109TH CONGRESS 

1ST SESSION S. 467

AMENDMENT

In the House of Representatives, U. S.,

December 7, 2005.

Resolved, That the bill from the Senate (S. 467) entitled 

‘‘An Act to extend the applicability of the Terrorism Risk Insurance Act of 2002’’, do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Terrorism Risk Insur3 ance Revision Act of 2005’’. 

4 SEC. 2. EXTENSION OF PROGRAM AND PROGRAM CHANGES. 

5 (a) IN GENERAL.—Title I of the Terrorism Risk Insur6 ance Act of 2002 (15 U.S.C. 6701 note) is amended—

7 (1) by striking sections 101 through 107 and in8 serting the following new sections: 

9 ‘‘SEC. 101. CONGRESSIONAL FINDINGS AND PURPOSE. 

10 ‘‘(a) FINDINGS.—The Congress finds that—

11 ‘‘(1) the ability of businesses and individuals to 

12 obtain property, casualty, group life, and NBCR in13 surance at reasonable and predictable prices, in order 

14 to spread the risk of both routine and catastrophic 

15 loss, is critical to economic growth, urban develop-
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1 ment, and the construction and maintenance of public 

2 and private housing, as well as to the promotion of 

3 United States exports and foreign trade in an in4 creasingly interconnected world; 

5 ‘‘(2) property, casualty, and life insurance firms 

6 are important financial institutions, the products of 

7 which allow mutualization of risk and the efficient 

8 use of financial resources and enhance the ability of 

9 the economy to maintain stability, while responding 

10 to a variety of economic, political, environmental, 

11 and other risks with a minimum of disruption; 

12 ‘‘(3) the ability of the insurance industry to 

13 cover the unprecedented financial risks presented by 

14 potential acts of terrorism in the United States can 

15 be a major factor in the recovery from terrorist at16 tacks, while maintaining the stability of the economy; 

17 ‘‘(4) widespread financial market uncertainties 

18 have arisen following the terrorist attacks of Sep19 tember 11, 2001, including the absence of information 

20 from which financial institutions can make statis21 tically valid estimates of the probability and cost of 

22 future terrorist events, and therefore the size, funding, 

23 and allocation of the risk of loss caused by such acts 

24 of terrorism; 
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1 ‘‘(5) a decision by property, casualty, group life, 

2 and NBCR insurers to deal with such uncertainties, 

3 either by terminating property, casualty, group life, 

4 or NBCR coverage for losses arising from terrorist 

5 events, or by radically escalating premium coverage 

6 to compensate for risks of loss that are not readily 

7 predictable, could seriously hamper ongoing and 

8 planned construction, property acquisition, and other 

9 business projects, generate a dramatic increase in 

10 rents, and otherwise suppress economic activity; and 

11 ‘‘(6) the United States Government should pro12 vide temporary financial compensation to insured 

13 parties, contributing to the stabilization of the United 

14 States economy in a time of national crisis, while the 

15 financial services industry develops the systems, 

16 mechanisms, products, and programs necessary to cre17 ate a viable financial services market for private ter18 rorism risk insurance. 

19 ‘‘(b) PURPOSE.—The purpose of this title is to estab20 lish a temporary Federal program that provides for a trans21 parent system of shared public and private compensation 

22 for insured losses resulting from acts of terrorism, in order 

23 to—

24 ‘‘(1) protect consumers by addressing market dis25 ruptions and ensure the continued widespread avail-
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1 ability and affordability of property, casualty, group 

2 life, and NBCR insurance for terrorism risk; and 

3 ‘‘(2) allow for a transitional period for the pri4 vate markets to stabilize, resume pricing of such in5 surance, and build capacity to absorb any future 

6 losses, while preserving State insurance regulation 

7 and consumer protections. 

8 ‘‘SEC. 102. DEFINITIONS. 

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

10 ‘‘(1) ACT OF TERRORISM.—

11 ‘‘(A) CERTIFICATION.—The term ‘act of ter12 rorism’ means any act that is certified by the 

13 Secretary, in concurrence with the Secretary of 

14 State, and the Attorney General of the United 

15 States—

16 ‘‘(i) to be an act of terrorism; 

17 ‘‘(ii) to be a violent act or an act that 

18 is dangerous to—

19 ‘‘(I) human life; 

20 ‘‘(II) property; or 

21 ‘‘(III) infrastructure; 

22 ‘‘(iii) to have resulted in damage with23 in the United States, or outside of the 

24 United States in the case of—
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1 ‘‘(I) an air carrier or vessel de2 scribed in paragraph (5)(B); or 

3 ‘‘(II) the premises of a United 

4 States mission; and 

5 ‘‘(iv) to have been committed by an in6 dividual or individuals as part of an effort 

7 to coerce the civilian population of the 

8 United States or to influence the policy or 

9 affect the conduct of the United States Gov10 ernment by coercion. 

11 ‘‘(B) LIMITATION.—No act shall be certified 

12 by the Secretary as an act of terrorism if the act 

13 is committed as part of the course of a war de14 clared by the Congress, except that this clause 

15 shall not apply with respect to any coverage for 

16 workers’ compensation or group life insurance. 

17 ‘‘(C) DETERMINATIONS FINAL.—Any certifi18 cation of, or determination not to certify, an act 

19 as an act of terrorism under this paragraph 

20 shall be final. 

21 ‘‘(D) NONDELEGATION.—The Secretary may 

22 not delegate or designate to any other officer, em23 ployee, or person, any determination under this 

24 paragraph of whether, during the effective period 

25 of the Program, an act of terrorism has occurred. 
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1 ‘‘(2) AFFILIATE.—The term ‘affiliate’ means, 

2 with respect to an insurer, any insurer that owns, is 

3 owned by, or is under common ownership with an4 other insurer. 

5 ‘‘(3) CASUALTY INSURANCE.—The term ‘casualty 

6 insurance’ means—

7 ‘‘(A) insurance, including excess insurance 

8 and surety insurance, against legal liability for 

9 losses caused by the death, injury, or disability 

10 of any person or for damage to property, with 

11 provision for medical, hospital and surgical ben12 efits to the injured persons; and 

13 ‘‘(B) for the purposes of this Act, does not 

14 include any type of commercial automobile or 

15 workers’ compensation insurance. 

16 ‘‘(4) COVERED LINE OF INSURANCE.—The term 

17 ‘covered line of insurance’ means—

18 ‘‘(A) commercial property insurance, com19 mercial casualty insurance, workers’ compensa20 tion insurance and group life insurance; and 

21 ‘‘(B) does not include—

22 ‘‘(i) Federal crop insurance issued or 

23 reinsured under the Federal Crop Insurance 

24 Act (7 U.S.C. 1501 et seq.), or any other 
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1 type of crop or livestock insurance that is 

2 privately issued or reinsured; 

3 ‘‘(ii) private mortgage insurance (as 

4 that term is defined in section 2 of the 

5 Homeowners Protection Act of 1998 (12 

6 U.S.C. 4901)) or title insurance; 

7 ‘‘(iii) financial guaranty insurance 

8 issued by monoline financial guaranty in9 surance corporations; 

10 ‘‘(iv) insurance for medical mal11 practice; 

12 ‘‘(v) health or life insurance, except 

13 group life insurance; 

14 ‘‘(vi) flood insurance provided under 

15 the National Flood Insurance Act of 1968 

16 (42 U.S.C. 4001 et seq.); 

17 ‘‘(vii) reinsurance or retrocessional re18 insurance; or 

19 ‘‘(viii) commercial automobile insur20 ance. 

21 ‘‘(5) DIRECT EARNED PREMIUM.—The term ‘di22 rect earned premium’ means a direct earned premium 

23 for commercial property, commercial casualty, work24 ers’ compensation, or group life insurance issued by 

25 any insurer for insurance against losses occurring at 
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1 the locations described in subparagraphs (A) and (B) 

2 of paragraph (10). 

3 ‘‘(6) EXEMPT COMMERCIAL PURCHASER.—The 

4 term ‘exempt commercial purchaser’ means any per5 son purchasing commercial insurance that meets the 

6 following requirements: 

7 ‘‘(A) The person employs or retains a quali8 fied risk manager to negotiate insurance cov9 erage. 

10 ‘‘(B) The person pays annual aggregate na11 tionwide insurance premiums in excess of 

12 $100,000 for covered lines of insurance. 

13 ‘‘(C) The person meets at least one of the 

14 following criteria: 

15 ‘‘(i) The person possesses a net worth 

16 in excess of $10,000,000. 

17 ‘‘(ii) The person generates annual reve18 nues in excess of $10,000,000. 

19 ‘‘(iii) The person employs more than 

20 100 full-time or full-time equivalent em21 ployees per individual insured or is a mem22 ber of affiliated group employing more than 

23 250 employees in the aggregate. 

24 ‘‘(iv) The person is a not-for-profit or25 ganization or public entity generating an-
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1 nual budgeted expenditures of at least 

2 $25,000,000. 

3 ‘‘(v) The person is a municipality with 

4 a population in excess of 40,000 persons. 

5 ‘‘(7) EXEMPT COMMERCIAL PURCHASER CERTIFI6 CATION.—The term ‘exempt commercial purchaser 

7 certification’ means a written certification that the 

8 insurer offering a policy to an exempt commercial 

9 purchaser has obtained, at least within the previous 

10 12 months, a certification signed by the qualified risk 

11 manager, the chief executive officer, or the chief finan12 cial officer of the exempt commercial purchaser, certi13 fying with respect to the insurance to which the re14 quirements of section 103(c)(1) apply to that insurer 

15 that—

16 ‘‘(A) the purchaser has an employee that 

17 meets the definition of a qualified risk manager 

18 under this section; 

19 ‘‘(B) the purchaser meets the definition of 

20 an exempt commercial purchaser in accordance 

21 with this section; 

22 ‘‘(C) the purchaser is aware that the policy 

23 being considered for purchase contains forms and 

24 rates that are not subject to State regulatory re25 view or approval; 
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1 ‘‘(D) the purchaser has or has retained the 

2 necessary expertise to negotiate its own policy 

3 language and rates; and 

4 ‘‘(E) the purchaser agrees to the use of ex5 empted rates and forms by its insurer or insur6 ers. 

7 ‘‘(8) GROUP LIFE INSURANCE.—The term ‘group 

8 life insurance’ means an insurance contract that pro9 vides term life insurance coverage, accidental death 

10 coverage, or a combination thereof, for a number of 

11 individuals under a single contract, on the basis of a 

12 group selection of risks, but does not include ‘Cor13 porate Owned Life Insurance’ or ‘Business Owned 

14 Life Insurance,’ each as defined under the Internal 

15 Revenue Code of 1986, or any similar product. 

16 ‘‘(9) HOME STATE.—The term ‘home State’ 

17 means as follows: 

18 ‘‘(A) In the case of a policy written for com19 mercial risks that are primarily located in a 

20 State, such term means such State. 

21 ‘‘(B) If subparagraph (A) does not apply, 

22 such term means the State where the commercial 

23 policyholder has its principal place of business 

24 (such as where the policyholder’s headquarters 

25 are located, as determined by the predominant 
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1 physical location in the United States of the offi2 cers and senior management of the policyholder). 

3 ‘‘(10) INSURED LOSS.—The term ‘insured loss’ 

4 means any loss resulting from an act of terrorism (in5 cluding an act of war, in the case of workers’ com6 pensation and group life insurance) that is covered by 

7 primary or excess property, casualty, workers’ com8 pensation, or group life insurance issued by an in9 surer if such loss—

10 ‘‘(A) occurs within the United States; or 

11 ‘‘(B) occurs to an air carrier (as defined in 

12 section 40102 of title 49, United States Code), to 

13 a United States flag vessel (or a vessel based 

14 principally in the United States, on which 

15 United States income tax is paid and whose in16 surance coverage is subject to regulation in the 

17 United States), regardless of where the loss oc18 curs, or at the premises of any United States 

19 mission. 

20 ‘‘(11) INSURER.—The term ‘insurer’ means any 

21 entity, including any affiliate thereof—

22 ‘‘(A) that is—

23 ‘‘(i) licensed or admitted to engage in 

24 the business of providing primary or excess 

25 insurance in any State; 
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1 ‘‘(ii) not licensed or admitted as de2 scribed in clause (i), if it is an eligible sur3 plus line carrier listed on the Quarterly 

4 Listing of Alien Insurers of the NAIC, or 

5 any successor thereto; 

6 ‘‘(iii) approved for the purpose of offer7 ing a covered line of insurance by a Federal 

8 agency in connection with maritime, en9 ergy, or aviation activity; 

10 ‘‘(iv) a State residual market insur11 ance entity or State workers’ compensation 

12 fund; or 

13 ‘‘(v) any other entity described in sec14 tion 103(f), to the extent provided in the 

15 rules of the Secretary issued under section 

16 103(f); 

17 ‘‘(B) that receives direct earned premiums 

18 for any type of covered line of insurance cov19 erage, other than in the case of entities described 

20 in subsections (d) and (f) of section 103; and 

21 ‘‘(C) that meets any other criteria that the 

22 Secretary may reasonably prescribe. 

23 ‘‘(12) INSURER DEDUCTIBLE.—The term ‘insurer 

24 deductible’ means—
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1 ‘‘(A) for the Transition Period, the value of 

2 an insurer’s direct earned premiums over the 

3 calendar year immediately preceding the date of 

4 enactment of this Act, multiplied by 1 percent; 

5 ‘‘(B) for Program Year 1, the value of an 

6 insurer’s direct earned premiums over the cal7 endar year immediately preceding Program Year 

8 1, multiplied by 7 percent; 

9 ‘‘(C) for Program Year 2, the value of an 

10 insurer’s direct earned premiums over the cal11 endar year immediately preceding Program Year 

12 2, multiplied by 10 percent; 

13 ‘‘(D) for Program Year 3, the value of an 

14 insurer’s direct earned premiums over the cal15 endar year immediately preceding Program Year 

16 3, multiplied by 15 percent; 

17 ‘‘(E) for Program Year 4—

18 ‘‘(i) except as provided in clause (ii), 

19 the value of an insurer’s direct earned pre20 mium for a covered line of insurance over 

21 the calendar year immediately preceding 

22 Program Year 4, multiplied by—

23 ‘‘(I) for workers’ compensation in24 surance, 16 percent; 
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1 ‘‘(II) for group life insurance, 

2 21.5 percent; 

3 ‘‘(III) for property insurance, 20 

4 percent; and 

5 ‘‘(IV) for casualty insurance, 25 

6 percent; and 

7 ‘‘(ii) with respect to NBCR terrorism 

8 coverage, the value of an insurer’s direct 

9 earned premium for a covered line of insur10 ance over the calendar year immediately 

11 preceding Program Year 4, multiplied by 

12 the following percentages which shall be 

13 treated as sub-deductibles that apply in lieu 

14 of the deductibles set forth in clause (i) for 

15 NBCR terrorism losses—

16 ‘‘(I) for workers’ compensation in17 surance, 7.5 percent; 

18 ‘‘(II) for group life insurance, 7.5 

19 percent; 

20 ‘‘(III) for property insurance, 7.5 

21 percent; and 

22 ‘‘(IV) for casualty insurance, 7.5 

23 percent; and 

24 ‘‘(iii) if, for any covered line of insur25 ance, an insurer incurs insured losses 
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1 caused by NBCR terrorism, such NBCR in2 sured losses shall be applied against both 

3 the deductible set forth in clause (i) and the 

4 NBCR terrorism deductible set forth in 

5 clause (ii) for that covered line of insurance; 

6 ‘‘(F) for any Additional Program Years—

7 ‘‘(i) except as provided in clause (ii), 

8 the value of an insurer’s direct earned pre9 mium for a covered line of insurance over 

10 the calendar year immediately preceding 

11 that year, multiplied by the insurer deduct12 ible for each covered line of insurance for 

13 the preceding calendar year plus an addi14 tional percentage, as follows—

15 ‘‘(I) for workers’ compensation in16 surance, 2.0 percent; 

17 ‘‘(II) for group life insurance, 2.5 

18 percent; 

19 ‘‘(III) for property insurance, 2.5 

20 percent; and 

21 ‘‘(IV) for casualty insurance, 5.0 

22 percent; and 

23 ‘‘(ii) with respect to NBCR terrorism 

24 coverage, the value of an insurer’s direct 

25 earned premium for a covered line of insur-
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1 ance over the calendar year immediately 

2 preceding that year, multiplied by the 

3 NBCR terrorism deductible for the pre4 ceding year for that covered line of insur5 ance plus the following additional percent6 ages, all of which shall be treated as 

7 subdeductibles that apply in lieu of the 

8 deductibles listed in clause (i) for NBCR 

9 terrorism insured losses—

10 ‘‘(I) for workers’ compensation in11 surance, 0.75 percent; 

12 ‘‘(II) for group life insurance, 

13 0.75 percent; 

14 ‘‘(III) for property insurance, 

15 0.75 percent; and 

16 ‘‘(IV) for casualty insurance, 0.75 

17 percent; and 

18 ‘‘(iii) if, for any covered line of insur19 ance, an insurer incurs insured losses 

20 caused by NBCR terrorism, such NBCR in21 sured losses shall be applied against both 

22 the deductible set forth in clause (i) and the 

23 NBCR terrorism deductible set forth in 

24 clause (ii) for that covered line of insurance; 
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1 ‘‘(G) notwithstanding subparagraphs (A) 

2 through (F), for the Transition Period and any 

3 other Program Year or other calendar year, if an 

4 insurer has not had a full year of operations 

5 during the calendar year immediately preceding 

6 such Period or year, such portion of the direct 

7 earned premiums of the insurer as the Secretary 

8 determines appropriate, subject to appropriate 

9 methodologies established by the Secretary for 

10 measuring such direct earned premiums; and 

11 ‘‘(H) if, in any calendar year, aggregate in12 dustry insured losses exceed $1,000,000,000, the 

13 insurer deductibles for the next calendar year 

14 shall be reduced by 0.1 percent for each 

15 $1,000,000,000 in insured losses that have oc16 curred during the preceding calendar year, ex17 cept that no insurer deductible shall be reduced 

18 below 5 percent. 

19 ‘‘(13) NAIC.—The term ‘NAIC’ means the Na20 tional Association of Insurance Commissioners. 

21 ‘‘(14) OWNERSHIP.—An insurer ‘owns’ another 

22 insurer if the insurer, directly or indirectly or acting 

23 through one or more other persons, owns 25 percent 

24 or more of any class of voting securities of the other 

25 insurer. 
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1 ‘‘(15) NBCR TERRORISM.—The term ‘NBCR ter2 rorism’ means an act of terrorism involving nuclear, 

3 biological, chemical, or radioactive reactions, releases, 

4 or contaminations, to the extent any insured losses 

5 are caused by any such reactions, releases, or con6 taminations. 

7 ‘‘(16) PERSON.—The term ‘person’ means any 

8 individual, business or nonprofit entity (including 

9 those organized in the form of a partnership, limited 

10 liability company, corporation, or association), trust 

11 or estate, or a State or political subdivision of a State 

12 or other governmental unit. 

13 ‘‘(17) PROGRAM.—The term ‘Program’ means the 

14 Terrorism Insurance Program established by this 

15 title. 

16 ‘‘(18) PROGRAM YEARS.—

17 ‘‘(A) TRANSITION PERIOD.—The term 

18 ‘Transition Period’ means the period beginning 

19 on the date of enactment of this Act and ending 

20 on December 31, 2002. 

21 ‘‘(B) PROGRAM YEAR 1.—The term ‘Pro22 gram Year 1’ means the period beginning on 

23 January 1, 2003 and ending on December 31, 

24 2003. 
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1 ‘‘(C) PROGRAM YEAR 2.—The term ‘Pro2 gram Year 2’ means the period beginning on 

3 January 1, 2004 and ending on December 31, 

4 2004. 

5 ‘‘(D) PROGRAM YEAR 3.—The term ‘Pro6 gram Year 3’ means the period beginning on 

7 January 1, 2005 and ending on December 31, 

8 2005. 

9 ‘‘(E) PROGRAM YEAR 4.—The term ‘Pro10 gram Year 4’ means the period beginning on 

11 January 1, 2006 and ending on December 31, 

12 2006. 

13 ‘‘(F) ADDITIONAL PROGRAM YEARS.—The 

14 term ‘Additional Program Year’ means any ad15 ditional one-year period after Program Year 4 

16 during which the Program is in effect, which pe17 riod shall begin on January 1 and end on De18 cember 31 of the same calendar year. 

19 ‘‘(19) PROPERTY INSURANCE.—The term ‘prop20 erty insurance’ means—

21 ‘‘(A) except as provided in subparagraph 

22 (B), insurance on real or personal property of 

23 every kind, including excess insurance, against 

24 loss or damage from any and all hazard or cause 

25 and against loss consequential upon such loss or 
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1 damage, including business interruption insur2 ance, other than non-contractual legal liability 

3 for such loss or damage; and 

4 ‘‘(B) does not include any type of commer5 cial automobile or workers’ compensation insur6 ance. 

7 ‘‘(20) QUALIFIED RISK MANAGER.—The term 

8 ‘qualified risk manager’ means any person who meets 

9 all of the following criteria: 

10 ‘‘(A) The person is an employee of, or third 

11 party consultant retained by, the commercial 

12 policyholder. 

13 ‘‘(B) The person provides skilled services in 

14 loss prevention, loss reduction, or risk and insur15 ance coverage analysis, and purchase of insur16 ance. 

17 ‘‘(C) The person possesses at least 2 of the 

18 following credentials: 

19 ‘‘(i) An advanced degree in risk man20 agement issued by an accredited college or 

21 university. 

22 ‘‘(ii) At least 5 years of experience in 

23 one or more of the following areas of com24 mercial property insurance or commercial 

25 casualty insurance: 
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1 ‘‘(I) Risk financing. 

2 ‘‘(II) Claims administration. 

3 ‘‘(III) Loss prevention. 

4 ‘‘(IV) Risk and insurance cov5 erage analysis. 

6 ‘‘(iii) Any one of the following designa7 tions: 

8 ‘‘(I) A designation as a Chartered 

9 Property and Casualty Underwriter 

10 (in this clause referred to as ‘CPCU’) 

11 issued by the American Institute for 

12 CPCU/Insurance Institute of America. 

13 ‘‘(II) A designation as an Asso14 ciate in Risk Management (ARM) 

15 issued by the American Institute for 

16 CPCU/Insurance Institute of America. 

17 ‘‘(III) A designation as a Cer18 tified Risk Manager (CRM) issued by 

19 the National Alliance for Insurance 

20 Education & Research. 

21 ‘‘(IV) A designation as RIMS Fel22 low (RF) issued by the Global Risk 

23 Management Institute. 

24 ‘‘(V) Any other designation, cer25 tification, or license determined by the 
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1 insurance regulatory agency for a 

2 State to demonstrate minimum com3 petency in risk management. 

4 ‘‘(21) SECRETARY.—The term ‘Secretary’ means 

5 the Secretary of the Treasury. 

6 ‘‘(22) STATE.—The term ‘State’ means any 

7 State of the United States, the District of Columbia, 

8 the Commonwealth of Puerto Rico, the Commonwealth 

9 of the Northern Mariana Islands, American Samoa, 

10 Guam, each of the United States Virgin Islands, and 

11 any territory or possession of the United States. 

12 ‘‘(23) UNITED STATES.—The term ‘United 

13 States’ means the several States, and includes the ter14 ritorial sea and the continental shelf of the United 

15 States, as those terms are defined in the Violent 

16 Crime Control and Law Enforcement Act of 1994 (18 

17 U.S.C. 2280, 2281). 

18 ‘‘(24) WORKERS’ COMPENSATION.—The term 

19 ‘workers’ compensation’ means insurance against loss 

20 from liability imposed by law upon employers to 

21 compensate employees and their dependents for injury 

22 sustained by the employees arising out of and in the 

23 course of the employment, irrespective of negligence or 

24 of the fault of either party. 
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1 ‘‘(25) RULE OF CONSTRUCTION FOR DATES.—

2 With respect to any reference to a date in this title, 

3 such day shall be construed—

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

5 and 

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

7 ‘‘SEC. 103. TERRORISM INSURANCE PROGRAM. 

8 ‘‘(a) ESTABLISHMENT OF PROGRAM.—

9 ‘‘(1) IN GENERAL.—There is established in the 

10 Department of the Treasury the Terrorism Insurance 

11 Program. 

12 ‘‘(2) AUTHORITY OF THE SECRETARY.—Notwith13 standing any other provision of State or Federal law, 

14 the Secretary shall administer the Program, and shall 

15 pay the Federal share of compensation for insured 

16 losses in accordance with subsection (e). 

17 ‘‘(3) MANDATORY PARTICIPATION.—Each entity 

18 that meets the definition of an insurer under this title 

19 shall participate in the Program. 

20 ‘‘(b) CONDITIONS FOR FEDERAL PAYMENTS.—No pay21 ment may be made by the Secretary under this section with 

22 respect to an insured loss that is covered by an insurer, 

23 unless—
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1 ‘‘(1) the person that suffers the insured loss, or 

2 a person acting on behalf of that person, files a claim 

3 with the insurer; 

4 ‘‘(2) the insurer provides clear and conspicuous 

5 disclosure to the policyholder of the premium charged 

6 for insured losses covered by the program and the 

7 Federal share of compensation for insured losses 

8 under the Program—

9 ‘‘(A) in the case of any policy that is issued 

10 before the date of enactment of this Act, not later 

11 than 90 days after that date of enactment; 

12 ‘‘(B) in the case of any policy that is issued 

13 within 90 days of the date of enactment of this 

14 Act, at the time of offer, purchase, and renewal 

15 of the policy; and 

16 ‘‘(C) in the case of any policy that is issued 

17 more than 90 days after the date of enactment 

18 of this Act, on a separate line item in the policy, 

19 at the time of offer, purchase, and renewal of the 

20 policy; 

21 ‘‘(3) the insurer processes the claim for the in22 sured loss in accordance with appropriate business 

23 practices, and any reasonable procedures that the Sec24 retary may prescribe; and 
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1 ‘‘(4) the insurer submits to the Secretary, in ac2 cordance with such reasonable procedures as the Sec3 retary may establish—

4 ‘‘(A) a claim for payment of the Federal 

5 share of compensation for insured losses under 

6 the Program; 

7 ‘‘(B) written certification—

8 ‘‘(i) of the underlying claim; and 

9 ‘‘(ii) of all payments made for insured 

10 losses; and 

11 ‘‘(C) certification of its compliance with the 

12 provisions of this subsection. 

13 ‘‘(c) MANDATORY AVAILABILITY.—Each entity that 

14 meets the definition of an insurer under section 102—

15 ‘‘(1) shall make available, in all of its covered 

16 lines of insurance policies, coverage for insured losses 

17 that does not differ materially from the terms, 

18 amounts, and other coverage limitations applicable to 

19 losses arising from events other than acts of terrorism; 

20 ‘‘(2) shall make available, in any of its covered 

21 lines of insurance policies that exclude coverage for 

22 losses resulting from NBCR terrorism, coverage for 

23 losses resulting from NBCR terrorism that may differ 

24 materially from the terms, amounts, and other cov-
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1 erage limitations applicable to losses arising from 

2 events other than NBCR terrorism; and 

3 ‘‘(3) shall make available, in any life insurance 

4 policy, coverage that does not preclude future lawful 

5 foreign travel by the person insured, and shall not 

6 charge a premium for such coverage that is excessive 

7 and not based on a good faith actuarial analysis. 

8 ‘‘(d) STATE RESIDUAL MARKET INSURANCE ENTI9 TIES.—

10 ‘‘(1) IN GENERAL.—The Secretary shall issue 

11 regulations, as soon as practicable after the date of 

12 enactment of this Act, that apply the provisions of 

13 this title to State residual market insurance entities, 

14 State workers’ compensation funds, and State work15 ers’ compensation reinsurance pools. 

16 ‘‘(2) TREATMENT OF CERTAIN ENTITIES.—For 

17 purposes of the regulations issued pursuant to para18 graph (1)—

19 ‘‘(A) a State residual market insurance en20 tity that does not share its profits and losses 

21 with private sector insurers shall be treated as a 

22 separate insurer; and 

23 ‘‘(B) a State residual market insurance en24 tity that shares its profits and losses with pri25 vate sector insurers shall not be treated as a sep-
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1 arate insurer, and shall report to each private 

2 sector insurance participant its share of the in3 sured losses of the entity, which shall be included 

4 in each private sector insurer’s insured losses. 

5 ‘‘(3) TREATMENT OF PARTICIPATION IN CERTAIN

6 ENTITIES.—Any insurer that participates in sharing 

7 profits and losses of a State residual market insur8 ance entity shall include in its calculations of pre9 miums any premiums distributed to the insurer by 

10 the State residual market insurance entity. 

11 ‘‘(e) INSURED LOSS SHARED COMPENSATION.—

12 ‘‘(1) FEDERAL SHARE.—

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graphs (B) and (C), the Federal share of com15 pensation under the Program to be paid by the 

16 Secretary for insured losses of an insurer during 

17 each Program Year shall be equal to that portion 

18 of the amount of such insured losses for each cov19 ered line of insurance that exceeds the applicable 

20 insurer deductible required to be paid during 

21 such Program Year, multiplied by a percentage 

22 based on aggregate industry insured losses for a 

23 Program Year, which shall be as follows: 
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1 ‘‘(i) 80 percent of the aggregate indus2 try insured losses of less than 

3 $10,000,000,000; 

4 ‘‘(ii) 85 percent of the aggregate indus5 try insured losses between $10,000,000,000 

6 and $20,000,000,000; 

7 ‘‘(iii) 90 percent of the aggregate in8 dustry insured losses between 

9 $20,000,000,000 and $40,000,000,000; and 

10 ‘‘(iv) 95 percent of the aggregate indus11 try insured losses above industry losses 

12 above $40,000,000,000; 

13 and shall be prorated by insurer based on each 

14 insurer’s percentage of the aggregate industry in15 sured losses for that Program Year. 

16 ‘‘(B) PROGRAM TRIGGER.—No compensa17 tion shall be paid by the Secretary under sub18 section (a) unless the aggregate industry insured 

19 losses exceed—

20 ‘‘(i) $50,000,000, with respect to in21 sured losses occurring in Program Year 4; 

22 ‘‘(ii) $100,000,000, with respect to in23 sured losses occurring in the Additional 

24 Program Year beginning on January 1, 

25 2007; 
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1 ‘‘(iii) with respect to each Additional 

2 Program Year thereafter that coverage is 

3 provided under the Program, the amount 

4 that is equal to the sum of (I) the dollar 

5 amount applicable under this subparagraph 

6 for the Program Year preceding such Addi7 tional Program Year, and (II) $50,000,000; 

8 except that the applicable Program Trigger 

9 amount shall be reduced by $10,000,000 for each 

10 $1,000,000,000 in insured losses occurring in 

11 any preceding year, provided that the Program 

12 Trigger shall not be reduced below $50,000,000 

13 for any year. 

14 ‘‘(C) PROHIBITION ON DUPLICATIVE COM15 PENSATION.—The Federal share of compensation 

16 for insured losses under the Program shall be re17 duced by the amount of compensation provided 

18 by the Federal Government to any person under 

19 any other Federal program for those insured 

20 losses. 

21 ‘‘(2) TRIA CAPITAL RESERVE FUNDS.—

22 ‘‘(A) ESTABLISHMENT.—Any insurer may 

23 establish a TRIA Capital Reserve Fund (in this 

24 section referred to as a ‘CRF’) in which it may 
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1 hold funds in a fiduciary capacity on behalf of 

2 the Secretary. 

3 ‘‘(B) FUNDING.—An insurer may fund a 

4 CRF by making an election, in advance, to treat 

5 some or all of the premiums it has disclosed pur6 suant to section 103(b)(2) as TRIA program fee 

7 charges imposed by the Secretary. Any such pre8 miums for which such an election has been made 

9 must be maintained in segregated accounts in a 

10 fiduciary capacity on behalf of the Secretary. 

11 Such funds may be invested in any otherwise le12 gally permissible manner but all interest, divi13 dends, and capital accumulations also shall be 

14 retained in such segregated accounts on behalf of 

15 the Secretary. 

16 ‘‘(C) USE.—Funds from a CRF shall be col17 lected and used by the Secretary to offset, in 

18 whole or in part, the Federal share of compensa19 tion provided to all insurers under the Program 

20 as provided for in paragraph (1), except that an 

21 insurer may first use the funds in a CRF of that 

22 insurer to satisfy any one or more of the fol23 lowing: 

24 ‘‘(i) The applicable insurer deductibles 

25 for the insurer. 
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1 ‘‘(ii) The portion of the insurer’s losses 

2 that exceed the insurer deductible but are 

3 not compensated by the Federal share pur4 suant to paragraph (1). 

5 ‘‘(iii) The insurer’s obligations to pay 

6 for insured losses if the program trigger es7 tablished in paragraph (1)(B) is not satis8 fied. 

9 ‘‘(iv) Any risk sharing obligations the 

10 insurer may have under any agreements 

11 made pursuant to or in accordance with 

12 paragraph (3). 

13 ‘‘(D) TERMINATION.—

14 ‘‘(i) TERMINATION OF PROGRAM.—

15 Upon termination of the Program under 

16 section 108(a), and subject to the Sec17 retary’s continuing authority under section 

18 108(b) to adjust claims in satisfaction of the 

19 Federal share of compensation under the 

20 Program as provided in paragraph (1) of 

21 this subsection, 10 percent of each insurer’s 

22 CRF funds shall be remitted to the Sec23 retary and the remainder shall be remitted 

24 to the insurer. The Secretary shall deter-
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1 mine the manner in which the remittance of 

2 such income to the insurer shall be made. 

3 ‘‘(ii) ELIMINATION OF FEDERAL SHARE

4 OF COMPENSATION.—If the Program re5 mains in effect but the Federal share of 

6 compensation for insured losses under the 

7 Program is eliminated from the Program, 

8 the CRF funds shall be retained and used 

9 for the purposes set forth in subparagraph 

10 (C) of this paragraph. At such time as an 

11 insurer’s liability for insured losses under 

12 the Program terminates, as a consequence of 

13 the insurer’s termination of its business or 

14 otherwise, the insurer shall remit any re15 maining CRF funds to the Secretary. 

16 ‘‘(3) RISK-SHARING MECHANISMS.—

17 ‘‘(A) FINDING; RULE OF CONSTRUCTION.—

18 Congress finds that it is desirable to encourage 

19 the growth of nongovernmental, private market 

20 reinsurance capacity for protection against losses 

21 arising from acts of terrorism. Therefore, nothing 

22 in this title shall prohibit insurers from devel23 oping risk-sharing mechanisms (including mu24 tual reinsurance facilities and agreements) to 

25 voluntarily reinsure terrorism losses between and 
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1 among themselves that are not subject to reim2 bursement under this section 103. 

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 mechanisms; 

8 ‘‘(ii) assist the Secretary and be avail9 able to administer such mechanisms; and 

10 ‘‘(iii) develop articles of incorporation, 

11 bylaws, and a plan of operation for any 

12 long-term reinsurance facility authorized or 

13 created in the future. 

14 ‘‘(C) MEMBERSHIP.—The Advisory Com15 mittee shall be composed of nine members who 

16 are directors, officers, or other employees of in17 surers that are participating or that desire to 

18 participate in such mechanisms, and who are 

19 representative of the affected sectors of the insur20 ance industry. In making these appointments, 

21 the Secretary shall solicit major trade associa22 tions of the insurance industry to nominate lists 

23 of qualified individuals representative of the 

24 commercial property insurance, commercial cas-
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1 ualty insurance, group life insurance, and rein2 surance industries. 

3 ‘‘(4) CAP ON ANNUAL LIABILITY.—

4 ‘‘(A) IN GENERAL.—Notwithstanding para5 graph (1) or any other provision of Federal or 

6 State law, if the aggregate insured losses exceed 

7 $100,000,000,000 during any Program Year 

8 (until such time as the Congress may act other9 wise with respect to such losses)—

10 ‘‘(i) the Secretary shall not make any 

11 payment under this title for any portion of 

12 the amount of such losses that exceeds 

13 $100,000,000,000; and 

14 ‘‘(ii) no insurer that has met its in15 surer deductible shall be liable for the pay16 ment of any portion of that amount that ex17 ceeds $100,000,000,000. 

18 ‘‘(B) INSURER SHARE.—For purposes of 

19 subparagraph (A), the Secretary shall determine 

20 the pro rata share of insured losses to be paid by 

21 each insurer that incurs insured losses under the 

22 Program. 

23 ‘‘(5) NOTICE TO CONGRESS.—The Secretary shall 

24 notify the Congress if estimated or actual aggregate 

25 insured losses exceed $100,000,000,000 during any 
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1 Program Year and the Congress shall determine the 

2 procedures for and the source of any payments for 

3 such excess insured losses. 

4 ‘‘(6) FINAL NETTING.—The Secretary shall have 

5 sole discretion to determine the time at which claims 

6 relating to any insured loss or act of terrorism shall 

7 become final. 

8 ‘‘(7) DETERMINATIONS FINAL.—Any determina9 tion of the Secretary under this subsection shall be 

10 final, unless expressly provided otherwise. 

11 ‘‘(8) FULL RECOUPMENT OF FEDERAL SHARE.—

12 The Secretary shall collect, for repayment of the Fed13 eral financial assistance provided in connection with 

14 all acts of terrorism (or acts of war, in the case of 

15 workers’ compensation and group life insurance), ter16 rorism loss risk-spreading premiums in an amount 

17 equal to the total amount paid by the Secretary in 

18 accordance with this section. 

19 ‘‘(9) POLICY SURCHARGE FOR TERRORISM LOSS

20 RISK-SPREADING PREMIUMS.—

21 ‘‘(A) POLICYHOLDER PREMIUM.—Any 

22 amount established by the Secretary as a ter23 rorism loss risk-spreading premium shall—

24 ‘‘(i) be imposed as a policyholder pre25 mium surcharge on all covered lines of in-
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1 surance policies in force after the date of 

2 such establishment; 

3 ‘‘(ii) begin with such period of coverage 

4 during the year as the Secretary determines 

5 appropriate; and 

6 ‘‘(iii) be based on a percentage of the 

7 premium amount charged for covered lines 

8 of insurance coverage under the policy. 

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

10 provide for insurers to collect terrorism loss risk11 spreading premiums and remit such amounts 

12 collected to the Secretary. 

13 ‘‘(C) PERCENTAGE LIMITATION.—A ter14 rorism loss risk-spreading premium may not ex15 ceed, on an annual basis, the amount equal to 3 

16 percent of the premium charged for covered lines 

17 of insurance coverage under the policy. 

18 ‘‘(D) ADJUSTMENT FOR URBAN AND SMALL19 ER COMMERCIAL AND RURAL AREAS AND DIF20 FERENT LINES OF INSURANCE.—

21 ‘‘(i) ADJUSTMENTS.—In determining 

22 the method and manner of imposing ter23 rorism loss risk-spreading premiums, in24 cluding the amount of such premiums, the 

25 Secretary shall take into consideration—
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1 ‘‘(I) the economic impact on com2 mercial centers of urban areas, includ3 ing the effect on commercial rents and 

4 commercial insurance premiums, par5 ticularly rents and premiums charged 

6 to small businesses, and the avail7 ability of lease space and commercial 

8 insurance within urban areas; 

9 ‘‘(II) the risk factors related to 

10 rural areas and smaller commercial 

11 centers, including the potential expo12 sure to loss and the likely magnitude of 

13 such loss, as well as any resulting 

14 cross-subsidization that might result; 

15 and 

16 ‘‘(III) the various exposures to 

17 terrorism risk for different lines of in18 surance. 

19 ‘‘(ii) RECOUPMENT OF ADJUST20 MENTS.—Any recoupment amounts not col21 lected by the Secretary because of adjust22 ments under this subparagraph shall be re23 couped through additional terrorism loss 

24 risk-spreading premiums. 
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1 ‘‘(E) TIMING OF PREMIUMS.—The Secretary 

2 may adjust the timing of terrorism loss risk3 spreading premiums to provide for equivalent 

4 application of the provisions of this title to poli5 cies that are not based on a calendar year, or to 

6 apply such provisions on a daily, monthly, or 

7 quarterly basis, as appropriate. 

8 ‘‘(F) REPLENISHMENT OF TRIA CAPITAL RE9 SERVE FUNDS.—After any funds expended di10 rectly from the United States Treasury are fully 

11 repaid, the balance of the amounts collected 

12 under this paragraph shall be used to fully re13 plenish all insurer CRFs used by the Secretary 

14 in accordance with the provisions of paragraph 

15 (2)(C) that were not used by the insurer to sat16 isfy its obligations in accordance with clauses (i) 

17 through (iv) of paragraph (2)(C). 

18 ‘‘(f) CAPTIVE INSURERS AND OTHER SELF-INSURANCE

19 ARRANGEMENTS.—The Secretary may, in consultation with 

20 the NAIC or the appropriate State regulatory authority, 

21 apply the provisions of this title, as appropriate, to other 

22 classes or types of captive insurers and other self-insurance 

23 arrangements by municipalities and other entities (such as 

24 workers’ compensation self-insurance programs and State 

25 workers’ compensation reinsurance pools), but only if such 
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1 application is determined before the occurrence of an act 

2 of terrorism in which such an entity incurs an insured loss 

3 and all of the provisions of this title are applied comparably 

4 to such entities. 

5 ‘‘(g) REINSURANCE TO COVER EXPOSURE.—

6 ‘‘(1) OBTAINING COVERAGE.—This title may not 

7 be construed to limit or prevent insurers from obtain8 ing reinsurance coverage for insurer deductibles or in9 sured losses retained by insurers pursuant to this sec10 tion, nor shall the obtaining of such coverage affect 

11 the calculation of such deductibles or retentions. 

12 ‘‘(2) LIMITATION ON FINANCIAL ASSISTANCE.—

13 The amount of financial assistance provided pursuant 

14 to this section, including amounts from a CRF used 

15 pursuant to subsection (e)(2)(C), shall not be reduced 

16 by reinsurance paid or payable to an insurer from 

17 other sources, except that recoveries from such other 

18 sources, taken together with financial assistance for 

19 the Transition Period or a Program Year provided 

20 pursuant to this section, may not exceed the aggregate 

21 amount of the insurer’s insured losses for such period. 

22 If such recoveries and financial assistance for the 

23 Transition Period or a Program Year exceed such ag24 gregate amount of insured losses for that period and 

25 there is no agreement between the insurer and any re-
40

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1 insurer to the contrary, an amount in excess of such 

2 aggregate insured losses shall be returned to the Sec3 retary. 

4 ‘‘(h) PERSONAL LINES STUDY.—

5 ‘‘(1) IN GENERAL.—The Comptroller General of 

6 the United States, after consultation with the NAIC, 

7 representatives of the insurance industry, including a 

8 cross-section of insurers, independent insurance 

9 agents and brokers, policyholders, and other experts 

10 in the insurance field, shall conduct a study con11 cerning the exposure of personal lines (including 

12 homeowners insurance) to terrorism risk, the coverage 

13 currently available, and potential policy responses. 

14 ‘‘(2) REPORT.—Not later than September 1, 

15 2006, the Comptroller General shall submit a report 

16 to the Congress on the results of the study conducted 

17 under subparagraph (1), together with specific policy 

18 recommendations. 

19 ‘‘(i) STUDY OF RISKS STEMMING FROM NUCLEAR, BI20 OLOGICAL, CHEMICAL AND RADIOACTIVE EVENTS.—

21 ‘‘(1) IN GENERAL.—The Comptroller General of 

22 the United States, after consultation with the NAIC, 

23 representatives of the insurance industry, including a 

24 cross-section of insurers, independent insurance 

25 agents and brokers, and policyholders, and other ex-
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1 perts in the insurance field, shall conduct a study to 

2 determine the extent to which risks associated with 

3 nuclear, biological, chemical, or radioactive events are 

4 measurable and insurable at the Federal or private 

5 sector level, or both. 

6 ‘‘(2) REPORT.—Not later than September 1, 

7 2006, the Comptroller General shall submit a report 

8 to the Congress on the results of the study conducted 

9 under paragraph (1), together with specific policy 

10 recommendations. 

11 ‘‘(j) STUDY OF NEED FOR FEDERAL NATURAL DIS12 ASTER CATASTROPHE PROGRAM.—

13 ‘‘(1) IN GENERAL.—The Comptroller General of 

14 the United States, after consultation with the NAIC, 

15 representatives of the insurance industry, including a 

16 cross-section of insurers, independent insurance 

17 agents and brokers, and policyholders, and other ex18 perts in the insurance field, shall conduct a study 

19 concerning the need for a Federal program that pro20 vides for a system of shared public and private com21 pensation for insured losses resulting from natural 

22 disaster. 

23 ‘‘(2) ISSUES.—The study under this section shall 

24 include an analysis of whether, and in what manner, 

25 such a Federal program should incorporate any or all 
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1 of the following concepts: tax-free capital reserves; vol2 untary mutual reinsurance pools; a distinction be3 tween sophisticated and non-sophisticated commercial 

4 purchasers for the purposes of exemption from regula5 tion; or Federal support for the purchase of reinsur6 ance by State disaster insurance programs. 

7 ‘‘(3) REPORT.—Not later than September 1, 

8 2006, the Comptroller General shall submit a report 

9 to the Congress on the results of the study conducted 

10 under this subsection together with specific policy rec11 ommendations. 

12 ‘‘SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF 

13 CLAIMS. 

14 ‘‘(a) GENERAL AUTHORITY.—The Secretary shall have 

15 the powers and authorities necessary to carry out the pro16 gram, including authority—

17 ‘‘(1) to investigate and audit all claims under 

18 the Program; and 

19 ‘‘(2) to prescribe regulations and procedures to 

20 effectively administer and implement the Program, 

21 and to ensure that all insurers and self-insured enti22 ties that participate in the Program are treated com23 parably under the Program. 
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1 ‘‘(b) INTERIM RULES AND PROCEDURES.—The Sec2 retary may issue interim final rules or procedures speci3 fying the manner in which—

4 ‘‘(1) insurers may file and certify claims under 

5 the Program; 

6 ‘‘(2) the Federal share of compensation for in7 sured losses will be paid under the Program, includ8 ing payments based on estimates of or actual insured 

9 losses; 

10 ‘‘(3) the Secretary may, at any time, seek repay11 ment from or reimburse any insurer, based on esti12 mates of insured losses under the Program, to effec13 tuate the insured loss sharing provisions in section 

14 103; and 

15 ‘‘(4) the Secretary will determine any final net16 ting of payments under the Program, including pay17 ments owed to the Federal Government from any in18 surer and any Federal share of compensation for in19 sured losses owed to any insurer, to effectuate the in20 sured loss sharing provisions in section 103. 

21 ‘‘(c) CONSULTATION.—The Secretary shall consult 

22 with the NAIC, as the Secretary determines appropriate, 

23 concerning the Program. 
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1 ‘‘(d) CONTRACTS FOR SERVICES.—The Secretary may 

2 employ persons or contract for services as may be necessary 

3 to implement the Program. 

4 ‘‘(e) CIVIL PENALTIES.—

5 ‘‘(1) IN GENERAL.—The Secretary may assess a 

6 civil monetary penalty in an amount not exceeding 

7 the amount under paragraph (2) against any insurer 

8 that the Secretary determines, on the record after op9 portunity for a hearing—

10 ‘‘(A) has failed to charge, collect, or remit 

11 terrorism loss risk-spreading premiums under 

12 section 103(e) in accordance with the require13 ments of, or regulations issued under, this title; 

14 ‘‘(B) has intentionally provided to the Sec15 retary erroneous information regarding premium 

16 or loss amounts; 

17 ‘‘(C) submits to the Secretary fraudulent 

18 claims under the Program for insured losses; 

19 ‘‘(D) has failed to provide the disclosures re20 quired under subsection (f); or 

21 ‘‘(E) has otherwise failed to comply with the 

22 provisions of, or the regulations issued under, 

23 this title. 

24 ‘‘(2) AMOUNT.—The amount under this para25 graph is the greater of $1,000,000 and, in the case of 
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1 any failure to pay, charge, collect, or remit amounts 

2 in accordance with this title or the regulations issued 

3 under this title, such amount in dispute. 

4 ‘‘(3) RECOVERY OF AMOUNT IN DISPUTE.—A 

5 penalty under this subsection for any failure to pay, 

6 charge, collect, or remit amounts in accordance with 

7 this title or the regulations under this title shall be 

8 in addition to any such amounts recovered by the 

9 Secretary. 

10 ‘‘(f) SUBMISSION OF PREMIUM INFORMATION.—

11 ‘‘(1) IN GENERAL.—The Secretary shall annually 

12 compile information on the terrorism risk insurance 

13 premium rates of insurers for the preceding year. 

14 ‘‘(2) ACCESS TO INFORMATION.—To the extent 

15 that such information is not otherwise available to the 

16 Secretary, the Secretary may require each insurer to 

17 submit to the NAIC terrorism risk insurance pre18 mium rates, as necessary to carry out paragraph (1), 

19 and the NAIC shall make such information available 

20 to the Secretary. 

21 ‘‘(3) AVAILABILITY TO CONGRESS.—The Sec22 retary shall make information compiled under this 

23 subsection available to the Congress, upon request. 

24 ‘‘(g) FUNDING.—
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1 ‘‘(1) FEDERAL PAYMENTS.—There are hereby ap2 propriated, out of funds in the Treasury not otherwise 

3 appropriated, such sums as may be necessary to pay 

4 the Federal share of compensation for insured losses 

5 under the Program to the extent such Federal share 

6 exceeds funds collected by the Secretary pursuant to 

7 section 103(e)(2). 

8 ‘‘(2) ADMINISTRATIVE EXPENSES.—There are 

9 hereby appropriated, out of funds in the Treasury not 

10 otherwise appropriated, such sums as may be nec11 essary to pay reasonable costs of administering the 

12 Program. 

13 ‘‘SEC. 105. ESTABLISHMENT OF COMMISSION ON TER14 RORISM RISK INSURANCE. 

15 ‘‘(a) IN GENERAL.—There is hereby established the 

16 Commission on Terrorism Risk Insurance (in this section 

17 referred to as the ‘Commission’). 

18 ‘‘(b) MEMBERSHIP.—

19 ‘‘(1) The Commission shall consist of 11 mem20 bers, as follows: 

21 ‘‘(A) The Secretary of the Treasury or his 

22 designee. 

23 ‘‘(B) One State insurance commissioner 

24 designated by the members of the NAIC. 
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1 ‘‘(C) Nine members appointed by the Presi2 dent, who shall be—

3 ‘‘(i) a representative of group life in4 surers; 

5 ‘‘(ii) a representative of property and 

6 casualty insurers with direct written pre7 mium of $1,000,000,000 or less; 

8 ‘‘(iii) a representative of property and 

9 casualty insurers with direct written pre10 mium of more than $1,000,000,000; 

11 ‘‘(iv) a representative of multiline in12 surers; 

13 ‘‘(v) a representative of independent 

14 insurance agents; 

15 ‘‘(vi) a representative of insurance bro16 kers; 

17 ‘‘(vii) a policyholder representative; 

18 ‘‘(viii) a representative of the survivors 

19 of the victims of the attacks of September 

20 11, 2001; and 

21 ‘‘(ix) a representative of the reinsur22 ance industry. 

23 ‘‘(2) SECRETARY.—The Program Director of the 

24 Terrorism Risk Insurance Act shall serve as Secretary 

25 of the Commission. The Secretary of the Commission 
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1 shall determine the manner in which the Commission 

2 shall operate, including funding and staffing. 

3 ‘‘(c) DUTIES.—

4 ‘‘(1) IN GENERAL.—The Commission shall iden5 tify and make recommendations regarding—

6 ‘‘(A) possible actions to encourage, facili7 tate, and sustain provision by the private insur8 ance industry in the United States of affordable 

9 coverage for losses due to an act or acts of ter10 rorism; 

11 ‘‘(B) possible actions or mechanisms to sus12 tain or supplement the ability of the insurance 

13 industry in the United States to cover losses re14 sulting from acts of terrorism in the event that—

15 ‘‘(i) such losses jeopardize the capital 

16 and surplus of the insurance industry in 

17 the United States as a whole; or 

18 ‘‘(ii) other consequences from such acts 

19 occur, as determined by the Commission, 

20 that may significantly affect the ability of 

21 the insurance industry in the United States 

22 to independently cover such losses; and 

23 ‘‘(C) significantly reducing the expected 

24 Federal role over time in any continuing Federal 

25 terrorism risk insurance program. 
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1 ‘‘(2) EVALUATIONS.—In identifying and making 

2 the recommendations required under paragraph (1), 

3 the Commission shall specifically evaluate the utility 

4 and viability of TRIA Capital Reserve Funds made 

5 available under section 103(e)(2), any risk sharing 

6 mechanism created or made available under section 

7 103(e)(3), a Federally created or mandated reinsur8 ance facility, empowering such a facility to issue pre9 event financing bonds, post-event financing bonds, as10 sessments, single or multiple pooling arrangements, 

11 and other risk sharing arrangements to accomplish, 

12 in whole or in part, the specified objectives, taking 

13 into consideration the studies and reports to the Con14 gress pursuant to subsections (h) and (i) of section 

15 103. 

16 ‘‘(3) REPORT.—Not later than December 31, 

17 2006, the Commission shall submit a report to Con18 gress evaluating and making recommendations re19 garding whether there is a need for a Federal ter20 rorism risk insurance program and, if so, shall make 

21 a specific, detailed recommendation for the replace22 ment of the Program, including specific, detailed rec23 ommendations for the creation of a terrorism reinsur24 ance facility or facilities or single or multiple pooling 

25 arrangements, or both. 
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1 ‘‘(d) EFFECT ON EXISTING PROGRAM.—For purposes 

2 of section 108(a), the Secretary shall make a determination 

3 not later than January 31, 2007, of whether the Commis4 sion has satisfied its obligations under subsection (c)(3). 

5 ‘‘SEC. 106. PRESERVATION PROVISIONS. 

6 ‘‘(a) STATE LAW.—Nothing in this title shall affect the 

7 jurisdiction or regulatory authority of the insurance com8 missioner (or any agency or office performing like func9 tions) of any State over any insurer or other person—

10 ‘‘(1) except as specifically provided in this title; 

11 and 

12 ‘‘(2) except that—

13 ‘‘(A) the definition of the term ‘act of ter14 rorism’ in section 102 shall be the exclusive defi15 nition of that term for purposes of compensation 

16 for insured losses under this title, and shall pre17 empt any provision of State law that is incon18 sistent with that definition, to the extent that 

19 such provision of law would otherwise apply to 

20 any type of insurance covered by this title; and 

21 ‘‘(B) during the period beginning on the 

22 date of enactment of this Act and for so long as 

23 the Program is in effect, as provided in section 

24 108, including authority in subsection 108(b), 

25 books and records of any insurer that are rel-
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1 evant to the Program shall be provided, or 

2 caused to be provided, to the Secretary, upon re3 quest by the Secretary, notwithstanding any pro4 vision of the laws of any State prohibiting or 

5 limiting such access; and 

6 ‘‘(3) except that with respect to coverage required 

7 to be made available under section 103(c)—

8 ‘‘(A) no laws or regulations of a State im9 posing a diligent search requirement for the 

10 placement of a surplus lines policy shall apply 

11 in connection with the purchase of such insur12 ance by an exempt commercial purchaser; and 

13 ‘‘(B) no laws or regulations of a State, ex14 cept of the home State, imposing a diligent 

15 search requirement for the placement of a sur16 plus lines policy shall apply with respect to the 

17 placement of a multi-State surplus lines com18 mercial insurance policy, provided the contract 

19 of insurance insures risks in the home State. 

20 ‘‘(b) STREAMLINED RATE AND FORM FILING.—The 

21 Congress intends that, by December 31, 2007, all States, 

22 with respect to submission of a commercial property insur23 ance policy or commercial casualty insurance policy that 

24 includes coverage for acts of terrorism—
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1 ‘‘(1) implement and fully utilize the System for 

2 Electronic Rate and Form Filing (in this section re3 ferred to as ‘SERFF’), developed by the NAIC, with4 out deviation to provide a single point for electronic 

5 filing of property insurance and casualty insurance 

6 forms for review; 

7 ‘‘(2) update SERFF to provide a single coordi8 nated checklist for inputting the required information 

9 used by various States for filing reviews and desig10 nating to which States the information will be sub11 mitted; 

12 ‘‘(3) allow the option of filing of self-certified 

13 commercial property insurance and commercial cas14 ualty insurance forms through a substantially nation15 wide coordinated electronic filing system that—

16 ‘‘(A) includes a review checklist with uni17 form nomenclature clearly establishing what is 

18 required under the laws of such State for a com19 pliant filing of such forms; 

20 ‘‘(B) uses a single input system and trans21 mittal document that allows the filer to submit 

22 such form for review without required format de23 viations to any combination of the States par24 ticipating in the system; 
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1 ‘‘(C) does not require prior approval for 

2 such self-certified form filing; 

3 ‘‘(D) keeps such filings confidential until 

4 they are implemented, deemed implemented, or 

5 disapproved; and 

6 ‘‘(E) only allows disapproval of such filings 

7 in writing based on specific standards that are 

8 published in statute, rule, or regulation. 

9 ‘‘(c) STREAMLINED SURPLUS LINES PLACEMENT.—

10 The Congress intends that, by December 31, 2007, all States 

11 streamline their surplus lines diligent search rules with re12 spect to the placement of surplus lines policies in any cov13 ered line of insurance that includes coverage for acts of ter14 rorism by providing for—

15 ‘‘(1) automatic export for exempt commercial 

16 purchasers, under which a surplus lines broker seek17 ing to obtain, provide, or place insurance in a State 

18 for an insured that qualifies as an exempt commer19 cial purchaser may procure surplus lines insurance 

20 from or place surplus lines insurance with any non21 admitted insurer without making a diligent search to 

22 determine whether the full amount or type of insur23 ance sought by the exempt commercial purchaser can 

24 be obtained from admitted insurers in such State. 
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1 ‘‘(2) home State regulation of diligent search re2 quirements, that provides that, except as provided in 

3 paragraph (1), only the home State may impose a 

4 diligent search requirement for the placement of a 

5 multi-State surplus lines commercial insurance pol6 icy, provided the contract of insurance insures risks 

7 in the Home State. 

8 ‘‘(d) EXISTING REINSURANCE AGREEMENTS.—Noth9 ing in this title shall be construed to alter, amend, or ex10 pand the terms of coverage under any reinsurance agree11 ment in effect on the date of enactment of this Act. The 

12 terms and conditions of such an agreement shall be deter13 mined by the language of that agreement.’’; and 

14 (2) in section 108—

15 (A) by striking subsection (a) and inserting 

16 the following new subsection: 

17 ‘‘(a) TERMINATION OF PROGRAM.—

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), the Program shall terminate on December 

20 31, 2008. 

21 ‘‘(2) FAILURE OF COMMISSION TO SUBMIT RE22 PORT.—If the Secretary determines pursuant to sec23 tion 105(d) that the Commission on Terrorism Risk 

24 Insurance established under section 105 has not satis-
55

•S 467 EAH 

1 fied its obligations under section 105(c)(3), the Pro2 gram shall terminate on December 31, 2007.’’; and 

3 (B) in subsection (c)(1), by striking ‘‘para4 graph (4), (5), (6), (7), or (8) of’’. 

5 (b) APPLICABILITY.—The amendments made by sub6 section (a) shall take effect and apply beginning on Janu7 ary 1, 2006.

Attest:

Clerk.