual terrorism reinsurance company owned by the insurers that have submitted buy-down coverage premiums in proportion to such premiums minus any buy-down coverage payments received. 

* * * * * * * 

SEC. 108. TERMINATION OF PROGRAM. 

(a) TERMINATION OF PROGRAM.—The Program shall terminate on 

øDecember 31, 2007¿ December 31, 2022. 

* * * * * * * 

(c) REPEAL; SAVINGS CLAUSE.—This title is repealed on the final 

termination date of the Program under subsection (a), except that 

such repeal shall not be construed— (1) to prevent the Secretary from taking, or causing to be 

taken, such actions under subsection (b) of this section, øparagraph (4), (5), (6), (7), or (8)¿ paragraph (5), (6), (7), (8), or (9) 

of section 103(e), or subsection (a)(1), (c), (d), or (e) of section 

104, as in effect on the day before the date of such repeal, or 

applicable regulations promulgated thereunder, during any period in which the authority of the Secretary under subsection 

(b) of this section is in effect; or 

* * * * * * * 

ø(e) ANALYSIS OF MARKET CONDITIONS FOR TERRORISM RISK IN- SURANCE.— ø(1) IN GENERAL.—The President’s Working Group on Financial Markets, in consultation with the National Association of 

Insurance Commissioners, representatives of the insurance industry, representatives of the securities industry, and representatives of policy holders, shall perform an analysis regarding the long-term availability and affordability of insurance for terrorism risk, including—

ø(A) group life coverage; and 

ø(B) coverage for chemical, nuclear, biological, and radiological events. 

ø(2) REPORT.—Not later than September 30, 2006, the President’s Working Group on Financial Markets shall submit a report to the Committee on Banking, Housing, and Urban Affairs 

of the Senate and the Committee on Financial Services of the 

House of Representatives on its findings pursuant to the analysis conducted under subsection (a).¿ 

(e) ANALYSIS OF MARKET CONDITIONS FOR TERRORISM RISK INSURANCE.—

(1) IN GENERAL.—The Secretary, in consultation with the 

NAIC, representatives of the insurance industry, representatives 

of the securities industry, and representatives of policyholders, 

shall perform an analysis regarding the long-term availability 

and affordability of insurance for terrorism risk in the private 

marketplace, including coverage for—

(A) property and casualty insurance; 

(B) group life insurance; 

(C) workers’ compensation; 


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85 

(D) nuclear, biological, chemical, and radiological events; 

and 

(E) commercial real estate. 

(2) BIENNIAL REPORTS.—The Secretary shall submit biennial 

reports to the Committee on Financial Services of the House of 

Representatives and the Committee on Banking, Housing, and 

Urban Affairs of the Senate, on its findings pursuant to the 

analysis conducted under paragraph (1). The first such report 

shall be submitted not later than the expiration of the 24-month 

period beginning on the date of the enactment of the Terrorism 

Risk Insurance Revision and Extension Act of 2007. 

(3) TESTIMONY.—Upon submission of each biennial report 

under paragraph (2), the Secretary shall provide oral testimony 

to the Committee on Financial Services of the House of Representatives and Committee on Banking, Housing, and Urban 

Affairs of the United States Senate regarding the report and the 

analysis under this subsection for which the report is submitted. 

SEC. 109. COMMISSION ON TERRORISM RISK INSURANCE. 

(a) ESTABLISHMENT.—There is hereby established the Commission 

on Terrorism Risk Insurance (in this section referred to as the 

‘‘Commission’’). 

(b) MEMBERSHIP.—

(1) The Commission shall consist of 21 members, as follows: 

(A) The Secretary of the Treasury or the designee of the 

Secretary. 

(B) One member who is a State insurance commissioner, 

designated by the NAIC. 

(C) 15 members, who shall be appointed by the President, 

who shall include—

(i) a representative of group life insurers; 

(ii) a representative of property and casualty insurers 

with direct earned premium of $1,000,000,000 or less; 

(iii) a representative of property and casualty insurers with direct earned premium of more than 

$1,000,000,000; 

(iv) a representative of multiline insurers; 

(v) a representative of independent insurance agents; 

(vi) a representative of insurance brokers; 

(vii) a policyholder representative; 

(viii) a representative of the survivors of the victims 

of the attacks of September 11, 2001; 

(ix) a representative of the reinsurance industry; 

(x) a representative of workers’ compensation insurers; 

(xi) a representative from the commercial mortgagebacked securities industry; 

(xii) a representative from a nationally recognized 

statistical rating organization; 

(xiii) a real estate developer; 

(xiv) a representative of workers’ compensation insurers created by State legislatures, selected in consultation with the American Association of State Compensation Insurance Funds from among its members; and 


ycherry on PRODPC74 with REPORTS
86 

(xv) a representative from the commercial real estate 

brokerage industry or the commercial property management industry. 

(D) Four members, who shall serve as liaisons to the 

Congress, who shall include two members jointly selected 

by the Chairman and Ranking Member of the Committee 

on Financial Services of the House of Representatives and 

two members jointly selected by the Chairman and Ranking Member of the Committee on Banking, Housing, and 

Urban Affairs of the Senate. 

(2) SECRETARY.—The Program Director of the Terrorism Risk 

Insurance Act of the Department of the Treasury shall serve as 

Secretary of the Commission. The Secretary of the Commission 

shall determine the manner in which the Commission shall operate, including funding and staffing. 

(c) DUTIES.—

(1) IN GENERAL.—The Commission shall identify and make 

recommendations regarding—

(A) possible actions to encourage, facilitate, and sustain 

provision by the private insurance industry in the United 

States of affordable coverage for losses due to an act or acts 

of terrorism; 

(B) possible actions or mechanisms to sustain or supplement the ability of the insurance industry in the United 

States to cover losses resulting from acts of terrorism in the 

event that—

(i) such losses jeopardize the capital and surplus of 

the insurance industry in the United States as a whole; 

or 

(ii) other consequences from such acts occur, as determined by the Commission, that may significantly affect 

the ability of the insurance industry in the United 

States to cover such losses independently; and 

(C) possible actions to significantly reduce the Federal 

role in covering losses resulting from acts of terrorism. 

(2) EVALUATIONS.—In identifying and making the recommendations required under paragraph (1), the Commission 

shall specifically evaluate the utility and viability of proposals 

aimed at improving the availability of insurance against terrorism risk in the private marketplace. 

(3) INITIAL MEETING.—The Commission shall hold its first 

meeting during the 3-month period that begins 15 months after 

the date of the enactment of the Terrorism Risk Insurance Revision and Extension Act of 2007. 

(4) REPORTS.—

(A) CONTENTS.—The Commission shall submit two reports to the Congress that—

(i) evaluate and make recommendations regarding 

whether there is a need for a Federal terrorism risk insurance program; 

(ii) if so, include a specific, detailed recommendation 

for the replacement of the Program under this title; 

and 

(iii) include the identifications, evaluations, and recommendations required under paragraphs (1) and (2). 


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87 

(B) TIMING.—The first report required under subparagraph (A) shall be submitted before the expiration of the 60- 

month period beginning on the date of the enactment of the 

Terrorism Risk Insurance Revision and Extension Act of 

2007. The second such report shall be submitted before the 

expiration of the 96-month period beginning upon such 

date of enactment. 

* * * * * * * 


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(88) 

ADDITIONAL REPUBLICAN VIEWS 

Enacted after the September 11, 2001 terrorist attacks, the Terrorism Risk Insurance Act (TRIA) was intended to be ‘‘a temporary 

Federal program . . . to allow for a transitional period for the private market to stabilize, resume pricing of [terrorism] insurance, 

and build capacity.’’ Subsequently, Congress recognized the need 

for a short-term extension of this new program to curb uncertainty 

and maintain market stability. To ensure that the taxpayers’ liability under TRIA would not become permanent, several mechanisms 

were included to phase out the Federal subsidy over time, including: increasing the insurer deductibles from 7 to 20 percent, increasing the program trigger from $5 million to $100 million, increasing the insurer co-share from 10 to 15 percent, increasing industry retention from $10 billion to $27.5 billion, and narrowing 

lines of coverage. 

TRIA has successfully fulfilled its mandate. According to a report 

by the President’s Working Group on Financial Markets, as the 

Federal subsidies for terrorism insurance have been slowly phased 

out, take-up rates have risen, prices have declined, reinsurance has 

expanded, and the private marketplace has been successfully diversifying and absorbing additional risk exposure. Unfortunately, H.R. 

2761 radically revises TRIA, changing it from a temporary handup into a permanent hand-out. Instead of continuing to expand the 

private sector role in the marketplace, H.R. 2761 turns the program on its head, shifting the responsibility from a majority-private sector program to a more government-run program with taxpayers on the hook for massive increased potential liabilities. 

While Republicans authored the original TRIA proposals and 

continue to strongly support extending it for a reasonable period of 

time, H.R. 2761 goes in the wrong direction with respect to the 

proper balance between private and public sector participation. The 

15 year program extension is too long for such an enormous taxpayer liability—particularly with the terrorist threat continuing to 

rapidly evolve. The phase-out of the Federal role and narrowing of 

scope under current law would be largely reversed, the program 

trigger halved, and required deductibles and co-shares would be 

dramatically reduced for insurance companies. While deductibles 

would continue to slightly increase annually, they are reset below 

Year 1 levels, with the rate of increase not bringing the deductibles 

even close to current levels until long after the 15 year extension. 

Despite H.R. 2761’s vast expansion of TRIA’s federal subsidies, 

Committee Republicans and Democrats worked together in a number of critical areas to provide more protection from terrorist 

threats in the marketplace. For example, many of the provisions of 

H.R. 2761 protecting policyholders from domestic threats and nuclear, biological, chemical, and radiological (NBCR) risks were initially developed in TRIA extension legislation that passed the 


ycherry on PRODPC74 with REPORTS
89 

House last Congress. Republicans were also successful in getting 

several important amendments adopted to add more market reforms to TRIA, encourage the long-term build-up of dedicated terrorism surplus, protect taxpayers, increase private sector responsibility, and better implement the NBCR mandates. 

For example, the manager’s amendment to H.R. 2761 offered by 

Chairman Frank at the Committee markup contained several key 

Republican provisions to create a transition period for implementation of the new NBCR requirements, better balance the application 

of insurance company deductibles, and allow insurers to accumulate and pool dedicated long-term terrorism reserves for their 

deductibles and co-shares. State forms requirements for NBCR terrorism coverage not previously required will be exempt from state 

review for the first two years as the NBCR marketplace adjusts 

and evolves. State price controls will be partly preempted for three 

years to allow insurers to charge appropriate rates for NBCR coverage as they adjust their risk portfolios during this transition period, although states will still be permitted to invalidate a rate as 

inadequate or unfairly discriminatory. Insurers are allowed to voluntarily participate in a terrorism buy-down fund, to lower their liability for deductibles and co-shares after an event by contributing 

premiums to a fund that would accumulate interest over time. The 

funds can be pooled to help create additional capacity over time, 

particularly to help insurers absorb the increasing deductibles or 

increases in the Program trigger. These reforms are based on 

amendments offered by Rep. Richard Baker at the Capital Markets, Insurance, and Government Sponsored Enterprises Subcommittee markup of H.R. 2761, and will especially benefit smaller 

insurers, who may find it difficult to initially price and set aside 

reserves for NBCR coverage. 

In addition to the Manager’s Amendment, the Committee approved two Republican amendments that improve the ability of insurers to comply with the NBCR make-available mandate. Rep. 

Kenny Marchant offered a measure clarifying that an insurer may 

partner with another insurer with a comparable credit rating to 

provide NBCR coverage. This will allow insurers that may find it 

more difficult to offer NBCR coverage without risking insolvency or 

a ratings downgrade to continue offering commercial property and 

casualty insurance in high-risk areas. Rep. Donald Manzullo had 

an amendment accepted to allow exemptions to the NBCR makeavailable mandate for small insurers that demonstrate a likelihood 

of insolvency in the case of nuclear, biological, chemical, or radiological terrorism. This amendment allows small insurers to continue offering their underlying coverage to policyholders even 

though the NBCR mandate would otherwise magnify their risk exposure and force a significant coverage contraction. These reforms 

will ease the implementation of the NBCR mandates for covered 

lines under the TRIA program. It should be noted that TRIA does 

not provide a backstop for homeowners’ insurance or other personal 

lines, and NBCR risks are expected to continue to be excluded from 

most homeowners’ policies. Past Committee reports have suggested 

that NBCR is a relatively uninsurable risk absent some form of 

government backstop. 


ycherry on PRODPC74 with REPORTS
90 

Republican amendments were also accepted to better protect taxpayers from bearing the brunt of an expanded TRIA program. Rep. 

Michele Bachmann offered an amendment directing Treasury to either require full taxpayer recoupment of any Federal payouts to 

cover terrorism losses, or to report to Congress on why full 

recoupment is not appropriate, based on such factors as cost to taxpayers, the economic environment, and insurance affordability for 

small- and mediumsized companies. Full recoupment is a vital 

component of any TRIA extension. While mandatory 100% payback 

of the taxpayers has been included in every previous Committeepassed TRIA bill, requiring Treasury to either recoup such 

amounts or report to Congress why and to what extent such full 

recoupment cannot be made is an improvement over the introduced 

language of H.R. 2761. The Committee also adopted an amendment 

offered by Rep. Scott Garrett increasing the TRIA deductible each 

year for events over $1 billion by one-half a percentage point each 

year (50 basis points), with a reset mechanism to bring the 

deductibles back down if another major terrorist event occurred. 

Deductibles have increased by at least 2.5% each year since the 

creation of TRIA. Though the new increase is much more modest, 

adding at least some increase to H.R. 2761 ensures that private 

sector responsibility will continue to grow and the Federal subsidy 

decline over time. Rep. Ginny Brown-Waite also offered a fiscal responsibility amendment designed to reduce taxpayer exposure to 

terrorism losses. Under this amendment, Treasury is directed to 

index the TRIA program—including the trigger and cap—to adjust 

each year for inflation. This will ensure that the dollar amounts do 

not decline in actual value each year, protecting the government 

and taxpayers from having to intervene in relatively small events 

that do not threaten the functioning or solvency of the marketplace. 

The vast majority of Republicans remain strongly committed to 

TRIA and its extension for a reasonable length of time. H.R. 2761 

includes a number of important reforms that have been developed 

as the result of bipartisan efforts over several years. It is my hope 

that H.R. 2761 can be rebalanced, either on the House Floor or in 

conference with the Senate, to better reflect its intended temporary 

and private sector focused nature. TRIA is working extremely well 

today. Its Federal subsidies should not be increased, but rather 

slowly decreased to encourage private sector solutions and innovation. If this goal can be achieved, final passage of TRIA will have 

overwhelming bipartisan support. 

SPENCER BACHUS, Ranking Member. 


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DISSENTING VIEWS OF RON PAUL ON H.R. 2761 

Six years ago, when the Congress considered the bill creating the 

terrorism insurance program, I urged my colleagues to reject it. 

One of the reasons I opposed the bill was my concern that, contrary 

to the claims of the bill’s supporters, terrorism insurance would not 

be allowed to sunset. As I said then: 

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.’’

I am disappointed to be proven correct. I am also skeptical that, 

having renewed the program twice, this time for fifteen years, Congress will ever allow it to expire. 

As Congress considers extending this program, I renew my opposition to it for substantially the same reasons I stated six years 

ago. However, I do have a suggestion on how to improve the program. Since one claimed problem with allowing the private market 

to provide terrorism insurance is the difficulty of quantifying the 

risk of an attack, the taxpayers’ liability under the terrorism reinsurance program should be reduced for an attack occurring when 

the country is under orange or red alert. After all, because the 

point of the alert system is to let Americans know when there is 

an increased likelihood of an attack it is reasonable to expect insurance companies to demand that their clients take extra precautionary measures during periods of high alert. Reducing taxpayer subsidies will provide an incentive to ensure private parties 

take every possible precaution to minimize the potential damage 

from possible terrorists attack. 

Since my fundamental objections to the program remain the 

same as six years ago, I am attaching my statement regarding H.R. 

3210, which created the terrorist insurance program in the 107th 

Congress: 

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. 


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Under H.R. 3210, taxpayers are responsible for paying 90% 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 reVerDate Aug 31 2005 13:46 Sep 07, 2007 Jkt 059006 PO 00000 Frm 00092 Fmt 6604 Sfmt 6604 E:\HR\OC\HR318.XXX HR318

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duces 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 an American taxpayer. 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. 

RON PAUL. 

Æ 


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