Terrorism Risk Insurance Legislation in 2007: Issue Summary and Side-by-Side
Terrorism Risk Insurance Legislation in 2007:
Issue Summary and Side-by-Side
Updated January 15, 2008
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. 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, P.L. 107-297, 116 Stat. 2322). 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 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 expiration of TRIA with the passage
of the Terrorism Risk Insurance Extension Act (TRIEA, P.L. 109-144, 119 Stat.
2660). 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 were very similar to the three
years under the first act. The market for terrorism insurance improved, but doubts
remained 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. In response, the House passed H.R. 2761 in the 110th Congress, which
would have extended the TRIA program 15 years and made substantial other
changes. The Senate also passed H.R. 2761, after amending it with language from
S. 2285, which would have extended TRIA seven years while making more limited
changes to the underlying law. The House then passed H.R. 4299, which contained
the language of the Senate-passed H.R. 2761 plus some of the provisions from the
previous version of H.R. 2761. The differences between the House and Senate bills
included the inclusion of group life insurance, restrictions on life insurers’ use of
travel in underwriting, lowering the deductible and trigger after a large terrorist
attack, and the reduction of the program trigger to $50 million. The Senate, however,
did not act on H.R. 4299, and the House ultimately agreed to the amended version
of H.R. 2761 that was previously passed by the Senate. The President signed this bill
into law on December 26, 2007.
This report briefly outlines the issues involved with terrorism insurance and
includes a side-by-side of the previous TRIA law, the two House TRIA-extension
bills, and the Senate bill that was ultimately signed by the President. It will not be
updated. For more complete information on the issue, please see CRS Report
RL34025, Terrorism Risk Insurance: Issue Analysis and Legislation, by Baird
Webel.
Contents
In troduction ......................................................1
Legislative Action.................................................2
Terrorism Risk Insurance Revision and Extension Act of 2007
(TRIREA, H.R. 2761)......................................2
Administration Reaction to H.R. 2761.........................5
Terrorism Risk Insurance Program Reauthorization Act of 2007
(TRIPRA, S. 2285)........................................6
Administration Reaction to the Senate Action....................7
Terrorism Risk Insurance Program Reauthorization Act of 2007
(H.R. 4299)..............................................7
Final Passage and Enactment of TRIA-Extension Legislation...........8
List of Tables
Table 1. Terrorism Risk Insurance Side-by Side: Previous Law, H.R. 2761
(as passed by the House), H.R. 4299 (as passed by the House), and
P.L. 110-160.................................................10
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 President2
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 signed, the
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 The original statute specifies the name as the “Terrorism Insurance Program” while the
Department of Treasury entitles it the “Terrorism Risk Insurance Program” (TRIP) and this
name has become more generally accepted.
Terrorism Risk Insurance Extension Act of 2005 (TRIEA)3 in December 2005.
TRIEA extended the program for two years while increasing the private sector
exposure under the program.
The two years’ experience under TRIEA proved to be similar to the three under
TRIA. During this time, terrorism risk insurance was available, pricing was
moderate, and takeup rates slowly increased. Some additional progress was made on
a larger scale private solution and some private groups outlined proposals for such
a solution.4 There was, however, little concrete movement towards adopting such
proposals. The industry focus seemed to be on promoting the possibility of another
extension of the TRIA program.
Some see this experience 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
In the first session of the 110th Congress, three different bills addressing the
impending expiration of the TRIA program saw committee or floor action, two in the
House and one in the Senate. As was the case in the TRIA extension debate in 2005,
the House bills were more significant revisions and expansions of the TRIA program,
whereas the Senate bill had a narrower focus — extending the program while making
more limited changes. Also as in 2005, the Administration generally supported the
Senate’s approach.
Terrorism Risk Insurance Revision and
Extension Act of 2007 (TRIREA, H.R. 2761)
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
3 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.
4 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], visited on Jan. 14, 2008.
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 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 trigger and deductible 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, 2007.5 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 were a future terrorist attack resulting in more than $1
billion in damages, the trigger would be 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 would have established a
5 The full committee markup began on July 26, but H.R. 2761 was the last of a number of
bills to be marked up.
“terrorism buy down fund” in the U.S. Treasury, essentially allowing 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 have also borrowed 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) a specific allowance for
insurers to partner in meeting the requirement to make NCBR coverage available; (4)
indexing various dollar amounts in the bill to an unspecified measure of inflation; (5)
provision for a report by the Secretary of the Treasury in the event that the Secretary
decides not to recoup expended federal funds beyond $27.5 billion; (6) 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 appeared to fail to meet the requirements of the “pay-as-you-go” (PAYGO) rule
adopted by the House at the beginning of the 110th Congress.6
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 requiring passage by Congress of a
joint resolution before any funds could be expended. H.Res. 660 provided 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 introduced uncertainty to the TRIA program that did not exist before. It was
unclear exactly how the insurance market might have reacted to this uncertainty,
should this language have 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
6 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.
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 have made the following changes to the current Terrorism Risk Insurance
Program:
!extended the TRIA program for 15 years, until the end of 2022;
!made spending by the program contingent on passage of a future
joint resolution;
!added coverage for domestic terrorist acts in the program;
!added the Secretary of Homeland Security to the certification
process;
!added group life insurance to the program with a separate set of
retentions and deductibles;
!returned farmowners multiple peril as a covered line;
!reduced the general trigger to $50 million;
!required insurers to cover nuclear, biological, chemical, and
radiological (NCBR) terrorist attacks starting in 2009;
!lowered insurer deductible for NCBR attacks to 3.5% immediately
and then raised that number by 0.5% per year in the future;
!increased the federal share of NCBR losses from 85% to as high as
!temporarily preempted state laws on rate and form filing for NCBR
coverages;
!provided 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 have been only for insurers who suffer losses.
!increased the post-reset insurer deductibles by 0.5% per year;
!established a “Terrorism Buy-Down Fund” that would have
essentially allowed insurers to put aside reserves that would grow
tax-free to cover future losses that are not reimbursed by TRIA. The
fund would also have been available to the Secretary of the Treasury
to cover the federal share of TRIA losses.
!restricted life insurers’ use of foreign travel as an underwriting tool;
and
!indexed the dollar amounts in the program to future inflation.
Administration Reaction to H.R. 2761. The Office of Management and
Budget (OMB) released a Statement of Administration Policy on September 17,
2007, indicating that “if H.R. 2761 as reported were presented to the President, his
senior advisors would recommend that he veto the bill.”7 The Administration
7 See [http://www.whitehouse.gov/omb/legislative/sap/110-1/hr2761sap-r.pdf], visited on
(continued...)
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.
Terrorism Risk Insurance Program
Reauthorization Act of 2007 (TRIPRA, S. 2285)
The Senate Banking, Housing, and Urban Affairs Committee marked up this
legislation as an original bill on October 17, 2007. While Senator Charles 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. Chairman Christopher Dodd introduced the bill, numbered S. 2285, on
November 1, 2007, and the committee report (S.Rept. 110-215) was issued the same
day.
TRIPRA as introduced was a relatively straightforward reauthorization of the
existing TRIA program. The two primary changes to current law were to
!extend the program for seven years, until 2014; and
!add coverage for domestic terrorist attacks to the program.
In addition, S. 2285 would have modified slightly the annual liability cap, and
required 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 called 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). Finally, the President’s Working Group on Financial
Markets was 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
CBO issued a cost estimate for S. 2285 on October 29, 2007. It found that the
bill would increase direct spending by $3.1 billion from 2008 to 2012 and by $6.6
billion from 2008 to 2017. This spending would be offset by increased government
receipts of $100 million from 2008 to 2012 and $1.5 billion from 2008 to 2017. This8
score caused similar PAYGO issues as those faced in the House.
In response to these PAYGO issues, language was added to TRIPRA before it
was considered on the Senate floor. This new language increased the total amount
of the recoupment surcharge to 133% of the previous mandatory recoupment amount.
It also increased the rate of repayment — requiring that repayment be completed by
September 30, 2012, for any attack before 2011, and that repayment be completed by
September 30, 2017, for any attack after 2011. For any attack during 2011, 35% of
7 (...continued)
Jan. 14, 2008.
8 See CRS Report RL31943, Budget Enforcement Procedures: Senate’s Pay-As-You-Go
(PAYGO) Rule, by Bill Heniff, Jr., for more information on the Senate PAYGO rule.
the repayment must be completed by September 30, 2012, and 65% of repayment
must be completed by September 30, 2017. It also removed the 3% limit on
mandatory recoupment amounts.
CBO issued a cost estimate for the amended version of S. 2285 on November
15, 2007. This estimate found that, while the expected amount of direct spending
would not be affected, the offsetting government receipts would be increased. In
total, CBO found the amended version would reduce budget deficits or increase
surpluses by less than $50 million over the 5- and 10-year windows. Thus, the
amended version would not face a point of order under the PAYGO rules.
On November 16, 2006, the Senate took up the House-passed version of H.R.
2761, and amended it by unanimous consent with S.Amdt. 3800, which contained the
language from the committee-passed S. 2285, plus the new language as scored by
CBO. This amended version of H.R. 2761 was then passed by unanimous consent
and the House was informed of the Senate action. At this time, however, the Senate
did not request a conference with the House to reconcile the differences between the
two versions of H.R. 2761.
Administration Reaction to the Senate Action. No official Statement
of Administration Policy was released on S. 2285 or the amended version of H.R.
Administration would be willing to accept the bill as it passed the Senate committee.
Terrorism Risk Insurance Program Reauthorization
Act of 2007 (H.R. 4299)
With no conference committee to reconcile the versions of H.R. 2761, the
House Rules Committee passed two rules (H.Res. 849 and H.Res. 862) to govern
further consideration of TRIA-extension legislation. H.Res 849 provided for the
consideration of the Senate-passed version of H.R. 2761 with one amendment made
in order. H.Res. 862 provided for the consideration of a new bill (H.R. 4299), which
was introduced by Chairman Barney Frank on December 6, 2007. H.R. 4299
consisted of the language of H.R. 2761 as passed by the Senate, plus the text of the
amendment to H.R. 2761 that was made in order by H.Res. 849. The new language
would have made the following changes to the Senate-passed bill:
!added coverage of group life insurance with a separate deductible,
retention pool, recoupment amount, and policy surcharge amount;
!decreased the individual insurer deductible in 2008 to 5% for
insurers suffering losses in terrorist attacks that exceed $1 billion,
and then increase this amount by 0.5% per year after 2008;
!reset, after a $1 billion event, the trigger to $5 million, and the
insurer deductible for insurers suffering losses to 5% with a 0.5%
increase per year thereafter;
9 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],
visited on Jan. 14, 2008.
!restricted life insurers’ use of foreign travel as an underwriting tool;
and
!reduced the program trigger to $50 million.
The House considered H.R. 4299 under the provisions of H.Res. 862 on
December 12, 2007. The bill passed on a vote of 303-116 and was forwarded to the
Senate.
Administration Reaction to H.R. 4299. OMB released a Statement of
Administration Policy on the new House language on December 7, 2007. This
statement reiterated administration support for the Senate-passed bill, and indicated
the House additions to this bill would result in a veto recommendation from the10
President’s senior advisors.
Final Passage and Enactment of TRIA-Extension Legislation
H.R. 4299 was referred to the Senate Banking, Housing, and Urban Affairs
Committee on December 13, 2007. No action, however, was taken by the committee
or the full Senate on this bill. On December 18, 2007, the House took up H.R. 2761
as previously amended by the Senate and passed this bill on a vote of 360-53. H.R.
P.L. 110-160 makes the following changes to the previous law:
!The TRIA program is extended for seven years, until 2014.
!Domestic terrorist attacks are covered by the program.
!The annual liability cap language is modified, clarifying that insurers
are not responsible for losses exceeding $100 billion.
!The Secretary of the Treasury is directed to provide a report within
120 days and to promulgate regulations within 240 days on
determining the pro rata share of payments in the event that losses
exceed $100 billion.
!The Government Accountability Office (GAO) is directed to issue
reports 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).
!The President’s Working Group on Financial Markets is directed 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.The total amount of the recoupment surcharge is increased to
!Any recoupment amount is now accelerated with the following
criteria: (1) for any attack before 2011 repayment must be
completed by September 30, 2012; (2) for any attack during 2011,
and 65% of repayment must be completed by September 30, 2017;
10 See [http://www.whitehouse.gov/omb/legislative/sap/110-1/hr2761sap-h.pdf], visited on
Jan. 14, 2008.
and (3) for any attack after 2011 repayment must be completed by
September 30, 2017.
!There is no longer a 3% limit on mandatory recoupment amounts.
CRS-10
Side: Previous Law, H.R. 2761 (as passed by the House), H.R. 4299 (as
passed by the House), and P.L. 110-160.
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
Terrorism Insurance ProgramTerrorism Risk InsuranceTerrorism Risk InsuranceTerrorism Risk Insurance
Revision and Extension Act ofProgram Reauthorization Act ofProgram Reauthorization Act of
200720072007
iki/CRS-RL34219
g/wDecember 31, 2007 December 31, 2022December 31, 2014 December 31, 2014
s.or(Sec. 108(a))(Sec. 2)(Sec. 3)(Sec. 3)
leak
For an act of terrorism to beRemoves requirement that aRemoves requirement that aRemoves requirement that a
://wiki”covered under TRIA, it must be acovered act of terrorism becovered act of terrorism becovered act of terrorism be
httpviolent act committed on behalf ofcommitted on behalf of a foreigncommitted on behalf of a foreigncommitted on behalf of a foreign
a foreign person or interest as partperson or interest. Addsperson or interest. (Sec. 2)person or interest. (Sec. 2)
of an effort to coerce the U.S.“Nuclear, Biological, Chemical,
civilian population or influenceand Radiological (NBCR)
U.S. government policy. It mustTerrorism” as a separate category
have resulted in damage within theof terrorism. Adds Secretary of
United States or to a U.S. airliner orHomeland Security to the
mission abroad. Terrorist act is tocertification of an act of terrorism
be certified by the Secretary of theor NBCR terrorism. (Sec. 102
Treasury in concurrence with the(1))
Attorney General and Secretary of
State. (Sec. 102(1)(A))
CRS-11
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
regateTerrorist act must cause more thanLowers Program Trigger toLowers Program Trigger toNo Similar Provision
Loss$5 million in losses to be certified.$50,000,000 for the life of the$50,000,000 for the life of the
ent andProgram Trigger preventsprogram. Trigger will reset toprogram.
ram Trigger coverage under the program unless$5,000,000 after a terrorist attackTrigger will reset to $5,000,000
aggregate industry losses exceedresulting in $1,000,000,000 inafter a terrorist attack resulting
$50,000,000 in 2006 ordamage. in $1,000,000,000 in damage.
iki/CRS-RL34219$100,000,000 in 2007. (Sec. 103 (e)(1)(C))(Secs. 9 and 7(2))
g/w(Secs.102(1)(B)(ii) and
s.or103(e)(1)(B))
leak
://wiki10% of earned premium for 2004, equal to 0.0351% of the value ofin the event of a terrorist attack,
http15% of earned premium for 2005,an insurer’s amount at risk. (Sec.or series of terrorist attacks,
17.5% of earned premium for 2006,102 (11)(G)(ii)).totaling $1,000,000,000 or more
20% of earned premium for 2007. for those insurers suffering
(Sec. 102(7))damage in the attack. Raises
this large event deductible 0.5%
per year in future years.
Adds deductible for group life
equal to 0.0351% of the value of
an insurer’s amount at risk.
(Secs. 7(1) and 6(b)(4)(A)(ii))
CRS-12
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
ductibleNo ProvisionIn the event of an NBCR terroristNo Similar ProvisionNo Similar Provision
attack, the 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
iki/CRS-RL34219year and then raised 0.00088%
g/wper year thereafter.
s.or(Sec. 102(11)(I))
leak
rovisionsNo ProvisionIn the event of a terrorist attackIn the event of a terrorist attackNo Similar Provision
://wikior series of attacks that causeor series of attacks that cause
httpmore than $1,000,000,000 inmore than $1,000,000,000 in
damage, for future programdamage, for future program
years: (1) the Program Triggeryears: (1) the Program Trigger
would be reduced to $5,000,000;would be reduced to $5,000,000;
(2) the deductible for any insurer(2) the deductible for any insurer
suffering damage would besuffering damage would be
lowered to 5% and then be raisedlowered to 5% and then be
(Secs. 103 (e)(1)(C) and(Sec. 7)
CRS-13
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
setNo ProvisionStarting with the fifth additionalNo Similar ProvisionNo Similar Provision
isionsprogram 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
iki/CRS-RL34219suffering losses would be
g/wlowered to 5% and then be raised
s.or0.5% per year thereafter. (Sec.
leak 102(11)(K ))
://wiki
http
CRS-14
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
ered lines ofCommercial property casualtyAdds farm owners multiple perilAdds group life insurance. No Similar Provision
insurance including excessback to covered lines. Adds(Sec. 6)
insurance, workers’ compensation,group life insurance. (Secs.
and surety but excluding crop102(5), 102(8), and 102(17))
insurance, private mortgage
insurance, title insurance, financial
iki/CRS-RL34219guaranty insurance, medical
g/wmalpractice insurance, health or life
s.orinsurance, flood insurance,
leakreinsurance, commercial auto,
burglary and theft, professional
://wikiliability (except for directors and
httpofficers liability), and farm owners
multiple peril. (Sec. 102(12))
Every insurer must make terrorismAdds coverage for NBCRNo Similar ProvisionNo Similar Provision
coverage available that does notterrorism to that which must be
differ materially from coveragemade available starting in 2009.
applicable to losses other than(Sec. 103(c)) Allows for an
terrorism. (Sec 103(c))exemption to small insurers from
the requirement to provide NBCR
coverage. (Sec. 103 (a)(4))
CRS-15
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
nsurance andNo ProvisionLimits life insurers fromLimits life insurers fromNo Similar Provision
elconsidering lawful travel inconsidering lawful travel in
underwriting life insuranceunderwriting life insurance
except in certain circumstances.except in certain circumstances.
(Sec. 103 (c)(4))(Sec. 8)
iki/CRS-RL34219Federal share of losses is 90% forinsured losses that exceed theAdds sliding scale for federalshare of NBCR terrorism losses,No Similar ProvisionNo Similar Provision
g/wpensationapplicable insurer deductible fromfrom 85% for losses less than
s.or
leak2002-2006.$10,000,000,000 to 100% for
For 2007, federal share of losses islosses greater than
://wiki85%. $100,000,000,000.
http(Sec. 103(e))(Sec. 103(e)(1)(B))
regate$10,000,000,000 for 2002-3,Adds aggregate retention amountAdds aggregate retentionNo Similar Provision
ount$12,500,000,000 for 2004, for group life insurance equal toamount for group life insurance
um$15,000,000,000 for 2005,$5,000,000,000. (Sec.103equal to $5,000,000,000.
$25,000,000,000 for 2006,(e)(7)(ii))(Sec. 6(d))
$27,500,000,000 for 2007.
(Sec. 103 (e)(6))
CRS-16
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
Should losses to terrorism exceedPayment for federal governmentRemoves the possibility that aRemoves the possibility that a
$100,000,000, the federalshare would be capped atfuture Congress could requirefuture Congress could require
government will not make any$100,000,000,000. Assuminginsurers to cover some share ofinsurers to cover some share of
payments on the portion of lossesthat an insurer has met itslosses above $100,000,000,000losses above $100,000,000,000 if
that exceed $100,000,000,000. deductible, insurers are notif the insurer has met itsthe insurer has met its individual
Assuming that an insurer has metresponsible for paying losses thatindividual deductible. Requiresdeductible. Requires insurers to
iki/CRS-RL34219its deductible, insurers are notexceed $100,000,000,000 unlessinsurers to clearly disclose thisclearly disclose this to policy
g/wresponsible for paying losses thatCongress acts otherwise withto policy holders. (Sec. 4(a) andholders. (Sec. 4(a) and Sec. 4(d))
s.orexceed $100,000,000,000 unlessrespect to these losses. RequiresSec. 4(d))
leakCongress acts otherwise withinsurers to clearly disclose this to
respect to these losses. (Sec. 103policy holders. (Sec. 103(e)(2))
://wiki(e)(2)
http
mentAfter notice by the Secretary of theSecretary of the Treasury willRequires Secretary of theRequires Secretary of the
Treasury, Congress determines thedetermine the pro rata share ofTreasury to publish regulationsTreasury to publish regulations
procedures for payments if lossesinsured losses to be paid by eachregarding payments if lossesregarding payments if losses
exceed $100,000,000,000. (Sec.insurer. Federal courts will haveexceed $100,000,000,000 withinexceed $100,000,000,000 within
event that losses exceed
$100,000,000,000. (Sec.
103(e)(2), 103(e)(3)(C), and
CRS-17
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
If insurer losses are under theAdds an optional report shouldIncreases total recoupmentIncreases total recoupment
ent ofaggregate retention amount, athe Secretary of the Treasuryamount to be collected by theamount to be collected by the
al Sharemandatory recoupment of thechoose not to requirepremium surcharges to 133% ofpremium surcharges to 133% of
federal share of the loss will bereimbursement above thethe previously definedthe previously defined mandatory
imposed. If insurer losses are overaggregate retention amount. mandatory recoupment amount.recoupment amount. (Sec. 4
the aggregate retention amount,(Sec. 103(e)(8)(D))(Sec. 4 (e)(1)(A))(e)(1)(A))
iki/CRS-RL34219such recoupment is at the discretion
g/wof the Secretary of the Treasury.
s.or(Sec. 103(e)(7))
leak
entSurcharge is limited to 3% ofAdds limit on group lifeRemoves 3% limit forRemoves 3% limit for mandatory
://wikieproperty-casualty insuranceinsurance recoupment surchargemandatory surcharge. surcharge. (Sec. 4(e)(2)(A))
httppremium and may be adjusted byof 0.053% of amount at risk.Adds limit on group life
the Secretary to take into account(Sec. 103(9)(C))insurance recoupment
the economic impact of thediscretionary surcharge of
surcharge on urban commercial0.053% of amount at risk.
centers, the differential risk factors(Secs. 4(e)(2)(A) and 6(g)(2))
related to rural areas and smaller
commercial centers, and the
various exposures to terrorism risk
across lines of insurance. (Sec.
CRS-18
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
ing ofNo ProvisionNo provisionRequires expedited collection ofRequires expedited collection of
recoupment amounts:recoupment amounts:
ent(1) for a terrorist attack before(1) for a terrorist attack before
2011, all required recoupment2011, all required recoupment
amounts must be collected byamounts must be collected by
September 30, 2012;September 30, 2012;
iki/CRS-RL34219(2) for a terrorist attack in 2011,(2) for a terrorist attack in 2011,
g/w35% of required recoupment35% of required recoupment
s.oramounts must be collected byamounts must be collected by
leakSeptember 30, 2012, and theSeptember 30, 2012, and the
balance must be collected bybalance must be collected by
://wikiSeptember 30, 2017;September 30, 2017;
http(3) for a terrorist attack after(3) for a terrorist attack after
2011, all required recoupment2011, all required recoupment
amounts must be collected byamounts must be collected by
September 30, 2017.September 30, 2017.
(Sec. 4(e)(1)(B))(Sec. 4(e)(1)(B))
esolutionNo ProvisionRequires passage of a future JointNo Similar ProvisionNo Similar Provision
ent forResolution before any funds
ure Paymentswould be expended under the act.
Provides for expedited
consideration of this Resolution.
(Sec. 103(h))
CRS-19
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
ation andPreserves all existing regulatoryPreempts state laws requiringNo Similar ProvisionNo Similar Provision
ption ofauthority and jurisdiction of theprior approval of rates and forms
Statestates except that:for insurance required by the act
exclusions for terrorism existing atuntil December 31, 2008.
the time of the act’s enactment arePreempts state laws requiring
annulled, but can be reinstated byprior approval of forms for
iki/CRS-RL34219the insurer with the agreement ofNBCR insurance required by the
g/wthe insured;act until December 31, 2009.
s.orthe definition for “Act ofPreempts state laws requiring
leakTerrorism” in the act shall preemptprior approval of rates for NBCR
any state definitions for purposes ofinsurance required by the act
://wikithe act, state rate and form filinguntil December 31, 2010. (Sec.
httprequirements until the end of 20033(a)(4))
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))
No ProvisionIndexes dollar amounts in the billNo Similar ProvisionNo Similar Provision
ustmentfor inflation using the CPI-U as
an adjustor. (Sec. 103(h))
CRS-20
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
Buy-No ProvisionCreates a “Terrorism Buy-DownNo Similar ProvisionNo Similar Provision
Fund” that would allow insurers
to buy additional terrorism
coverage from the government.
This coverage would be limited
to the amount of an insurer’s
iki/CRS-RL34219deductible and co-share. Payout
g/wamounts would be limited to the
s.oramount that the insurer paid for
leakthe coverage plus interest.
Amounts in this buy-down fund
://wikiwould be available to be
httpborrowed 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-21
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
Calls for a study of the need toCalls for ongoing analysis by theCalls for GAO studies andCalls for GAO studies and
include group life insurance underSecretary of the Treasury ofreports on insurance for nuclear,reports on insurance for nuclear,
TRIA (Sec. 103 (h)), a study andterrorism risk insurance marketbiological, chemical, andbiological, chemical, and
report of the potential impact ofconditions and biennial reportsradiological events and on theradiological events and on the
terrorism on life insurance andand testimony. (Sec. 5(a))availability and affordability ofavailability and affordability of
other lines of insurance (Sec 103terrorism risk insurance interrorism risk insurance in
iki/CRS-RL34219(g)), and a study assessing thespecific markets. Calls forspecific markets. Calls for
g/weffectiveness of the program, theongoing analysis by theongoing analysis by the
s.orlikelihood of the private industryPresident’s Working Group onPresident’s Working Group on
leakinsuring against terrorism after theFinancial Markets, with reportsFinancial Markets, with reports to
program expiration, and theto be delivered in 2010 andbe delivered in 2010 and 2013.
://wikiavailability and affordability of2013. (Sec. 5)(Sec. 5)
httpsuch 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
CRS-22
15 U.S.C. 6701 note H.R. 2761 H.R. 4299 P.L. 110-160(H.R. 2761 as amended by the
Provision(P.L. 107-297 as amended by P.L.(as initially passed by the(as passed by the House)Senate and subsequently passed
mission onNo ProvisionEstablishes a 21-memberNo Similar ProvisionNo Similar Provision
Riskcommission with a wide range of
stakeholders, including insurers,
policyholders, and the insurance
commissioners. The commission
is to make recommendations
iki/CRS-RL34219regarding possible actions to
g/wencourage private insurance
s.orcoverage of terrorism risk. The
leakcommission is to make two
reports specifically evaluating the
://wikineed for the TRIA program and
httpsuggesting possible replacements.
One report to be submitted before
60 months after enactment and
the other submitted before 96
months after enactment. (Sec.
Items in italics under the15 U.S.C. 6701 note column are those added by P.L. 109-144. H.R. 2761 as passed by the House would strike most of 15 U.S.C. 6701 note and replace
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
ill were enacted, except for the provisions entitled “Expiration Date” and “Preservation and Preemption of Existing State Law.” In contrast, the Senate-passed H.R. 2761, which
e P.L. 110-160, and H.R. 4299 simply amend 15 U.S.C. 6701 note. The section numbers cited in this side-by-side are thus those of the two bills themselves.