H. R. 3210—2
the ability of the economy to maintain stability, while
responding to a variety of economic, political, environmental,
and other risks with a minimum of disruption;
(3) the ability of the insurance industry to cover the
unprecedented financial risks presented by potential acts of
terrorism in the United States can be a major factor in the
recovery from terrorist attacks, while maintaining the stability
of the economy;
(4) widespread financial market uncertainties have arisen
following the terrorist attacks of September 11, 2001, including
the absence of information from which financial institutions
can make statistically valid estimates of the probability and
cost of future terrorist events, and therefore the size, funding,
and allocation of the risk of loss caused by such acts of ter-
rorism;
(5) a decision by property and casualty insurers to deal
with such uncertainties, either by terminating property and
casualty coverage for losses arising from terrorist events, or
by radically escalating premium coverage to compensate for
risks of loss that are not readily predictable, could seriously
hamper ongoing and planned construction, property acquisition,
and other business projects, generate a dramatic increase in
rents, and otherwise suppress economic activity; and
(6) the United States Government should provide tem-
porary financial compensation to insured parties, contributing
to the stabilization of the United States economy in a time
of national crisis, while the financial services industry develops
the systems, mechanisms, products, and programs necessary
to create a viable financial services market for private terrorism
risk insurance.
(b) PURPOSE.—The purpose of this title is to establish a tem-
porary Federal program that provides for a transparent system
of shared public and private compensation for insured losses
resulting from acts of terrorism, in order to—
(1) protect consumers by addressing market disruptions
and ensure the continued widespread availability and afford-
ability of property and casualty insurance for terrorism risk;
and
(2) allow for a transitional period for the private markets
to stabilize, resume pricing of such insurance, and build
capacity to absorb any future losses, while preserving State
insurance regulation and consumer protections.
SEC. 102. DEFINITIONS.
In this title, the following definitions shall apply:
(1) ACT OF TERRORISM.—
(A) CERTIFICATION.—The term ‘‘act of terrorism’’ means
any act that is certified by the Secretary, in concurrence
with the Secretary of State, and the Attorney General
of the United States—
(i) to be an act of terrorism;
(ii) to be a violent act or an act that is dangerous
to—
(I) human life;
(II) property; or
(III) infrastructure;
H. R. 3210—3
(iii) to have resulted in damage within the United
States, or outside of the United States in the case
of—
(I) an air carrier or vessel described in para-
graph (5)(B); or
(II) the premises of a United States mission;
and
(iv) to have been committed by an individual or
individuals acting on behalf of any foreign person or
foreign interest, as part of an effort to coerce the
civilian population of the United States or to influence
the policy or affect the conduct of the United States
Government by coercion.
(B) LIMITATION.—No act shall be certified by the Sec-
retary as an act of terrorism if—
(i) the act is committed as part of the course of
a war declared by the Congress, except that this clause
shall not apply with respect to any coverage for
workers’ compensation; or
(ii) 
property 
and 
casualty 
insurance 
losses
resulting from the act, in the aggregate, do not exceed
$5,000,000.
(C) DETERMINATIONS FINAL.—Any certification of, or
determination not to certify, an act as an act of terrorism
under this paragraph shall be final, and shall not be subject
to judicial review.
(D) NONDELEGATION.—The Secretary may not delegate
or designate to any other officer, employee, or person, any
determination under this paragraph of whether, during
the effective period of the Program, an act of terrorism
has occurred.
(2) AFFILIATE.—The term ‘‘affiliate’’ means, with respect
to an insurer, any entity that controls, is controlled by, or
is under common control with the insurer.
(3) CONTROL.—An entity has ‘‘control’’ over another entity,
if—
(A) the entity directly or indirectly or acting through
1 or more other persons owns, controls, or has power to
vote 25 percent or more of any class of voting securities
of the other entity;
(B) the entity controls in any manner the election
of a majority of the directors or trustees of the other entity;
or
(C) the Secretary determines, after notice and oppor-
tunity for hearing, that the entity directly or indirectly
exercises a controlling influence over the management or
policies of the other entity.
(4) DIRECT
EARNED
PREMIUM.—The term ‘‘direct earned
premium’’ means a direct earned premium for property and
casualty insurance issued by any insurer for insurance against
losses occurring at the locations described in subparagraphs
(A) and (B) of paragraph (5).
(5) INSURED LOSS.—The term ‘‘insured loss’’ means any
loss resulting from an act of terrorism (including an act of
war, in the case of workers’ compensation) that is covered
by primary or excess property and casualty insurance issued
by an insurer if such loss—
H. R. 3210—4
(A) occurs within the United States; or
(B) occurs to an air carrier (as defined in section 40102
of title 49, United States Code), to a United States flag
vessel (or a vessel based principally in the United States,
on which United States income tax is paid and whose
insurance coverage is subject to regulation in the United
States), regardless of where the loss occurs, or at the prem-
ises of any United States mission.
(6) INSURER.—The term ‘‘insurer’’ means any entity,
including any affiliate thereof—
(A) that is—
(i) licensed or admitted to engage in the business
of providing primary or excess insurance in any State;
(ii) not licensed or admitted as described in clause
(i), if it is an eligible surplus line carrier listed on
the Quarterly Listing of Alien Insurers of the NAIC,
or any successor thereto;
(iii) approved for the purpose of offering property
and casualty insurance by a Federal agency in connec-
tion with maritime, energy, or aviation activity;
(iv) a State residual market insurance entity or
State workers’ compensation fund; or
(v) any other entity described in section 103(f),
to the extent provided in the rules of the Secretary
issued under section 103(f);
(B) that receives direct earned premiums for any type
of commercial property and casualty insurance coverage,
other than in the case of entities described in sections
103(d) and 103(f); and
(C) that meets any other criteria that the Secretary
may reasonably prescribe.
(7) INSURER DEDUCTIBLE.—The term ‘‘insurer deductible’’
means—
(A) for the Transition Period, the value of an insurer’s
direct earned premiums over the calendar year immediately
preceding the date of enactment of this Act, multiplied
by 1 percent;
(B) for Program Year 1, the value of an insurer’s direct
earned premiums over the calendar year immediately pre-
ceding Program Year 1, multiplied by 7 percent;
(C) for Program Year 2, the value of an insurer’s direct
earned premiums over the calendar year immediately pre-
ceding Program Year 2, multiplied by 10 percent;
(D) for Program Year 3, the value of an insurer’s
direct earned premiums over the calendar year immediately
preceding Program Year 3, multiplied by 15 percent; and
(E) notwithstanding subparagraphs (A) through (D),
for the Transition Period, Program Year 1, Program Year
2, or Program Year 3, if an insurer has not had a full
year of operations during the calendar year immediately
preceding such Period or Program Year, such portion of
the direct earned premiums of the insurer as the Secretary
determines appropriate, subject to appropriate methodolo-
gies established by the Secretary for measuring such direct
earned premiums.
(8) NAIC.—The term ‘‘NAIC’’ means the National Associa-
tion of Insurance Commissioners.
H. R. 3210—5
(9) PERSON.—The term ‘‘person’’ means any individual,
business or nonprofit entity (including those organized in the
form of a partnership, limited liability company, corporation,
or association), trust or estate, or a State or political subdivision
of a State or other governmental unit.
(10) PROGRAM.—The term ‘‘Program’’ means the Terrorism
Insurance Program established by this title.
(11) PROGRAM YEARS.—
(A) TRANSITION PERIOD.—The term ‘‘Transition Period’’
means the period beginning on the date of enactment of
this Act and ending on December 31, 2002.
(B) PROGRAM
YEAR
1.—The term ‘‘Program Year 1’’
means the period beginning on January 1, 2003 and ending
on December 31, 2003.
(C) PROGRAM
YEAR
2.—The term ‘‘Program Year 2’’
means the period beginning on January 1, 2004 and ending
on December 31, 2004.
(D) PROGRAM YEAR 3.—The term ‘‘Program Year 3’’
means the period beginning on January 1, 2005 and ending
on December 31, 2005.
(12) PROPERTY AND CASUALTY INSURANCE.—The term ‘‘prop-
erty and casualty insurance’’—
(A) means commercial lines of property and casualty
insurance, including excess insurance, workers’ compensa-
tion insurance, and surety insurance; and
(B) does not include—
(i) Federal crop insurance issued or reinsured
under the Federal Crop Insurance Act (7 U.S.C. 1501
et seq.), or any other type of crop or livestock insurance
that is privately issued or reinsured;
(ii) private mortgage insurance (as that term is
defined in section 2 of the Homeowners Protection
Act of 1998 (12 U.S.C. 4901)) or title insurance;
(iii) financial guaranty insurance issued by
monoline financial guaranty insurance corporations;
(iv) insurance for medical malpractice;
(v) health or life insurance, including group life
insurance;
(vi) flood insurance provided under the National
Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.);
or
(vii) reinsurance or retrocessional reinsurance.
(13) SECRETARY.—The term ‘‘Secretary’’ means the Sec-
retary of the Treasury.
(14) STATE.—The term ‘‘State’’ means any State of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, American Samoa, Guam, each of the United States
Virgin Islands, and any territory or possession of the United
States.
(15) UNITED STATES.—The term ‘‘United States’’ means the
several States, and includes the territorial sea and the conti-
nental shelf of the United States, as those terms are defined
in the Violent Crime Control and Law Enforcement Act of
1994 (18 U.S.C. 2280, 2281).
H. R. 3210—6
(16) RULE OF CONSTRUCTION FOR DATES.—With respect to
any reference to a date in this title, such day shall be
construed—
(A) to begin at 12:01 a.m. on that date; and
(B) to end at midnight on that date.
SEC. 103. TERRORISM INSURANCE PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—
(1) IN GENERAL.—There is established in the Department
of the Treasury the Terrorism Insurance Program.
(2) AUTHORITY OF THE SECRETARY.—Notwithstanding any
other provision of State or Federal law, the Secretary shall
administer the Program, and shall pay the Federal share of
compensation for insured losses in accordance with subsection
(e).
(3) MANDATORY
PARTICIPATION.—Each entity that meets
the definition of an insurer under this title shall participate
in the Program.
(b) CONDITIONS FOR FEDERAL PAYMENTS.—No payment may
be made by the Secretary under this section with respect to an
insured loss that is covered by an insurer, unless—
(1) the person that suffers the insured loss, or a person
acting on behalf of that person, files a claim with the insurer;
(2) the insurer provides clear and conspicuous disclosure
to the policyholder of the premium charged for insured losses
covered by the Program and the Federal share of compensation
for insured losses under the Program—
(A) in the case of any policy that is issued before
the date of enactment of this Act, not later than 90 days
after that date of enactment;
(B) in the case of any policy that is issued within
90 days of the date of enactment of this Act, at the time
of offer, purchase, and renewal of the policy; and
(C) in the case of any policy that is issued more than
90 days after the date of enactment of this Act, on a
separate line item in the policy, at the time of offer, pur-
chase, and renewal of the policy;
(3) the insurer processes the claim for the insured loss
in accordance with appropriate business practices, and any
reasonable procedures that the Secretary may prescribe; and
(4) the insurer submits to the Secretary, in accordance
with such reasonable procedures as the Secretary may
establish—
(A) a claim for payment of the Federal share of com-
pensation for insured losses under the Program;
(B) written certification—
(i) of the underlying claim; and
(ii) of all payments made for insured losses; and
(C) certification of its compliance with the provisions
of this subsection.
(c) MANDATORY AVAILABILITY.—
(1) INITIAL PROGRAM PERIODS.—During the period begin-
ning on the first day of the Transition Period and ending
on the last day of Program Year 2, each entity that meets
the definition of an insurer under section 102—
H. R. 3210—7
(A) shall make available, in all of its property and
casualty insurance policies, coverage for insured losses;
and
(B) shall make available property and casualty insur-
ance coverage for insured losses that does not differ materi-
ally from the terms, amounts, and other coverage limita-
tions applicable to losses arising from events other than
acts of terrorism.
(2) PROGRAM YEAR 3.—Not later than September 1, 2004,
the Secretary shall, based on the factors referred to in section
108(d)(1), determine whether the provisions of subparagraphs
(A) and (B) of paragraph (1) should be extended through Pro-
gram Year 3.
(d) STATE RESIDUAL MARKET INSURANCE ENTITIES.—
(1) IN
GENERAL.—The Secretary shall issue regulations,
as soon as practicable after the date of enactment of this
Act, that apply the provisions of this title to State residual
market insurance entities and State workers’ compensation
funds.
(2) TREATMENT OF CERTAIN ENTITIES.—For purposes of the
regulations issued pursuant to paragraph (1)—
(A) a State residual market insurance entity that does
not share its profits and losses with private sector insurers
shall be treated as a separate insurer; and
(B) a State residual market insurance entity that
shares its profits and losses with private sector insurers
shall not be treated as a separate insurer, and shall report
to each private sector insurance participant its share of
the insured losses of the entity, which shall be included
in each private sector insurer’s insured losses.
(3) TREATMENT OF PARTICIPATION IN CERTAIN ENTITIES.—
Any insurer that participates in sharing profits and losses
of a State residual market insurance entity shall include in
its calculations of premiums any premiums distributed to the
insurer by the State residual market insurance entity.
(e) INSURED LOSS SHARED COMPENSATION.—
(1) FEDERAL SHARE.—
(A) IN GENERAL.—The Federal share of compensation
under the Program to be paid by the Secretary for insured
losses of an insurer during the Transition Period and each
Program Year shall be equal to 90 percent of that portion
of the amount of such insured losses that exceeds the
applicable insurer deductible required to be paid during
such Transition Period or such Program Year.
(B) PROHIBITION ON DUPLICATIVE COMPENSATION.—The
Federal share of compensation for insured losses under
the Program shall be reduced by the amount of compensa-
tion provided by the Federal Government to any person
under any other Federal program for those insured losses.
(2) CAP ON ANNUAL LIABILITY.—
(A) IN GENERAL.—Notwithstanding paragraph (1) or
any other provision of Federal or State law, if the aggregate
insured losses exceed $100,000,000,000, during the period
beginning on the first day of the Transition Period and
ending on the last day of Program Year 1, or during Pro-
gram Year 2 or Program Year 3 (until such time as the
Congress may act otherwise with respect to such losses)—
H. R. 3210—8
(i) the Secretary shall not make any payment
under this title for any portion of the amount of such
losses that exceeds $100,000,000,000; and
(ii) no insurer that has met its insurer deductible
shall be liable for the payment of any portion of that
amount that exceeds $100,000,000,000.
(B) INSURER
SHARE.—For purposes of subparagraph
(A), the Secretary shall determine the pro rata share of
insured losses to be paid by each insurer that incurs
insured losses under the Program.
(3) NOTICE TO CONGRESS.—The Secretary shall notify the
Congress if estimated or actual aggregate insured losses exceed
$100,000,000,000 during the period beginning on the first day
of the Transition Period and ending on the last day of Program
Year 1, or during Program Year 2 or Program Year 3, and
the Congress shall determine the procedures for and the source
of any payments for such excess insured losses.
(4) FINAL NETTING.—The Secretary shall have sole discre-
tion to determine the time at which claims relating to any
insured loss or act of terrorism shall become final.
(5) DETERMINATIONS FINAL.—Any determination of the Sec-
retary under this subsection shall be final, unless expressly
provided, and shall not be subject to judicial review.
(6) 
INSURANCE
MARKETPLACE
AGGREGATE
RETENTION
AMOUNT.—For purposes of paragraph (7), the insurance market-
place aggregate retention amount shall be—
(A) for the period beginning on the first day of the
Transition Period and ending on the last day of Program
Year 1, the lesser of—
(i) $10,000,000,000; and
(ii) the aggregate amount, for all insurers, of
insured losses during such period;
(B) for Program Year 2, the lesser of—
(i) $12,500,000,000; and
(ii) the aggregate amount, for all insurers, of
insured losses during such Program Year; and
(C) for Program Year 3, the lesser of—
(i) $15,000,000,000; and
(ii) the aggregate amount, for all insurers, of
insured losses during such Program Year.
(7) RECOUPMENT OF FEDERAL SHARE.—
(A) MANDATORY RECOUPMENT AMOUNT.—For purposes
of this paragraph, the mandatory recoupment amount for
each of the periods referred to in subparagraphs (A), (B),
and (C) of paragraph (6) shall be the difference between—
(i) the insurance marketplace aggregate retention
amount under paragraph (6) for such period; and
(ii) the aggregate amount, for all insurers, of
insured losses during such period that are not com-
pensated by the Federal Government because such
losses—
(I) are within the insurer deductible for the
insurer subject to the losses; or
(II) are within the portion of losses of the
insurer that exceed the insurer deductible, but
are not compensated pursuant to paragraph (1).
H. R. 3210—9
(B) NO MANDATORY RECOUPMENT IF UNCOMPENSATED
LOSSES EXCEED INSURANCE MARKETPLACE RETENTION.—Not-
withstanding subparagraph (A), if the aggregate amount
of uncompensated insured losses referred to in clause (ii)
of such subparagraph for any period referred to in subpara-
graph (A), (B), or (C) of paragraph (6) is greater than
the insurance marketplace aggregate retention amount
under paragraph (6) for such period, the mandatory
recoupment amount shall be $0.
(C) MANDATORY
ESTABLISHMENT
OF
SURCHARGES
TO
RECOUP MANDATORY RECOUPMENT AMOUNT.—The Secretary
shall collect, for repayment of the Federal financial assist-
ance provided in connection with all acts of terrorism (or
acts of war, in the case of workers compensation) occurring
during any of the periods referred to in subparagraph
(A), (B), or (C) of paragraph (6), terrorism loss risk-
spreading premiums in an amount equal to any mandatory
recoupment amount for such period.
(D) DISCRETIONARY
RECOUPMENT
OF
REMAINDER
OF
FINANCIAL
ASSISTANCE.—To the extent that the amount
of Federal financial assistance provided exceeds any
mandatory recoupment amount, the Secretary may recoup,
through terrorism loss risk-spreading premiums, such addi-
tional amounts that the Secretary believes can be recouped,
based on—
(i) the ultimate costs to taxpayers of no additional
recoupment;
(ii) the economic conditions in the commercial
marketplace, including the capitalization, profitability,
and investment returns of the insurance industry and
the current cycle of the insurance markets;
(iii) the affordability of commercial insurance for
small- and medium-sized businesses; and
(iv) such other factors as the Secretary considers
appropriate.
(8) POLICY SURCHARGE FOR TERRORISM LOSS RISK-SPREADING
PREMIUMS.—
(A) POLICYHOLDER PREMIUM.—Any amount established
by the Secretary as a terrorism loss risk-spreading pre-
mium shall—
(i) be imposed as a policyholder premium sur-
charge on property and casualty insurance policies in
force after the date of such establishment;
(ii) begin with such period of coverage during the
year as the Secretary determines appropriate; and
(iii) be based on a percentage of the premium
amount charged for property and casualty insurance
coverage under the policy.
(B) COLLECTION.—The Secretary shall provide for
insurers to collect terrorism loss risk-spreading premiums
and remit such amounts collected to the Secretary.
(C) PERCENTAGE LIMITATION.—A terrorism loss risk-
spreading premium (including any additional amount
included in such premium on a discretionary basis pursuant
to paragraph (7)(D)) may not exceed, on an annual basis,
the amount equal to 3 percent of the premium charged
H. R. 3210—10
for property and casualty insurance coverage under the
policy.
(D) ADJUSTMENT FOR URBAN AND SMALLER COMMERCIAL
AND RURAL AREAS AND DIFFERENT LINES OF INSURANCE.—
(i) ADJUSTMENTS.—In determining the method and
manner of imposing terrorism loss risk-spreading pre-
miums, including the amount of such premiums, the
Secretary shall take into consideration—
(I) the economic impact on commercial centers
of urban areas, including the effect on commercial
rents 
and 
commercial 
insurance 
premiums,
particularly rents and premiums charged to small
businesses, and the availability of lease space and
commercial insurance within urban areas;
(II) the risk factors related to rural areas and
smaller commercial centers, including the potential
exposure to loss and the likely magnitude of such
loss, as well as any resulting cross-subsidization
that might result; and
(III) the various exposures to terrorism risk
for different lines of insurance.
(ii) RECOUPMENT OF ADJUSTMENTS.—Any manda-
tory recoupment amounts not collected by the Secretary
because of adjustments under this subparagraph shall
be recouped through additional terrorism loss risk-
spreading premiums.
(E) TIMING OF PREMIUMS.—The Secretary may adjust
the timing of terrorism loss risk-spreading premiums to
provide for equivalent application of the provisions of this
title to policies that are not based on a calendar year,
or to apply such provisions on a daily, monthly, or quarterly
basis, as appropriate.
(f) CAPTIVE INSURERS AND OTHER SELF-INSURANCE ARRANGE-
MENTS.—The Secretary may, in consultation with the NAIC or
the appropriate State regulatory authority, apply the provisions
of this title, as appropriate, to other classes or types of captive
insurers and other self-insurance arrangements by municipalities
and other entities (such as workers’ compensation self-insurance
programs and State workers’ compensation reinsurance pools), but
only if such application is determined before the occurrence of
an act of terrorism in which such an entity incurs an insured
loss and all of the provisions of this title are applied comparably
to such entities.
(g) REINSURANCE TO COVER EXPOSURE.—
(1) OBTAINING COVERAGE.—This title may not be construed
to limit or prevent insurers from obtaining reinsurance coverage
for insurer deductibles or insured losses retained by insurers
pursuant to this section, nor shall the obtaining of such cov-
erage affect the calculation of such deductibles or retentions.
(2) LIMITATION
ON
FINANCIAL
ASSISTANCE.—The amount
of financial assistance provided pursuant to this section shall
not be reduced by reinsurance paid or payable to an insurer
from other sources, except that recoveries from such other
sources, taken together with financial assistance for the Transi-
tion Period or a Program Year provided pursuant to this section,
may not exceed the aggregate amount of the insurer’s insured
H. R. 3210—11
losses for such period. If such recoveries and financial assist-
ance for the Transition Period or a Program Year exceed such
aggregate amount of insured losses for that period and there
is no agreement between the insurer and any reinsurer to
the contrary, an amount in excess of such aggregate insured
losses shall be returned to the Secretary.
(h) GROUP LIFE INSURANCE STUDY.—
(1) STUDY.—The Secretary shall study, on an expedited
basis, whether adequate and affordable catastrophe reinsurance
for acts of terrorism is available to life insurers in the United
States that issue group life insurance, and the extent to which
the threat of terrorism is reducing the availability of group
life insurance coverage for consumers in the United States.
(2) CONDITIONAL COVERAGE.—To the extent that the Sec-
retary determines that such coverage is not or will not be
reasonably available to both such insurers and consumers, the
Secretary shall, in consultation with the NAIC—
(A) apply the provisions of this title, as appropriate,
to providers of group life insurance; and
(B) provide such restrictions, limitations, or conditions
with respect to any financial assistance provided that the
Secretary deems appropriate, based on the study under
paragraph (1).
(i) STUDY AND REPORT.—
(1) STUDY.—The Secretary, after consultation with the
NAIC, representatives of the insurance industry, and other
experts in the insurance field, shall conduct a study of the
potential effects of acts of terrorism on the availability of life
insurance and other lines of insurance coverage, including per-
sonal lines.
(2) REPORT.—Not later than 9 months after the date of
enactment of this Act, the Secretary shall submit a report
to the Congress on the results of the study conducted under
paragraph (1).
SEC. 104. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.
(a) GENERAL AUTHORITY.—The Secretary shall have the powers
and authorities necessary to carry out the Program, including
authority—
(1) to investigate and audit all claims under the Program;
and
(2) to prescribe regulations and procedures to effectively
administer and implement the Program, and to ensure that
all insurers and self-insured entities that participate in the
Program are treated comparably under the Program.
(b) INTERIM RULES AND PROCEDURES.—The Secretary may issue
interim final rules or procedures specifying the manner in which—
(1) insurers may file and certify claims under the Program;
(2) the Federal share of compensation for insured losses
will be paid under the Program, including payments based
on estimates of or actual insured losses;
(3) the Secretary may, at any time, seek repayment from
or reimburse any insurer, based on estimates of insured losses
under the Program, to effectuate the insured loss sharing provi-
sions in section 103; and
(4) the Secretary will determine any final netting of pay-
ments under the Program, including payments owed to the
H. R. 3210—12
Federal Government from any insurer and any Federal share
of compensation for insured losses owed to any insurer, to
effectuate the insured loss sharing provisions in section 103.
(c) CONSULTATION.—The Secretary shall consult with the NAIC,
as the Secretary determines appropriate, concerning the Program.
(d) CONTRACTS FOR SERVICES.—The Secretary may employ per-
sons or contract for services as may be necessary to implement
the Program.
(e) CIVIL PENALTIES.—
(1) IN GENERAL.—The Secretary may assess a civil mone-
tary penalty in an amount not exceeding the amount under
paragraph (2) against any insurer that the Secretary deter-
mines, on the record after opportunity for a hearing—
(A) has failed to charge, collect, or remit terrorism
loss risk-spreading premiums under section 103(e) in
accordance with the requirements of, or regulations issued
under, this title;
(B) has intentionally provided to the Secretary erro-
neous information regarding premium or loss amounts;
(C) submits to the Secretary fraudulent claims under
the Program for insured losses;
(D) has failed to provide the disclosures required under
subsection (f); or
(E) has otherwise failed to comply with the provisions
of, or the regulations issued under, this title.
(2) AMOUNT.—The amount under this paragraph is the
greater of $1,000,000 and, in the case of any failure to pay,
charge, collect, or remit amounts in accordance with this title
or the regulations issued under this title, such amount in
dispute.
(3) RECOVERY OF AMOUNT IN DISPUTE.—A penalty under
this subsection for any failure to pay, charge, collect, or remit
amounts in accordance with this title or the regulations under
this title shall be in addition to any such amounts recovered
by the Secretary.
(f) SUBMISSION OF PREMIUM INFORMATION.—
(1) IN
GENERAL.—The Secretary shall annually compile
information on the terrorism risk insurance premium rates
of insurers for the preceding year.
(2) ACCESS
TO
INFORMATION.—To the extent that such
information is not otherwise available to the Secretary, the
Secretary may require each insurer to submit to the NAIC
terrorism risk insurance premium rates, as necessary to carry
out paragraph (1), and the NAIC shall make such information
available to the Secretary.
(3) AVAILABILITY TO CONGRESS.—The Secretary shall make
information compiled under this subsection available to the
Congress, upon request.
(g) FUNDING.—
(1) FEDERAL PAYMENTS.—There are hereby appropriated,
out of funds in the Treasury not otherwise appropriated, such
sums as may be necessary to pay the Federal share of com-
pensation for insured losses under the Program.
(2) ADMINISTRATIVE EXPENSES.—There are hereby appro-
priated, out of funds in the Treasury not otherwise appro-
priated, such sums as may be necessary to pay reasonable
costs of administering the Program.
H. R. 3210—13
SEC. 105. PREEMPTION AND NULLIFICATION OF PRE-EXISTING TER-
RORISM EXCLUSIONS.
(a) GENERAL NULLIFICATION.—Any terrorism exclusion in a con-
tract for property and casualty insurance that is in force on the
date of enactment of this Act shall be void to the extent that
it excludes losses that would otherwise be insured losses.
(b) GENERAL PREEMPTION.—Any State approval of any ter-
rorism exclusion from a contract for property and casualty insurance
that is in force on the date of enactment of this Act, shall be
void to the extent that it excludes losses that would otherwise
be insured losses.
(c) REINSTATEMENT
OF
TERRORISM
EXCLUSIONS.—Notwith-
standing subsections (a) and (b) or any provision of State law,
an insurer may reinstate a preexisting provision in a contract
for property and casualty insurance that is in force on the date
of enactment of this Act and that excludes coverage for an act
of terrorism only—
(1) if the insurer has received a written statement from
the insured that affirmatively authorizes such reinstatement;
or
(2) if—
(A) the insured fails to pay any increased premium
charged by the insurer for providing such terrorism cov-
erage; and
(B) the insurer provided notice, at least 30 days before
any such reinstatement, of—
(i) the increased premium for such terrorism cov-
erage; and
(ii) the rights of the insured with respect to such
coverage, including any date upon which the exclusion
would be reinstated if no payment is received.
SEC. 106. PRESERVATION PROVISIONS.
(a) STATE LAW.—Nothing in this title shall affect the jurisdic-
tion or regulatory authority of the insurance commissioner (or any
agency or office performing like functions) of any State over any
insurer or other person—
(1) except as specifically provided in this title; and
(2) except that—
(A) the definition of the term ‘‘act of terrorism’’ in
section 102 shall be the exclusive definition of that term
for purposes of compensation for insured losses under this
title, and shall preempt any provision of State law that
is inconsistent with that definition, to the extent that such
provision of law would otherwise apply to any type of
insurance covered by this title;
(B) during the period beginning on the date of enact-
ment of this Act and ending on December 31, 2003, rates
and forms for terrorism risk insurance covered by this
title and filed with any State shall not be subject to prior
approval or a waiting period under any law of a State
that would otherwise be applicable, except that nothing
in this title affects the ability of any State to invalidate
a rate as excessive, inadequate, or unfairly discriminatory,
and, with respect to forms, where a State has prior approval
authority, it shall apply to allow subsequent review of
such forms; and
H. R. 3210—14
(C) during the period beginning on the date of enact-
ment of this Act and for so long as the Program is in
effect, as provided in section 108, including authority in
subsection 108(b), books and records of any insurer that
are relevant to the Program shall be provided, or caused
to be provided, to the Secretary, upon request by the Sec-
retary, notwithstanding any provision of the laws of any
State prohibiting or limiting such access.
(b) EXISTING REINSURANCE AGREEMENTS.—Nothing in this title
shall be construed to alter, amend, or expand the terms of coverage
under any reinsurance agreement in effect on the date of enactment
of this Act. The terms and conditions of such an agreement shall
be determined by the language of that agreement.
SEC. 107. LITIGATION MANAGEMENT.
(a) PROCEDURES AND DAMAGES.—
(1) IN GENERAL.—If the Secretary makes a determination
pursuant to section 102 that an act of terrorism has occurred,
there shall exist a Federal cause of action for property damage,
personal injury, or death arising out of or resulting from such
act of terrorism, which shall be the exclusive cause of action
and remedy for claims for property damage, personal injury,
or death arising out of or relating to such act of terrorism,
except as provided in subsection (b).
(2) PREEMPTION OF STATE ACTIONS.—All State causes of
action of any kind for property damage, personal injury, or
death arising out of or resulting from an act of terrorism
that are otherwise available under State law are hereby pre-
empted, except as provided in subsection (b).
(3) SUBSTANTIVE LAW.—The substantive law for decision
in any such action described in paragraph (1) shall be derived
from the law, including choice of law principles, of the State
in which such act of terrorism occurred, unless such law is
otherwise inconsistent with or preempted by Federal law.
(4) JURISDICTION.—For each determination described in
paragraph (1), not later than 90 days after the occurrence
of an act of terrorism, the Judicial Panel on Multidistrict Litiga-
tion shall designate 1 district court or, if necessary, multiple
district courts of the United States that shall have original
and exclusive jurisdiction over all actions for any claim
(including any claim for loss of property, personal injury, or
death) relating to or arising out of an act of terrorism subject
to this section. The Judicial Panel on Multidistrict Litigation
shall select and assign the district court or courts based on
the convenience of the parties and the just and efficient conduct
of the proceedings. For purposes of personal jurisdiction, the
district court or courts designated by the Judicial Panel on
Multidistrict Litigation shall be deemed to sit in all judicial
districts in the United States.
(5) PUNITIVE DAMAGES.—Any amounts awarded in an action
under paragraph (1) that are attributable to punitive damages
shall not count as insured losses for purposes of this title.
(b) EXCLUSION.—Nothing in this section shall in any way limit
the liability of any government, an organization, or person who
knowingly participates in, conspires to commit, aids and abets,
or commits any act of terrorism with respect to which a determina-
tion described in subsection (a)(1) was made.
H. R. 3210—15
(c) RIGHT
OF SUBROGATION.—The United States shall have
the right of subrogation with respect to any payment or claim
paid by the United States under this title.
(d) RELATIONSHIP TO OTHER LAW.—Nothing in this section shall
be construed to affect—
(1) any party’s contractual right to arbitrate a dispute;
or
(2) any provision of the Air Transportation Safety and
System Stabilization Act (Public Law 107–42; 49 U.S.C. 40101
note.).
(e) EFFECTIVE PERIOD.—This section shall apply only to actions
described in subsection (a)(1) that arise out of or result from acts
of terrorism that occur or occurred during the effective period of
the Program.
SEC. 108. TERMINATION OF PROGRAM.
(a) TERMINATION OF PROGRAM.—The Program shall terminate
on December 31, 2005.
(b) CONTINUING AUTHORITY
TO PAY
OR ADJUST COMPENSA-
TION.—Following the termination of the Program, the Secretary
may take such actions as may be necessary to ensure payment,
recoupment, reimbursement, or adjustment of compensation for
insured losses arising out of any act of terrorism occurring during
the period in which the Program was in effect under this title,
in accordance with the provisions of section 103 and regulations
promulgated thereunder.
(c) REPEAL; SAVINGS CLAUSE.—This title is repealed on the
final termination date of the Program under subsection (a), except
that such repeal shall not be construed—
(1) to prevent the Secretary from taking, or causing to
be taken, such actions under subsection (b) of this section,
paragraph (4), (5), (6), (7), or (8) of section 103(e), or subsection
(a)(1), (c), (d), or (e) of section 104, as in effect on the day
before the date of such repeal, or applicable regulations promul-
gated thereunder, during any period in which the authority
of the Secretary under subsection (b) of this section is in effect;
or
(2) to prevent the availability of funding under section
104(g) during any period in which the authority of the Secretary
under subsection (b) of this section is in effect.
(d) STUDY AND REPORT ON THE PROGRAM.—
(1) STUDY.—The Secretary, in consultation with the NAIC,
representatives of the insurance industry and of policy holders,
other experts in the insurance field, and other experts as
needed, shall assess the effectiveness of the Program and the
likely capacity of the property and casualty insurance industry
to offer insurance for terrorism risk after termination of the
Program, and the availability and affordability of such insur-
ance for various policyholders, including railroads, trucking,
and public transit.
(2) REPORT.—The Secretary shall submit a report to the
Congress on the results of the study conducted under paragraph
(1) not later than June 30, 2005.