cans and often serve as their only life insurance ben-
efit; 
‘‘(11) the group life insurance industry, in the 
event of a severe act of terrorism, is vulnerable to in-
solvency because high concentrations of covered em-
ployees work in the same locations, because primary 
group life insurers do not exclude conventional and 
NBCR terrorism risks while most catastrophic rein-
surance does exclude such terrorism risks, and because 
a large-scale loss of life would fall outside of actuarial 
expectations of death; and 
‘‘(12) the United States Government should pro-
vide temporary financial compensation to insured 
parties, contributing to the stabilization of the United 
States economy in a time of national crisis, while the 
financial services industry develops the systems, 
mechanisms, products, and programs necessary to cre-
ate a viable financial services market for private ter-
rorism risk insurance. 
‘‘(b) PURPOSE.—The purpose of this title is to estab-
lish a temporary Federal program that provides for a trans-
parent system of shared public and private compensation 
for insured losses resulting from acts of terrorism, in order 
to— 
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‘‘(1) protect consumers by addressing market dis-
ruptions and ensure the continued widespread avail-
ability and affordability of property and casualty in-
surance and group life insurance for all types of ter-
rorism risk, including conventional terrorism risk 
and nuclear, biological, chemical, and radiological 
terrorism risk; 
‘‘(2) allow for a transitional period for the pri-
vate markets to stabilize, resume pricing of such in-
surance, and build capacity to absorb any future 
losses, while preserving State insurance regulation 
and consumer protections (unless otherwise preempted 
by this Act); and 
‘‘(3) provide finite liability limits for terrorism 
insurance losses for insurers and the United States 
Government. 
‘‘SEC. 102. DEFINITIONS. 
‘‘In this title, the following definitions shall apply: 
‘‘(1) ACT OF TERRORISM.— 
‘‘(A) CERTIFICATION.—The term ‘act of ter-
rorism’ means any act that is certified by the 
Secretary, in concurrence with the Secretary of 
State, the Secretary of Homeland Security, and 
the Attorney General of the United States— 
‘‘(i) to be an act of terrorism; 
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‘‘(ii) to be a violent act or an act that 
is dangerous to— 
‘‘(I) human life; 
‘‘(II) property; or 
‘‘(III) infrastructure; 
‘‘(iii) to have resulted in damage with-
in the United States, or outside of the 
United States in the case of— 
‘‘(I) an air carrier or vessel de-
scribed in paragraph (9)(B); or 
‘‘(II) the premises of a United 
States mission; and 
‘‘(iv) to have been committed by an in-
dividual or individuals as part of an effort 
to coerce the civilian population of the 
United States or to influence the policy or 
affect the conduct of the United States Gov-
ernment by coercion. 
‘‘(B) LIMITATION.—No act shall be certified 
by the Secretary as an act of terrorism if— 
‘‘(i) the act is committed as part of the 
course of a war declared by the Congress, 
except that this clause shall not apply with 
respect to any coverage for workers’ com-
pensation; or 
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‘‘(ii) property and casualty insurance 
and group life insurance losses resulting 
from the act, in the aggregate, do not exceed 
$5,000,000. 
‘‘(C) CERTIFICATION OF ACT OF NBCR TER-
RORISM.—Upon certification of an act of ter-
rorism, the Secretary, in concurrence with the 
Secretary of State, the Secretary of Homeland 
Security, and the Attorney General of the United 
States, shall determine whether the act of ter-
rorism meets the definition of NBCR terrorism 
in this section. If such determination is that the 
act does meet such definition, the Secretary shall 
further certify such act of terrorism as an act of 
NBCR terrorism. 
‘‘(D) DETERMINATIONS
FINAL.—Any cer-
tification of, or determination not to certify, an 
act as an act of terrorism or as an act of NBCR 
terrorism under this paragraph shall be final, 
and shall not be subject to judicial review. 
‘‘(E) NONDELEGATION.—The Secretary may 
not delegate or designate to any other officer, em-
ployee, or person, any determination under this 
paragraph of whether, during the effective period 
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of the Program, an act of terrorism, including 
an act of NBCR terrorism, has occurred. 
‘‘(2) AFFILIATE.—The term ‘affiliate’ means, 
with respect to an insurer, any entity that controls, 
is controlled by, or is under common control with the 
insurer. 
‘‘(3) AMOUNT AT RISK.—The term ‘amount at 
risk’ means face amount less statutory policy reserves 
for group life insurance issued by any insurer for in-
surance against losses occurring at the locations de-
scribed in subparagraph (A) of paragraph (9). 
‘‘(4) CONTROL.—An entity has ‘control’ over an-
other entity, if— 
‘‘(A) the entity directly or indirectly or act-
ing through 1 or more other persons owns, con-
trols, or has power to vote 25 percent or more of 
any class of voting securities of the other entity; 
‘‘(B) the entity controls in any manner the 
election of a majority of the directors or trustees 
of the other entity; or 
‘‘(C) the Secretary determines, after notice 
and opportunity for hearing, that the entity di-
rectly or indirectly exercises a controlling influ-
ence over the management or policies of the other 
entity; except that for purposes of any proceeding 
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under this subparagraph, there shall be a pre-
sumption that any entity which directly or indi-
rectly owns, controls, or has power to vote less 
than 5 percent of any class of voting securities 
of another entity does not have control over that 
entity. 
‘‘(5) COVERED LINES.—The term ‘covered lines’ 
means property and casualty insurance and group 
life insurance, as defined in this section. 
‘‘(6) DIRECT EARNED PREMIUM.—The term ‘di-
rect earned premium’ means a direct earned premium 
for property and casualty insurance issued by any 
insurer for insurance against losses occurring at the 
locations described in subparagraph (A) of paragraph 
(9). 
‘‘(7) EXCESS INSURED LOSS.—The term ‘excess 
insured loss’ means, with respect to a Program Year, 
any portion of the amount of insured losses during 
such Program Year that exceeds the cap on annual li-
ability under section 103(e)(2)(A). 
‘‘(8) GROUP LIFE INSURANCE.—The term ‘group 
life insurance’ means an insurance contract that pro-
vides life insurance coverage, including term life in-
surance coverage, universal life insurance coverage, 
variable universal life insurance coverage, and acci-
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dental death coverage, or a combination thereof, for a 
number of individuals under a single contract, on the 
basis of a group selection of risks, but does not in-
clude ‘Corporate Owned Life Insurance’ or ‘Business 
Owned Life Insurance,’ each as defined under the In-
ternal Revenue Code of 1986, or any similar product, 
or group life reinsurance or retrocessional reinsur-
ance. 
‘‘(9) INSURED LOSS.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the term ‘insured loss’ means 
any loss resulting from an act of terrorism (in-
cluding an act of war, in the case of workers’ 
compensation) that is covered by primary or ex-
cess property and casualty insurance, or group 
life insurance to the extent of the amount at risk, 
issued by an insurer, if such loss— 
‘‘(i) occurs within the United States; 
or 
‘‘(ii) occurs to an air carrier (as de-
fined 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 
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subject to regulation in the United States), 
regardless of where the loss occurs, or at the 
premises of any United States mission. 
‘‘(B) LIMITATION FOR GROUP LIFE INSUR-
ANCE.—Such term shall not include any losses of 
an insurer resulting from coverage of any single 
certificate holder under any group life insurance 
coverages of the insurer to the extent such losses 
are not compensated under the Program by rea-
son of section 103(e)(1)(D). 
‘‘(10) INSURER.—The term ‘insurer’ means any 
entity, including any affiliate thereof— 
‘‘(A) that is— 
‘‘(i) licensed or admitted to engage in 
the business of providing primary or excess 
insurance, or group life insurance, in any 
State; 
‘‘(ii) not licensed or admitted as de-
scribed in clause (i), if it is an eligible sur-
plus line carrier listed on the Quarterly 
Listing of Alien Insurers of the NAIC, or 
any successor thereto; 
‘‘(iii) approved for the purpose of offer-
ing property and casualty insurance by a 
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Federal agency in connection with mari-
time, energy, or aviation activity; 
‘‘(iv) a State residual market insur-
ance entity or State workers’ compensation 
fund; or 
‘‘(v) any other entity described in sec-
tion 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 cas-
ualty insurance coverage, or, in the case of group 
life insurance, that receives direct premiums, 
other than in the case of entities described in sec-
tions 103(d) and 103(f); and 
‘‘(C) that meets any other criteria that the 
Secretary may reasonably prescribe. 
‘‘(11) INSURER DEDUCTIBLE.—The term ‘insurer 
deductible’ means— 
‘‘(A) for the Transition Period, the value of 
an insurer’s direct earned premiums over the 
calendar year immediately preceding the date of 
enactment of this Act, multiplied by 1 percent; 
‘‘(B) for Program Year 1, the value of an 
insurer’s direct earned premiums over the cal-
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endar year immediately preceding Program Year 
1, multiplied by 7 percent; 
‘‘(C) for Program Year 2, the value of an 
insurer’s direct earned premiums over the cal-
endar year immediately preceding Program Year 
2, multiplied by 10 percent; 
‘‘(D) for Program Year 3, the value of an 
insurer’s direct earned premiums over the cal-
endar year immediately preceding Program Year 
3, multiplied by 15 percent; 
‘‘(E) for Program Year 4, the value of an 
insurer’s direct earned premiums over the cal-
endar year immediately preceding Program Year 
4, multiplied by 17.5 percent; 
‘‘(F) for Program Year 5, the value of an 
insurer’s direct earned premiums over the cal-
endar year immediately preceding Program Year 
5, multiplied by 20 percent; 
‘‘(G) for each additional Program Year— 
‘‘(i) with respect to property and cas-
ualty insurance, the value of an insurer’s 
direct earned premiums over the calendar 
year immediately preceding such Program 
Year, multiplied by 20 percent; and 
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‘‘(ii) with respect to group life insur-
ance, the value of an insurer’s amount at 
risk over the calendar year immediately 
preceding such Program Year, multiplied by 
0.0351 percent; 
‘‘(H) notwithstanding subparagraphs (A) 
through (G), for the Transition Period or any 
Program Year, if an insurer has not had a full 
year of operations during the calendar year im-
mediately preceding such Period or Program 
Year, such portion of the direct earned premiums 
with respect to property and casualty insurance, 
and such portion of the amounts at risk with re-
spect to group life insurance, of the insurer as 
the Secretary determines appropriate, subject to 
appropriate methodologies established by the Sec-
retary for measuring such direct earned pre-
miums and amounts at risk; 
‘‘(I) notwithstanding subparagraphs (A) 
through (H) and (J), in the case of any act of 
NBCR terrorism, for any additional Program 
Year— 
‘‘(i) with respect to property and cas-
ualty insurance, the value of an insurer’s 
direct earned premiums over the calendar 
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year immediately preceding such Program 
Year, multiplied by a percentage, which— 
‘‘(I) for the second additional Pro-
gram Year, shall be 3.5 percent; and 
‘‘(II) for each succeeding Program 
Year thereafter, shall be 50 basis points 
greater than the percentage applicable 
to the preceding additional Program 
Year; and 
‘‘(ii) with respect to group life insur-
ance, the value of an insurer’s amount at 
risk over the calendar year immediately 
preceding such Program Year, multiplied by 
a percentage, which— 
‘‘(I) for the first additional Pro-
gram Year, shall be 0.00614 percent; 
and 
‘‘(II) for each succeeding Program 
Year thereafter, shall be 0.088 basis 
point greater than the percentage ap-
plicable to the preceding additional 
Program Year; and 
‘‘(J) notwithstanding subparagraph (G)(i), 
if aggregate industry insured losses resulting 
from 
a 
certified 
act 
of 
terrorism 
exceed 
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$1,000,000,000, for any insurer that sustains in-
sured losses resulting from such act of terrorism, 
the value of such insurer’s direct earned pre-
miums over the calendar year immediately pre-
ceding the Program Year, multiplied by a per-
centage, which— 
‘‘(i) for the first additional Program 
Year shall be 5 percent; 
‘‘(ii) for each additional Program Year 
thereafter, shall be 50 basis points greater 
than the percentage applicable to the pre-
ceding additional Program Year, except 
that if an act of terrorism occurs during 
any additional Program Year that results 
in aggregate industry insured losses exceed-
ing $1,000,000,000, the percentage for the 
succeeding additional Program Year shall 
be 5 percent and the increase under this 
clause shall apply to additional Program 
Years thereafter; 
except that for purposes of determining under 
this subparagraph whether aggregate industry 
insured losses exceed $1,000,000,000, the Sec-
retary may combine insured losses resulting from 
two or more certified acts of terrorism occurring 
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during such Program Year in the same geo-
graphic area (with such area determined by the 
Secretary), in which case such insurer shall be 
permitted to combine insured losses resulting 
from such acts of terrorism for purposes of satis-
fying its insurer deductible under this subpara-
graph; and except that the insurer deductible 
under this subparagraph shall apply only with 
respect to compensation of insured losses result-
ing from such certified act, or combined certified 
acts, and that for purposes of compensation of 
any other insured losses occurring in the same 
Program Year, the insurer deductible determined 
under subparagraph (G)(i) or (I) shall apply. 
‘‘(12) NAIC.—The term ‘NAIC’ means the Na-
tional Association of Insurance Commissioners. 
‘‘(13) NBCR TERRORISM.—The term ‘NBCR ter-
rorism’ means an act of terrorism that involves nu-
clear, biological, chemical, or radiological reactions, 
releases, or contaminations, to the extent any insured 
losses result from any such reactions, releases, or con-
taminations. 
‘‘(14) PERSON.—The term ‘person’ means any 
individual, business or nonprofit entity (including 
those organized in the form of a partnership, limited 
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liability company, corporation, or association), trust 
or estate, or a State or political subdivision of a State 
or other governmental unit. 
‘‘(15) PROGRAM.—The term ‘Program’ means the 
Terrorism Insurance Program established by this 
title. 
‘‘(16) PROGRAM YEARS.— 
‘‘(A) 
TRANSITION
PERIOD.—The 
term 
‘Transition Period’ means the period beginning 
on the date of enactment of this Act and ending 
on December 31, 2002. 
‘‘(B) PROGRAM
YEAR
1.—The term ‘Pro-
gram Year 1’ means the period beginning on 
January 1, 2003 and ending on December 31, 
2003. 
‘‘(C) PROGRAM
YEAR
2.—The term ‘Pro-
gram Year 2’ means the period beginning on 
January 1, 2004 and ending on December 31, 
2004. 
‘‘(D) PROGRAM
YEAR
3.—The term ‘Pro-
gram Year 3’ means the period beginning on 
January 1, 2005 and ending on December 31, 
2005. 
‘‘(E) PROGRAM
YEAR
4.—The term ‘Pro-
gram Year 4’ means the period beginning on 
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January 1, 2006 and ending on December 31, 
2006. 
‘‘(F) PROGRAM
YEAR
5.—The term ‘Pro-
gram Year 5’ means the period beginning on 
January 1, 2007 and ending on December 31, 
2007. 
‘‘(G) ADDITIONAL
PROGRAM
YEAR.—The 
term ‘additional Program Year’ means any ad-
ditional one-year period after Program Year 5 
during which the Program is in effect, which pe-
riod shall begin on January 1 and end on De-
cember 31 of the same calendar year. 
‘‘(17) PROPERTY AND CASUALTY INSURANCE.— 
The term ‘property and casualty insurance’— 
‘‘(A) means commercial lines of property 
and casualty insurance, including excess insur-
ance, workers’ compensation insurance, and di-
rectors and officers liability insurance; and 
‘‘(B) does not include— 
‘‘(i) Federal crop insurance issued or 
reinsured under the Federal Crop Insurance 
Act (7 U.S.C. 1501 et seq.), or any other 
type of crop or livestock insurance that is 
privately issued or reinsured; 
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‘‘(ii) private mortgage insurance (as 
that term is defined in section 2 of the 
Homeowners Protection Act of 1998 (12 
U.S.C. 4901)) or title insurance; 
‘‘(iii) financial guaranty insurance 
issued by monoline financial guaranty in-
surance corporations; 
‘‘(iv) insurance for medical mal-
practice; 
‘‘(v) health or life insurance, including 
group life insurance; 
‘‘(vi) flood insurance provided under 
the National Flood Insurance Act of 1968 
(42 U.S.C. 4001 et seq.); 
‘‘(vii) reinsurance or retrocessional re-
insurance; 
‘‘(viii) commercial automobile insur-
ance; 
‘‘(ix) burglary and theft insurance; 
‘‘(x) surety insurance; or 
‘‘(xi) professional liability insurance. 
‘‘(18) SECRETARY.—The term ‘Secretary’ means 
the Secretary of the Treasury. 
‘‘(19) STATE.—The term ‘State’ means any 
State of the United States, the District of Columbia, 
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the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, American Samoa, 
Guam, each of the United States Virgin Islands, and 
any territory or possession of the United States. 
‘‘(20) UNITED
STATES.—The term ‘United 
States’ means the several States, and includes the ter-
ritorial sea and the continental shelf of the United 
States, as those terms are defined in the Violent 
Crime Control and Law Enforcement Act of 1994 (18 
U.S.C. 2280, 2281). 
‘‘(21) RULE OF CONSTRUCTION FOR DATES.— 
With respect to any reference to a date in this title, 
such day shall be construed— 
‘‘(A) to begin at 12:01 a.m. on that date; 
and 
‘‘(B) to end at midnight on that date. 
‘‘SEC. 103. TERRORISM INSURANCE PROGRAM. 
‘‘(a) ESTABLISHMENT OF PROGRAM.— 
‘‘(1) IN GENERAL.—There is established in the 
Department of the Treasury the Terrorism Insurance 
Program. 
‘‘(2) AUTHORITY OF THE SECRETARY.—Notwith-
standing any other provision of State or Federal law, 
the Secretary shall administer the Program, and shall 
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pay the Federal share of compensation for insured 
losses in accordance with subsection (e). 
‘‘(3) MANDATORY PARTICIPATION.—Each entity 
that meets the definition of an insurer under this title 
shall participate in the Program. 
‘‘(4) NBCR EXEMPTION
FOR
CERTAIN
INSUR-
ERS.—Notwithstanding the requirements of para-
graph (3): 
‘‘(A) ELIGIBILITY.—Upon request, the Sec-
retary may provide an exemption from the re-
quirements of subparagraph (B) of subsection 
(c)(1) in the Program to an entity that otherwise 
meets the definition of an insurer under this title 
if— 
‘‘(i) such insurer’s direct earned pre-
mium is less than $50,000,000 in the cal-
endar year immediately preceding the cur-
rent additional Program Year; and 
‘‘(ii) the Secretary makes the deter-
mination set forth in subparagraph (D). 
‘‘(B) INSURER
GROUP.—For purposes of 
subparagraph (A)(i), the direct earned premium 
of any insurer shall include the direct earned 
premiums of every affiliate of that insurer. 
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‘‘(C) INFORMATION AND CONSULTATION.— 
Any insurer requesting an exemption pursuant 
to this paragraph shall provide any information 
the Secretary may require to establish its eligi-
bility for the exemption. In developing standards 
for evaluating eligibility for the exemption under 
this paragraph, the Secretary shall consult with 
the NAIC. 
‘‘(D) DETERMINATION.—In making any de-
termination regarding eligibility for exemption 
under this paragraph, the Secretary shall consult 
with the insurance commissioner of the State or 
other appropriate State regulatory authority 
where the insurer is domiciled and determine 
whether the insurer has demonstrated that it 
would become insolvent if it were required, in the 
event of an act of NBCR terrorism, to satisfy— 
‘‘(i) its deductible and maximum ap-
plicable share above the deductible pursuant 
to sections 102(11)(I) and 103(e)(1)(B), re-
spectively, for such act of NBCR terrorism 
resulting in aggregate industry insured 
losses above the trigger established in section 
103(e)(1)(C); or 
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‘‘(ii) its maximum payment obliga-
tions for insured losses for such act of 
NBCR terrorism resulting in aggregate in-
dustry insured losses below the trigger estab-
lished in section 103(e)(1)(C). 
‘‘(E) WORKERS’ COMPENSATION AND OTHER 
COMPULSORY INSURANCE LAW.—In granting an 
exemption under this paragraph, the Secretary 
shall not approve any request for exemption with 
regard to State workers’ compensation insurance 
or other compulsory insurance law requiring 
coverage of the risks described in subparagraph 
(B) of subsection (c)(1). 
‘‘(F) EXEMPTION PERIOD.— 
‘‘(i) IN
GENERAL.—Any exemption 
granted to an insurer by the Secretary 
under this paragraph shall have a duration 
of not longer than 2 years. 
‘‘(ii) 
EXTENSION.—Notwithstanding 
clause (i), the Secretary may, upon applica-
tion by an insurer granted an exemption 
under this paragraph, extend such exemp-
tion for additional periods of not longer 
than 2 years. 
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‘‘(b) CONDITIONS FOR FEDERAL PAYMENTS.—No pay-
ment may be made by the Secretary under this section with 
respect to an insured loss that is covered by an insurer, 
unless— 
‘‘(1) the person that suffers the insured loss, or 
a person acting on behalf of that person, files a claim 
with the insurer; 
‘‘(2) the insurer provides clear and conspicuous 
disclosure to the policyholder of the premium charged 
for insured losses covered by the Program (including 
the additional premium, if any, charged for the cov-
erage for insured losses resulting from acts of NBCR 
terrorism as made available pursuant to subsection 
(c)(1)(B)) and the Federal share of compensation for 
insured losses under the Program— 
‘‘(A) in the case of any policy that is issued 
before the date of enactment of this Act, not later 
than 90 days after that date of enactment; 
‘‘(B) in the case of any policy that is issued 
within 90 days of the date of enactment of this 
Act, at the time of offer, purchase, and renewal 
of the policy; and 
‘‘(C) in the case of any policy that is issued 
more than 90 days after the date of enactment 
of this Act, on a separate line item in the policy, 
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at the time of offer, purchase, and renewal of the 
policy; 
‘‘(3) the insurer processes the claim for the in-
sured loss in accordance with appropriate business 
practices, and any reasonable procedures that the Sec-
retary may prescribe; and 
‘‘(4) the insurer submits to the Secretary, in ac-
cordance with such reasonable procedures as the Sec-
retary may establish— 
‘‘(A) a claim for payment of the Federal 
share of compensation for insured losses under 
the Program; 
‘‘(B) written certification— 
‘‘(i) of the underlying claim; and 
‘‘(ii) of all payments made for insured 
losses; and 
‘‘(C) certification of its compliance with the 
provisions of this subsection. 
‘‘(c) MANDATORY AVAILABILITY.— 
‘‘(1) AVAILABILITY OF COVERAGE FOR INSURED 
LOSSES.—Subject to paragraph (3), during each Pro-
gram Year, each entity that meets the definition of an 
insurer under section 102 shall make available— 
‘‘(A) in all of its insurance policies for cov-
ered lines, coverage for insured losses that does 
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not differ materially from the terms, amounts, 
and other coverage limitations applicable to 
losses arising from events other than acts of ter-
rorism; and 
‘‘(B) in insurance policies for covered lines 
for which the coverage described in subparagraph 
(A) is provided, exceptions to the pollution and 
nuclear hazard exclusions of such policies that 
render such exclusions inapplicable only as to 
insured losses arising from acts of NBCR ter-
rorism. 
‘‘(2) ALLOWABLE EXCLUSIONS IN OTHER COV-
ERAGE.—Subject to paragraph (3) and notwith-
standing any other provision of Federal or State law, 
including any State workers’ compensation and other 
compulsory insurance law, if a person elects not to 
purchase an insurance policy with the coverage de-
scribed in paragraph (1)— 
‘‘(A) an insurer may exclude coverage for 
all losses from acts of terrorism including acts of 
NBCR terrorism, except for State workers’ com-
pensation and other compulsory insurance law 
requiring coverage of the risks described in sub-
section (c)(1) (unless permitted by State law); or 
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