[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3210 Enrolled Bill (ENR)]
H.R.3210
One Hundred Seventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Wednesday,
the twenty-third day of January, two thousand and two
An Act
To ensure the continued financial capacity of insurers to provide
coverage for risks from terrorism.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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(a) Short Title.--This Act may be cited as the ``Terrorism Risk
Insurance Act of 2002''.
(b) Table of Contents.--The table of contents for this Act is as
follows:

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0b5e2f4732b3f6c277b091325d2cf298f039c45cd8c88d0012522ead7d651f86

TITLE I

-TERRORISM INSURANCE PROGRAM

terrorist organizations, and State sponsors of terrorism.

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TITLE II

-TREATMENT OF TERRORIST ASSETS

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TITLE III

-FEDERAL RESERVE BOARD PROVISIONS

(a) Findings.--The Congress finds that--
(1) the ability of businesses and individuals to obtain
property and casualty insurance at reasonable and predictable
prices, in order to spread the risk of both routine and
catastrophic loss, is critical to economic growth, urban
development, and the construction and maintenance of public and
private housing, as well as to the promotion of United States
exports and foreign trade in an increasingly interconnected world;
(2) property and casualty insurance firms are important
financial institutions, the products of which allow mutualization
of risk and the efficient use of financial resources and enhance
the ability of the economy to maintain stability, while responding
to a variety of economic, political, environmental, and other risks
with a minimum of disruption;
(3) the ability of the insurance industry to cover the
unprecedented financial risks presented by potential acts of
terrorism in the United States can be a major factor in the
recovery from terrorist attacks, while maintaining the stability of
the economy;
(4) widespread financial market uncertainties have arisen
following the terrorist attacks of September 11, 2001, including
the absence of information from which financial institutions can
make statistically valid estimates of the probability and cost of
future terrorist events, and therefore the size, funding, and
allocation of the risk of loss caused by such acts of terrorism;
(5) a decision by property and casualty insurers to deal with
such uncertainties, either by terminating property and casualty
coverage for losses arising from terrorist events, or by radically
escalating premium coverage to compensate for risks of loss that
are not readily predictable, could seriously hamper ongoing and
planned construction, property acquisition, and other business
projects, generate a dramatic increase in rents, and otherwise
suppress economic activity; and
(6) the United States Government should provide temporary
financial compensation to insured parties, contributing to the
stabilization of the United States economy in a time of national
crisis, while the financial services industry develops the systems,
mechanisms, products, and programs necessary to create a viable
financial services market for private terrorism risk insurance.
(b) Purpose.--The purpose of this title is to establish a temporary
Federal program that provides for a transparent system of shared public
and private compensation for insured losses resulting from acts of
terrorism, in order to--
(1) protect consumers by addressing market disruptions and
ensure the continued widespread availability and affordability of
property and casualty insurance for terrorism risk; and
(2) allow for a transitional period for the private markets to
stabilize, resume pricing of such insurance, and build capacity to
absorb any future losses, while preserving State insurance
regulation and consumer protections.

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In this title, the following definitions shall apply:
(1) Act of terrorism.--
(A) Certification.--The term ``act of terrorism'' means any
act that is certified by the Secretary, in concurrence with the
Secretary of State, and the Attorney General of the United
States--
(i) to be an act of terrorism;
(ii) to be a violent act or an act that is dangerous
to--
(I) human life;
(II) property; or
(III) infrastructure;
(iii) to have resulted in damage within the United
States, or outside of the United States in the case of--
(I) an air carrier or vessel described in paragraph
(5)(B); or
(II) the premises of a United States mission; and
(iv) to have been committed by an individual or
individuals acting on behalf of any foreign person or
foreign interest, as part of an effort to coerce the
civilian population of the United States or to influence
the policy or affect the conduct of the United States
Government by coercion.
(B) Limitation.--No act shall be certified by the Secretary
as an act of terrorism if--
(i) the act is committed as part of the course of a war
declared by the Congress, except that this clause shall not
apply with respect to any coverage for workers'
compensation; or
(ii) property and casualty insurance losses resulting
from the act, in the aggregate, do not exceed $5,000,000.
(C) Determinations final.--Any certification of, or
determination not to certify, an act as an act of terrorism
under this paragraph shall be final, and shall not be subject
to judicial review.
(D) Nondelegation.--The Secretary may not delegate or
designate to any other officer, employee, or person, any
determination under this paragraph of whether, during the
effective period of the Program, an act of terrorism has
occurred.
(2) Affiliate.--The term ``affiliate'' means, with respect to
an insurer, any entity that controls, is controlled by, or is under
common control with the insurer.
(3) Control.--An entity has ``control'' over another entity,
if--
(A) the entity directly or indirectly or acting through 1
or more other persons owns, controls, or has power to vote 25
percent or more of any class of voting securities of the other
entity;
(B) the entity controls in any manner the election of a
majority of the directors or trustees of the other entity; or
(C) the Secretary determines, after notice and opportunity
for hearing, that the entity directly or indirectly exercises a
controlling influence over the management or policies of the
other entity.
(4) Direct earned premium.--The term ``direct earned premium''
means a direct earned premium for property and casualty insurance
issued by any insurer for insurance against losses occurring at the
locations described in subparagraphs (A) and (B) of paragraph (5).
(5) Insured loss.--The term ``insured loss'' means any loss
resulting from an act of terrorism (including an act of war, in the
case of workers' compensation) that is covered by primary or excess
property and casualty insurance issued by an insurer if such loss--
(A) occurs within the United States; or
(B) occurs to an air carrier (as defined in section 40102
of title 49, United States Code), to a United States flag
vessel (or a vessel based principally in the United States, on
which United States income tax is paid and whose insurance
coverage is subject to regulation in the United States),
regardless of where the loss occurs, or at the premises of any
United States mission.
(6) Insurer.--The term ``insurer'' means any entity, including
any affiliate thereof--
(A) that is--
(i) licensed or admitted to engage in the business of
providing primary or excess insurance in any State;
(ii) not licensed or admitted as described in clause
(i), if it is an eligible surplus line carrier listed on
the Quarterly Listing of Alien Insurers of the NAIC, or any
successor thereto;
(iii) approved for the purpose of offering property and
casualty insurance by a Federal agency in connection with
maritime, energy, or aviation activity;
(iv) a State residual market insurance entity or State
workers' compensation fund; or
(v) any other entity described in section 103(f), to
the extent provided in the rules of the Secretary issued
under section 103(f);
(B) that receives direct earned premiums for any type of
commercial property and casualty insurance coverage, other than
in the case of entities described in sections 103(d) and
103(f); and
(C) that meets any other criteria that the Secretary may
reasonably prescribe.
(7) Insurer deductible.--The term ``insurer deductible''
means--
(A) for the Transition Period, the value of an insurer's
direct earned premiums over the calendar year immediately
preceding the date of enactment of this Act, multiplied by 1
percent;
(B) for Program Year 1, the value of an insurer's direct
earned premiums over the calendar year immediately preceding
Program Year 1, multiplied by 7 percent;
(C) for Program Year 2, the value of an insurer's direct
earned premiums over the calendar year immediately preceding
Program Year 2, multiplied by 10 percent;
(D) for Program Year 3, the value of an insurer's direct
earned premiums over the calendar year immediately preceding
Program Year 3, multiplied by 15 percent; and
(E) notwithstanding subparagraphs (A) through (D), for the
Transition Period, Program Year 1, Program Year 2, or Program
Year 3, if an insurer has not had a full year of operations
during the calendar year immediately preceding such Period or
Program Year, such portion of the direct earned premiums of the
insurer as the Secretary determines appropriate, subject to
appropriate methodologies established by the Secretary for
measuring such direct earned premiums.
(8) NAIC.--The term ``NAIC'' means the National Association of
Insurance Commissioners.
(9) Person.--The term ``person'' means any individual, business
or nonprofit entity (including those organized in the form of a
partnership, limited liability company, corporation, or
association), trust or estate, or a State or political subdivision
of a State or other governmental unit.
(10) Program.--The term ``Program'' means the Terrorism
Insurance Program established by this title.
(11) Program years.--
(A) Transition period.--The term ``Transition Period''
means the period beginning on the date of enactment of this Act
and ending on December 31, 2002.
(B) Program year 1.--The term ``Program Year 1'' means the
period beginning on January 1, 2003 and ending on December 31,
2003.
(C) Program year 2.--The term ``Program Year 2'' means the
period beginning on January 1, 2004 and ending on December 31,
2004.
(D) Program year 3.--The term ``Program Year 3'' means the
period beginning on January 1, 2005 and ending on December 31,
2005.
(12) Property and casualty insurance.--The term ``property and
casualty insurance''--
(A) means commercial lines of property and casualty
insurance, including excess insurance, workers' compensation
insurance, and surety insurance; and
(B) does not include--
(i) Federal crop insurance issued or reinsured under
the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.), or
any other type of crop or livestock insurance that is
privately issued or reinsured;
(ii) private mortgage insurance (as that term is
defined in section 2 of the Homeowners Protection Act of
1998 (12 U.S.C. 4901)) or title insurance;
(iii) financial guaranty insurance issued by monoline
financial guaranty insurance corporations;
(iv) insurance for medical malpractice;
(v) health or life insurance, including group life
insurance;
(vi) flood insurance provided under the National Flood
Insurance Act of 1968 (42 U.S.C. 4001 et seq.); or
(vii) reinsurance or retrocessional reinsurance.
(13) Secretary.--The term ``Secretary'' means the Secretary of
the Treasury.
(14) State.--The term ``State'' means any State of the United
States, the District of Columbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana Islands, American Samoa,
Guam, each of the United States Virgin Islands, and any territory
or possession of the United States.
(15) United states.--The term ``United States'' means the
several States, and includes the territorial sea and the
continental shelf of the United States, as those terms are defined
in the Violent Crime Control and Law Enforcement Act of 1994 (18
U.S.C. 2280, 2281).
(16) Rule of construction for dates.--With respect to any
reference to a date in this title, such day shall be construed--
(A) to begin at 12:01 a.m. on that date; and
(B) to end at midnight on that date.

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(a) Establishment of Program.--
(1) In general.--There is established in the Department of the
Treasury the Terrorism Insurance Program.
(2) Authority of the secretary.--Notwithstanding any other
provision of State or Federal law, the Secretary shall administer
the Program, and shall pay the Federal share of compensation for
insured losses in accordance with subsection (e).
(3) Mandatory participation.--Each entity that meets the
definition of an insurer under this title shall participate in the
Program.
(b) Conditions for Federal Payments.--No payment may be made by the
Secretary under this section with respect to an insured loss that is
covered by an insurer, unless--
(1) the person that suffers the insured loss, or a person
acting on behalf of that person, files a claim with the insurer;
(2) the insurer provides clear and conspicuous disclosure to
the policyholder of the premium charged for insured losses covered
by the Program and the Federal share of compensation for insured
losses under the Program--
(A) in the case of any policy that is issued before the
date of enactment of this Act, not later than 90 days after
that date of enactment;
(B) in the case of any policy that is issued within 90 days
of the date of enactment of this Act, at the time of offer,
purchase, and renewal of the policy; and
(C) in the case of any policy that is issued more than 90
days after the date of enactment of this Act, on a separate
line item in the policy, at the time of offer, purchase, and
renewal of the policy;
(3) the insurer processes the claim for the insured loss in
accordance with appropriate business practices, and any reasonable
procedures that the Secretary may prescribe; and
(4) the insurer submits to the Secretary, in accordance with
such reasonable procedures as the Secretary may establish--
(A) a claim for payment of the Federal share of
compensation for insured losses under the Program;
(B) written certification--
(i) of the underlying claim; and
(ii) of all payments made for insured losses; and
(C) certification of its compliance with the provisions of
this subsection.
(c) Mandatory Availability.--
(1) Initial program periods.--During the period beginning on
the first day of the Transition Period and ending on the last day
of Program Year 2, each entity that meets the definition of an
insurer under section 102--
(A) shall make available, in all of its property and
casualty insurance policies, coverage for insured losses; and
(B) shall make available property and casualty insurance
coverage for insured losses that does not differ materially
from the terms, amounts, and other coverage limitations
applicable to losses arising from events other than acts of
terrorism.
(2) Program year 3.--Not later than September 1, 2004, the
Secretary shall, based on the factors referred to in section
108(d)(1), determine whether the provisions of subparagraphs (A)
and (B) of paragraph (1) should be extended through Program Year 3.
(d) State Residual Market Insurance Entities.--
(1) In general.--The Secretary shall issue regulations, as soon
as practicable after the date of enactment of this Act, that apply
the provisions of this title to State residual market insurance
entities and State workers' compensation funds.
(2) Treatment of certain entities.--For purposes of the
regulations issued pursuant to paragraph (1)--
(A) a State residual market insurance entity that does not
share its profits and losses with private sector insurers shall
be treated as a separate insurer; and
(B) a State residual market insurance entity that shares
its profits and losses with private sector insurers shall not
be treated as a separate insurer, and shall report to each
private sector insurance participant its share of the insured
losses of the entity, which shall be included in each private
sector insurer's insured losses.
(3) Treatment of participation in certain entities.--Any
insurer that participates in sharing profits and losses of a State
residual market insurance entity shall include in its calculations
of premiums any premiums distributed to the insurer by the State
residual market insurance entity.
(e) Insured Loss Shared Compensation.--
(1) Federal share.--
(A) In general.--The Federal share of compensation under
the Program to be paid by the Secretary for insured losses of
an insurer during the Transition Period and each Program Year
shall be equal to 90 percent of that portion of the amount of
such insured losses that exceeds the applicable insurer
deductible required to be paid during such Transition Period or
such Program Year.
(B) Prohibition on duplicative compensation.--The Federal
share of compensation for insured losses under the Program
shall be reduced by the amount of compensation provided by the
Federal Government to any person under any other Federal
program for those insured losses.
(2) Cap on annual liability.--
(A) In general.--Notwithstanding paragraph (1) or any other
provision of Federal or State law, if the aggregate insured
losses exceed $100,000,000,000, during the period beginning on
the first day of the Transition Period and ending on the last
day of Program Year 1, or during Program Year 2 or Program Year
3 (until such time as the Congress may act otherwise with
respect to such losses)--
(i) the Secretary shall not make any payment under this
title for any portion of the amount of such losses that
exceeds $100,000,000,000; and
(ii) no insurer that has met its insurer deductible
shall be liable for the payment of any portion of that
amount that exceeds $100,000,000,000.
(B) Insurer share.--For purposes of subparagraph (A), the
Secretary shall determine the pro rata share of insured losses
to be paid by each insurer that incurs insured losses under the
Program.
(3) Notice to congress.--The Secretary shall notify the
Congress if estimated or actual aggregate insured losses exceed
$100,000,000,000 during the period beginning on the first day of
the Transition Period and ending on the last day of Program Year 1,
or during Program Year 2 or Program Year 3, and the Congress shall
determine the procedures for and the source of any payments for
such excess insured losses.
(4) Final netting.--The Secretary shall have sole discretion to
determine the time at which claims relating to any insured loss or
act of terrorism shall become final.
(5) Determinations final.--Any determination of the Secretary
under this subsection shall be final, unless expressly provided,
and shall not be subject to judicial review.
(6) Insurance marketplace aggregate retention amount.--For
purposes of paragraph (7), the insurance marketplace aggregate
retention amount shall be--
(A) for the period beginning on the first day of the
Transition Period and ending on the last day of Program Year 1,
the lesser of--
(i) $10,000,000,000; and
(ii) the aggregate amount, for all insurers, of insured
losses during such period;
(B) for Program Year 2, the lesser of--
(i) $12,500,000,000; and
(ii) the aggregate amount, for all insurers, of insured
losses during such Program Year; and
(C) for Program Year 3, the lesser of--
(i) $15,000,000,000; and
(ii) the aggregate amount, for all insurers, of insured
losses during such Program Year.
(7) Recoupment of federal share.--
(A) Mandatory recoupment amount.--For purposes of this
paragraph, the mandatory recoupment amount for each of the
periods referred to in subparagraphs (A), (B), and (C) of
paragraph (6) shall be the difference between--
(i) the insurance marketplace aggregate retention
amount under paragraph (6) for such period; and
(ii) the aggregate amount, for all insurers, of insured
losses during such period that are not compensated by the
Federal Government because such losses--
(I) are within the insurer deductible for the
insurer subject to the losses; or
(II) are within the portion of losses of the
insurer that exceed the insurer deductible, but are not
compensated pursuant to paragraph (1).
(B) No mandatory recoupment if uncompensated losses exceed
insurance marketplace retention.--Notwithstanding subparagraph
(A), if the aggregate amount of uncompensated insured losses
referred to in clause (ii) of such subparagraph for any period
referred to in subparagraph (A), (B), or (C) of paragraph (6)
is greater than the insurance marketplace aggregate retention
amount under paragraph (6) for such period, the mandatory
recoupment amount shall be $0.
(C) Mandatory establishment of surcharges to recoup
mandatory recoupment amount.--The Secretary shall collect, for
repayment of the Federal financial assistance provided in
connection with all acts of terrorism (or acts of war, in the
case of workers compensation) occurring during any of the
periods referred to in subparagraph (A), (B), or (C) of
paragraph (6), terrorism loss risk-spreading premiums in an
amount equal to any mandatory recoupment amount for such
period.
(D) Discretionary recoupment of remainder of financial
assistance.--To the extent that the amount of Federal financial
assistance provided exceeds any mandatory recoupment amount,
the Secretary may recoup, through terrorism loss risk-spreading
premiums, such additional amounts that the Secretary believes
can be recouped, based on--
(i) the ultimate costs to taxpayers of no additional
recoupment;
(ii) the economic conditions in the commercial
marketplace, including the capitalization, profitability,
and investment returns of the insurance industry and the
current cycle of the insurance markets;
(iii) the affordability of commercial insurance for
small- and medium-sized businesses; and
(iv) such other factors as the Secretary considers
appropriate.
(8) Policy surcharge for terrorism loss risk-spreading
premiums.--
(A) Policyholder premium.--Any amount established by the
Secretary as a terrorism loss risk-spreading premium shall--
(i) be imposed as a policyholder premium surcharge on
property and casualty insurance policies in force after the
date of such establishment;
(ii) begin with such period of coverage during the year
as the Secretary determines appropriate; and
(iii) be based on a percentage of the premium amount
charged for property and casualty insurance coverage under
the policy.
(B) Collection.--The Secretary shall provide for insurers
to collect terrorism loss risk-spreading premiums and remit
such amounts collected to the Secretary.
(C) Percentage limitation.--A terrorism loss risk-spreading
premium (including any additional amount included in such
premium on a discretionary basis pursuant to paragraph (7)(D))
may not exceed, on an annual basis, the amount equal to 3
percent of the premium charged for property and casualty
insurance coverage under the policy.
(D) Adjustment for urban and smaller commercial and rural
areas and different lines of insurance.--
(i) Adjustments.--In determining the method and manner
of imposing terrorism loss risk-spreading premiums,
including the amount of such premiums, the Secretary shall
take into consideration--
(I) the economic impact 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;
(II) 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
(III) the various exposures to terrorism risk for
different lines of insurance.
(ii) Recoupment of adjustments.--Any mandatory
recoupment amounts not collected by the Secretary because
of adjustments under this subparagraph shall be recouped
through additional terrorism loss risk-spreading premiums.
(E) Timing of premiums.--The Secretary may adjust the
timing of terrorism loss risk-spreading premiums to provide for
equivalent application of the provisions of this title to
policies that are not based on a calendar year, or to apply
such provisions on a daily, monthly, or quarterly basis, as
appropriate.
(f) Captive Insurers and Other Self-Insurance Arrangements.--The
Secretary may, in consultation with the NAIC or the appropriate State
regulatory authority, apply the provisions of this title, as
appropriate, to other classes or types of captive insurers and other
self-insurance arrangements by municipalities and other entities (such
as workers' compensation self-insurance programs and State workers'
compensation reinsurance pools), but only if such application is
determined before the occurrence of an act of terrorism in which such
an entity incurs an insured loss and all of the provisions of this
title are applied comparably to such entities.
(g) Reinsurance to Cover Exposure.--
(1) Obtaining coverage.--This title may not be construed to
limit or prevent insurers from obtaining reinsurance coverage for
insurer deductibles or insured losses retained by insurers pursuant
to this section, nor shall the obtaining of such coverage affect
the calculation of such deductibles or retentions.
(2) Limitation on financial assistance.--The amount of
financial assistance provided pursuant to this section shall not be
reduced by reinsurance paid or payable to an insurer from other
sources, except that recoveries from such other sources, taken
together with financial assistance for the Transition Period or a
Program Year provided pursuant to this section, may not exceed the
aggregate amount of the insurer's insured losses for such period.
If such recoveries and financial assistance for the Transition
Period or a Program Year exceed such aggregate amount of insured
losses for that period and there is no agreement between the
insurer and any reinsurer to the contrary, an amount in excess of
such aggregate insured losses shall be returned to the Secretary.
(h) Group Life Insurance Study.--
(1) Study.--The Secretary shall study, on an expedited basis,
whether adequate and affordable catastrophe reinsurance for acts of
terrorism is available to life insurers in the United States that
issue group life insurance, and the extent to which the threat of
terrorism is reducing the availability of group life insurance
coverage for consumers in the United States.
(2) Conditional Coverage.--To the extent that the Secretary
determines that such coverage is not or will not be reasonably
available to both such insurers and consumers, the Secretary shall,
in consultation with the NAIC--
(A) apply the provisions of this title, as appropriate, to
providers of group life insurance; and
(B) provide such restrictions, limitations, or conditions
with respect to any financial assistance provided that the
Secretary deems appropriate, based on the study under paragraph
(1).
(i) Study and Report.--
(1) Study.--The Secretary, after consultation with the NAIC,
representatives of the insurance industry, and other experts in the
insurance field, shall conduct a study of the potential effects of
acts of terrorism on the availability of life insurance and other
lines of insurance coverage, including personal lines.
(2) Report.--Not later than 9 months after the date of
enactment of this Act, the Secretary shall submit a report to the
Congress on the results of the study conducted under paragraph (1).

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(a) General Authority.--The Secretary shall have the powers and
authorities necessary to carry out the Program, including authority--
(1) to investigate and audit all claims under the Program; and
(2) to prescribe regulations and procedures to effectively
administer and implement the Program, and to ensure that all
insurers and self-insured entities that participate in the Program
are treated comparably under the Program.
(b) Interim Rules and Procedures.--The Secretary may issue interim
final rules or procedures specifying the manner in which--
(1) insurers may file and certify claims under the Program;
(2) the Federal share of compensation for insured losses will
be paid under the Program, including payments based on estimates of
or actual insured losses;
(3) the Secretary may, at any time, seek repayment from or
reimburse any insurer, based on estimates of insured losses under
the Program, to effectuate the insured loss sharing provisions in
section 103; and
(4) the Secretary will determine any final netting of payments
under the Program, including payments owed to the Federal
Government from any insurer and any Federal share of compensation
for insured losses owed to any insurer, to effectuate the insured
loss sharing provisions in section 103.
(c) Consultation.--The Secretary shall consult with the NAIC, as
the Secretary determines appropriate, concerning the Program.
(d) Contracts for Services.--The Secretary may employ persons or
contract for services as may be necessary to implement the Program.
(e) Civil Penalties.--
(1) In general.--The Secretary may assess a civil monetary
penalty in an amount not exceeding the amount under paragraph (2)
against any insurer that the Secretary determines, on the record
after opportunity for a hearing--
(A) has failed to charge, collect, or remit terrorism loss
risk-spreading premiums under section 103(e) in accordance with
the requirements of, or regulations issued under, this title;
(B) has intentionally provided to the Secretary erroneous
information regarding premium or loss amounts;
(C) submits to the Secretary fraudulent claims under the
Program for insured losses;
(D) has failed to provide the disclosures required under
subsection (f); or
(E) has otherwise failed to comply with the provisions of,
or the regulations issued under, this title.
(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 title or the regulations
issued under this title, such amount in dispute.
(3) Recovery of amount in dispute.--A penalty under this
subsection for any failure to pay, charge, collect, or remit
amounts in accordance with this title or the regulations under this
title shall be in addition to any such amounts recovered by the
Secretary.
(f) Submission of Premium Information.--
(1) In general.--The Secretary shall annually compile
information on the terrorism risk insurance premium rates of
insurers for the preceding year.
(2) Access to information.--To the extent that such information
is not otherwise available to the Secretary, the Secretary may
require each insurer to submit to the NAIC terrorism risk insurance
premium rates, as necessary to carry out paragraph (1), and the
NAIC shall make such information available to the Secretary.
(3) Availability to congress.--The Secretary shall make
information compiled under this subsection available to the
Congress, upon request.
(g) Funding.--
(1) Federal payments.--There are hereby appropriated, out of
funds in the Treasury not otherwise appropriated, such sums as may
be necessary to pay the Federal share of compensation for insured
losses under the Program.
(2) Administrative expenses.--There are hereby appropriated,
out of funds in the Treasury not otherwise appropriated, such sums
as may be necessary to pay reasonable costs of administering the
Program.

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EXCLUSIONS.
(a) General Nullification.--Any terrorism exclusion in a contract
for property and casualty insurance that is in force on the date of
enactment of this Act shall be void to the extent that it excludes
losses that would otherwise be insured losses.
(b) General Preemption.--Any State approval of any terrorism
exclusion from a contract for property and casualty insurance that is
in force on the date of enactment of this Act, shall be void to the
extent that it excludes losses that would otherwise be insured losses.
(c) Reinstatement of Terrorism Exclusions.--Notwithstanding
subsections (a) and (b) or any provision of State law, an insurer may
reinstate a preexisting provision in a contract for property and
casualty insurance that is in force on the date of enactment of this
Act and that excludes coverage for an act of terrorism only--
(1) if the insurer has received a written statement from the
insured that affirmatively authorizes such reinstatement; or
(2) if--
(A) the insured fails to pay any increased premium charged
by the insurer for providing such terrorism coverage; and
(B) the insurer provided notice, at least 30 days before
any such reinstatement, of--
(i) the increased premium for such terrorism coverage;
and
(ii) the rights of the insured with respect to such
coverage, including any date upon which the exclusion would
be reinstated if no payment is received.

3f903bcadf496a23d97dc238e1b779f2a9a665684277c5963a1425f359f43c73

(a) State Law.--Nothing in this title shall affect the jurisdiction
or regulatory authority of the insurance commissioner (or any agency or
office performing like functions) of any State over any insurer or
other person--
(1) except as specifically provided in this title; and
(2) except that--
(A) the definition of the term ``act of terrorism'' in
section 102 shall be the exclusive definition of that term for
purposes of compensation for insured losses under this title,
and shall preempt any provision of State law that is
inconsistent with that definition, to the extent that such
provision of law would otherwise apply to any type of insurance
covered by this title;
(B) during the period beginning on the date of enactment of
this Act and ending on December 31, 2003, rates and forms for
terrorism risk insurance covered by this title and filed with
any State shall not be subject to prior approval or a waiting
period under any law of a State that would otherwise be
applicable, except that nothing in this title affects the
ability of any State to invalidate a rate as excessive,
inadequate, or unfairly discriminatory, and, with respect to
forms, where a State has prior approval authority, it shall
apply to allow subsequent review of such forms; and
(C) during the period beginning on the date of enactment of
this Act and for so long as the Program is in effect, as
provided in section 108, including authority in subsection
108(b), books and records of any insurer that are relevant to
the Program shall be provided, or caused to be provided, to the
Secretary, upon request by the Secretary, notwithstanding any
provision of the laws of any State prohibiting or limiting such
access.
(b) Existing Reinsurance Agreements.--Nothing in this title shall
be construed to alter, amend, or expand the terms of coverage under any
reinsurance agreement in effect on the date of enactment of this Act.
The terms and conditions of such an agreement shall be determined by
the language of that agreement.

eb155aa6fc56c58a88386bab9172ee6308953ce025257f0eb49901ba93cfee75

(a) Procedures and Damages.--
(1) In general.--If the Secretary makes a determination
pursuant to section 102 that an act of terrorism has occurred,
there shall exist a Federal cause of action for property damage,
personal injury, or death arising out of or resulting from such act
of terrorism, which shall be the exclusive cause of action and
remedy for claims for property damage, personal injury, or death
arising out of or relating to such act of terrorism, except as
provided in subsection (b).
(2) Preemption of state actions.--All State causes of action of
any kind for property damage, personal injury, or death arising out
of or resulting from an act of terrorism that are otherwise
available under State law are hereby preempted, except as provided
in subsection (b).
(3) Substantive law.--The substantive law for decision in any
such action described in paragraph (1) 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 otherwise
inconsistent with or preempted by Federal law.
(4) Jurisdiction.--For each determination described in
paragraph (1), not later than 90 days after the occurrence of an
act of terrorism, the Judicial Panel on Multidistrict Litigation
shall designate 1 district court or, if necessary, multiple
district courts of the United States that shall have original and
exclusive jurisdiction over all actions for any claim (including
any claim for loss of property, personal injury, or death) relating
to or arising out of an act of terrorism subject to this section.
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) Punitive damages.--Any amounts awarded in an action under
paragraph (1) that are attributable to punitive damages shall not
count as insured losses for purposes of this title.
(b) Exclusion.--Nothing in this section shall in any way limit the
liability of any government, an organization, or person who knowingly
participates in, conspires to commit, aids and abets, or commits any
act of terrorism with respect to which a determination described in
subsection (a)(1) was made.
(c) Right of Subrogation.--The United States shall have the right
of subrogation with respect to any payment or claim paid by the United
States under this title.
(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) Effective Period.--This section shall apply only to actions
described in subsection (a)(1) that arise out of or result from acts of
terrorism that occur or occurred during the effective period of the
Program.

653cbabd711af78bab9f1c323e825b1714f8fcd4ba6d8b91d2350437661d2935

(a) Termination of Program.--The Program shall terminate on
December 31, 2005.
(b) Continuing Authority to Pay or Adjust Compensation.--Following
the termination of the Program, the Secretary may take such actions as
may be necessary to ensure payment, recoupment, reimbursement, or
adjustment of compensation for insured losses arising out of any act of
terrorism occurring during the period in which the Program was in
effect under this title, in accordance with the provisions of section
103 and regulations promulgated thereunder.
(c) Repeal; Savings Clause.--This title is repealed on the final
termination date of the Program under subsection (a), except that such
repeal shall not be construed--
(1) to prevent the Secretary from taking, or causing to be
taken, such actions under subsection (b) of this section, paragraph
(4), (5), (6), (7), or (8) of section 103(e), or subsection (a)(1),
(c), (d), or (e) of section 104, as in effect on the day before the
date of such repeal, or applicable regulations promulgated
thereunder, during any period in which the authority of the
Secretary under subsection (b) of this section is in effect; or
(2) to prevent the availability of funding under section 104(g)
during any period in which the authority of the Secretary under
subsection (b) of this section is in effect.
(d) Study and Report on the Program.--
(1) Study.--The Secretary, in consultation with the NAIC,
representatives of the insurance industry and of policy holders,
other experts in the insurance field, and other experts as needed,
shall assess the effectiveness of the Program and the likely
capacity of the property and casualty insurance industry to offer
insurance for terrorism risk after termination of the Program, and
the availability and affordability of such insurance for various
policyholders, including railroads, trucking, and public transit.
(2) Report.--The Secretary shall submit a report to the
Congress on the results of the study conducted under paragraph (1)
not later than June 30, 2005.

d2441cf3f2df2a8c29abe1dc1e0e22889aec9baeaa8f8fae62ce3200a9e98fb4

TERRORIST ORGANIZATIONS, AND STATE SPONSORS OF TERRORISM.
(a) In General.--Notwithstanding any other provision of law, and
except as provided in subsection (b), in every case in which a person
has obtained a judgment against a terrorist party on a claim based upon
an act of terrorism, or for which a terrorist party is not immune under
section 1605(a)(7) of title 28, United States Code, the blocked assets
of that terrorist party (including the blocked assets of any agency or
instrumentality of that terrorist party) shall be subject to execution
or attachment in aid of execution in order to satisfy such judgment to
the extent of any compensatory damages for which such terrorist party
has been adjudged liable.
(b) Presidential Waiver.--
(1) In general.--Subject to paragraph (2), 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
subsection (a) 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.
(2) Exception.--A waiver under this subsection shall not apply
to--
(A) property subject to the Vienna Convention on Diplomatic
Relations or the Vienna Convention on Consular Relations that
has been used by the United States for any nondiplomatic
purpose (including use as rental property), or the proceeds of
such use; or
(B) the proceeds of any sale or transfer for value to a
third party of any asset subject to the Vienna Convention on
Diplomatic Relations or the Vienna Convention on Consular
Relations.
(c) Special Rule for Cases Against Iran.--Section 2002 of the
Victims of Trafficking and Violence Protection Act of 2000 (Public Law
106-386; 114 Stat. 1542), as amended by section 686 of Public Law 107-
228, is further amended--
(1) in subsection (a)(2)(A)(ii), by striking ``July 27, 2000,
or January 16, 2002'' and inserting ``July 27, 2000, any other date
before October 28, 2000, or January 16, 2002'';
(2) in subsection (b)(2)(B), by inserting after ``the date of
enactment of this Act'' the following: ``(less amounts therein as
to which the United States has an interest in subrogation pursuant
to subsection (c) arising prior to the date of entry of the
judgment or judgments to be satisfied in whole or in part
hereunder)'';
(3) by redesignating subsections (d), (e), and (f) as
subsections (e), (f), and (g), respectively; and
(4) by inserting after subsection (c) the following new
subsection (d):
``(d) Distribution of Account Balances and Proceeds Inadequate to
Satisfy Full Amount of Compensatory Awards Against Iran.--
``(1)  Prior judgments.--
``(A) In general.--In the event that the Secretary
determines that 90 percent of the amounts available to be paid
under subsection (b)(2) are inadequate to pay the total amount
of compensatory damages awarded in judgments issued as of the
date of the enactment of this subsection in cases identified in
subsection (a)(2)(A) with respect to Iran, the Secretary shall,
not later than 60 days after such date, make payment from such
amounts available to be paid under subsection (b)(2) to each
party to which such a judgment has been issued in an amount
equal to a share, calculated under subparagraph (B), of 90
percent of the amounts available to be paid under subsection
(b)(2) that have not been subrogated to the United States under
this Act as of the date of enactment of this subsection.
``(B) Calculation of payments.--The share that is payable
to a person under subparagraph (A), including any person issued
a final judgment as of the date of enactment of this subsection
in a suit filed on a date added by the amendment made by
section 686 of Public Law 107-228, shall be equal to the
proportion that the amount of unpaid compensatory damages
awarded in a final judgment issued to that person bears to the
total amount of all unpaid compensatory damages awarded to all
persons to whom such judgments have been issued as of the date
of enactment of this subsection in cases identified in
subsection (a)(2)(A) with respect to Iran.
``(2) Subsequent judgment.--
``(A) In general.--The Secretary shall pay to any person
awarded a final judgment after the date of enactment of this
subsection, in the case filed on January 16, 2002, and
identified in subsection (a)(2)(A) with respect to Iran, an
amount equal to a share, calculated under subparagraph (B), of
the balance of the amounts available to be paid under
subsection (b)(2) that remain following the disbursement of all
payments as provided by paragraph (1). The Secretary shall make
such payment not later than 30 days after such judgment is
awarded.
``(B) Calculation of payments.--To the extent that funds
are available, the amount paid under subparagraph (A) to such
person shall be the amount the person would have been paid
under paragraph (1) if the person had been awarded the judgment
prior to the date of enactment of this subsection.
``(3) Additional payments.--
``(A) In general.--Not later than 30 days after the
disbursement of all payments under paragraphs (1) and (2), the
Secretary shall make an additional payment to each person who
received a payment under paragraph (1) or (2) in an amount
equal to a share, calculated under subparagraph (B), of the
balance of the amounts available to be paid under subsection
(b)(2) that remain following the disbursement of all payments
as provided by paragraphs (1) and (2).
``(B) Calculation of payments.--The share payable under
subparagraph (A) to each such person shall be equal to the
proportion that the amount of compensatory damages awarded that
person bears to the total amount of all compensatory damages
awarded to all persons who received a payment under paragraph
(1) or (2).
``(4) Statutory construction.--Nothing in this subsection shall
bar, or require delay in, enforcement of any judgment to which this
subsection applies under any procedure or against assets otherwise
available under this section or under any other provision of law.
``(5) Certain rights and claims not relinquished.--Any person
receiving less than the full amount of compensatory damages awarded
to that party in a judgment to which this subsection applies shall
not be required to make the election set forth in subsection
(a)(2)(B) or, with respect to subsection (a)(2)(D), the election
relating to relinquishment of any right to execute or attach
property that is subject to section 1610(f)(1)(A) of title 28,
United States Code, except that such person shall be required to
relinquish rights set forth--
``(A) in subsection (a)(2)(C); and
``(B) in subsection (a)(2)(D) with respect to enforcement
against property that is at issue in claims against the United
States before an international tribunal or that is the subject
of awards by such tribunal.
``(6) Guidelines for establishing claims of a right to
payment.--The Secretary may promulgate reasonable guidelines
through which any person claiming a right to payment under this
section may inform the Secretary of the basis for such claim,
including by submitting a certified copy of the final judgment
under which such right is claimed and by providing commercially
reasonable payment instructions. The Secretary shall take all
reasonable steps necessary to ensure, to the maximum extent
practicable, that such guidelines shall not operate to delay or
interfere with payment under this section.''.
(d) Definitions.--In this section, the following definitions shall
apply:
(1) Act of terrorism.--The term ``act of terrorism'' means--
(A) any act or event certified under section 102(1); or
(B) to the extent not covered by subparagraph (A), any
terrorist activity (as defined in section 212(a)(3)(B)(iii) of
the Immigration and Nationality Act (8 U.S.C.
1182(a)(3)(B)(iii))).
(2) Blocked asset.--The term ``blocked asset'' means--
(A) any asset seized or frozen by the United States under
section 5(b) of the Trading With the Enemy Act (50 U.S.C. App.
5(b)) or under sections 202 and 203 of the International
Emergency Economic Powers Act (50 U.S.C. 1701; 1702); and
(B) does not include property that--
(i) is subject to a license issued by the United States
Government for final payment, transfer, or disposition by
or to a person subject to the jurisdiction of the United
States in connection with a transaction for which the
issuance of such license has been specifically required by
statute other than the International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.) or the United Nations
Participation Act of 1945 (22 U.S.C. 287 et seq.); or
(ii) in the case of property subject to the Vienna
Convention on Diplomatic Relations or the Vienna Convention
on Consular Relations, or that enjoys equivalent privileges
and immunities under the law of the United States, is being
used exclusively for diplomatic or consular purposes.
(3) Certain property.--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.
(4) Terrorist party.--The term ``terrorist party'' means a
terrorist, a terrorist organization (as defined in section
212(a)(3)(B)(vi) of the Immigration and Nationality Act (8 U.S.C.
1182(a)(3)(B)(vi))), 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).

8b15c9cb1317b4d0e695a247c1502548d47757318cadea5adc7a09d47a65e22d

RESERVE SYSTEM.
Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by
adding at the end the following new subsection:
``(r)(1) Any action that this Act provides may be taken only upon
the affirmative vote of 5 members of the Board may be taken upon the
unanimous vote of all members then in office if there are fewer than 5
members in office at the time of the action.
``(2)(A) Any action that the Board is otherwise authorized to take
under section 13(3) may be taken upon the unanimous vote of all
available members then in office, if--
``(i) at least 2 members are available and all available
members participate in the action;
``(ii) the available members unanimously determine that--
``(I) unusual and exigent circumstances exist and the
borrower is unable to secure adequate credit accommodations
from other sources;
``(II) action on the matter is necessary to prevent,
correct, or mitigate serious harm to the economy or the
stability of the financial system of the United States;
``(III) despite the use of all means available (including
all available telephonic, telegraphic, and other electronic
means), the other members of the Board have not been able to be
contacted on the matter; and
``(IV) action on the matter is required before the number
of Board members otherwise required to vote on the matter can
be contacted through any available means (including all
available telephonic, telegraphic, and other electronic means);
and
``(iii) any credit extended by a Federal reserve bank pursuant
to such action is payable upon demand of the Board.
``(B) The available members of the Board shall document in writing
the determinations required by subparagraph (A)(ii), and such written
findings shall be included in the record of the action and in the
official minutes of the Board, and copies of such record shall be
provided as soon as practicable to the members of the Board who were
not available to participate in the action and to the Chairman of the
Committee on Banking, Housing, and Urban Affairs of the Senate and to
the Chairman of the Committee on Financial Services of the House of
Representatives.''.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

735437e3ae3f2091403b8bf6cadf5eb6c95e80aeedf148c55b674adecd6893cf

Terrorism Risk Insurance Act of 2002

Other Sections

TITLE I

TITLE II

TITLE III

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