II
Calendar No. 252
107TH CONGRESS
1ST SESSION
H. R. 3210
IN THE SENATE OF THE UNITED STATES
NOVEMBER 30, 2001
Received and read the first time
DECEMBER 3, 2001
Read the second time and placed on the calendar
AN ACT
To ensure the continued financial capacity of insurers to
provide coverage for risks from terrorism.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Terrorism Risk Protection Act’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title and table of contents.
Sec. 2. Congressional findings.
Sec. 3. Authority of Secretary of the Treasury.
Sec. 4. Submission of premium information to Secretary.
Sec. 5. Initial and subsequent triggering determinations.
Sec. 6. Federal cost-sharing for commercial insurers.
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Sec. 7. Assessments.
Sec. 8. Terrorism loss repayment surcharge.
Sec. 9. Administration of assessments and surcharges.
Sec. 10. Application to self-insurance arrangements and offshore insurers and
reinsurers.
Sec. 11. Study of reserves for property and casualty insurance for terrorist or
other catastrophic events.
Sec. 12. State preemption.
Sec. 13. Consistent State guidelines for coverage for acts of terrorism.
Sec. 14. Consultation with State insurance regulators and NAIC.
Sec. 15. Litigation management.
Sec. 16. Study of potential effects of terrorism on life insurance industry.
Sec. 17. Railroad and trucking insurance study.
Sec. 18. Study of reinsurance pool system for future acts of terrorism.
Sec. 19. Definitions.
Sec. 20. Covered period and extension of program.
Sec. 21. Regulations.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that—
(1) the terrorist attacks on the World Trade
Center and the Pentagon of September 11, 2001, re-
sulted in a large number of deaths and injuries, the
destruction and damage to buildings, and interrup-
tion of business operations;
(2) the attacks have inflicted possibly the larg-
est losses ever incurred by insurers and reinsurers in
a single day;
(3) while the insurance and reinsurance indus-
tries have committed to pay the losses arising from
the September 11 attacks, the resulting disruption
has created widespread market uncertainties with re-
gard to the risk of losses arising from possible fu-
ture terrorist attacks;
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(4) such uncertainty threatens the continued
availability of United States commercial property
and casualty insurance for terrorism risk at mean-
ingful coverage levels;
(5) the unavailability of affordable commercial
property and casualty insurance for terrorist acts
threatens the growth and stability of the United
States economy, including impeding the ability of fi-
nancial services providers to finance commercial
property acquisitions and new construction;
(6) in the past, the private insurance and rein-
surance markets have shown a remarkable resiliency
in adapting to changed circumstances;
(7) given time, the private markets will diver-
sify and develop risk spreading mechanisms to in-
crease capacity and guard against possible future
losses incurred by terrorist attacks;
(8) it is necessary to create a temporary indus-
try risk sharing program to ensure the continued
availability of commercial property and casualty in-
surance and reinsurance for terrorism-related risks;
(9) such action is necessary to limit immediate
market disruptions, encourage economic stabiliza-
tion, and facilitate a transition to a viable market
for private terrorism risk insurance;
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(10) in addition, it is necessary promptly to
conduct a study of whether there is a need for re-
serves for property and casualty insurance for ter-
rorist or other catastrophic events; and
(11) terrorism insurance plays an important
role in the efficient functioning of the economy and
the financing of commercial property acquisitions
and new construction and, therefore, the Congress
intends to continue to monitor, review, and evaluate
the private terrorism insurance and reinsurance
marketplace to determine whether additional action
is necessary to maintain the long-term stability of
the real estate and capital markets.
SEC. 3. AUTHORITY OF SECRETARY OF THE TREASURY.
The Secretary of the Treasury shall be responsible
for carrying out a program for financial assistance for
commercial property and casualty insurers, as provided in
this Act.
SEC. 4. SUBMISSION OF PREMIUM INFORMATION TO SEC-
RETARY.
To the extent such information is not otherwise avail-
able to the Secretary, the Secretary may require each in-
surer to submit, to the Secretary or to the NAIC, a state-
ment specifying the net premium amount of coverage writ-
ten by such insurer under each line of commercial property
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and casualty insurance sold by such insurer during such
periods as the Secretary may provide.
SEC. 5. INITIAL AND SUBSEQUENT TRIGGERING DETER-
MINATIONS.
(a) IN GENERAL.—For purposes of this Act, a ‘‘trig-
gering determination’’ is a determination by the Secretary
that an act of terrorism has occurred during the covered
period and that the aggregate insured losses resulting
from such occurrence or from multiple occurrences of acts
of terrorism all occurring during the covered period, meet
the requirements under either of the following paragraphs:
(1) INDUSTRY-WIDE TRIGGER.—Such industry-
wide losses exceed $1,000,000,000.
(2) INDIVIDUAL INSURER TRIGGER.—Such in-
dustry-wide losses exceed $100,000,000 and some
portion of such losses for any single commercial in-
surer exceed—
(A) 10 percent of the capital surplus of
such commercial insurer (as such term is de-
fined by the Secretary); and
(B) 10 percent of the net premium written
by such commercial insurer that is in force at
the time the insured losses occurred;
except that this paragraph shall not apply to any
commercial insurer that was not providing commer-
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cial property and casualty insurance coverage prior
to September 11, 2001, unless such insurer incurs
such losses under commercial property and casualty
insurance providing coverage for acts of terrorism
through a pool of reserves for terrorism risks that
is not under the control of any commercial insurer.
(b) DETERMINATIONS REGARDING OCCURRENCES.—
The Secretary, after consultation with the Attorney Gen-
eral of the United States and the Secretary of State, shall
have the sole authority which may not be delegated or des-
ignated to any other officer, employee, or position, for de-
termining whether—
(1) an occurrence was caused by an act of ter-
rorism; and
(2) an act of terrorism occurred during the cov-
ered period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSUR-
ERS.
(a) IN GENERAL.—Pursuant to a triggering deter-
mination, the Secretary shall provide financial assistance
to commercial insurers in accordance with this section to
cover insured losses resulting from acts of terrorism,
which shall be repaid in accordance with subsection (e).
(b) AMOUNT.—
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(1) INDUSTRY-WIDE TRIGGER.—Subject to sub-
sections (c) and (d), with respect to a triggering de-
termination under section 5(a)(1), financial assist-
ance shall be made available under this section to
each commercial insurer in an amount equal to the
difference between—
(A) 90 percent of the amount of the in-
sured losses of the insurer as a result of the
triggering event involved; and
(B) $5,000,000.
(2) INDIVIDUAL INSURER TRIGGER.—Subject to
subsections (c) and (d), with respect to a triggering
determination under section 5(a)(2), financial assist-
ance shall be made available under this section, to
each commercial insurer incurring insured losses as
a result of the triggering event involved that exceed
the amounts under subparagraphs (A) and (B) of
such section, in an amount equal to the difference
between—
(A) 90 percent of the amount of the in-
sured losses of the insurer as a result of such
triggering event; and
(B) the amount under subparagraph (B) of
section 5(a)(2).
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(3) ADDITIONAL
AMOUNTS.—Subject to sub-
section (c), if the Secretary has provided financial
assistance to a commercial insurer pursuant to para-
graph (2) of this subsection and subsequently makes
a triggering determination pursuant to section
5(a)(1), the Secretary shall provide financial assist-
ance to such insurer in connection with such subse-
quent triggering determination (in addition to the
amount of financial assistance provided to such in-
surer pursuant to paragraph (1) of this subsection)
in the amount under section 5(a)(2)(B).
(c) AGGREGATE LIMITATION.—
(1) IN GENERAL.—The aggregate amount of fi-
nancial assistance provided pursuant to this section
may not exceed $100,000,000,000.
(2) SENSE OF CONGRESS REGARDING SEVERE
LOSSES.—It is the sense of the Congress that acts
of terrorism resulting in insured losses greater than
$100,000,000,000 would necessitate further action
by the Congress to address such additional losses.
(d) LIMITATIONS.—The Secretary may establish such
limitations as may be necessary to ensure that payments
under this section in connection with a triggering deter-
mination are made only to commercial insurers that are