‘‘(II) the cost-of-living adjustment
determined under subsection (f)(3) for
such calendar year, determined by sub-
stituting ‘calendar year 2001’ for ‘cal-
endar year 1992’ in subparagraph (B)
thereof.
If any amount after adjustment under the
preceding sentence is not a multiple of
$1,000,000, such amount shall be rounded
to the nearest multiple of $1,000,000.
‘‘(4) DECLARED TERRORISM LOSSES.—For pur-
poses of this subsection—
‘‘(A) IN GENERAL.—The term ‘declared ter-
rorism losses’ means, with respect to a taxable
year—
‘‘(i) the amount of net losses and loss
adjustment expenses incurred in commercial
lines of business that are attributable to 1
or more declared terrorism events, plus
‘‘(ii) any nonrecoverable assessments,
surcharges, or other liabilities that are
borne by the company and are attributable
to such events.
‘‘(B) DECLARED TERRORISM EVENT.—The
term ‘declared terrorism event’ means any event
declared by the Secretary of the Treasury to be
an act of terrorism against the United States for
purposes of this section.
‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be appropriate to
carry out this subsection, and shall prescribe such
regulations after consultation with the National Asso-
ciation of Insurance Commissioners.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 832(b) of such Code
is amended by striking ‘‘and’’ at the end of subpara-
graph (D), by striking the period at the end of sub-
paragraph (E) and inserting in lieu thereof ‘‘, and’’,
and by adding at the end the following new subpara-
graph:
‘‘(F) each net decrease in reserves which is
required by paragraph (1) or (3) of subsection
(h) to be taken into account under this subpara-
graph.’’
(2) Subsection (c) of section 832 of such Code is
amended by striking ‘‘and’’ at the end of paragraph
(12), by striking the period at the end of paragraph
(13) and inserting in lieu thereof ‘‘; and’’, and by
adding at the end the following new paragraph:
‘‘(14) each net increase in reserves which is re-
quired by subsection (h)(1) to be taken into account
under this paragraph.’’
(c) EFFECTIVE DATE.—The amendments made by this
subsection shall apply to taxable years beginning after De-
cember 31, 2001.
SEC. 12. STATE PREEMPTION.
(a) COVERED PERILS.—A commercial insurer shall be
considered to have complied with any State law that re-
quires or regulates the provision of insurance coverage for
acts of terrorism if the insurer provides coverage in accord-
ance with the definitions regarding acts of terrorism under
this Act or under any regulations issued by the Secretary.
(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.—With respect only to commercial
property and casualty insurance covering acts of terrorism,
any provision of State law that requires, 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 approval by the State insurance regulator for such
State) other than filing of such rates and policies and re-
lated information with such State insurance regulator is
preempted to the extent such law requires such additional
actions for such insurance coverage. This subsection shall
not be considered to preempt a provision of State law solely
because the law provides that rates and policies for such
insurance coverage are, upon such filing, subject to subse-
quent review and action, which may include actions to dis-
approve or discontinue use of such rates or policies, by the
State insurance regulator.
SEC. 13. CONSISTENT STATE GUIDELINES FOR COVERAGE
FOR ACTS OF TERRORISM.
(a) SENSE OF CONGRESS REGARDING COVERED PER-
ILS.—It is the sense of the Congress that—
(1) the NAIC, in consultation with the Secretary,
should develop appropriate definitions for acts of ter-
rorism and appropriate standards for making deter-
minations regarding occurrences of acts of terrorism;
(2) each State should adopt the definitions and
standards developed by the NAIC for purposes of reg-
ulating insurance coverage made available in that
State;
(3) in consulting with the NAIC, the Secretary
should advocate and promote the development of defi-
nitions and standards that are appropriate for pur-
poses of this Act; and
(4) after consultation with the NAIC, the Sec-
retary should adopt definitions for acts of terrorism
and standards for determinations that are appro-
priate 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 guidelines
for purposes of regulating commercial insurers
doing business in that State.
(2) CONSIDERATION OF ADOPTION OF NATIONAL
GUIDELINES.—Upon the expiration of the 6-month
period beginning on the date of the enactment of this
Act, the Secretary shall make a determination of
whether the guidelines referred to in paragraph (1)
have, by such time, been developed and adopted by
nearly all States in a uniform manner. If the Sec-
retary determines that such guidelines have not been
so developed and adopted, the Secretary shall consider
adopting, and may adopt, such guidelines on a na-
tional basis in a manner that would supercede any
State law regarding maintenance of reserves against
such risks.
(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 includes cov-
erage for acts of terrorism, that the price of any such
terrorism coverage, including the costs of any ter-
rorism 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 providing for
the disclosures described in paragraph (1) within a
reasonable period of time after the date of the enact-
ment of this Act, the Secretary shall, after consulta-
tion with the NAIC, adopt guidelines on a national
basis requiring such disclosure in a manner that
supercedes any State law regarding such disclosure.
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 SUR-
CHARGES.—The Secretary may take such actions, including
entering into such agreements and providing such technical
and organizational assistance to insurers and State insur-
ance regulators, as may be necessary to provide for the dis-
tribution 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 Sec-
retary may, in consultation with the State insurance regu-
lators and the NAIC, investigate and audit claims of in-
sured losses by commercial insurers.
SEC. 15. SOVEREIGN IMMUNITY PROTECTIONS.
(a) FEDERAL CAUSE OF ACTION FOR DAMAGES FROM
TERRORIST ACTS RESULTING IN TRIGGERING DETERMINA-
TION.—
(1) IN GENERAL.—If a triggering determination
occurs requiring an assessment under section 7 or a
surcharge under section 8, there shall exist a Federal
cause of action, which shall be the exclusive remedy,
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 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 act of terrorism occurred, 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 original and ex-
clusive jurisdiction over all actions brought pursuant
to this subsection that arise out of the triggering event
involved.
(4) OFFSET FOR RELIEF PAYMENTS.—Any recov-
ery 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 compensation of losses re-
lated to the act of terrorism involved.
(b) DAMAGES
IN ACTIONS REGARDING INSURANCE
CLAIMS.—In an action brought under this section for dam-
ages or coverage claimed by or against an insured 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
DAMAGES.—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 damages allocated to the defendant
in direct proportion to the percentage of respon-
sibility of the defendant for the harm to the
claimant.
(B) DEFINITION.—For purposes of subpara-
graph (A), the term ‘‘noneconomic damages’’
means damages for losses for physical and emo-
tional pain, suffering, inconvenience, physical
impairment, mental anguish, disfigurement, loss
of enjoyment of life, loss of society and compan-
ionship, loss of consortium, hedonic damages, in-
jury to reputation, and any other nonpecuniary
losses.
Nothing in this subsection may be construed to limit an
action by an injured party for damages other than a claim
for commercial property and casualty insurance resulting
from an act of terrorism causing a triggering determina-
tion.
(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 the
Secretary may seek protective orders or assert privileges or-
dinarily available to the United States to protect against
the disclosure of classified information, including the invo-
cation of the military and State secrets privilege.
(e) EXCLUSION.—Nothing in this section shall apply
to, or in any way limit, the liability of any person who—
(1) attempts to commit, knowingly participates
in, knowingly and intentionally aids and abets, or
commits, any act of terrorism or any criminal act re-
lated to or resulting from an act of terrorism that
caused the insured losses resulting in the triggering
determination; or
(2) knowingly participates in a conspiracy to
commit any act of terrorism or any criminal act re-
sulting from or related to an act of terrorism that
caused the insured losses resulting in the triggering
determination.
(f) SATISFACTION OF JUDGMENTS FROM SEIZED AS-
SETS OF TERRORISTS.—All assets of terrorists or terrorist
organizations seized or frozen by the United States in ac-
cordance with law shall be liable for satisfaction of judg-
ments rendered for acts of terrorism, in proportions deter-
mined by the courts.
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 estab-
lish a commission (in this section referred to as the ‘‘Com-
mission’’) to study and report on the potential effects 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 des-
ignee of the Chairman.
(C) The Assistant to the President for
Homeland Security.
(D) 4 members appointed by the President,
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 Com-
mission 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 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 ter-
rorism, 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