I
107TH CONGRESS
1ST SESSION
H. R. 3357
To ensure the continued financial capacity of insurers to provide coverage
for risks from terrorism, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 28, 2001
Mr. ARMEY (for himself, Mr. OXLEY, Mr. SENSENBRENNER, Mr. NUSSLE,
and Mr. THOMAS) introduced the following bill; which was referred to the
Committee on Financial Services, and in addition to the Committees on
the Judiciary, Ways and Means, and the Budget, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of
such provisions as fall within the jurisdiction of the committee concerned
A BILL
To ensure the continued financial capacity of insurers to
provide coverage for risks from terrorism, and for other
purposes.
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.
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;
(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;
(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
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-
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.—
(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).
(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
not in default of any obligation under section 7 to pay
assessments or under section 8 to collect surcharges.
(e) REPAYMENT.—Financial assistance made avail-
able under this section shall be repaid through assess-
ments under section 7 collected by the Secretary and sur-
charges remitted to the Secretary under section 8. Any
such amounts collected or remitted shall be deposited into
the general fund of the Treasury.
(f) 
EMERGENCY
DESIGNATION.—Congress 
des-
ignates the amount of new budget authority and outlays
in all fiscal years resulting from this section as an emer-
gency requirement pursuant to section 252(e) of the Bal-
anced Budget and Emergency Deficit Control Act of 1985
(2 U.S.C. 901(e)). Such amount shall be available only
to the extent that a request, that includes designation of
such amount as an emergency requirement as defined in
such Act, is transmitted by the President to Congress.
SEC. 7. ASSESSMENTS.
(a) IN GENERAL.—In the case of a triggering deter-
mination, each commercial insurer shall be subject to as-
sessments under this section for the purpose of repaying
a portion of the financial assistance made available under
section 6 in connection with such determination.
(b) AGGREGATE ASSESSMENT.—Pursuant to a trig-
gering determination, the Secretary shall determine the
aggregate amount to be assessed under this section among
all commercial insurers, which shall be equal to the lesser
of—
(1) $20,000,000,000; and
(2) the amount of financial assistance paid
under section 6 in connection with the triggering de-
termination.
The aggregate assessment amount under this subsection
shall be assessed to commercial insurers through an indus-
try obligation assessment under subsection (c) and, if nec-
essary, the remainder shall be assessed through one or
more financing assessments under subsection (d).
(c) INDUSTRY OBLIGATION ASSESSMENTS.—
(1) IN GENERAL.—Immediately upon the occur-
rence of a triggering determination, the Secretary
shall impose an industry obligation assessment
under this subsection on all commercial insurers,
subject to paragraph (3).
(2) AMOUNT.—The aggregate amount of an in-
dustry obligation assessment in connection with a
triggering determination shall be equal to—
(A) in the case of a triggering determina-
tion occurring during the covered period speci-
fied in section 20(a), the lesser of—
(i) 
the 
difference 
between 
(I)
$5,000,000,000, and (II) the aggregate
amount of any assessments made by the
Secretary pursuant to this section during
the portion of such covered period pre-
ceding the triggering determination; and
(ii) the amount of financial assistance
made available under section 6 in connec-
tion with the triggering determination; or
(B) such other aggregate industry obliga-
tion amount as may apply pursuant to sub-
section (g).
(3) TIMING OF MULTIPLE ASSESSMENTS.—
(A) DELAYED IMPOSITION AND AGGREGA-
TION
OF
ASSESSMENTS.—In the case of any
triggering determination occurring within 12
months of the occurrence of a previous trig-
gering determination, any industry obligation
assessments under this subsection resulting
from such subsequent determination shall be
imposed upon the conclusion of the quarterly
assessment period under subparagraph (B) dur-
ing which such determination occurs.
(B) QUARTERLY
ASSESSMENT
PERIOD.—
With respect to a subsequent triggering deter-
mination referred to in subparagraph (A), the
quarterly assessment periods under this sub-
paragraph are—
(i) the 3-month period that begins
upon the imposition of the industry obliga-
tion assessment resulting from the trig-
gering determination that—
(I) occurred most recently before
such subsequent triggering determina-
tion; and
(II) did not occur within 12
months of the occurrence of any pre-
vious triggering determination; and
(ii) each successive 3-month period
thereafter that begins during the covered
period.
(d) FINANCING ASSESSMENTS.—
(1) IN GENERAL.—If the aggregate assessment
amount in connection with a triggering determina-
tion exceeds the aggregate amount of the industry
obligation assessment under subsection (c) in con-
nection with the determination, the remaining
amount shall be assessed through one or more, as
may be necessary pursuant to paragraph (3), financ-
ing assessments under this subsection.
(2) TIMING.—A financing assessment under
this subsection in connection with a triggering deter-
mination shall be imposed only upon the expiration
of any 12-month period beginning after such deter-
mination during which no assessments under this
section have been imposed.
(3) LIMITATION.—The aggregate amount of
any financing assessments imposed under this sub-
section on any single commercial insurer during any
12-month period shall not exceed the amount that is
equal to 3 percent of the net premium for such in-
surer for such period.
(e) ALLOCATION OF ASSESSMENT.—The portion of
the aggregate amount of any industry obligation assess-
ment or financing assessment under this section that is
allocated to each commercial insurer shall be based on the
ratio that the net premium written by such commercial
insurer during the year during which the assessment is
imposed bears to the aggregate written premium for such
year, subject to section 9 and the limitation under sub-
section (d)(3) of this section.
(f) NOTICE AND OBLIGATION TO PAY.—
(1) NOTICE.—As soon as practicable after any
triggering determination, the Secretary shall notify
each commercial insurer in writing of an assessment
under this section, which notice shall include the
amount of the assessment allocated to such insurer.
(2) EFFECT
OF
NOTICE.—Upon notice to a
commercial insurer, the commercial insurer shall be
obligated to pay to the Secretary, not later than 60
days after receipt of such notice, the amount of the
assessment on such commercial insurer.
(3) FAILURE TO MAKE TIMELY PAYMENT.—If
any commercial insurer fails to pay an assessment
under this section before the deadline established
under paragraph (2) for the assessment, the Sec-
retary may take either or both of the following ac-
tions:
(A) CIVIL MONETARY PENALTY.—Assess a
civil monetary penalty pursuant to section 9(d)
upon such insurer.
(B) INTEREST.—Require such insurer to
pay interest, at such rate as the Secretary con-
siders appropriate, on the amount of the assess-
ment that was not paid before the deadline es-
tablished under paragraph (2).
(g) AGGREGATE INDUSTRY OBLIGATION AMOUNT
FOR PROGRAM EXTENSION YEARS.—If the Secretary ex-
ercises the authority under section 20(b) to extend the
covered period, the aggregate industry obligation amount
for purposes of subsection (c)(2)(B) shall, in the case of
a triggering determination occurring during the portion of
the covered period beginning on the date referred to in
section 20(a), be equal to the lesser of—
(1) 
the 
difference 
between 
(A)
$10,000,000,000, and (B) the aggregate amount of
any assessments made by the Secretary pursuant to
this section during the 12-month period preceding
the triggering determination; and
(2) the amount of financial assistance made
available under section 6 in connection with the trig-
gering determination.
(h) ADMINISTRATIVE FLEXIBILITY.—
(1) ADJUSTMENT OF ASSESSMENTS.—The Sec-
retary may provide for or require estimations of
amounts under this section and may provide for sub-
sequent refunds or require additional payments to
correct such estimations, as appropriate.
(2) DEFERRAL OF CONTRIBUTIONS.—The Sec-
retary may defer the payment of part or all of an
assessment required under this section to be paid by
a commercial insurer, but only to the extent that the
Secretary determines that such deferral is necessary
to avoid the likely insolvency of the commercial in-
surer.
(3) TIMING OF ASSESSMENTS.—The Secretary
shall make adjustments regarding the timing and
imposition of assessments (including the calculation
of net premiums and aggregate written premium) as
appropriate for commercial insurers that provide
commercial property and casualty insurance on a
non-calendar year basis.
SEC. 8. TERRORISM LOSS REPAYMENT SURCHARGE.
(a) DETERMINATION OF IMPOSITION AND COLLEC-
TION.—
(1) IN GENERAL.—If, pursuant to a triggering
determination, the Secretary determines that the ag-
gregate amount of financial assistance provided pur-
suant to section 6 exceeds $20,000,000,000, the
Secretary shall consider and weigh the factors under
paragraph (2) to determine the extent to which a
surcharge under this section should be established.
(2) FACTORS.—The factors under this para-
graph are—
(A) the ultimate costs to taxpayers if a
surcharge under this section is not established;
(B) the economic conditions in the com-
mercial marketplace;
(C) the affordability of commercial insur-
ance for small- and medium-sized business; and
(D) such other factors as the Secretary
considers appropriate.
(3) POLICYHOLDER PREMIUM.—The amount es-
tablished by the Secretary as a surcharge under this
section shall be established and imposed as a policy-
holder premium surcharge on commercial property
and casualty insurance written after such determina-
tion, for the purpose of repaying financial assistance
made available under section 6 in connection with
such triggering determination.
(4) COLLECTION.—The Secretary shall provide
for commercial insurers to collect surcharge amounts
established under this section and remit such
amounts collected to the Secretary.
(b) AMOUNT AND DURATION.—Subject to subsection
(c), the surcharge under this section shall be established
in such amount, and shall apply to commercial property
and casualty insurance written during such period, as the
Secretary determines is necessary to recover the aggregate
amount of financial assistance provided under section 6
in connection with the triggering determination that ex-
ceeds $20,000,000,000.
(c) 
PERCENTAGE
LIMITATION.—The 
surcharge
under this section applicable to commercial property and
casualty insurance coverage may not exceed, on an annual
basis, the amount equal to 3 percent of the premium
charged for such coverage.
(d) OTHER TERMS.—The surcharge under this sec-
tion shall—
(1) be based on a percentage of the premium
amount charged for commercial property and cas-
ualty insurance coverage that a policy provides; and
(2) be imposed with respect to all commercial
property and casualty insurance coverage written
during the period referred to in subsection (b).
(e) EXCLUSIONS.—For purposes of this section, com-
mercial property and casualty insurance does not include
any reinsurance provided to primary insurance companies.
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SUR-
CHARGES.
(a) MANNER AND METHOD.—
(1) IN GENERAL.—Except to the extent speci-
fied in such sections, the Secretary shall provide for
the manner and method of carrying out assessments
under section 7 and surcharges under section 8, in-
cluding the timing and procedures of making assess-
ments and surcharges, notifying commercial insurers
of assessments and surcharge requirements, col-
lecting payments from and surcharges through com-
mercial insurers, and refunding of any excess
amounts paid or crediting such amounts against fu-
ture assessments.
(2) EFFECT
OF
ASSESSMENTS
AND
SUR-
CHARGES
ON
URBAN
AND
SMALLER
COMMERCIAL
AND RURAL AREAS AND DIFFERENT LINES OF IN-
SURANCE.—In determining the method and manner
of imposing assessments under section 7 and sur-
charges under section 8, including the amount of
such assessments and surcharges, the Secretary
shall take into consideration—
(A) the economic impact of any such as-
sessments and surcharges on commercial cen-
ters 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;
(B) the risk factors related to rural areas
and smaller commercial centers, including the
potential exposure to loss and the likely mag-
nitude of such loss, as well as any resulting
cross-subsidization that might result; and
(C) the various exposures to terrorism risk
for different lines of commercial property and
casualty insurance.
(b) TIMING OF COVERAGES AND ASSESSMENTS.—
The Secretary may adjust the timing of coverages and as-
sessments provided under this Act to provide for equiva-
lent application of the provisions of this Act to commercial
insurers and policies that are not based on a calendar
year.
(c) ADJUSTMENT.—The Secretary may adjust the as-
sessments charged under section 7 or the percentage im-
posed under the surcharge under section 8 at any time,
as the Secretary considers appropriate to protect the na-
tional interest, which may include avoiding unreasonable
economic disruption or excessive market instability and
avoiding undue burdens on small businesses.
(d) CIVIL MONETARY PENALTY.—
(1) IN GENERAL.—The Secretary may assess a
civil monetary penalty in an amount not exceeding
the amount under paragraph (2) against any com-
mercial insurer that the Secretary determines, on
the record after opportunity for a hearing—
(A) has failed to pay an assessment under
section 7 in accordance with the requirements
of, or regulations issued, under this Act;
(B) has failed to charge, collect, or remit
surcharges under section 8 in accordance with
the requirements of, or regulations issued
under, this Act;
(C) has intentionally provided to the Sec-
retary erroneous information regarding pre-
mium or loss amounts; or
(D) has otherwise failed to comply with the
provisions of, or the regulations issued under,
this Act.
(2) AMOUNT.—The amount under this para-
graph 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 Act or the regula-
tions issued under this Act, such amount in dispute.
SEC. 10. APPLICATION TO SELF-INSURANCE ARRANGE-
MENTS AND OFFSHORE INSURERS AND REIN-
SURERS.
(a) SELF-INSURANCE ARRANGEMENTS.—The Sec-
retary may, in consultation with the NAIC, apply the pro-
visions of this Act, as appropriate, to self-insurance ar-
rangements by municipalities and other entities, but only
if such application is determined before the occurrence of
a triggering event and all of the provisions of this Act are
applied uniformly to such entities.
(b) OFFSHORE INSURERS AND REINSURERS.—The
Secretary shall ensure that the provisions of this Act are
applied as appropriate to any offshore or non-admitted en-
tities that provide commercial property and casualty insur-
ance.
SEC. 11. STUDY OF RESERVES FOR PROPERTY AND CAS-
UALTY 
INSURANCE 
FOR 
TERRORIST 
OR
OTHER CATASTROPHIC EVENTS.
(a) IN GENERAL.—The Secretary of the Treasury
shall conduct a study of issues relating to permitting prop-
erty and casualty insurance companies to establish deduct-
ible reserves against losses for future acts of terrorism,
including—
(1) whether such tax-favored reserves would
promote (A) insurance coverage of risks of ter-
rorism, and (B) the accumulation of additional re-
sources needed to satisfy potential claims resulting
from such risks,
(2) the lines of business for which such reserves
would be appropriate, including whether such re-
serves should be applied to personal or commercial
lines of business,
(3) how the amount of such reserves would be
determined,
(4) how such reserves would be administered,
(5) a comparison of the Federal tax treatment
of such reserves with other insurance reserves per-
mitted under Federal tax laws,
(6) an analysis of the use of tax-favored re-
serves for catastrophic events, including acts of ter-
rorism, under the tax laws of foreign countries, and
(7) whether it would be appropriate to permit
similar reserves for other future catastrophic events,
such as natural disasters, taking into account the
factors under the preceding paragraphs.
(b) REPORT.—Not later than 4 months after the date
of the enactment of this Act, the Secretary of the Treasury
shall submit a report to Congress on the results of the
study under subsection (a), together with recommenda-
tions for amending the Internal Revenue Code of 1986
or other appropriate action.
SEC. 12. STATE PREEMPTION.
(a) COVERED PERILS.—A commercial insurer shall
be considered to have complied with any State law that
requires or regulates the provision of insurance coverage
for acts of terrorism if the insurer provides coverage in
accordance with the definitions regarding acts of terrorism
under this Act or under any regulations issued by the Sec-
retary.
(b) RATE LAWS.—If any provision of any State law
prevents an insurer from increasing its premium rates in
an amount necessary to recover any assessments pursuant
to section 7, such provision is preempted only to the extent
necessary to provide for such insurer to recover such
losses.
(c) FILE AND USE.—
(1) IN GENERAL.—With respect only to com-
mercial property and casualty insurance covering
acts of terrorism, any provision of State law that re-
quires, as a condition precedent to the effectiveness
of rates or policies for such insurance that is made
available by an insurer licensed to transact such
business in the State, any action (including prior ap-
proval by the State insurance regulator for such
State) other than filing of such rates and policies
and related information with such State insurance
regulator is preempted to the extent such law re-
quires such additional actions for such insurance
coverage.
(2) SUBSEQUENT REVIEW AUTHORITY.—Para-
graph (1) shall not be considered to preempt a pro-
vision of State law solely because the law provides
that rates and policies for such insurance coverage
are, upon such filing, subject to subsequent review
and action, which may include actions to disapprove
or discontinue use of such rates or policies, by the
State insurance regulator.
(3) TREATMENT
OF
PRIOR
REVIEW
PROVI-
SIONS.—Any authority for prior review and action
by a State regulator preempted under paragraph (1)
shall be deemed to be authority to conduct a subse-
quent review and action on such filings.
SEC. 13. CONSISTENT STATE GUIDELINES FOR COVERAGE
FOR ACTS OF TERRORISM.
(a) SENSE
OF CONGRESS REGARDING COVERED
PERILS.—It is the sense of the Congress that—
(1) the NAIC, in consultation with the Sec-
retary, should develop appropriate definitions for
acts of terrorism that are consistent with this Act
and appropriate standards for making determina-
tions regarding occurrences of acts of terrorism;
(2) each State should adopt the definitions and
standards developed by the NAIC for purposes of
regulating insurance coverage made available in that
State;
(3) in consulting with the NAIC, the Secretary
should advocate and promote the development of
definitions and standards that are appropriate for
purposes of this Act; and
(4) after consultation with the NAIC, the Sec-
retary should adopt further definitions for acts of
terrorism and standards for determinations that are
appropriate for this Act.
(b) INSURANCE RESERVE GUIDELINES.—
(1) SENSE OF CONGRESS REGARDING ADOPTION
BY STATES.—It is the sense of the Congress that—
(A) the NAIC should develop appropriate
guidelines for commercial insurers and pools re-
garding maintenance of reserves against the
risks of acts of terrorism; and
(B) each State should adopt such guide-
lines for purposes of regulating commercial in-
surers doing business in that State.
(2) CONSIDERATION
OF
ADOPTION
OF
NA-
TIONAL GUIDELINES.—Upon the expiration of the 6-
month period beginning on the date of the enact-
ment of this Act, the Secretary shall make a deter-
mination of whether the guidelines referred to in
paragraph (1) have, by such time, been developed
and adopted by nearly all States in a uniform man-
ner. If the Secretary determines that such guidelines
have not been so developed and adopted, the Sec-
retary shall consider adopting, and may adopt, such
guidelines on a national basis in a manner that su-
persedes any State law regarding maintenance of re-
serves against such risks.
(c) GUIDELINES REGARDING DISCLOSURE OF PRIC-
ING AND TERMS OF COVERAGE.—
(1) SENSE OF CONGRESS.—It is the sense of
the Congress that the States should require, by laws
or regulations governing the provision of commercial
property and casualty insurance that includes cov-
erage for acts of terrorism, that the price of any
such terrorism coverage, including the costs of any
terrorism related assessments or surcharges under
this Act, be separately disclosed.
(2) ADOPTION OF NATIONAL GUIDELINES.—If
the Secretary determines that the States have not
enacted laws or adopted regulations adequately pro-
viding for the disclosures described in paragraph (1)
within a reasonable period of time after the date of
the enactment of this Act, the Secretary shall, after
consultation with the NAIC, adopt guidelines on a
national basis requiring such disclosure in a manner
that supersedes any State law regarding such disclo-
sure.
SEC. 14. CONSULTATION WITH STATE INSURANCE REGU-
LATORS AND NAIC.
(a) IN GENERAL.—The Secretary shall consult with
the State insurance regulators and the NAIC in carrying
out this Act.
(b) FINANCIAL ASSISTANCE, ASSESSMENTS, AND
SURCHARGES.—The Secretary may take such actions, in-
cluding entering into such agreements and providing such
technical and organizational assistance to insurers and
State insurance regulators, as may be necessary to provide
for the distribution of financial assistance under section
6 and the collection of assessments under section 7 and
surcharges under section 8.
(c) INVESTIGATING
AND AUDITING CLAIMS.—The
Secretary may, in consultation with the State insurance
regulators and the NAIC, investigate and audit claims of
insured losses by commercial insurers and otherwise re-
quire verification of amounts of premiums or losses, as
appropriate.
SEC. 15. LITIGATION MANAGEMENT.
(a) FEDERAL CAUSE OF ACTION FOR CLAIMS RE-
LATING TO TERRORIST ACTS.—
(1) IN GENERAL.—Subject to paragraph (2), if
the Secretary makes a determination pursuant to
section 5(b) that one or more acts of terrorism oc-
curred, there shall exist a Federal cause of action,
which, except as provided in subsection (b), shall be
the exclusive remedy for claims arising out of, relat-
ing to, or resulting from such acts of terrorism.
(2) EFFECT
OF
DETERMINATION.—A deter-
mination referred to in paragraph (1)—
(A) shall not be subject to judicial review;
(B) shall take effect upon its publication in
the Federal Register; and
(C) shall be subject to such changes as the
Secretary may provide in one or more later de-
terminations made in accordance with the pro-
visions of this paragraph.
(3) SUBSTANTIVE LAW.—The substantive law
for decision in any such action shall be derived from
the law, including choice of law principles, of the
State in which such acts of terrorism occurred, un-
less such law is inconsistent with or preempted by
Federal law.
(4) JURISDICTION.—For each determination
under paragraph (1), the Judicial Panel on Multidis-
trict Litigation shall designate one or more district
courts of the United States which shall have original
and exclusive jurisdiction over all actions for any
claim (including any claim for loss of property, per-
sonal injury, or death) brought pursuant to this sub-
section. The Judicial Panel on Multidistrict Litiga-
tion 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) LIMITS
ON
DAMAGES.—In an action
brought under this subsection for damages:
(A) No punitive damages intended to pun-
ish or deter, exemplary damages, or other dam-
ages not intended to compensate a plaintiff for
actual losses may be awarded, nor shall any
party be liable for interest prior to the judg-
ment.
(B)(i) Each defendant in such an action
shall be liable only for the amount of non-
economic damages allocated to the defendant in
direct proportion to the percentage of responsi-
bility of the defendant for the harm to the
plaintiff, and no plaintiff may recover non-
economic damages unless the plaintiff suffered
physical harm.
(ii) For purposes of clause (i), the term
‘‘noneconomic damages’’ means damages for
losses for physical and emotional pain, suf-
fering, 
inconvenience, 
physical 
impairment,
mental anguish, disfigurement, loss of enjoy-
ment of life, loss of society and companionship,
loss of consortium, hedonic damages, injury to
reputation, and any other nonpecuniary losses.
(6) COLLATERAL SOURCES.—Any recovery by a
plaintiff in an action under this subsection shall be
reduced by the amount of collateral source com-
pensation, if any, that the plaintiff has received or
is entitled to receive as a result of the acts of ter-
rorism with respect to which the determination
under paragraph (1) was made.
(7) ATTORNEY
FEES.—Reasonable attorneys
fees for work performed shall be subject to the dis-
cretion of the court, but in no event shall any attor-
ney charge, demand, receive, or collect for services
rendered, fees or compensation in an amount in ex-
cess of 20 percent of the damages ordered by the
court to be paid pursuant to this section, or in ex-
cess of 20 percent of any court-approved settlement
made of any claim cognizable under this section.
Any attorney who charges, demands, receives, or col-
lects for services rendered in connection with such
claim any amount in excess of that allowed under
this section, if recovery be had, shall be fined not
more than $2,000 or imprisoned not more than 1
year, or both.
(b) EXCLUSION.—Nothing in this section shall in any
way limit the liability of any person who—
(1) attempts to commit, knowingly participates
in, aids and abets, or commits any act of terrorism
with respect to which a determination under sub-
section (a)(1) was made, or any criminal act related
to or resulting from such act of terrorism; or
(2) participates in a conspiracy to commit any
such act of terrorism or any such criminal act.
(c) RIGHT OF SUBROGATION.—The United States
shall have the right of subrogation with respect to any
claim paid by the United States under this Act.
(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) SATISFACTION OF JUDGMENTS FROM FROZEN
ASSETS
OF TERRORISTS, TERRORIST ORGANIZATIONS,
AND STATE SPONSORS OF TERRORISM.—
(1) IN GENERAL.—Except as provided in para-
graph (2), in every case in which a person obtains
a judgment against a terrorist party on a claim for
compensatory damages for an act of terrorism, or a
claim for money damages brought pursuant to sec-
tion 1605(a)(7) of title 28, United States Code, the
frozen assets of that terrorist party, or any agency
or instrumentality of that terrorist party, shall be
available for satisfaction of the judgment, to the ex-
tent of any compensatory damages awarded in the
judgment for which the terrorist party is liable.
(2) PRESIDENTIAL WAIVER.—
(A) Subject to subparagraph (B), upon de-
termining on an asset-by-asset basis that a
waiver is necessary in the national security in-
terest, the President may waive the require-
ments of this subsection in connection with
(and prior to the enforcement of) any judicial
order directing attachment in aid of execution
or execution against any property subject to the
Vienna Convention on Diplomatic Relations or
the Vienna Convention on Consular Relations.
(B) A waiver under this paragraph shall
not apply to—
(i) property subject to the Vienna
Convention on Diplomatic Relations or the
Vienna Convention on Consular Relations
that has been used for any nondiplomatic
purpose (including use as rental property),
the proceeds of such use; or
(ii) any asset subject to the Vienna
Convention on Diplomatic Relations or the
Vienna Convention on Consular Relations
that is sold or otherwise transferred for
value to a third party, the proceeds of such
sale or transfer.
(3) DEFINITIONS.—In this subsection:
(A) The term ‘‘terrorist party’’ means a
terrorist, a terrorist organization, or a foreign
state designated as a state sponsor of terrorism
under section 6(j) of the Export Administration
Act of 1979 (50 U.S.C. App. 2405(j)) or sec-
tion 620A of the Foreign Assistance Act of
1961 (22 U.S.C. 2371).
(B) The term ‘‘frozen assets’’ means assets
seized or frozen by the United States in accord-
ance with law.
(C) The term ‘‘property subject to the Vi-
enna Convention on Diplomatic Relations or the
Vienna Convention on Consular Relations’’ and
the term ‘‘asset subject to the Vienna Conven-
tion on Diplomatic Relations or the Vienna
Convention on Consular Relations’’ mean any
property or asset, respectively, the attachment
in aid of execution or execution of which would
result in a violation of an obligation of the
United States under the Vienna Convention on
Diplomatic Relations or the Vienna Convention
on Consular Relations, as the case may be.
SEC. 16. STUDY OF POTENTIAL EFFECTS OF TERRORISM
ON LIFE INSURANCE INDUSTRY.
(a) ESTABLISHMENT.—Not later than 30 days after
the date of enactment of this Act, the President shall es-
tablish a commission (in this section referred to as the
‘‘Commission’’) to study and report on the potential ef-
fects of an act or acts of terrorism on the life insurance
industry in the United States and the markets served by
such industry.
(b) MEMBERSHIP AND OPERATIONS.—
(1) APPOINTMENT.—The Commission shall con-
sist of 7 members, as follows:
(A) The Secretary of the Treasury or the
designee of the Secretary.
(B) The Chairman of the Board of Gov-
ernors of the Federal Reserve System or the
designee of the Chairman.
(C) The Assistant to the President for
Homeland Security.
(D) 4 members appointed by the Presi-
dent, who shall be—
(i) a representative of direct under-
writers of life insurance within the United
States;
(ii) a representative of reinsurers of
life insurance within the United States;
(iii) an officer of the NAIC; and
(iv) a representative of insurance
agents for life underwriters.
(2) OPERATIONS.—The chairperson of the
Commission shall determine the manner in which
the Commission shall operate, including funding,
staffing, and coordination with other governmental
entities.
(c) STUDY.—The Commission shall conduct a study
of the life insurance industry in the United States, which
shall identify and make recommendations regarding—
(1) possible actions to encourage, facilitate, and
sustain the provision, by the life insurance industry
in the United States, of coverage for losses due to
death or disability resulting from an act or acts of
terrorism, including in the face of threats of such
acts; and
(2) possible actions or mechanisms to sustain or
supplement the ability of the life insurance industry
in the United States to cover losses due to death or
disability resulting from an act or acts of terrorism
in the event that—
(A) such acts significantly affect mortality
experience of the population of the United
States over any period of time;
(B) such losses jeopardize the capital and
surplus of the life insurance industry in the
United States as a whole; or
(C) other consequences from such acts
occur, as determined by the Commission, that
may significantly affect the ability of the life in-
surance industry in the United States to inde-
pendently cover such losses.
(d) RECOMMENDATIONS.—The Commission may
make a recommendation pursuant to subsection (c) only
upon the concurrence of a majority of the members of the
Commission.
(e) REPORT.—Not later than 120 days after the date
of enactment of this Act, the Commission shall submit to
the House of Representatives and the Senate a report de-
scribing the results of the study and any recommendations
developed under subsection (c).
(f) TERMINATION.—The Commission shall terminate
60 days after submission of the report pursuant to sub-
section (e).
SEC. 17. RAILROAD AND TRUCKING INSURANCE STUDY.
The Secretary of the Treasury shall conduct a study
to determine how the Federal Government can address a
possible crisis in the availability and affordability of rail-
road and trucking insurance by making such insurance for
acts of terrorism available on commercially reasonable
terms. Not later than 120 days after the date of the enact-
ment of this Act the Secretary shall submit to the Con-
gress a report regarding the results and conclusions of the
study.
SEC. 18. STUDY OF REINSURANCE POOL SYSTEM FOR FU-
TURE ACTS OF TERRORISM.
(a) STUDY.—The Secretary, the Board of Governors
of the Federal Reserve System, and the Comptroller Gen-
eral of the United States shall jointly conduct a study on
the advisability and effectiveness of establishing a reinsur-
ance pool system relating to future acts of terrorism to
replace the program provided for under this Act.
(b) CONSULTATION.—In conducting the study under
subsection (a), the Secretary, the Board of Governors of
the Federal Reserve System, and the Comptroller General
shall consult with (1) academic experts, (2) the United
Nations Secretariat for Trade and Development, (3) rep-
resentatives from the property and casualty insurance in-
dustry, (4) representatives from the reinsurance industry,
(5) the NAIC, and (6) such consumer organizations as
the Secretary considers appropriate.
(c) REPORT.—Not later than 6 months after the date
of the enactment of this Act, the Secretary, the Board of
Governors of the Federal Reserve System, and the Comp-
troller General shall jointly submit a report to the Con-
gress on the results of the study under subsection (a).
SEC. 19. DEFINITIONS.
For purposes of this Act, the following definitions
shall apply:
(1) ACT OF TERRORISM.—
(A) IN GENERAL.—The term ‘‘act of ter-
rorism’’ means any act that the Secretary de-
termines meets the requirements under sub-
paragraph (B), as such requirements are fur-
ther defined and specified by the Secretary in
consultation with the NAIC.
(B) REQUIREMENTS.—An act meets the
requirements of this subparagraph if the act—
(i) is unlawful;
(ii) causes harm to a person, property,
or entity, in the United States, or in the
case of a domestic United States air car-
rier or 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),
in or outside the United States;
(iii) is committed by a person or
group of persons or associations who are
recognized, either before or after such act,
by the Department of State or the Sec-
retary as an international terrorist group
or have conspired with such a group or the
group’s agents or surrogates;
(iv) has as its purpose to overthrow or
destabilize the government of any country,
or to influence the policy or affect the con-
duct of the government of the United
States or any segment of the economy of
United States, by coercion; and
(v) is not considered an act of war,
except that this clause shall not apply with
respect to any coverage for workers com-
pensation.
(2) AFFILIATE.—The term ‘‘affiliate’’ means,
with respect to an insurer, any company that con-
trols, is controlled by, or is under common control
with the insurer.
(3) 
AGGREGATE
WRITTEN
PREMIUM.—The
term ‘‘aggregate written premium’’ means, with re-
spect to a year, the aggregate premium amount of
all commercial property and casualty insurance cov-
erage written during such year under all lines of
commercial property and casualty insurance.
(4) COMMERCIAL INSURER.—The term ‘‘com-
mercial insurer’’ means any corporation, association,
society, order, firm, company, mutual, partnership,
individual, aggregation of individuals, or any other
legal entity that provides commercial property and
casualty insurance. Such term includes any affiliates
of a commercial insurer.
(5) COMMERCIAL PROPERTY AND CASUALTY IN-
SURANCE.—
(A) IN GENERAL.—The term ‘‘commercial
property and casualty insurance’’ means insur-
ance or reinsurance, or retrocessional reinsur-
ance, for persons or properties in the United
States against—
(i) loss of or damage to property;
(ii) loss of income or extra expense in-
curred because of loss of or damage to
property;
(iii) third party liability claims caused
by negligence or imposed by statute or con-
tract, including workers compensation; or
(iv) loss resulting from debt or default
of another.
(B) EXCLUSIONS.—Such term does not
include—
(i) insurance for homeowners, tenants,
private passenger nonfleet automobiles,
mobile homes, or other insurance for per-
sonal, family, or household needs;
(ii) insurance for professional liability,
including medical malpractice, errors and
omissions, or directors’ and officers’ liabil-
ity; or
(iii) health or life insurance.
(6) CONTROL.—A company has control over an-
other company if—
(A) the company directly or indirectly or
acting through one or more other persons owns,
controls, or has power to vote 25 percent or
more of any class of voting securities of the
other company;
(B) the company controls in any manner
the election of a majority of the directors or
trustees of the other company; or
(C) the Secretary determines, after notice
and opportunity for hearing, that the company
directly or indirectly exercises a controlling in-
fluence over the management or policies of the
other company.
(7) COVERED PERIOD.—The term ‘‘covered pe-
riod’’ has the meaning given such term in section
20.
(8) INDUSTRY-WIDE
LOSSES.—The term ‘‘in-
dustry-wide losses’’ means the aggregate insured
losses sustained by all insurers from coverage writ-
ten under all lines of commercial property and cas-
ualty insurance.
(9) INSURED LOSS.—The term ‘‘insured loss’’
means 
any 
loss, 
net 
of 
reinsurance 
and
retrocessional reinsurance, covered by commercial
property and casualty insurance.
(10) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
(11) NET PREMIUM.—The term ‘‘net premium’’
means, with respect a commercial insurer and a
year, the aggregate premium amount collected by
such commercial insurer for all commercial property
and casualty insurance coverage written during such
year under all lines of commercial property and cas-
ualty insurance by such commercial insurer, less any
premium paid by such commercial insurer to other
commercial insurers to insure or reinsure those
risks.
(12) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of the Treasury.
(13) STATE.—The term ‘‘State’’ means the
States of the United States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam,
the Virgin Islands, American Samoa, and any other
territory or possession of the United States.
(14) STATE
INSURANCE
REGULATOR.—The
term ‘‘State insurance regulator’’ means, with re-
spect to a State, the principal insurance regulatory
authority of the State.
(15) TRIGGERING DETERMINATION.—The term
‘‘triggering determination’’ has the meaning given
such term in section 5(a).
(16) TRIGGERING
EVENT.—The term ‘‘trig-
gering event’’ means, with respect to a triggering de-
termination, the occurrence of an act of terrorism,
or the occurrence of such acts, that caused the in-
sured losses resulting in such triggering determina-
tion.
(17) UNITED
STATES.—The term ‘‘United
States’’ means, collectively, the States (as such term
is defined in this section).
SEC. 20. COVERED PERIOD AND EXTENSION OF PROGRAM.
(a) COVERED PERIOD.—Except to the extent pro-
vided otherwise under subsection (b), for purposes of this
Act, the term ‘‘covered period’’ means the period begin-
ning on the date of the enactment of this Act and ending
on January 1, 2003.
(b) EXTENSION OF PROGRAM.—If the Secretary de-
termines that extending the covered period is necessary
to ensure the adequate availability in the United States
of commercial property and casualty insurance coverage
for acts of terrorism, the Secretary may, subject to sub-
section (c), extend the covered period by not more than
two years.
(c) REPORT.—The Secretary may exercise the au-
thority under subsection (b) to extend the covered period
only if the Secretary submits a report to the Congress pro-
viding notice of and setting forth the reasons for such ex-
tension.
SEC. 21. REGULATIONS.
The Secretary shall issue any regulations necessary
to carry out this Act.
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