I 

113TH CONGRESS 

2D SESSION H. R. 4871 

To reauthorize the Terrorism Risk Insurance Act of 2002, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 17, 2014 

Mr. NEUGEBAUER (for himself and Mr. WESTMORELAND) introduced the 

following bill; which was referred to the Committee on Financial Services 

A BILL 

To reauthorize the Terrorism Risk Insurance Act of 2002, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘TRIA Reform Act of 2014’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. References. 

Sec. 3. Extension of program. 

Sec. 4. Certification of acts of terrorism. 

Sec. 5. Separate treatment of conventional terrorism from NBCR terrorism. 

Sec. 6. Availability of coverage. 

Sec. 7. Terrorism loss risk-spreading premiums amount. 


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Sec. 8. Increase of aggregate retention amount; mandatory recoupment. 

Sec. 9. Terrorism loss risk-spreading premium. 

Sec. 10. Risk-sharing mechanisms. 

Sec. 11. Reporting of terrorism insurance data. 

Sec. 12. Delivery of notices to policyholders. 

Sec. 13. Definition of control. 

Sec. 14. Annual study of small insurer market competitiveness. 

Sec. 15. CBO and OMB studies regarding budgeting for costs of Federal insurance programs. 

Sec. 16. GAO study on upfront premiums and capital reserve fund. 

1 SEC. 2. REFERENCES. 

2 Except as otherwise expressly provided, wherever in 

3 this Act an amendment or repeal is expressed in terms 

4 of an amendment to, or repeal of, a section or other provi5 sion, the reference shall be considered to be made to a 

6 section or other provision of the Terrorism Risk Insurance 

7 Act of 2002 (15 U.S.C. 6701 note). 

8 SEC. 3. EXTENSION OF PROGRAM. 

9 (a) IN GENERAL.—Subsection (a) of section 108 (15 

10 U.S.C. 6701 note) is amended by striking ‘‘December 31, 

11 2014’’ and inserting ‘‘December 31, 2019’’. 

12 (b) PROGRAM YEARS.—Subparagraph (G) of section 

13 102(11) (15 U.S.C. 6701 note) is amended by striking 

14 ‘‘2014’’ and inserting ‘‘2019’’. 

15 SEC. 4. CERTIFICATION OF ACTS OF TERRORISM. 

16 (a) IN GENERAL.—Paragraph (1) of section 102 (15 

17 U.S.C. 6701 note) is amended— 

18 (1) in subparagraph (A), in the matter pre19 ceding clause (I), by striking ‘‘concurrence with the 


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1 Secretary of State’’ and inserting ‘‘consultation with 

2 the Secretary of Homeland Security’’; 

3 (2) in subparagraph (B)— 

4 (A) in clause (I), by striking ‘‘; or’’ and in5 serting a period; 

6 (B) by striking clause (ii); and 

7 (C) by striking ‘‘terrorism if—’’ and all 

8 that follows through ‘‘(I) the act’’ and inserting 

9 ‘‘terrorism if the act’’; 

10 (3) by redesignating subparagraphs (C) and 

11 (D) as subparagraphs (E) and (G), respectively; 

12 (4) by inserting after subparagraph (B) the fol13 lowing new subparagraph: 

14 ‘‘(C) TIMING OF CERTIFICATION.— 

15 ‘‘(I) PRELIMINARY CERTIFICATION

16 NOTICE.—The Secretary shall issue a pre17 liminary certification notice indicating 

18 whether an act is expected to be a certified 

19 act of terrorism not later than 15 days 

20 after— 

21 ‘‘(I) the date of the occurrence of 

22 a potential act of terrorism; or 

23 ‘‘(II) the receipt of a petition 

24 seeking a preliminary certification de25 cision submitted by an insurer having 


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1 an in-force policy or policies that 

2 could be affected by a certification de3 cision. 

4 ‘‘(ii) FINAL CERTIFICATION NO5 TICE.—Not later than 90 days after the 

6 date of the occurrence of a potential act of 

7 terrorism or the receipt of a petition sub8 mitted to the Secretary pursuant to clause 

9 (I)(II), the Secretary shall issue a final 

10 certification notice indicating whether an 

11 act is a certified act of terrorism for pur12 poses of this Act. 

13 ‘‘(iii) RULE OF CONSTRUCTION.— 

14 Failure to issue a preliminary certification 

15 notice under clause (I) shall not prevent 

16 the Secretary from issuing a final certifi17 cation notice under clause (ii).’’; and 

18 (5) by inserting before subparagraph (G), as so 

19 redesignated by paragraph (3) of this subsection, the 

20 following new subparagraph: 

21 ‘‘(F) FAILURE TO MAKE DETERMINA22 TION.—If the Secretary does not certify, or 

23 make a determination not to certify, an act as 

24 an act of terrorism before the expiration of the 

25 90-day period beginning on the occurrence of 


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1 such act, such act shall be treated for purposes 

2 of this Act as having been determined by the 

3 Secretary not to be an act of terrorism and 

4 such determination shall be final and shall not 

5 be subject to judicial review.’’. 

6 (b) APPLICABILITY.—The amendments made by sub7 section (a) shall apply to the Program Year for the Ter8 rorism Insurance Program established by title I of the 

9 Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 

10 note) that begins on January 1, 2015, and Program Years 

11 thereafter. 

12 SEC. 5. SEPARATE TREATMENT OF CONVENTIONAL TER13 RORISM FROM NBCR TERRORISM. 

14 (a) DEFINITION.— 

15 (1) IN GENERAL.—Section 102 (15 U.S.C. 

16 6701 note) is amended— 

17 (A) in paragraph (1), by inserting after 

18 subparagraph (C), as added by section 4(a)(4) 

19 of this Act, the following new subparagraph: 

20 ‘‘(D) ACT OF NBCR TERRORISM.—Each 

21 certification of an act of terrorism under sub22 paragraph (A) shall include a determination of 

23 whether such act involves NBCR terrorism.’’; 


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1 (B) by redesignating paragraphs (9) 

2 through (16) as paragraphs (10) through (17), 

3 respectively; and 

4 (C) by inserting after paragraph (8) the 

5 following new paragraph: 

6 ‘‘(9) NBCR TERRORISM.—Notwithstanding 

7 paragraph (1), the term ‘NBCR terrorism’ means an 

8 act of terrorism to the extent that the insured losses 

9 involve, regardless of any other cause or event that 

10 contributes concurrently or in any sequence to such 

11 insurance loss— 

12 ‘‘(A) an act of terrorism that is carried out 

13 by means of the dispersal or application of ra14 dioactive material, or through the use of a nu15 clear weapon or device that involves or produces 

16 a nuclear reaction, nuclear radiation, or radio17 active contamination; 

18 ‘‘(B) the release of radioactive material, 

19 and it appears that one purpose of the act of 

20 terrorism was to release such material; 

21 ‘‘(C) an act of terrorism that is carried out 

22 by means of the dispersal or application of 

23 pathogenic or poisonous biological or chemical 

24 material; or 


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1 ‘‘(D) the release of pathogenic or poi2 sonous biological or chemical material, and it 

3 appears that one purpose of the act of ter4 rorism was to release such material.’’. 

5 (2) APPLICABILITY.—The amendments made 

6 by paragraph (1) shall apply to the Program Year 

7 for the Terrorism Insurance Program established by 

8 title I of the Terrorism Risk Insurance Act of 2002 

9 (15 U.S.C. 6701 note) that begins on January 1, 

10 2016, and Program Years thereafter. 

11 (b) FEDERAL SHARE OF INSURED LOSS COMPENSA12 TION.—Subparagraph (A) of section 103(e)(1) (15 U.S.C. 

13 6701 note) is amended— 

14 (1) by striking ‘‘The Federal share’’ and insert15 ing ‘‘Subject to subparagraphs (B) and (C), the 

16 Federal share’’; 

17 (2) by striking ‘‘an insurer during the Transi18 tion period’’ and inserting the following: ‘‘an in19 surer— 

20 ‘‘(I) during the Transition period,’’; 

21 (3) by inserting ‘‘through the Program Year 

22 ending on December 31, 2015,’’ after ‘‘each Pro23 gram Year thereafter’’; 

24 (4) by striking the period at the end and insert25 ing ‘‘; and’’; and 


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1 (5) by adding at the end the following new 

2 clause: 

3 ‘‘(ii) shall be equal to— 

4 ‘‘(I) except as provided in sub5 clause (II)— 

6 ‘‘(aa) during the Program 

7 Year beginning on January 1, 

8 2016, 84 percent of that portion 

9 of the amount of such insured 

10 losses that exceeds the applicable 

11 insurer deductible required to be 

12 paid during such Program Year; 

13 ‘‘(bb) during the Program 

14 Year beginning on January 1, 

15 2017, 83 percent of that portion 

16 of the amount of such insured 

17 losses that exceeds the applicable 

18 insurer deductible required to be 

19 paid during such Program Year; 

20 ‘‘(cc) during the Program 

21 Year beginning on January 1, 

22 2018, 82 percent of that portion 

23 of the amount of such insured 

24 losses that exceeds the applicable 

25 insurer deductible required to be 


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1 paid during such Program Year; 

2 and 

3 ‘‘(dd) during the Program 

4 Year beginning on January 1, 

5 2019, 80 percent of that portion 

6 of the amount of such insured 

7 losses that exceeds the applicable 

8 insurer deductible required to be 

9 paid during such Program Year; 

10 and 

11 ‘‘(II) in the case of insured losses 

12 resulting from acts of NBCR ter13 rorism, during the Program Year be14 ginning on January 1, 2016, and each 

15 Program Year thereafter, 85 percent 

16 of that portion of the amount of such 

17 insured losses that exceeds the appli18 cable insurer deductible required to be 

19 paid during such Program Year.’’. 

20 (c) PROGRAM TRIGGER.—Subparagraph (B) of sec21 tion 103(e)(1) (15 U.S.C. 6701 note) is amended— 

22 (1) in the matter preceding clause (I)— 

23 (A) by striking ‘‘a certified act’’ and in24 serting ‘‘certified acts’’; and 


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1 (B) by striking ‘‘such certified act’’ and in2 serting ‘‘such certified acts’’; 

3 (2) in clause (I) by striking ‘‘or’’ at the end; 

4 (3) in clause (ii), by striking the period at the 

5 end and inserting the following ‘‘through the Pro6 gram Year ending on December 31, 2015; or’’; 

7 (4) by adding at the end the following: 

8 ‘‘(iii)(I) except as provided in sub9 clause (II)— 

10 ‘‘(aa) $200,000,000, with respect 

11 to such insured losses occurring in the 

12 Program Year beginning on January 

13 1, 2016; 

14 ‘‘(bb) $300,000,000, with respect 

15 to such insured losses occurring in the 

16 Program Year beginning on January 

17 1, 2017; 

18 ‘‘(cc) $400,000,000, with respect 

19 to such insured losses occurring in the 

20 Program Year beginning on January 

21 1, 2018; and 

22 ‘‘(dd) $500,000,000, with respect 

23 to such insured losses occurring in the 

24 Program Year beginning on January 

25 1, 2019; and 


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1 ‘‘(II) in the case of an act of NBCR 

2 terrorism, $100,000,000, with respect to 

3 such insured losses occurring in the Pro4 gram Year beginning on January 1, 2016, 

5 or any Program Year thereafter.’’; and 

6 (5) by adding after and below clause (iii), as 

7 added by paragraph (4) of this subsection, the fol8 lowing: 

9 ‘‘In determining the aggregate industry insured 

10 losses resulting from certified acts of terrorism 

11 for purposes of this subparagraph, the Sec12 retary shall not consider any act of terrorism 

13 resulting, in the aggregate, in less than 

14 $50,000,000 in insured losses.’’. 

15 SEC. 6. AVAILABILITY OF COVERAGE. 

16 Subsection (c) of section 103 (15 U.S.C. 6701 note) 

17 is amended to read as follows: 

18 ‘‘(c) MANDATORY AVAILABILITY.— 

19 ‘‘(1) IN GENERAL.—Except as provided in para20 graph (2), during each Program Year, each entity 

21 that meets the definition of an insurer under section 

22 102 shall make available— 

23 ‘‘(A) in all of its property and casualty in24 surance policies, coverage for insured losses; 

25 and 


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1 ‘‘(B) property and casualty insurance cov2 erage for insured losses that does not differ ma3 terially from the terms, amounts, and other cov4 erage limitations applicable to losses arising 

5 from events other than acts of terrorism. 

6 ‘‘(2) NO MANDATORY AVAILABILITY FOR SMALL

7 INSURERS.—The Secretary shall provide, by regula8 tion and in consultation with State insurance regu9 latory authorities, that paragraph (1) shall not apply 

10 for a Program Year with respect to any small in11 surer (as such term is defined in such regulations by 

12 the Secretary) that, at the option of the insurer, 

13 makes a request for such inapplicability for such 

14 Program Year to the appropriate State insurance 

15 regulatory authority for the State in which such in16 surer is domiciled and is determined by such State 

17 insurance regulatory authority to meet such require18 ments for financial hardship or financial infeasibility 

19 of providing coverage for insured losses as the Sec20 retary shall establish in such regulations. The in21 surer shall provide notice, in a manner satisfactory 

22 to the State insurance regulatory authority, inform23 ing affected prospective and current policyholders 

24 whether such coverage is not provided by the in25 surer. This paragraph may not be construed to reVerDate Mar 15 2010 03:41 Jun 18, 2014 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4871.IH H4871

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1 quire any State insurance regulatory authority to 

2 undertake making determinations under this para3 graph.’’. 

4 SEC. 7. TERRORISM LOSS RISK-SPREADING PREMIUMS 

5 AMOUNT. 

6 (a) IN GENERAL.—Subparagraph (C) of section 

7 103(e)(7) (15 U.S.C. 6701 note) is amended— 

8 (1) by striking ‘‘subparagraphs (A) through 

9 (E)’’ and inserting ‘‘subparagraphs (A) through 

10 (F)’’; and 

11 (2) by striking ‘‘133 percent’’ and inserting 

12 ‘‘150 percent’’. 

13 (b) APPLICABILITY.—The amendment made by sub14 section (a) shall apply to the Program Year for the Ter15 rorism Insurance Program established by title I of the 

16 Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 

17 note) that begins on January 1, 2016, and Program Years 

18 thereafter. 

19 SEC. 8. INCREASE OF AGGREGATE RETENTION AMOUNT; 

20 MANDATORY RECOUPMENT. 

21 (a) IN GENERAL.—Paragraph (6) of section 103(e) 

22 (15 U.S.C. 6701 note) is amended— 

23 (1) in subparagraph (D)(ii), by striking ‘‘and’’ 

24 at the end; 

25 (2) in subparagraph (E)— 


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1 (A) in the matter preceding clause (I), by 

2 inserting ‘‘through the Program Year ending on 

3 December 31, 2015’’ before the comma; and 

4 (B) in clause (ii), by striking the period at 

5 the end and inserting ‘‘; and’’; and 

6 (3) by adding at the end the following new sub7 paragraph: 

8 ‘‘(F) for the Program Year beginning Jan9 uary 1, 2016, and each Program Year there10 after, the lesser of— 

11 ‘‘(I) the amount that is equal to the 

12 sum of the insurer deductibles for the Pro13 gram Year for all insurers participating in 

14 the Program; and 

15 ‘‘(ii) the aggregate amount, for all in16 surers, of insured losses during such Pro17 gram Year.’’. 

18 (b) MANDATORY RECOUPMENT.— 

19 (1) AMOUNT; TIMING.—Paragraph (7) of sec20 tion 103(e) (15 U.S.C. 6701 note) is amended— 

21 (A) by striking subparagraphs (A) and (B) 

22 and inserting the following new subparagraph: 

23 ‘‘(A) MANDATORY RECOUPMENT

24 AMOUNT.—For purposes of this paragraph, the 

25 mandatory recoupment amount for each of the 


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1 periods referred to in subparagraphs (A) 

2 through (F) of paragraph (6) shall be equal to 

3 the lesser of— 

4 ‘‘(I) the aggregate amount, for all in5 surers, of insured losses during such period 

6 that are compensated by the Federal Gov7 ernment pursuant to paragraph (1); or 

8 ‘‘(ii) the insurance marketplace aggre9 gate retention amount under paragraph 

10 (6) for such period.’’; 

11 (B) in subparagraph (E)(I)(III), by strik12 ing ‘‘after January 1, 2012’’ and inserting ‘‘be13 fore December 31, 2014’’; and 

14 (C) by redesignating subparagraphs (C), 

15 (D), (E) (as so amended), and (F) as subpara16 graphs (B), (C), (D), and (E), respectively. 

17 (2) CONFORMING AMENDMENTS.—Section 

18 103(e) (15 U.S.C. 6701 note) is amended— 

19 (A) in paragraph (7)(D)(I), as so redesig20 nated by paragraph (1)(B) of this subsection, 

21 by striking ‘‘subparagraph (C)’’ and inserting 

22 ‘‘subparagraph (B)’’; and 

23 (B) in paragraph (8)— 


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1 (I) in subparagraph (C), by striking 

2 ‘‘paragraph (7)(D)’’ and inserting ‘‘para3 graph (7)(C)’’; and 

4 (ii) in subparagraph (D)(ii), by strik5 ing ‘‘paragraph (7)(E)’’ and inserting 

6 ‘‘paragraph (7)(D)’’. 

7 SEC. 9. TERRORISM LOSS RISK-SPREADING PREMIUM. 

8 (a) IN GENERAL.—Section 103(e) (15 U.S.C. 6701 

9 note) is amended by striking paragraph (8) and inserting 

10 the following new paragraph: 

11 ‘‘(8) TERRORISM LOSS RISK-SPREADING PRE12 MIUMS.— 

13 ‘‘(A) ESTABLISHMENT.—After an act of 

14 terrorism, the Secretary shall, to the extent pro15 vided in subparagraph (7)(C), and may, to the 

16 extent provided in subparagraph (7)(D), estab17 lish terrorism loss risk-spreading premiums, 

18 which shall be imposed as a policyholder pre19 mium surcharge on property and casualty in20 surance policies for all participating insurers in 

21 force after the date of such establishment. 

22 ‘‘(B) COLLECTION.—The Secretary shall 

23 provide for insurers to collect terrorism loss 

24 risk-spreading premiums and remit such 

25 amounts collected to the Secretary. 


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1 ‘‘(C) DETERMINATION OF PREMIUMS.—In 

2 determining the method and manner of impos3 ing terrorism loss risk-spreading premiums, in4 cluding the amount of such premiums, the Sec5 retary shall— 

6 ‘‘(I) impose such terrorism loss risk7 spreading premiums beginning with such 

8 period of coverage during the year as the 

9 Secretary determines appropriate, but shall 

10 commence imposition of such premiums 

11 not later than 18 months after the occur12 rence of the act of terrorism for which 

13 such premiums are imposed; 

14 ‘‘(ii) base any terrorism loss risk15 spreading premium on a percentage of the 

16 premium amount charged for property and 

17 casualty insurance coverage under the pol18 icy; and 

19 ‘‘(iii) take into consideration— 

20 ‘‘(I) the economic impact on com21 mercial centers of urban areas, includ22 ing the effect on commercial rents and 

23 commercial insurance premiums, par24 ticularly rents and premiums charged 

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1 ability of lease space and commercial 

2 insurance within urban areas; 

3 ‘‘(II) the risk factors related to 

4 rural areas and smaller commercial 

5 centers, including the potential expo6 sure to loss and the likely magnitude 

7 of such loss, as well as any resulting 

8 cross-subsidization that might result; 

9 and 

10 ‘‘(III) the various exposures to 

11 terrorism risk for different lines of in12 surance. 

13 ‘‘(D) PERCENTAGE LIMITATION.—A ter14 rorism loss risk-spreading premium collected on 

15 a discretionary basis pursuant to paragraph 

16 (7)(D) shall not be less than, on an annual 

17 basis, the amount equal to 3 percent of the pre18 mium charged for property and casualty insur19 ance coverage under the policy. 

20 ‘‘(E) TIMING OF PREMIUMS.—The Sec21 retary may adjust the timing of terrorism loss 

22 risk-spreading premiums to provide for equiva23 lent application of the provisions of this title to 

24 policies that are not based on a calendar year, 


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1 or to apply such provisions on a daily, monthly, 

2 or quarterly basis, as appropriate.’’. 

3 (b) APPLICABILITY.—The amendment made by sub4 section (a) shall apply to the Program Year for the Ter5 rorism Insurance Program established by title I of the 

6 Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 

7 note) that begins on January 1, 2016, and Program Years 

8 thereafter. 

9 SEC. 10. RISK-SHARING MECHANISMS. 

10 (a) IN GENERAL.—Section 103(e) (15 U.S.C. 6701 

11 note) is amended by adding at the end the following new 

12 paragraph: 

13 ‘‘(9) RISK-SHARING MECHANISMS.— 

14 ‘‘(A) FINDING; RULE OF CONSTRUC15 TION.—The Congress finds that it is desirable 

16 to encourage the growth of nongovernmental, 

17 private market reinsurance capacity for protec18 tion against losses arising from acts of ter19 rorism. Therefore, nothing in this title shall 

20 prohibit insurers from developing risk-sharing 

21 mechanisms (including mutual reinsurance fa22 cilities and agreements, use of the capital mar23 kets, and insurance-linked securities) to volun24 tarily reinsure terrorism losses between and 


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1 among themselves that are not subject to reim2 bursement under this section. 

3 ‘‘(B) ESTABLISHMENT OF ADVISORY COM4 MITTEE.—The Secretary shall appoint an Advi5 sory Committee to— 

6 ‘‘(I) encourage the creation and devel7 opment of such risk-sharing mechanisms; 

8 ‘‘(ii) assist the Secretary and be avail9 able to administer such risk-sharing mech10 anisms; and 

11 ‘‘(iii) develop articles of incorporation, 

12 bylaws, and a plan of operation for any 

13 long-term reinsurance facility authorized or 

14 created in the future. 

15 ‘‘(C) MEMBERSHIP.—The Advisory Com16 mittee shall be composed of nine members who 

17 are directors, officers, or other employees of in18 surers, reinsurers, or capital market partici19 pants that are participating or that desire to 

20 participate in such mechanisms, and who are 

21 representative of the affected sectors of the in22 surance industry, including commercial property 

23 insurance, commercial casualty insurance, rein24 surance, and alternative risk transfer indus25 tries.’’. 


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1 (b) APPLICABILITY.—The amendment made by sub2 section (a) shall apply to the Program Year for the Ter3 rorism Insurance Program established by title I of the 

4 Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 

5 note) that begins on January 1, 2015, and Program Years 

6 thereafter. 

7 SEC. 11. REPORTING OF TERRORISM INSURANCE DATA. 

8 Section 104 (15 U.S.C. 6701 note) is amended by 

9 adding at the end the following new subsection: 

10 ‘‘(h) REPORTING OF TERRORISM INSURANCE

11 DATA.— 

12 ‘‘(1) AUTHORITY.—During the Program Year 

13 beginning on January 1, 2016, and in each Program 

14 Year thereafter, the Secretary shall require insurers 

15 participating in the Program to submit to the Sec16 retary such information regarding insurance cov17 erage for terrorism losses of such insurers as the 

18 Secretary considers appropriate to analyze the effec19 tiveness of the Program, which shall include infor20 mation regarding— 

21 ‘‘(A) lines of insurance with exposure to 

22 such losses; 

23 ‘‘(B) premiums earned on such coverage; 

24 ‘‘(C) geographical location of exposures; 

25 ‘‘(D) pricing of such coverage; 


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1 ‘‘(E) the take-up rate for such coverage; 

2 ‘‘(F) the amount of private reinsurance for 

3 acts of terrorism purchased; and 

4 ‘‘(G) such other matters as the Secretary 

5 considers appropriate. 

6 ‘‘(2) REPORTS.—Not later than 6 months after 

7 the termination of the Program Year beginning on 

8 January 1, 2016, and not later than 6 months after 

9 the termination of each Program Year thereafter, 

10 the Secretary shall submit a report to the Com11 mittee on Financial Services of the House of Rep12 resentatives and the Committee on Banking, Hous13 ing, and Urban Affairs of the Senate that includes— 

14 ‘‘(A) an analysis of the overall effectiveness 

15 of the Program; 

16 ‘‘(B) an evaluation of any changes or 

17 trends in the data collected under paragraph 

18 (1); 

19 ‘‘(C) an evaluation of whether any aspects 

20 of the Program have the effect of discouraging 

21 or impeding insurers from providing commercial 

22 property casualty insurance coverage or cov23 erage for acts of terrorism; 

24 ‘‘(D) an evaluation of the impact of the 

25 Program on workers’ compensation insurers; 


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1 ‘‘(E) an evaluation of the impact on avail2 ability and affordability of terrorism insurance 

3 coverage and fiscal protection of the taxpayers 

4 of separate Federal treatment under the Pro5 gram for nuclear, biological, chemical, and radi6 ological terrorism; and 

7 ‘‘(F) in the case of the data reported in 

8 paragraph (1)(B), an updated estimate of the 

9 total amount earned since the commencement 

10 of Program Year 1. 

11 ‘‘(3) PROTECTION OF DATA.—To the extent 

12 possible, the Secretary shall contract with an insur13 ance statistical aggregator to collect the information 

14 described in paragraph (1), which shall keep any 

15 nonpublic information confidential and provide it to 

16 the Secretary in an aggregate form or in such other 

17 form or manner that does not permit identification 

18 of the insurer submitting such information. 

19 ‘‘(4) ADVANCE COORDINATION.—Before col20 lecting any data or information under paragraph (1) 

21 from an insurer, or affiliate of an insurer, the Sec22 retary shall coordinate with the appropriate State in23 surance regulatory authorities or their representa24 tives and any relevant government agency or publicly 

25 available sources to determine if the information to 


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1 be collected is available from, and may be obtained 

2 in a timely manner by, individually or collectively, 

3 such entities. If the Secretary determines that such 

4 data or information is available, and may be ob5 tained in a timely matter, from such entities, the 

6 Secretary shall obtain the data or information from 

7 such entities. If the Secretary determines that such 

8 data or information is not so available, the Secretary 

9 may collect such data or information from an in10 surer and affiliates. 

11 ‘‘(5) CONFIDENTIALITY.— 

12 ‘‘(A) RETENTION OF PRIVILEGE.—The 

13 submission of any non-publicly available data 

14 and information to the Secretary and the shar15 ing of any non-publicly available data with or 

16 by the Secretary among other Federal agencies, 

17 the State insurance regulatory authorities and 

18 their collective agents, or any other entities 

19 under this subsection shall not constitute a 

20 waiver of, or otherwise affect, any privilege aris21 ing under Federal or State law (including the 

22 rules of any Federal or State court) to which 

23 the data or information is otherwise subject. 

24 ‘‘(B) CONTINUED APPLICATION OF PRIOR

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1 ment under Federal or State law to the extent 

2 otherwise applicable, or any requirement pursu3 ant to a written agreement in effect between 

4 the original source of any non-publicly available 

5 data or information and the source of such data 

6 or information to the Secretary, regarding the 

7 privacy or confidentiality of any data or infor8 mation in the possession of the source to the 

9 Secretary, shall continue to apply to such data 

10 or information after the data or information 

11 has been provided pursuant to this subsection. 

12 ‘‘(C) INFORMATION-SHARING AGREE13 MENT.—Any data or information obtained by 

14 the Secretary under this subsection may be 

15 made available to State insurance regulatory 

16 authorities, individually or collectively through 

17 an information-sharing agreement that— 

18 ‘‘(I) shall comply with applicable Fed19 eral law; and 

20 ‘‘(ii) shall not constitute a waiver of, 

21 or otherwise affect, any privilege under 

22 Federal or State law (including any privi23 lege referred to in subparagraph (A) and 

24 the rules of any Federal or State court) to 


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1 which the data or information is otherwise 

2 subject. 

3 ‘‘(D) AGENCY DISCLOSURE REQUIRE4 MENTS.—Section 552 of title 5, United States 

5 Code, including any exceptions thereunder, shall 

6 apply to any data or information submitted 

7 under this subsection to the Secretary by an in8 surer or affiliate of an insurer.’’. 

9 SEC. 12. DELIVERY OF NOTICES TO POLICYHOLDERS. 

10 Section 103(b)(2) (15 U.S.C. 6701 note) is amend11 ed— 

12 (1) in subparagraph (B), by striking ‘‘, pur13 chase,’’; and 

14 (2) in subparagraph (C), by striking ‘‘, pur15 chase,’’. 

16 SEC. 13. DEFINITION OF CONTROL. 

17 Paragraph (3) of section 102 (15 U.S.C. 6701 note) 

18 is amended— 

19 (1) by redesignating subparagraphs (A), (B), 

20 and (C) as clauses (I), (ii), and (iii), respectively and 

21 realigning such clauses, as so redesignated, so as to 

22 be indented six ems from the left margin; 

23 (2) in the matter preceding clause (I) (as so re24 designated), by striking ‘‘An entity has’’ and insert25 ing the following: 


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1 ‘‘(A) IN GENERAL.—An entity has’’; and 

2 (3) by adding at the end the following new sub3 paragraph: 

4 ‘‘(B) RULE OF CONSTRUCTION.—An enti5 ty, including any affiliate thereof, does not have 

6 control over another entity if, as of the date of 

7 the enactment of the TRIA Reform Act of 

8 2014, the entity is acting as an attorney-in-fact, 

9 as defined by the Secretary, for the other entity 

10 and such other entity is a reciprocal insurer, 

11 provided that the entity is not, for reasons 

12 other than the attorney-in-fact relationship, de13 fined as having control under subparagraph 

14 (A).’’. 

15 SEC. 14. ANNUAL STUDY OF SMALL INSURER MARKET COM16 PETITIVENESS. 

17 Section 108 (15 U.S.C. 6701 note) is amended by 

18 adding at the end the following new subsection: 

19 ‘‘(h) STUDY OF SMALL INSURER MARKET COMPETI20 TIVENESS.— 

21 ‘‘(1) IN GENERAL.—The Secretary shall con22 duct an annual study of small insurers participating 

23 in the Program, and identify any competitive chal24 lenges small insurers face in the terrorism risk in25 surance marketplace, including— 


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1 ‘‘(A) changes to the market share, pre2 mium volume, and policyholder surplus of small 

3 insurers relative to large insurers; 

4 ‘‘(B) how the property and casualty insur5 ance market for terrorism risk differs between 

6 small and large insurers, and whether such a 

7 difference exists within other perils; 

8 ‘‘(C) the impact of the Program’s manda9 tory availability requirement under section 

10 103(c) and the voluntary opt-out for small in11 surers; 

12 ‘‘(D) the effect of increasing the trigger 

13 amount for the Program under section 

14 103(e)(1)(B)(iii)(I) on small insurers; 

15 ‘‘(E) the availability and cost of private re16 insurance for small insurers; and 

17 ‘‘(F) the impact that State workers com18 pensation laws have on small insurers, particu19 larly the impact of mandatory, non-excludable 

20 participation and unlimited financial liability. 

21 ‘‘(2) TIMING AND REPORT.—The Secretary 

22 shall complete the first study under paragraph (1) 

23 and submit a report to the Congress setting forth 

24 the findings and conclusions of the study not later 

25 than June 30, 2016, and shall complete an annual 


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1 study under paragraph (1) and submit a report re2 garding such study to the Congress by June 1 annu3 ally thereafter.’’. 

4 SEC. 15. CBO AND OMB STUDIES REGARDING BUDGETING 

5 FOR COSTS OF FEDERAL INSURANCE PRO6 GRAMS. 

7 Not later than the expiration of the 12-month period 

8 beginning on the date of the enactment of this Act, the 

9 Director of the Congressional Budget Office and the Di10 rector of the Office of Management and Budget shall 

11 each— 

12 (1) conduct a study to determine the feasibility 

13 of applying accrual accounting concepts to budgeting 

14 for the costs of the Terrorism Risk Insurance Pro15 gram and for the costs of the other Federal insur16 ance programs; and 

17 (2) submit a report regarding such study to the 

18 Committees on the Budget of the House of Rep19 resentatives and the Senate, which shall include a 

20 recommendation specifically addressing the feasi21 bility of applying fair value concepts to budgeting 

22 for the costs of Federal insurance programs, includ23 ing the Terrorism Risk Insurance Program. 


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1 SEC. 16. GAO STUDY ON UPFRONT PREMIUMS AND CAPITAL 

2 RESERVE FUND. 

3 (a) STUDY.—Not later than 2 years after the date 

4 of the enactment of this Act, the Comptroller General of 

5 the United States shall complete a study on the viability 

6 of the Federal Government— 

7 (1) assessing and collecting upfront premiums 

8 on insurers that participate in the Terrorism Risk 

9 Insurance Program established under the Terrorism 

10 Risk Insurance Act of 2002 (15 U.S.C. 6701 note) 

11 (in this section referred to as the ‘‘Program’’), which 

12 shall include a comparison of practices in inter13 national markets to assess and collect premiums ei14 ther before or after terrorism losses are incurred; 

15 and 

16 (2) creating a capital reserve fund under the 

17 Program and requiring insurers participating in the 

18 Program to dedicate capital specifically for terrorism 

19 losses before such losses are incurred, which shall in20 clude a comparison of practices in international mar21 kets to establish reserve funds. 

22 (b) REQUIRED CONTENT.—The study required under 

23 subsection (a) shall examine, but shall not be limited to, 

24 the following issues: 

25 (1) UPFRONT PREMIUMS.—With respect to up26 front premiums described in subsection (a)(1)— 


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1 (A) how the Federal Government could de2 termine the price of such upfront premiums on 

3 insurers that participate in the Program; 

4 (B) how the Federal Government could col5 lect such upfront premiums; 

6 (C) how the Federal Government could en7 sure that such upfront premiums are not spent 

8 for purposes other than satisfying claims 

9 through the Program; 

10 (D) how the assessment and collection of 

11 such upfront premiums could affect take-up 

12 rates for terrorism risk coverage in different re13 gions and industries; 

14 (E) the effect of collecting such upfront 

15 premiums on the private market for terrorism 

16 risk reinsurance; and 

17 (F) the size of the Federal Government 

18 subsidy insurers currently receive through their 

19 participation in the Program. 

20 (2) CAPITAL RESERVE FUND.—With respect to 

21 the capital reserve fund described in subsection 

22 (a)(2)— 

23 (A) how the creation of a capital reserve 

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1 ance Program and the ability of the Program to 

2 meet its statutory purposes; 

3 (B) how a capital reserve fund would im4 pact insurers and reinsurers, including liquidity, 

5 insurance pricing, and capacity to provide ter6 rorism risk coverage; 

7 (C) the feasibility of segregating funds at8 tributable to terrorism risk from funds attrib9 utable to other insurance lines; 

10 (D) how a capital reserve fund would be 

11 viewed and treated under current Financial Ac12 counting Standards Board accounting rules and 

13 the tax laws; and 

14 (E) how a capital reserve fund would affect 

15 the States’ ability to regulate insurers partici16 pating in the Program. 

17 (3) INTERNATIONAL PRACTICES.—With respect 

18 to international markets referred to in paragraphs 

19 (1) and (2) of subsection (A), how other countries, 

20 if any— 

21 (A) have established terrorism insurance 

22 structures; 

23 (B) charge premiums or otherwise collect 

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1 ance structures, including risk and administra2 tive costs; and 

3 (C) have established capital reserve funds 

4 to pay for the costs of terrorism insurance 

5 structures. 

6 (4) DURATION.—With respect to the capital re7 serve fund described in subsection (a)(2), how the 

8 duration of the Program would affect the viability of 

9 such capital reserve fund. 

10 (c) REPORT.—Upon completion of the study required 

11 under subsection (a), the Comptroller General shall sub12 mit a report on the results of such study to the Committee 

13 on Banking, Housing, and Urban Affairs of the Senate 

14 and the Committee on Financial Services of the House of 

15 Representatives. 

16 (d) PUBLIC AVAILABILITY.—The study and report 

17 required under this section shall be made available to the 

18 public in electronic form and shall be published on the 

19 website of the Government Accountability Office. 

Æ 


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