son purchasing commercial insurance that meets the 
following requirements: 
‘‘(A) The person employs or retains a 
qualified risk manager to negotiate insurance 
coverage. 
‘‘(B) The person meets at least two of the 
following criteria: 
‘‘(i) The person possesses a net worth 
in excess of $10,000,000. 
‘‘(ii) The person generates annual rev-
enues in excess of $25,000,000. 
‘‘(iii) The person employs more than 
25 full time or full time equivalent employ-
ees per individual insured or is a member 
of affiliated group employing more than 50 
employees in the aggregate. 
‘‘(iv) The person pays annual aggre-
gate nationwide insurance premiums in ex-
cess of $10,000 for covered lines of insur-
ance. 
‘‘(v) The person is a not-for-profit or-
ganization or public entity generating an-
nual budgeted expenditures of at least 
$10,000,000.
‘‘(vi) The person is a municipality 
with a population in excess of 30,000 per-
sons. 
‘‘(7) EXEMPT
COMMERCIAL
PURCHASER
CER-
TIFICATION.—The term ‘exempt commercial pur-
chaser certification’ means a written certification 
that the insurer offering a policy to an exempt com-
mercial purchaser has obtained, at least within the 
previous 12 months, a certification signed by the 
qualified risk manager, the chief executive officer, or 
the chief financial officer of the exempt commercial 
purchaser, certifying with respect to the insurance to 
which the requirements of section 103(c)(1) apply to 
that insurer that— 
‘‘(A) the purchaser has an employee that 
meets the definition of a qualified risk manager 
under this section; 
‘‘(B) the purchaser meets the definition of 
an exempt commercial purchaser in accordance 
with this section; 
‘‘(C) the purchaser is aware that the policy 
being considered for purchase contains forms 
and rates that are not subject to State regu-
latory review or approval;
‘‘(D) the purchaser has or has retained the 
necessary expertise to negotiate its own policy 
language and rates; and 
‘‘(E) the purchaser agrees to the use of ex-
empted rates and forms by its insurer or insur-
ers. 
‘‘(8) GROUP
LIFE
INSURANCE.—The term 
‘group life insurance’ means an insurance contract 
that provides term life insurance coverage, acci-
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 
include ‘Corporate Owned Life Insurance’ or ‘Busi-
ness Owned Life Insurance,’ each as defined under 
the Internal Revenue Code of 1986, or any similar 
product. 
‘‘(9) HOME
STATE.—The term ‘home State’ 
means as follows: 
‘‘(A) In the case of a policy written for 
commercial risks that are primarily located in a 
State, such term means such State. 
‘‘(B) If subparagraph (A) does not apply, 
such term means the State where the commer-
cial policyholder has its principal place of busi-
ness (such as where the policyholder’s head-
quarters are located, as determined by the pre-
dominant physical location in the United States 
of the officers and senior management of the 
policyholder). 
‘‘(10) INSURED LOSS.—The term ‘insured loss’ 
means any loss resulting from an act of terrorism 
(including an act of war, in the case of workers’ 
compensation and group life insurance) that is cov-
ered by primary or excess property, casualty, work-
ers’ compensation, or group life insurance issued by 
an insurer if such loss— 
‘‘(A) occurs within the United States; or 
‘‘(B) occurs to an air carrier (as defined in 
section 40102 of title 49, United States Code), 
to a United States flag vessel (or a vessel based 
principally in the United States, on which 
United States income tax is paid and whose in-
surance coverage is subject to regulation in the 
United States), regardless of where the loss oc-
curs, or at the premises of any United States 
mission. 
‘‘(11) INSURER.—The term ‘insurer’ means any 
entity, including any affiliate thereof— 
‘‘(A) that is—
‘‘(i) licensed or admitted to engage in 
the business of providing primary or excess 
insurance in any State; 
‘‘(ii) not licensed or admitted as 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 of-
fering a covered line of insurance by a 
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 covered line of insurance cov-
erage, other than in the case of entities de-
scribed in subsections (d) and (f) of section 
103; and
‘‘(C) that meets any other criteria that the 
Secretary may reasonably prescribe. 
‘‘(12) INSURER
DEDUCTIBLE.—The term ‘in-
surer 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-
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— 
‘‘(i) except as provided in clause (ii), 
the value of an insurer’s direct earned pre-
mium for a covered line of insurance over
the calendar year immediately preceding 
Program Year 4, multiplied by— 
‘‘(I) for workers’ compensation 
insurance, 17.5 percent; 
‘‘(II) for group life insurance, 20 
percent; 
‘‘(III) for property insurance, 20 
percent; and 
‘‘(IV) for casualty insurance, 25 
percent; and 
‘‘(ii) with respect to NBCR terrorism 
coverage, the value of an insurer’s direct 
earned premium for a covered line of in-
surance over the calendar year immediately 
preceding Program Year 4, multiplied by 
the following percentages which shall be 
treated as sub-deductibles that apply in 
lieu of the deductibles set forth in clause 
(i) for NBCR terrorism losses— 
‘‘(I) for workers’ compensation 
insurance, 7.5 percent; 
‘‘(II) for group life insurance, 7.5 
percent; 
‘‘(III) for property insurance, 7.5 
percent; and
‘‘(IV) for casualty insurance, 7.5 
percent; and 
‘‘(iii) if, for any covered line of insur-
ance, an insurer incurs insured losses 
caused by NBCR terrorism, such NBCR 
insured losses shall be applied against both 
the deductible set forth in clause (i) and 
the NBCR terrorism deductible set forth in 
clause (ii) for that covered line of insur-
ance; 
‘‘(F) for any Additional Program Years— 
‘‘(i) except as provided in clause (ii), 
the value of an insurer’s direct earned pre-
mium for a covered line of insurance over 
the calendar year immediately preceding 
that year, multiplied by the insurer deduct-
ible for each covered line of insurance for 
the preceding calendar year plus an addi-
tional percentage, as follows— 
‘‘(I) for workers’ compensation 
insurance, 2.5 percent; 
‘‘(II) for group life insurance, 2.5 
percent; 
‘‘(III) for property insurance, 2.5 
percent; and
‘‘(IV) for casualty insurance, 5.0 
percent; and 
‘‘(ii) with respect to NBCR terrorism 
coverage, the value of an insurer’s direct 
earned premium for a covered line of in-
surance over the calendar year immediately 
preceding that year, multiplied by the 
NBCR terrorism deductible for the pre-
ceding year for that covered line of insur-
ance plus the following additional percent-
ages, all of which shall be treated as 
subdeductibles that apply in lieu of the 
deductibles listed in clause (i) for NBCR 
terrorism insured losses— 
‘‘(I) for workers’ compensation 
insurance, 0.75 percent; 
‘‘(II) for group life insurance, 
0.75 percent; 
‘‘(III) for property insurance, 
0.75 percent; and 
‘‘(IV) for casualty insurance, 
0.75 percent; and 
‘‘(iii) if, for any covered line of insur-
ance, an insurer incurs insured losses 
caused by NBCR terrorism, such NBCR
insured losses shall be applied against both 
the deductible set forth in clause (i) and 
the NBCR terrorism deductible set forth in 
clause (ii) for that covered line of insur-
ance; 
‘‘(G) notwithstanding subparagraphs (A) 
through (F), for the Transition Period and any 
other Program Year or other calendar year, if 
an insurer has not had a full year of operations 
during the calendar year immediately preceding 
such Period or year, such portion of the direct 
earned premiums of the insurer as the Sec-
retary determines appropriate, subject to appro-
priate methodologies established by the Sec-
retary for measuring such direct earned pre-
miums; and 
‘‘(H) if, in any calendar year, aggregate 
industry insured losses exceed $1,000,000,000, 
the insurer deductibles for the next calendar 
year shall be reduced by 0.1 percent for each 
$1,000,000,000 in insured losses that have oc-
curred during the preceding calendar year, ex-
cept that no insurer deductible shall be reduced 
below 5 percent.