dures of making assessments and surcharges,
notifying commercial insurers of assessments
or surcharge requirements, collecting pay-
ments from and surcharges through commer-
cial insurers, and refunding of any excess
amounts paid or crediting such amounts
against future assessments.
(b) TIMING
OF
COVERAGES
AND
ASSESS-
MENTS.—The appropriate Administrator may
adjust the timing of coverages and assess-
ments provided under this Act to provide for
equivalent application of the provisions of
this Act to commercial insurers and policies
that are not based on a calendar year.
(c) APPLICATION
TO SELF-INSURANCE AR-
RANGEMENTS.—The appropriate Administrator
may, in consultation with the NAIC, apply the
provisions of this Act, as appropriate, to self-
insurance arrangements by municipalities
and other entities, but only if such applica-
tion is determined before the occurrence of a
triggering event and all of the provisions of
this Act are applied uniformly to such enti-
ties.
(d) ADJUSTMENT.—The appropriate Admin-
istrator may adjust the assessments charged
under section 7 or the percentage imposed
under the surcharge under section 8 at any
time, as the appropriate Administrator con-
siders appropriate to protect the national in-
terest, which may include avoiding unreason-
able economic disruption or excessive market
instability.
SEC. 10. 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 relat-
ing to permitting property and casualty insur-
ance companies to establish deductible re-
serves against losses for future acts of ter-
rorism, including—
(1) whether such tax-favored reserves
would promote (A) insurance coverage of
risks of terrorism and (B) the accumula-
tion of additional resources needed to
satisfy potential claims resulting from
such risks,
(2) the lines of business for which
such reserves would be appropriate, in-
cluding whether such reserves 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 ad-
ministered,
(5) a comparison of the Federal tax
treatment of such reserves with other in-
surance reserves permitted under Fed-
eral tax laws,
(6) an analysis of the use of tax-fa-
vored reserves for catastrophic events,
including acts of terrorism, under the tax
laws of foreign countries, and
(7) whether it would be appropriate
to permit similar reserves for other fu-
ture 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 Sec-
retary 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. 11. STATE PREEMPTION.
(a) COVERED PERILS.—A commercial in-
surer 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 the regulations issued
by the Administrators.
(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 ex-
tent necessary to provide for such insurer to
recover such losses.
(c) FILE AND USE.—With respect only to
commercial property and casualty insurance
covering acts of terrorism, any provision of
State law that requires, as a condition prece-
dent 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 requires such additional ac-
tions for such insurance coverage. This sub-
section shall not be considered to preempt a
provision of State law solely because the law
provides that rates and policies for such in-
surance coverage are, upon such filing, sub-
ject to subsequent review and action, which
may include actions to disapprove or dis-
continue use of such rates or policies, by the
State insurance regulator.
SEC. 12. CONSISTENT STATE GUIDELINES FOR COVERAGE
FOR ACTS OF TERRORISM.
(a) SENSE OF CONGRESS REGARDING COV-
ERED PERILS.—It is the sense of the Congress
that—
(1) the NAIC, in consultation with the
appropriate Administrator, should de-
velop appropriate definitions for acts of
terrorism and appropriate standards for
making determinations regarding events
or occurrences of acts of terrorism;
(2) each State should adopt the defi-
nitions and standards developed by the
NAIC for purposes of regulating insur-
ance coverage made available in that
State;
(3) in consulting with the NAIC, the
appropriate Administrator should advo-
cate and promote the development of
definitions and standards that are appro-
priate for purposes of this Act; and
(4) after consultation with the NAIC,
the appropriate Administrator should
adopt 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 ap-
propriate guidelines for commercial
insurers and pools regarding mainte-
(c) GUIDELINES REGARDING DISCLOSURE OF
PRICING 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 in-
cludes coverage for acts of terrorism,
that the price of any such terrorism cov-
erage, including the costs of any ter-
rorism related assessments or surcharges
under this Act, be separately disclosed.
(2) 
ADOPTION
OF
NATIONAL
GUIDE-
LINES.—If the appropriate Administrator
determines that the States have not en-
acted laws or adopted regulations ade-
quately providing for the disclosures de-
scribed in paragraph (1) within a reason-
able period of time after the date of the
enactment of this Act, the appropriate
Administrator shall, after consultation
with the NAIC, adopt guidelines on a na-
tional basis requiring such disclosure in
a manner that supercedes any State law
regarding such disclosure.
SEC. 13. CONSULTATION WITH STATE INSURANCE REGU-
LATORS AND NAIC.
The Administrators shall consult with the
State insurance regulators and the NAIC in
carrying out this Act. The Administrators may
take such actions, including entering into
such agreements and providing such tech-
nical and organizational assistance to insur-
ers and State insurance regulators, as may be
necessary to provide for the distribution of fi-
nancial assistance under section 6 and the
collection of assessments under section 7 and
surcharges under section 8.
SEC. 14. SOVEREIGN IMMUNITY PROTECTIONS.
(a) FEDERAL CAUSE OF ACTION FOR DAM-
AGES
FROM
TERRORIST
ACTS
RESULTING
IN
TRIGGERING DETERMINATION.—
(1) IN GENERAL.—If a triggering deter-
mination occurs requiring an assessment
under section 7 or a surcharge under sec-
tion 8, there shall exist a Federal cause of
action, which shall be the exclusive rem-
edy, for damages claimed pursuant to, or
in connection with, any acts of terrorism
that caused the insured losses resulting
in such triggering determination.
(2) 
SUBSTANTIVE
LAW.—The 
sub-
stantive law for decision in any such ac-
tion shall be derived from the law, in-
cluding choice of law principles, of the
State in which such act of terrorism oc-
curred, unless such law is inconsistent
with or preempted by Federal law.
(3) JURISDICTION.—Pursuant to each
triggering determination, the Judicial
Panel on Multidistrict Litigation shall
designate one or more district courts of
the United States which shall have origi-
nal and exclusive jurisdiction over all ac-
tions brought pursuant to this subsection
that arise out of the triggering event in-
volved.
(4) OFFSET FOR RELIEF PAYMENTS.—Any
recovery by a plaintiff in an action under
this subsection shall be offset by the
amount, if any, received by the plaintiff
from the United States pursuant to any
emergency or disaster relief program, or
from any other collateral source, for com-
pensation of losses related to the act of
terrorism involved.
(b) DAMAGES IN ACTIONS REGARDING INSUR-
ANCE CLAIMS.—In an action brought under
this section for damages claimed by an in-
sured pursuant to, or in connection with, any
commercial property and casualty insurance
providing coverage for acts of terrorism that
resulted in a triggering determination:
(1) PROHIBITION
OF
PUNITIVE
DAM-
AGES.—No punitive damages intended to
punish or deter may be awarded.
(2) NONECONOMIC DAMAGES.—
(A) IN GENERAL.—Each defendant
in such an action shall be liable only
for the amount of noneconomic dam-
ages allocated to the defendant in di-
rect proportion to the percentage of
responsibility of the defendant for
the harm to the claimant.
(B) DEFINITION.—For purposes of
subparagraph (A), the term ‘‘non-
economic damages’’ means damages
for losses for physical and emotional
pain, suffering, inconvenience, phys-
ical impairment, mental anguish, dis-
figurement, loss of enjoyment of life,
loss of society and companionship,
loss of consortium, hedonic damages,
injury to reputation, and any other
nonpecuniary losses of any kind or
nature.
(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) 
PROTECTIVE
ORDERS.—The 
United
States or any appropriate Administrator car-
rying out responsibilities under this Act may
seek protective orders or assert privileges or-
dinarily available to the United States to pro-
tect against the disclosure of classified infor-
mation, including the invocation of the mili-
tary and State secrets privilege
SEC. 15. 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 establish a commission (in
this section referred to as the ‘‘Commission’’)
to study and report on the potential effects of
an act or acts of terrorism on the life insur-
ance industry in the United States and the
markets served by such industry.
(b) MEMBERSHIP AND OPERATIONS.—
(1) APPOINTMENT.—The Commission
shall consist of 5 members, as follows:
(A) 
The 
appropriate 
Adminis-
trator, as designated by the Presi-
dent.
(B) 4 members appointed by the
President, who shall be—
(i) a representative of direct
underwriters of life insurance
within the United States;
(ii) a representative of rein-
surers of life insurance within the
United States;
(iii) an officer of the NAIC;
and
(iv) a representative of insur-
ance agents for life underwriters.
(2) OPERATIONS.—The chairperson of
the Commission shall determine the man-
ner in which the Commission shall oper-
ate, including funding, staffing, and co-
ordination with other governmental enti-
ties.
(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, fa-
cilitate, and sustain provision by the life
insurance industry in the United States
of coverage for losses due to death or dis-
ability 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 dis-
ability resulting from an act or acts of
terrorism in the event that—
(A) such acts significantly affect
mortality experience of the popu-
lation of the United States over any
period of time;
(B) such loses jeopardize the cap-
ital 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 insurance
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 Commis-
sion shall submit to the House of Representa-
tives and the Senate a report describing the
results of the study and any recommendations
developed under subsection (c).
(f) TERMINATION.—The Commission shall
terminate 60 days after submission of the re-
port as provided for in subsection (e).
SEC. 16. DEFINITIONS.
For purposes of this Act, the following
definitions shall apply:
(1) ACT OF TERRORISM.—
(A) IN GENERAL.—The term ‘‘act of
terrorism’’ means any act that the ap-
propriate Administrator determines
meets the requirements under sub-
paragraph (B), as such requirements
are further defined and specified by
the appropriate Administrator in con-
sultation with the NAIC.
(B) REQUIREMENTS.—An act meets
the requirements of this subpara-
graph if the act—
(i) is unlawful;
(ii) causes harm to a person,
property, or entity, in the United
States;
(iii) is committed by a group
of persons or associations who—
(I) are not a government
of a foreign country or the de
facto government of a foreign
country; and
(II) are recognized by the
Department of State or the
appropriate Administrator as
a terrorist group or have con-
spired with such a group or
the group’s agents or surro-
gates; and
(iv) has as its purpose to over-
throw or destabilize the govern-
ment of any country or to influ-
ence the policy or affect the con-
duct of the government of the
United States by coercion.
(2) 
APPROPRIATE
ADMINISTRATORS.—
The term ‘‘appropriate Administrator’’
means, with respect to any function or
responsibility of the Federal Government
under this Act, the Federal officer des-
ignated by the President pursuant to sec-
tion 3 as responsible for carrying out
such function or responsibility.
(3) AFFILIATE.—The term ‘‘affiliate’’
means, with respect to an insurer, any
company that controls, is controlled by,
or is under common control with the in-
surer.
(4) AGGREGATE
WRITTEN
PREMIUM.—
The term ‘‘aggregate written premium’’
means, with respect to a year, the aggre-
gate premium amount of all commercial
property and casualty insurance cov-
erage written during such year for per-
sons or properties in the United States
under all lines of commercial property
and casualty insurance.
(5) COMMERCIAL INSURANCE.—The term
‘‘commercial insurance’’ means property
and casualty insurance that is not insur-
ance for homeowners, tenants, private
passenger nonfleet automobiles, mobile
homes, or other insurance for personal,
family, or household needs.
(6) COMMERCIAL
INSURER.—The term
‘‘commercial insurer’’ means any corpora-
tion, association, society, order, firm,
company, 
mutual, 
partnership, 
indi-
vidual, aggregation of individuals, or any
other legal entity that is engaged in the
business of providing commercial prop-
erty and casualty insurance for persons
or properties in the United States. Such
term includes any affiliates of a commer-
cial insurer.
(7) COMMERCIAL
PROPERTY
AND
CAS-
UALTY INSURANCE.—The term ‘‘commercial
property and casualty insurance’’ means
property and casualty insurance that is
commercial insurance.
(8) CONTROL.—A company has control
over another company if—
(A) the company directly or indi-
rectly 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 appropriate Administrator
determines, after notice and oppor-
tunity for hearing, that the company
directly or indirectly exercises a con-
trolling influence over the manage-
ment or policies of the other com-
pany.
(9) COVERED PERIOD.—The term ‘‘cov-
ered period’’ has the meaning given such
term in section 5(b).
(10) INDUSTRY-WIDE LOSSES.—The term
‘‘industry-wide losses’’ means the aggre-
gate insured losses sustained by all insur-
ers, from coverage written for persons or
properties in the United States, under all
lines of commercial property and cas-
ualty insurance.
(11) INSURED
LOSS.—The term ‘‘in-
sured loss’’ means any loss in the United
States covered by commercial property
and casualty insurance.
(12) 
INSURER.—The 
term 
‘‘insurer’’
means any corporation, association, soci-
ety, order, firm, company, mutual, part-
nership, individual, aggregation of indi-
viduals, or any other legal entity that is
engaged in the business of providing
property and casualty insurance for per-
sons or properties in the United States.
Such term includes any affiliates of an in-
surer.
(13) NAIC.—The term ‘‘NAIC’’ means
the National Association of Insurance
Commissioners.
(14) PROPERTY
AND
CASUALTY
INSUR-
ANCE.—The term ‘‘property and casualty
insurance’’ means insurance against—
(A) loss of or damage to property;
(B) loss of income or extra ex-
pense incurred because of loss of or
damage to property; and
(C) third party liability claims
caused by negligence or imposed by
statute or contract.
Such term does not include health or life
insurance.
(15) STATE.—The term ‘‘State’’ means
the States of the United States, the Dis-
trict of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, the Vir-
gin Islands, American Samoa, and any
other territory or possession of the
United States.
(16) STATE
INSURANCE
REGULATOR.—
The term ‘‘State insurance regulator’’
means, with respect to a State, the prin-
cipal insurance regulatory authority of
the State.
(17) TRIGGERING DETERMINATION.—The
term ‘‘triggering determination’’ has the
meaning given such term in section 5(a).
(18) 
TRIGGERING
EVENT.—The 
term
‘‘triggering event’’ means, with respect to
a triggering determination, the event of
an act of terrorism, or the events of such
acts, that caused the insured losses re-
sulting in such triggering determination.
(19) 
UNITED
STATES.—The 
term
‘‘United States’’ means, collectively, the
States (as such term is defined in this
section).
SEC. 17. EXTENSION OF PROGRAM.
(a) AUTHORITY.—If the appropriate Admin-
istrator determines that action under this sec-
tion is necessary to ensure the adequate avail-
ability in the United States of commercial
property and casualty insurance coverage for
acts of terrorism, the appropriate Adminis-
trator may provide that the provisions of this
Act shall continue to apply with respect to a
period or periods, as established by the Ad-
ministrator, that begin after the expiration of
the covered period specified in section 5(b)
and end before January 1, 2005.
(b) COVERED PERIOD.—If the appropriate
Administrator exercises the authority under
subsection (a), notwithstanding section 5(b)
and section 16(9), the period or periods estab-
lished by the appropriate Administrator shall
be considered to be the covered period for
purposes of this Act.
SEC. 18. REGULATIONS.
The 
appropriate 
Administrators 
shall
issue any regulations necessary to carry out
this Act.