Expresses the sense of Congress that acts of terrorism resulting in insured losses greater than $100 billion would necessitate further action by the Congress to address such additional losses.
Sets forth repayment mechanisms under the financial assistance plan which provide for: (1) an assessments schedule; and (2) a terrorism loss repayment surcharge plan based upon imposing a policyholder premium surcharge on commercial property and casualty insurance.
Expresses the sense of the Congress that: (1) the National Association of Insurance Commissioners (NAIC) should develop appropriate definitions for acts of terrorism and appropriate standards for making determinations regarding such acts; (2) each State should adopt those definitions and standards for purposes of regulating insurance coverage in that State; (3) the Secretary should advocate and promote the development of definitions and standards appropriate for purposes of this Act; and (4) after such consultation, the Secretary should adopt definitions for acts of terrorism and standards for determinations appropriate for this Act.
Expresses the sense of Congress that: (1) the NAIC should develop appropriate guidelines for commercial insurers and pools regarding 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.
Expresses the sense of Congress that the States should require that the price of terrorism insurance coverage, including the costs of any terrorism related assessments or surcharges under this Act, be separately disclosed.
Declares that a Federal cause of action shall be the exclusive remedy if assessments or surcharges are required due to insured losses resulting from acts of terrorism. Limits damages in actions regarding insurance claims and attorneys' fees. Prohibits the award of punitive damages, or of non-economic damages in excess of the defendant's direct proportion of responsibility for the plaintiff's physical harm.
Instructs the President to establish a commission to study and report to Congress on the potential effects of an act of terrorism on the life insurance industry in the United States and the markets served by such industry.
[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3357 Introduced in House (IH)]
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
subsequently 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 Representatives 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, resulted in a large number of
deaths and injuries, the destruction and damage to buildings,
and interruption of business operations;
(2) the attacks have inflicted possibly the largest losses
ever incurred by insurers and reinsurers in a single day;
(3) while the insurance and reinsurance industries have
committed to pay the losses arising from the September 11
attacks, the resulting disruption has created widespread market
uncertainties with regard to the risk of losses arising from
possible future terrorist attacks;
(4) such uncertainty threatens the continued availability
of United States commercial property and casualty insurance for
terrorism risk at meaningful 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 financial services providers to finance
commercial property acquisitions and new construction;
(6) in the past, the private insurance and reinsurance
markets have shown a remarkable resiliency in adapting to
changed circumstances;
(7) given time, the private markets will diversify and
develop risk spreading mechanisms to increase capacity and
guard against possible future losses incurred by terrorist
attacks;
(8) it is necessary to create a temporary industry risk
sharing program to ensure the continued availability of
commercial property and casualty insurance and reinsurance for
terrorism-related risks;
(9) such action is necessary to limit immediate market
disruptions, encourage economic stabilization, 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 reserves for property and
casualty insurance for terrorist 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 SECRETARY.
To the extent such information is not otherwise available to the
Secretary, the Secretary may require each insurer to submit, to the
Secretary or to the NAIC, a statement specifying the net premium amount
of coverage written 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 DETERMINATIONS.
(a) In General.--For purposes of this Act, a ``triggering
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 industry-wide losses
exceed $100,000,000 and some portion of such losses for any
single commercial insurer exceed--
(A) 10 percent of the capital surplus of such
commercial insurer (as such term is defined 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 commercial 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 General of the United States and the
Secretary of State, shall have the sole authority which may not be
delegated or designated to any other officer, employee, or position,
for determining whether--
(1) an occurrence was caused by an act of terrorism; and
(2) an act of terrorism occurred during the covered period.
SEC. 6. FEDERAL COST-SHARING FOR COMMERCIAL INSURERS.
(a) In General.--Pursuant to a triggering determination, 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 subsections (c) and
(d), with respect to a triggering determination under section
5(a)(1), financial assistance 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 insured 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 assistance 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 insured 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 subsection (c), if the
Secretary has provided financial assistance to a commercial
insurer pursuant to paragraph (2) of this subsection and
subsequently makes a triggering determination pursuant to
section 5(a)(1), the Secretary shall provide financial
assistance to such insurer in connection with such subsequent
triggering determination (in addition to the amount of
financial assistance provided to such insurer 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 financial
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 determination 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 available under this
section shall be repaid through assessments under section 7 collected
by the Secretary and surcharges 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 designates the amount of new
budget authority and outlays in all fiscal years resulting from this
section as an emergency requirement pursuant to section 252(e) of the
Balanced 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 determination, each
commercial insurer shall be subject to assessments 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 triggering 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 determination.
The aggregate assessment amount under this subsection shall be assessed
to commercial insurers through an industry obligation assessment under
subsection (c) and, if necessary, the remainder shall be assessed
through one or more financing assessments under subsection (d).
(c) Industry Obligation Assessments.--
(1) In general.--Immediately upon the occurrence 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 industry obligation
assessment in connection with a triggering determination shall
be equal to--
(A) in the case of a triggering determination
occurring during the covered period specified 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 preceding the triggering
determination; and
(ii) the amount of financial assistance
made available under section 6 in connection
with the triggering determination; or
(B) such other aggregate industry obligation amount
as may apply pursuant to subsection (g).
(3) Timing of multiple assessments.--
(A) Delayed imposition and aggregation of
assessments.--In the case of any triggering
determination occurring within 12 months of the
occurrence of a previous triggering 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) during which such
determination occurs.
(B) Quarterly assessment period.--With respect to a
subsequent triggering determination referred to in
subparagraph (A), the quarterly assessment periods
under this subparagraph are--
(i) the 3-month period that begins upon the
imposition of the industry obligation
assessment resulting from the triggering
determination that--
(I) occurred most recently before
such subsequent triggering
determination; and
(II) did not occur within 12 months
of the occurrence of any previous
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 determination exceeds the
aggregate amount of the industry obligation assessment under
subsection (c) in connection with the determination, the
remaining amount shall be assessed through one or more, as may
be necessary pursuant to paragraph (3), financing assessments
under this subsection.
(2) Timing.--A financing assessment under this subsection
in connection with a triggering determination shall be imposed
only upon the expiration of any 12-month period beginning after
such determination during which no assessments under this
section have been imposed.
(3) Limitation.--The aggregate amount of any financing
assessments imposed under this subsection 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 insurer for such period.
(e) Allocation of Assessment.--The portion of the aggregate amount
of any industry obligation assessment 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 subsection (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 Secretary may take either or both of the
following actions:
(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 considers
appropriate, on the amount of the assessment that was
not paid before the deadline established under
paragraph (2).
(g) Aggregate Industry Obligation Amount for Program Extension
Years.--If the Secretary exercises 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 triggering determination.
(h) Administrative Flexibility.--
(1) Adjustment of assessments.--The Secretary may provide
for or require estimations of amounts under this section and
may provide for subsequent refunds or require additional
payments to correct such estimations, as appropriate.
(2) Deferral of contributions.--The Secretary 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
insurer.
(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 Collection.--
(1) In general.--If, pursuant to a triggering
determination, the Secretary determines that the aggregate
amount of financial assistance provided pursuant 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 paragraph are--
(A) the ultimate costs to taxpayers if a surcharge
under this section is not established;
(B) the economic conditions in the commercial
marketplace;
(C) the affordability of commercial insurance for
small- and medium-sized business; and
(D) such other factors as the Secretary considers
appropriate.
(3) Policyholder premium.--The amount established by the
Secretary as a surcharge under this section shall be
established and imposed as a policyholder premium surcharge on
commercial property and casualty insurance written after such
determination, 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 exceeds
$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 section shall--
(1) be based on a percentage of the premium amount charged
for commercial property and casualty 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, commercial property
and casualty insurance does not include any reinsurance provided to
primary insurance companies.
SEC. 9. ADMINISTRATION OF ASSESSMENTS AND SURCHARGES.
(a) Manner and Method.--
(1) In general.--Except to the extent specified in such
sections, the Secretary shall provide for the manner and method
of carrying out assessments under section 7 and surcharges
under section 8, including the timing and procedures of making
assessments and surcharges, notifying commercial insurers of
assessments and surcharge requirements, collecting payments
from and surcharges through commercial insurers, and refunding
of any excess amounts paid or crediting such amounts against
future assessments.
(2) Effect of assessments and surcharges on urban and
smaller commercial and rural areas and different lines of
insurance.--In determining the method and manner of imposing
assessments under section 7 and surcharges under section 8,
including the amount of such assessments and surcharges, the
Secretary shall take into consideration--
(A) the economic impact of any such assessments and
surcharges on commercial centers 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 magnitude 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 assessments 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) Adjustment.--The Secretary may adjust the assessments charged
under section 7 or the percentage imposed under the surcharge under
section 8 at any time, as the Secretary considers appropriate to
protect the national 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 commercial 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 Secretary
erroneous information regarding premium 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 paragraph 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
regulations issued under this Act, such amount in dispute.
SEC. 10. APPLICATION TO SELF-INSURANCE ARRANGEMENTS AND OFFSHORE
INSURERS AND REINSURERS.
(a) Self-Insurance Arrangements.--The Secretary 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 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 entities that provide commercial property and
casualty insurance.
SEC. 11. STUDY OF RESERVES FOR PROPERTY AND CASUALTY INSURANCE FOR
TERRORIST OR OTHER CATASTROPHIC EVENTS.
(a) In General.--The Secretary of the Treasury shall conduct a
study of issues relating to permitting property and casualty insurance
companies to establish deductible reserves against losses for future
acts of terrorism, including--
(1) whether such tax-favored reserves would promote (A)
insurance coverage of risks of terrorism, and (B) the
accumulation of additional resources needed to satisfy
potential claims resulting from such risks,
(2) the lines of business for which such reserves would be
appropriate, including 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 administered,
(5) a comparison of the Federal tax treatment of such
reserves with other insurance reserves permitted under Federal
tax laws,
(6) an analysis of the use of tax-favored 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 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 recommendations 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
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.--
(1) In general.--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 related information with such
State insurance regulator is preempted to the extent such law
requires such additional actions for such insurance coverage.
(2) Subsequent review authority.--Paragraph (1) 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 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 provisions.--Any authority
for prior review and action by a State regulator preempted
under paragraph (1) shall be deemed to be authority to conduct
a subsequent 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 Secretary, should
develop appropriate definitions for acts of terrorism that are
consistent with this Act and appropriate standards for making
determinations 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 Secretary 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 regarding 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 Secretary
determines that such guidelines have not been so developed and
adopted, the Secretary shall consider adopting, and may adopt,
such guidelines on a national basis in a manner that supersedes
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 coverage 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 providing 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 disclosure.
SEC. 14. CONSULTATION WITH STATE INSURANCE REGULATORS 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, including 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 require verification of amounts of premiums or losses, as
appropriate.
SEC. 15. LITIGATION MANAGEMENT.
(a) Federal Cause of Action for Claims Relating 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 occurred, 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, relating to,
or resulting from such acts of terrorism.
(2) Effect of determination.--A determination 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
determinations made in accordance with the provisions
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, unless such law is inconsistent with or preempted by
Federal law.
(4) Jurisdiction.--For each determination under paragraph
(1), the Judicial Panel on Multidistrict 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, personal injury, or death) brought pursuant to this
subsection. The Judicial Panel on Multidistrict Litigation
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 punish or
deter, exemplary damages, or other damages not intended
to compensate a plaintiff for actual losses may be
awarded, nor shall any party be liable for interest
prior to the judgment.
(B)(i) 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 responsibility of the defendant for the
harm to the plaintiff, and no plaintiff may recover
noneconomic 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, suffering, inconvenience,
physical impairment, mental anguish, disfigurement,
loss of enjoyment 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 compensation, if any, that the plaintiff has
received or is entitled to receive as a result of the acts of
terrorism 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 discretion of the court, but
in no event shall any attorney charge, demand, receive, or
collect for services rendered, fees or compensation in an
amount in excess of 20 percent of the damages ordered by the
court to be paid pursuant to this section, or in excess of 20
percent of any court-approved settlement made of any claim
cognizable under this section. Any attorney who charges,
demands, receives, or collects 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 subsection (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 paragraph (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
section 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 extent of any compensatory
damages awarded in the judgment for which the terrorist party
is liable.
(2) Presidential waiver.--
(A) Subject to subparagraph (B), upon determining
on an asset-by-asset basis that a waiver is necessary
in the national security interest, the President may
waive the requirements 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 section 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 accordance with law.
(C) The term ``property subject to the Vienna
Convention on Diplomatic Relations or the Vienna
Convention on Consular Relations'' and the term ``asset
subject to the Vienna Convention 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 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
insurance industry in the United States and the markets served by such
industry.
(b) Membership and Operations.--
(1) Appointment.--The Commission shall consist of 7
members, as follows:
(A) The Secretary of the Treasury or the designee
of the Secretary.
(B) The Chairman of the Board of Governors 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 President, who shall
be--
(i) a representative of direct underwriters
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 insurance industry in
the United States to independently 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 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 report pursuant to subsection (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 railroad 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
enactment of this Act the Secretary shall submit to the Congress a
report regarding the results and conclusions of the study.
SEC. 18. STUDY OF REINSURANCE POOL SYSTEM FOR FUTURE ACTS OF TERRORISM.
(a) Study.--The Secretary, the Board of Governors of the Federal
Reserve System, and the Comptroller General of the United States shall
jointly conduct a study on the advisability and effectiveness of
establishing a reinsurance 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)
representatives from the property and casualty insurance industry, (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 Comptroller General shall jointly
submit a report to the Congress 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 terrorism''
means any act that the Secretary determines meets the
requirements under subparagraph (B), as such
requirements are further 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 carrier 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 Secretary 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 conduct
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 compensation.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insurer, any company that controls, is controlled by, or
is under common control with the insurer.
(3) Aggregate written premium.--The term ``aggregate
written premium'' means, with respect to a year, the aggregate
premium amount of all commercial property and casualty
insurance coverage written during such year under all lines of
commercial property and casualty insurance.
(4) Commercial insurer.--The term ``commercial 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 insurance.--
(A) In general.--The term ``commercial property and
casualty insurance'' means insurance or reinsurance, or
retrocessional reinsurance, for persons or properties
in the United States against--
(i) loss of or damage to property;
(ii) loss of income or extra expense
incurred because of loss of or damage to
property;
(iii) third party liability claims caused
by negligence or imposed by statute or
contract, 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 personal, family,
or household needs;
(ii) insurance for professional liability,
including medical malpractice, errors and
omissions, or directors' and officers'
liability; or
(iii) health or life insurance.
(6) Control.--A company has control over another 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 influence over the
management or policies of the other company.
(7) Covered period.--The term ``covered period'' has the
meaning given such term in section 20.
(8) Industry-wide losses.--The term ``industry-wide
losses'' means the aggregate insured losses sustained by all
insurers from coverage written under all lines of commercial
property and casualty 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 National
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 casualty
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 Columbia, the Commonwealth of
Puerto Rico, the Commonwealth 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 respect 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 ``triggering event''
means, with respect to a triggering determination, the
occurrence of an act of terrorism, or the occurrence of such
acts, that caused the insured losses resulting in such
triggering determination.
(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 provided otherwise under
subsection (b), for purposes of this Act, the term ``covered period''
means the period beginning on the date of the enactment of this Act and
ending on January 1, 2003.
(b) Extension of Program.--If the Secretary determines 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
subsection (c), extend the covered period by not more than two years.
(c) Report.--The Secretary may exercise the authority under
subsection (b) to extend the covered period only if the Secretary
submits a report to the Congress providing notice of and setting forth
the reasons for such extension.
SEC. 21. REGULATIONS.
The Secretary shall issue any regulations necessary to carry out
this Act.
<all>
Introduced in House
Introduced in House
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 subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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 subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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 subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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 subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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 subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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