Order Code RL34219
Terrorism Risk Insurance Legislation in 2007:
Issue Summary and Side-by-Side
October 25, 2007
Baird Webel
Analyst in Economics
Government and Finance Division
Terrorism Risk Insurance Legislation in 2007:
Issue Summary and Side-by-Side
Summary
Prior to the September 11, 2001 terrorist attacks, insurance covering terrorism
losses was normally included in general insurance policies without additional cost
to the policyholders. Following the attacks, both primary insurers and reinsurers
pulled back from offering terrorism coverage, citing particularly an inability to
calculate the probability of loss and gather the loss data critical for insurance pricing.
Some argued that terrorism risk would never be insurable by the private market due
to the uncertainty and potentially massive losses involved. Because insurance is
required for a variety of economic transactions, it was feared that a lack of insurance
against terrorism loss would have a wider economic impact.
Congress responded to the disruption in the insurance market by passing the
Terrorism Risk Insurance Act of 2002 (TRIA). TRIA created a temporary program,
expiring at the end of 2005, to calm the insurance markets through a government
backstop for terrorism losses and to give the private industry time to gather the data
and create the structures and capacity necessary for private insurance to cover
terrorism risk. From 2002 to 2005, terrorism insurance became widely available and
largely affordable, and the insurance industry greatly expanded its financial capacity.
There was, however, little apparent success on a longer term private solution and
fears persisted about wider economic consequences if insurance were not available.
Congress responded to the impending expiration of TRIA with the passage of the
Terrorism Risk Insurance Extension Act (TRIEA). TRIEA extended the TRIA
program until the end of 2007 while increasing the private sector exposure to
terrorism risk.
The two years under the extended TRIA program have been very similar to the
three years under the first act. The general market for terrorism insurance has
improved, but doubts remain as to capacity of the private sector to finance large-scale
terrorism risk in the United States, as well as whether terrorism risk can be
considered an insurable event at all. On September 19, 2007, The House took up and
passed H.R. 2761, which would extend the TRIA program 15 years and make
substantial other changes . On October 17, 2007, the Senate Banking Committee
marked up an original bill, which would extend TRIA seven years while making
more limited changes to the underlying law. It is unclear when exactly the Senate
may consider the Banking Committee bill, but action would be necessary before the
end of 2007 if expiration of the program is to be avoided.
This report briefly outlines the issues involved with terrorism insurance and
includes a side-by-side of the current TRIA law, and the House and Senate TRIA-
extension legislation. It will be updated as legislative events occur. For more
complete information on the issue, please see CRS Report RL34025, Terrorism Risk
Insurance: Issue Analysis and Legislation, by Baird Webel.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Legislative Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Terrorism Risk Insurance Revision and Extension Act of 2007
(TRIREA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Terrorism Risk Insurance Program Reauthorization Act of 2007
(TRIPRA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Administration Reaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
List of Tables
Table 1. Terrorism Risk Insurance Side-by Side: Current Law, H.R. 2761,
and Senate Committee Original Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Terrorism Risk Insurance Legislation in 2007:
Issue Summary and Side-by-Side
Introduction
Prior to the September 11, 2001 terrorist attacks, insurance covering terrorism
losses was normally included in general insurance policies without a specific premium
being paid for this coverage. The attacks, and the more than $30 billion in insured
losses that resulted from them, caused a rethinking of the possibilities of future terrorist
attacks. In response to the new appreciation of the threat and the perceived inability
to calculate the probability of loss and gather the loss data critical for pricing insurance,
both primary insurers and reinsurers pulled back from offering terrorism coverage.
Many argued that terrorism risk is essentially uninsurable by the private market due to
the uncertainty and potentially massive losses involved. Because insurance is required
for a variety of economic transactions, many feared that a lack of insurance against
terrorism loss would have wider economic impact, particularly on large-scale
developments in urban areas that would be tempting targets for terrorism.
Congress responded to the disruption in the insurance market by passing the
Terrorism Risk Insurance Act of 2002 (TRIA)1, which was signed by the President in
November 2002. TRIA created the Terrorism Risk Insurance Program, which was
enacted as a temporary program, expiring at the end of 2005, to calm the insurance
markets through a government backstop for terrorism losses and give the private
industry time to gather the data and create the structures and capacity necessary for
private insurance to cover terrorism risk.
Terrorism insurance became widely available under TRIA, and the insurance
industry greatly expanded its financial capacity in the three years from 2002 to 2005.
Less progress, however, was made on creating terrorism models that are sufficiently
robust for insurers to return to offering widespread terrorism coverage without a
government backstop, and practically no progress was made on a private pooling
mechanism to cover terrorism risk. Again fearing economic disruption from the
absence of terrorism insurance, Congress passed, and the President approved, the
Terrorism Risk Insurance Extension Act of 2005 (TRIEA)2 in December 2005. TRIEA
extended the program for two years while increasing the private sector exposure under
the program.
1 P.L. 107-297, 116 Stat. 2322. See CRS Report RS21444, The Terrorism Risk Insurance
Act of 2002: A Summary of Provisions, by Baird Webel.
2 P.L. 109-144, 119 Stat. 2660. See CRS Report RL33177, Terrorism Risk Insurance
Legislation in 2005: Issue Summary and Side-by-Side, by Baird Webel.
CRS-2
The two years’ experience under TRIEA has proved to be much like the three
under TRIA. During this time, terrorism risk insurance has been available, pricing has
been moderate and takeup rates have slowly increased. Some additional progress has
been made on a larger scale private solution and some private groups outlined
proposals for such a solution.3 There was, however, little concrete movement towards
adopting such proposals. The industry focus seemed to be on the possibility of another
extension of the TRIA program.
Some see the past three years as proof of the argument that the private market will
never be able to offer insurance to cover terrorism risk and continue to see the
possibility of wider economic consequences if terrorism insurance again is unavailable.
Others, notably the U.S. Treasury Department, respond that TRIA itself is retarding the
growth of this private market by offering essentially free reinsurance against terrorism
risk. Thus, it should be allowed to expire, or at least be reduced from its current form.
Legislative Action
The 110th Congress responded to the impending expiration of the TRIA program
with two different bills, one in the House and one in the Senate. As was the case in the
TRIA extension debate in 2005, the House bill is a significant revision and expansion
of the TRIA program, whereas the Senate bill has a narrower focus — extending the
program while making relatively minor changes. Also as in 2005, the Administration
has indicated its support for the Senate’s approach.
Terrorism Risk Insurance Revision and
Extension Act of 2007 (TRIREA)
Representative Michael Capuano, along with 23 cosponsors, introduced H.R.
2761 on June 18, 2007. Referred to the Financial Services Committee, the bill was the
subject of a hearing in that committee’s Subcommittee on Capital Markets, Insurance,
and Government Sponsored Enterprises on June 21, 2007.
H.R. 2761 as introduced would have extended and revised the current structure
of the Terrorism Risk Insurance Program, adding significant new elements to this
structure. Within the existing TRIA structure, the bill would have extended the
program 10 years, to the end of 2017, while reducing the program trigger to $50
million and generally leaving the individual insurer deductibles and aggregate retention
unchanged at 20% of direct earned premium and $27.5 billion, respectively. It also
would have expanded the scope of TRIA by including domestic terrorism as a covered
event, adding group life insurance as a covered line, and mandating that insurers make
available coverage for nuclear, biological, chemical, and radiological (NCBR) terrorist
events. Under the bill as introduced, group life insurance would have had a separate
pool, with its own deductibles and recoupment amounts based on the amount of
3 See, for example, the testimony of Edmund F. Kelly before a joint hearing of the House
Financial Services Subcommittees on Capital Markets, Insurance, and Government
Sponsored Enterprises and Oversight and Investigations on September 7, 2006, available at
[http://financialservices.house.gov/media/pdf/092706efk.pdf].
CRS-3
insurance at risk, rather than direct earned premiums. NCBR coverage would have had
a lower (7.5%) deductible compared to non-NCBR terrorist events (20%). In addition,
H.R. 2761 as introduced included so-called reset provisions, that would have lowered
the program thresholds for areas that have suffered past terrorist attacks or that suffer
terrorist attacks in the future if the damage from the attacks exceeds $1 billion. Finally,
the bill would have expanded the mandatory availability provisions to include
restrictions on life insurers’ ability to consider lawful international travel as a factor in
underwriting decisions.
H.R. 2761 was marked up by the House Financial Services Committee’s
Subcommittee on Insurance, Capital Markets and Government Sponsored Enterprises
on July 24, 2007, and by the full committee on August 1, 2007.4 Substantial
amendments were adopted at both markups. The subcommittee markup began with a
complete substitute amendment by Chairman Kanjorski being adopted by voice vote.
This substitute changed the NBCR provisions, delaying the make available provisions
until 2009 and lowering the deductible to 3.5% with a 0.5% increase per year. It also
included a requirement for biennial reporting on the TRIA program by the Treasury and
changed the composition of the independent commission created by the bill to make
recommendations on the program. Several amendments to reduce the 10-year
extension of the program were rejected, as was one to require full recoupment of
federal funds expended beyond the $27.5 billion aggregate retention amount in current
law. Amendments adopted by the subcommittee included one by Representative Gary
Ackerman to include the Secretary of Homeland Security in the certification of a
terrorist attack under TRIA and one by Representative Richard Baker to apply the
lower trigger amount in the retrospective reset provisions to the entire country rather
than just to the affected area.
The full committee markup began with an amendment by Chairman Barney Frank
making a number of technical changes and three primary substantive changes. First,
Chairman Frank’s amendment changed the reset provisions, removing the retrospective
reset altogether and applying the prospective reset provisions to the entire country.
Thus, if there is a future terrorist attack resulting in more than $1 billion in damages,
the trigger would by reduced to $5 million and the insurer deductible would be reduced
to 5% for those insurers suffering terrorism losses. Second, it included temporary
preemptions from state rate and form approval laws for NBCR coverage mandated
under the bill. Third, it established a “terrorism buy down fund” in the U.S. Treasury
which would essentially allow insurers to put aside reserves that would grow tax-free
to cover losses from future terrorist attacks that are not reimbursed by TRIA. The U.S.
Treasury could also borrow from this fund to cover the federal share of a future
terrorist attack. The committee adopted a number of additional amendments, including
(1) an exemption for small insurers from the requirement to make NCBR coverage
available; (2) the return of farmowners multiple peril as a TRIA-covered line; (3) the
specific allowance for insurers to partner in meeting the requirement to make NCBR
coverage available; (4) the indexing of the various dollar amounts in the bill to an
unspecified measure of inflation; (5) the provision for a report by the Secretary of the
Treasury in the event that the Secretary decides not to recoup expended federal funds
4 The full committee markup began on July 26, but H.R. 2761 was the last of a number of
bills to be marked up.
CRS-4
beyond $27.5 billion; (6) the extension of the program for 15 years, to the end of 2022;
and (7) an increase in the post-reset deductible by 0.5% per year. The amended bill
was forwarded to the full House by a vote of 49-20.
The Congressional Budget Office (CBO) issued a cost estimate for H.R. 2761 on
September 6, 2007. CBO found that the bill as reported would increase direct spending
by $3.7 billion from 2008 to 2012 and $10.4 billion from 2008 to 2017. This spending
would be offset by additional revenues of about $100 million from 2008 to 2012 and
$2.0 billion from 2008 to 2017. Since the cost estimate found that an increase in the
budget deficit, or decrease in surplus, would result from the bill, it may fail to meet the
requirements of the “pay-as-you-go” (PAYGO) rule adopted by the House at the
beginning of the 110th Congress.5 In response to the PAYGO issues, the special rule
(H.Res. 660) under which TRIREA was considered on the House floor included a self-
executing amendment that inserted language into the underlying bill that would require
passage by Congress of a joint resolution before any funds could be expended. H.Res.
660 provides for expedited consideration of this future resolution, including a waiver
of all points of order against it and its consideration. This requirement for future
congressional action introduces uncertainty to the TRIA program that did not exist
before. It is unclear exactly how the insurance market might react to this uncertainty,
should this language become law.
H.R. 2761 was brought up on the House floor under H.Res. 660 on September 19,
2007. The rule made in order two floor amendments and a motion to recommit with
instructions. The manager’s amendment (H.Amdt. 801) by Chairman Barney Frank
changed the bill to include the NBCR deductible in the reset provisions, modified the
certification process for an NCBR attack, indexed the dollar amounts in the bill
specifically to the Consumer Price Index for All Urban Consumers (CPI-U), and made
a variety of technical and conforming changes. It passed on the House floor 426-1.
The other amendment (H.Amdt. 802) was offered by Representative Steve Pearce. It
would have changed the increase in the deductible under the post-attack reset
provisions from 0.5% per year to 1% per year. This amendment failed by a vote of
194-230. The motion to recommit with instructions was offered by Representative
David Drier and failed by a vote of 196-228. The House then passed the bill as
amended by a vote of 312-110. H.R. 2761 was received in the Senate on September
20, 2007, read twice, and referred to the Committee on Banking, Housing, and Urban
Affairs.
To summarize, H.R. 2761 as passed by the House included provisions that would
make the following changes to the current Terrorism Risk Insurance Program:
! Extend the TRIA program for 15 years, until the end of 2022.
! Make spending by the program contingent on passage of a future joint
resolution.
! Add coverage for domestic terrorist acts in the program.
! Add the Secretary of Homeland Security to the certification process.
5 See CRS Report RL33850, The House’s “Pay-As-You-Go” (PAYGO) Rule in the 110th
Congress: A Brief Overview, by Robert Keith, for more information on PAYGO.
CRS-5
! Add group life insurance to the program with a separate set of
retentions and deductibles.
! Return farmowners multiple peril as a covered line.
! Reduce the general trigger to $50 million.
! Require insurers to cover nuclear, biological, chemical, and
radiological (NCBR) terrorist attacks starting in 2009.
! Lower insurer deductible for NCBR attacks to 3.5% immediately and
then raise that number by 0.5% per year in the future.
! Increase the federal share of NCBR losses from 85% to as high as
100% for attacks causing over $100 billion in losses.
! Temporarily preempt state laws on rate and form filing for NCBR
coverages.
! Provide the possibility of relief from NBCR requirement to smaller
insurers.
! Reset individual insurer deductibles to 5% and the program trigger to
$5 million in the aftermath of a future terrorist attack (or series of
attacks) that causes more than $1 billion in damage. Deductible reset
would be only for insurers who suffer losses.
! Increase the post-reset insurer deductibles by 0.5% per year.
! Establish a “Terrorism Buy-Down Fund” that would essentially allow
insurers to put aside reserves that would grow tax-free to cover future
losses that are not reimbursed by TRIA. The fund would also be
available to the Secretary of the Treasury to cover the federal share of
TRIA losses.
! Restrict life insurers’ use of foreign travel as an underwriting tool.
! Index the dollar amounts in the program to future inflation.
Terrorism Risk Insurance Program
Reauthorization Act of 2007 (TRIPRA)
The Senate Banking, Housing, and Urban Affairs Committee marked up this
original bill, sponsored by Chairman Christopher Dodd and Ranking Member Richard
Shelby, on October 17, 2007. While Senator Schumer discussed possible amendments
in the markup session, no amendments were voted on in committee. The unamended
bill was ordered reported to the full Senate on a vote of 20-1. A committee report has
not been filed and the bill has yet to be introduced and assigned a number.
TRIPRA is a relatively straightforward reauthorization of the existing TRIA
program. The two primary changes that it would make to the program are (1) extend
it for seven years, until 2014; and (2) add coverage for domestic terrorist attacks to the
program. In addition, it would modify slightly the annual liability cap, and require the
Secretary of the Treasury to promulgate regulations on determining payments, should
losses exceed $100 billion rather than leaving this determination to a future Congress.
The bill would call for reports from the Government Accountability Office (GAO) on
the possibility of insurance coverage for NCBR events (within one year) and on the
affordability and availability of terrorism insurance in specific markets (within 180
days). In addition, the President’s Working Group on Financial Markets would be
CRS-6
tasked to continue its analysis of the longer term availability and affordability of
terrorism risk insurance, and to report on this subject in 2010 and 2013.
Administration Reaction
The Office of Management and Budget released a Statement of Administration
Policy6 on H.R. 2761 that indicated “if H.R. 2761 as reported were presented to the
President, his senior advisors would recommend that he veto the bill.” The
Administration indicated that it objected to the length of term of the extension, as well
as the increase in the federal role and the expansion of the scope of coverage. No
official Statement of Administration Policy has been released on the Senate bill.
Treasury Secretary Henry M. Paulson, has, however, indicated in a letter that the
Administration would be willing to accept the bill as it passed the committee.7
6 See [http://www.whitehouse.gov/omb/legislative/sap/110-1/hr2761sap-r.pdf].
7 Relevant text of this letter was provided to CRS by the Department of the Treasury. This
was also reported in the press. See [http://www.politico.com/news/stories/1007/6394.html].
CRS-7
Table 1. Terrorism Risk Insurance Side-by Side: Current Law, H.R. 2761, and Senate Committee Original Bill
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Title
Terrorism Insurance Program
Terrorism Risk Insurance Revision and
Terrorism Risk Insurance Program
Extension Act of 2007
Reauthorization Act of 2007
Expiration Date
December 31, 2007
December 31, 2022
December 31, 2014
(Sec. 108(a))
(Sec. 2)
(Sec. 3)
“Act of Terrorism” For an act of terrorism to be covered under
Removes requirement that a covered act of
Removes requirement that a covered act of
Definition
TRIA, it must be a violent act committed on
terrorism be committed on behalf of a foreign terrorism be committed on behalf of a
behalf of a foreign person or interest as part
person or interest. Adds “Nuclear,
foreign person or interest. (Sec. 2)
of an effort to coerce the U.S. civilian
Biological, Chemical, and Radiological
population or influence U.S. government
(NBCR) Terrorism” as a separate category of
policy. It must have resulted in damage
terrorism. Adds Secretary of Homeland
within the United States or to a U.S. airliner
Security to the certification of an act of
or mission abroad. Terrorist act is to be
terrorism or NBCR terrorism. (Sec. 102 (1))
certified by the Secretary of the Treasury in
concurrence with the Attorney General and
Secretary of State. (Sec. 102(1)(A))
CRS-8
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Aggregate Industry Terrorist act must cause more than $5
Lowers Program Trigger to $50,000,000 for
No Similar Provision
Loss Requirement
million in losses to be certified.
the life of the program. Trigger will reset to
and Program
Program Trigger prevents coverage under
$5,000,000 after a terrorist attack resulting in
Trigger
the program unless aggregate industry
$1,000,000,000 in damage.
losses exceed $50,000,000 in 2006 or
(Sec. 103 (e)(1)(C))
$100,000,000 in 2007. (Secs.102(1)(B)(ii)
and 103(e)(1)(B))
Insurer Deductible
7% of earned premium for 2003,
Adds deductible for group life equal to
No Similar Provision
10% of earned premium for 2004,
0.0351% of the value of an insurer’s amount
15% of earned premium for 2005,
at risk. (Sec. 102 (11)(G)(ii)).
17.5% of earned premium for 2006,
20% of earned premium for 2007.
(Sec. 102(7))
NBCR Deductible
No Provision
In the event of an NBCR terrorist attack, the
No Similar Provision
property/casualty deductible is 3.5% the first
year and then is raised 0.5% per year
thereafter. The group life NBCR deductible is
0.00614% the first year and then raised
0.00088% per year thereafter.
(Sec. 102(11)(I))
CRS-9
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Reset Provisions
No Provision
In the event of a terrorist attack or series of
No Similar Provision
attacks that cause more than $1,000,000,000
in damage, for future program years: (1) the
Program Trigger would be reduced to
$5,000,000; (2) the deductible for any insurer
suffering damage would be lowered to 5%
and then be raised 0.5% per year thereafter.
(Secs. 103 (e)(1)(C) and 102(11)(J))
NBCR Reset
No Provision
Starting with the fifth additional program
No Similar Provision
Provisions
year (2012), in the event of an NBCR terrorist
attack or series of attacks that cause more
than $1,000,000,000, the deductible for any
insurer suffering losses would be lowered to
5% and then be raised 0.5% per year
thereafter. (Sec. 102(11)(K))
CRS-10
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Covered lines of
Commercial property casualty insurance
Adds farm owners multiple peril back to
No Similar Provision
Insurance
including excess insurance, workers’
covered lines. Adds group life insurance.
compensation, and surety but excluding crop (Secs. 102(5), 102(8), and 102(17))
insurance, private mortgage insurance, title
insurance, financial guaranty insurance,
medical malpractice insurance, health or life
insurance, flood insurance, reinsurance,
commercial auto, burglary and theft,
professional liability (except for directors
and officers liability), and farm owners
multiple peril. (Sec. 102(12))
Mandatory
Every insurer must make terrorism coverage
Adds coverage for NBCR terrorism to that
No Similar Provision
Availability
available that does not differ materially from which must be made available starting in
coverage applicable to losses other than
2009. (Sec. 103(c)) Allows for an exemption
terrorism. (Sec 103(c))
to small insurers from the requirement to
provide NBCR coverage. (Sec. 103 (a)(4))
Life Insurance and
No Provision
Limits life insurers from considering lawful
No Similar Provision
Travel
travel in underwriting life insurance except in
certain circumstances. (Sec. 103 (c)(4))
CRS-11
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Insured Shared
Federal share of losses is 90% for insured
Adds sliding scale for federal share of NBCR
No Similar Provision
Loss Compensation losses that exceed the applicable insurer
terrorism losses, from 85% for losses less
deductible from 2002-2006.
than $10,000,000,000 to 100% for losses
For 2007, federal share of losses is 85%.
greater than $100,000,000,000.
(Sec. 103(e))
(Sec. 103(e)(1)(B))
Aggregate
$10,000,000,000 for 2002-3,
Adds aggregate retention amount for group
No Similar Provision
Retention Amount
$12,500,000,000 for 2004,
life insurance equal to $5,000,000,000.
Maximum
$15,000,000,000 for 2005,
(Sec.103 (e)(7)(ii))
$25,000,000,000 for 2006,
$27,500,000,000 for 2007.
(Sec. 103 (e)(6))
Annual Liability
Should losses to terrorism exceed
Payment for federal government share would
Removes the possibility that a future
Cap
$100,000,000, the federal government will
be capped at $100,000,000,000. Assuming
Congress could require insurers to cover
not make any payments on the portion of
that an insurer has met its deductible, insurers some share of losses above
losses that exceed $100,000,000,000.
are not responsible for paying losses that
$100,000,000,000 if the insurer has met its
Assuming that an insurer has met its
exceed $100,000,000,000 unless Congress
individual deductible. Requires insurers to
deductible, insurers are not responsible for
acts otherwise with respect to these losses.
clearly disclose this to policy holders(Sec.
paying losses that exceed $100,000,000,000
Requires insurers to clearly disclose this to
4(a) and Sec. 4(d))
unless Congress acts otherwise with respect
policy holders. (Sec. 103(e)(2))
to these losses. (Sec. 103 (e)(2)
CRS-12
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Payment
After notice by the Secretary of the
Secretary of the Treasury will determine the
Requires Secretary of the Treasury to
Procedures if
Treasury, Congress determines the
pro rata share of insured losses to be paid by
publish regulations regarding payments if
Losses Exceed
procedures for payments if losses exceed
each insurer. Federal courts will have
losses exceed $100,000,000,000 within 240
$100,000,000,000
$100,000,000,000. (Sec. 103 (e)(3)
jurisdiction over claims in the event that
days of passage. (Sec. 4(c))
losses exceed $100,000,000,000. (Sec.
103(e)(2), 103(e)(3)(C), and 103(e)(4)(F))
Mandatory
If insurer losses are under the aggregate
Adds an optional report should the Secretary
No Similar Provision
Recoupment of
retention amount, a mandatory recoupment
of the Treasury choose not to require
Federal Share
of the federal share of the loss will be
reimbursement above the aggregate retention
imposed. If insurer losses are over the
amount. (Sec. 103(e)(8)(D))
aggregate retention amount, such
recoupment is at the discretion of the
Secretary of the Treasury. (Sec. 103(e)(7))
Recoupment
Surcharge is limited to 3% of property-
Adds limit on group life insurance
No Similar Provision
Surcharge
casualty insurance premium and may be
recoupment surcharge of 0.053% of amount
adjusted by the Secretary to take into
at risk. (Sec. 103(9)(C))
account the economic impact of the
surcharge on urban commercial centers, the
differential risk factors related to rural areas
and smaller commercial centers, and the
various exposures to terrorism risk across
lines of insurance. (Sec. 103(8))
CRS-13
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Joint Resolution
No Provision
Requires passage of a future Joint Resolution
No Similar Provision
Requirement for
before any funds would be expended under
Future Payments
the Act. Provides for expedited consideration
of this Resolution. (Sec. 103(h))
Inflation
No Provision
Indexes dollar amounts in the bill for
No Similar Provision
Adjustment
inflation using the CPI-U as an adjustor.
(Sec. 103(h))
Preservation and
Preserves all existing regulatory authority
Preempts state laws requiring prior approval
No Similar Provision
Preemption of
and jurisdiction of the states except that:
of rates and forms for insurance required by
Existing State Law exclusions for terrorism existing at the time
the act until December 31, 2008. Preempts
of the Act’s enactment are annulled, but can
state laws requiring prior approval of forms
be reinstated by the insurer with the
for NBCR insurance required by the act until
agreement of the insured;
December 31, 2009. Preempts state laws
the definition for “Act of Terrorism” in the
requiring prior approval of rates for NBCR
Act shall preempt any state definitions for
insurance required by the act until December
purposes of the act, state rate and form filing 31, 2010. (Sec. 3(a)(4))
requirements until the end of 2003 are
partially preempted; and
insurers are required to provide books and
records relevant to the program at the
request of the Secretary of the Treasury
notwithstanding any state laws to the
contrary. (Sec. 105 and 106(a))
CRS-14
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Terrorism Buy-
No Provision
Creates a “Terrorism Buy-Down Fund” that
No Similar Provision
Down Fund
would allow insurers to buy additional
terrorism coverage from the government.
This coverage would be limited to the amount
of an insurer’s deductible and co-share.
Payout amounts would be limited to the
amount that the insurer paid for the coverage
plus interest. Amounts in this buy-down fund
would be available to be borrowed by the
Secretary of the Treasury to cover the federal
share of terrorism losses should they not be
needed by the insurer who purchased the
coverage. (Sec. 106A)
CRS-15
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Studies and
Calls for a study of the need to include group Calls for ongoing analysis by the Secretary of Calls for GAO studies and reports on
Reports
life insurance under TRIA (Sec. 103 (h)), a
the Treasury of terrorism risk insurance
insurance for nuclear, biological, chemical,
study and report of the potential impact of
market conditions and biennial reports and
and radiological events and on the
terrorism on life insurance and other lines of testimony. (Sec. 5(a))
availability and affordability of terrorism
insurance (Sec 103 (g)), and a study
risk insurance in specific markets. Calls for
assessing the effectiveness of the program,
ongoing analysis by the President’s Working
the likelihood of the private industry
Group on Financial Markets, with reports to
insuring against terrorism after the program
be delivered in 2010 and 2013. (Sec. 5)
expiration, and the availability and
affordability of such insurance.
(Sec. 108(d))
Calls for an analysis and report, not later
than September 30, 2006, from the
President’s Working Group on Financial
Markets, in consultation with various
stakeholders, on the longer term availability
and affordability of terrorism risk insurance
including particularly group life coverage
and coverage against chemical, nuclear,
biological, and radiological events.
(Sec. 108(3))
CRS-16
15 U.S.C. 6701 note
H.R. 2761
Senate Committee Original Bill
Provision
(P.L. 107-297 as amended by P.L. 109-144)
(as passed by the House)
(as ordered reported to the full Senate)
Commission on
No Provision
Establishes a 21-member commission with a
No Similar Provision
Terrorism Risk
wide range of stakeholders, including
Insurance
insurers, policyholders, and the insurance
commissioners. The commission is to make
recommendations regarding possible actions
to encourage private insurance coverage of
terrorism risk. The commission is to make
two reports specifically evaluating the need
for the TRIA program and suggesting
possible replacements. One report to be
submitted before 60 months after enactment
and the other submitted before 96 months
after enactment. (Sec. 109)
Notes: Items in italics under the15 U.S.C. 6701 note column are those added by P.L. 109-144. H.R. 2761 would strike most of 15 U.S.C. 6701 note and replace it with a similar
structure, including identical language in many sections. The section numbers for this bill cited in this side-by-side are, therefore, those that would appear in the code if the bill were
enacted, except for the provisions entitled “Expiration Date” and “Preservation and Preemption of Existing State Law.” In contrast, the Senate bill simply amends 15 U.S.C. 6701 note.
The section numbers cited in this side-by-side are thus those of the bill itself.