[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4871 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 4871
To reauthorize the Terrorism Risk Insurance Act of 2002, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 17, 2014
Mr. Neugebauer (for himself and Mr. Westmoreland) introduced the
following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To reauthorize the Terrorism Risk Insurance Act of 2002, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``TRIA Reform Act of
2014''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. References.
Sec. 3. Extension of program.
Sec. 4. Certification of acts of terrorism.
Sec. 5. Separate treatment of conventional terrorism from NBCR
terrorism.
Sec. 6. Availability of coverage.
Sec. 7. Terrorism loss risk-spreading premiums amount.
Sec. 8. Increase of aggregate retention amount; mandatory recoupment.
Sec. 9. Terrorism loss risk-spreading premium.
Sec. 10. Risk-sharing mechanisms.
Sec. 11. Reporting of terrorism insurance data.
Sec. 12. Delivery of notices to policyholders.
Sec. 13. Definition of control.
Sec. 14. Annual study of small insurer market competitiveness.
Sec. 15. CBO and OMB studies regarding budgeting for costs of Federal
insurance programs.
Sec. 16. GAO study on upfront premiums and capital reserve fund.
SEC. 2. REFERENCES.
Except as otherwise expressly provided, wherever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of the Terrorism Risk Insurance
Act of 2002 (15 U.S.C. 6701 note).
SEC. 3. EXTENSION OF PROGRAM.
(a) In General.--Subsection (a) of section 108 (15 U.S.C. 6701
note) is amended by striking ``December 31, 2014'' and inserting
``December 31, 2019''.
(b) Program Years.--Subparagraph (G) of section 102(11) (15 U.S.C.
6701 note) is amended by striking ``2014'' and inserting ``2019''.
SEC. 4. CERTIFICATION OF ACTS OF TERRORISM.
(a) In General.--Paragraph (1) of section 102 (15 U.S.C. 6701 note)
is amended--
(1) in subparagraph (A), in the matter preceding clause
(i), by striking ``concurrence with the Secretary of State''
and inserting ``consultation with the Secretary of Homeland
Security'';
(2) in subparagraph (B)--
(A) in clause (i), by striking ``; or'' and
inserting a period;
(B) by striking clause (ii); and
(C) by striking ``terrorism if--'' and all that
follows through ``(I) the act'' and inserting
``terrorism if the act'';
(3) by redesignating subparagraphs (C) and (D) as
subparagraphs (E) and (G), respectively;
(4) by inserting after subparagraph (B) the following new
subparagraph:
``(C) Timing of certification.--
``(i) Preliminary certification notice.--
The Secretary shall issue a preliminary
certification notice indicating whether an act
is expected to be a certified act of terrorism
not later than 15 days after--
``(I) the date of the occurrence of
a potential act of terrorism; or
``(II) the receipt of a petition
seeking a preliminary certification
decision submitted by an insurer having
an in-force policy or policies that
could be affected by a certification
decision.
``(ii) Final certification notice.--Not
later than 90 days after the date of the
occurrence of a potential act of terrorism or
the receipt of a petition submitted to the
Secretary pursuant to clause (i)(II), the
Secretary shall issue a final certification
notice indicating whether an act is a certified
act of terrorism for purposes of this Act.
``(iii) Rule of construction.--Failure to
issue a preliminary certification notice under
clause (i) shall not prevent the Secretary from
issuing a final certification notice under
clause (ii).''; and
(5) by inserting before subparagraph (G), as so
redesignated by paragraph (3) of this subsection, the following
new subparagraph:
``(F) Failure to make determination.--If the
Secretary does not certify, or make a determination not
to certify, an act as an act of terrorism before the
expiration of the 90-day period beginning on the
occurrence of such act, such act shall be treated for
purposes of this Act as having been determined by the
Secretary not to be an act of terrorism and such
determination shall be final and shall not be subject
to judicial review.''.
(b) Applicability.--The amendments made by subsection (a) shall
apply to the Program Year for the Terrorism Insurance Program
established by title I of the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note) that begins on January 1, 2015, and Program Years
thereafter.
SEC. 5. SEPARATE TREATMENT OF CONVENTIONAL TERRORISM FROM NBCR
TERRORISM.
(a) Definition.--
(1) In general.--Section 102 (15 U.S.C. 6701 note) is
amended--
(A) in paragraph (1), by inserting after
subparagraph (C), as added by section 4(a)(4) of this
Act, the following new subparagraph:
``(D) Act of nbcr terrorism.--Each certification of
an act of terrorism under subparagraph (A) shall
include a determination of whether such act involves
NBCR terrorism.'';
(B) by redesignating paragraphs (9) through (16) as
paragraphs (10) through (17), respectively; and
(C) by inserting after paragraph (8) the following
new paragraph:
``(9) NBCR terrorism.--Notwithstanding paragraph (1), the
term `NBCR terrorism' means an act of terrorism to the extent
that the insured losses involve, regardless of any other cause
or event that contributes concurrently or in any sequence to
such insurance loss--
``(A) an act of terrorism that is carried out by
means of the dispersal or application of radioactive
material, or through the use of a nuclear weapon or
device that involves or produces a nuclear reaction,
nuclear radiation, or radioactive contamination;
``(B) the release of radioactive material, and it
appears that one purpose of the act of terrorism was to
release such material;
``(C) an act of terrorism that is carried out by
means of the dispersal or application of pathogenic or
poisonous biological or chemical material; or
``(D) the release of pathogenic or poisonous
biological or chemical material, and it appears that
one purpose of the act of terrorism was to release such
material.''.
(2) Applicability.--The amendments made by paragraph (1)
shall apply to the Program Year for the Terrorism Insurance
Program established by title I of the Terrorism Risk Insurance
Act of 2002 (15 U.S.C. 6701 note) that begins on January 1,
2016, and Program Years thereafter.
(b) Federal Share of Insured Loss Compensation.--Subparagraph (A)
of section 103(e)(1) (15 U.S.C. 6701 note) is amended--
(1) by striking ``The Federal share'' and inserting
``Subject to subparagraphs (B) and (C), the Federal share'';
(2) by striking ``an insurer during the Transition period''
and inserting the following: ``an insurer--
``(i) during the Transition period,'';
(3) by inserting ``through the Program Year ending on
December 31, 2015,'' after ``each Program Year thereafter'';
(4) by striking the period at the end and inserting ``;
and''; and
(5) by adding at the end the following new clause:
``(ii) shall be equal to--
``(I) except as provided in
subclause (II)--
``(aa) during the Program
Year beginning on January 1,
2016, 84 percent of that
portion of the amount of such
insured losses that exceeds the
applicable insurer deductible
required to be paid during such
Program Year;
``(bb) during the Program
Year beginning on January 1,
2017, 83 percent of that
portion of the amount of such
insured losses that exceeds the
applicable insurer deductible
required to be paid during such
Program Year;
``(cc) during the Program
Year beginning on January 1,
2018, 82 percent of that
portion of the amount of such
insured losses that exceeds the
applicable insurer deductible
required to be paid during such
Program Year; and
``(dd) during the Program
Year beginning on January 1,
2019, 80 percent of that
portion of the amount of such
insured losses that exceeds the
applicable insurer deductible
required to be paid during such
Program Year; and
``(II) in the case of insured
losses resulting from acts of NBCR
terrorism, during the Program Year
beginning on January 1, 2016, and each
Program Year thereafter, 85 percent of
that portion of the amount of such
insured losses that exceeds the
applicable insurer deductible required
to be paid during such Program Year.''.
(c) Program Trigger.--Subparagraph (B) of section 103(e)(1) (15
U.S.C. 6701 note) is amended--
(1) in the matter preceding clause (i)--
(A) by striking ``a certified act'' and inserting
``certified acts''; and
(B) by striking ``such certified act'' and
inserting ``such certified acts'';
(2) in clause (i) by striking ``or'' at the end;
(3) in clause (ii), by striking the period at the end and
inserting the following ``through the Program Year ending on
December 31, 2015; or'';
(4) by adding at the end the following:
``(iii)(I) except as provided in subclause
(II)--
``(aa) $200,000,000, with respect
to such insured losses occurring in the
Program Year beginning on January 1,
2016;
``(bb) $300,000,000, with respect
to such insured losses occurring in the
Program Year beginning on January 1,
2017;
``(cc) $400,000,000, with respect
to such insured losses occurring in the
Program Year beginning on January 1,
2018; and
``(dd) $500,000,000, with respect
to such insured losses occurring in the
Program Year beginning on January 1,
2019; and
``(II) in the case of an act of NBCR
terrorism, $100,000,000, with respect to such
insured losses occurring in the Program Year
beginning on January 1, 2016, or any Program
Year thereafter.''; and
(5) by adding after and below clause (iii), as added by
paragraph (4) of this subsection, the following:
``In determining the aggregate industry insured losses
resulting from certified acts of terrorism for purposes
of this subparagraph, the Secretary shall not consider
any act of terrorism resulting, in the aggregate, in
less than $50,000,000 in insured losses.''.
SEC. 6. AVAILABILITY OF COVERAGE.
Subsection (c) of section 103 (15 U.S.C. 6701 note) is amended to
read as follows:
``(c) Mandatory Availability.--
``(1) In general.--Except as provided in paragraph (2),
during each Program Year, each entity that meets the definition
of an insurer under section 102 shall make available--
``(A) in all of its property and casualty insurance
policies, coverage for insured losses; and
``(B) 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) No mandatory availability for small insurers.--The
Secretary shall provide, by regulation and in consultation with
State insurance regulatory authorities, that paragraph (1)
shall not apply for a Program Year with respect to any small
insurer (as such term is defined in such regulations by the
Secretary) that, at the option of the insurer, makes a request
for such inapplicability for such Program Year to the
appropriate State insurance regulatory authority for the State
in which such insurer is domiciled and is determined by such
State insurance regulatory authority to meet such requirements
for financial hardship or financial infeasibility of providing
coverage for insured losses as the Secretary shall establish in
such regulations. The insurer shall provide notice, in a manner
satisfactory to the State insurance regulatory authority,
informing affected prospective and current policyholders
whether such coverage is not provided by the insurer. This
paragraph may not be construed to require any State insurance
regulatory authority to undertake making determinations under
this paragraph.''.
SEC. 7. TERRORISM LOSS RISK-SPREADING PREMIUMS AMOUNT.
(a) In General.--Subparagraph (C) of section 103(e)(7) (15 U.S.C.
6701 note) is amended--
(1) by striking ``subparagraphs (A) through (E)'' and
inserting ``subparagraphs (A) through (F)''; and
(2) by striking ``133 percent'' and inserting ``150
percent''.
(b) Applicability.--The amendment made by subsection (a) shall
apply to the Program Year for the Terrorism Insurance Program
established by title I of the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note) that begins on January 1, 2016, and Program Years
thereafter.
SEC. 8. INCREASE OF AGGREGATE RETENTION AMOUNT; MANDATORY RECOUPMENT.
(a) In General.--Paragraph (6) of section 103(e) (15 U.S.C. 6701
note) is amended--
(1) in subparagraph (D)(ii), by striking ``and'' at the
end;
(2) in subparagraph (E)--
(A) in the matter preceding clause (i), by
inserting ``through the Program Year ending on December
31, 2015'' before the comma; and
(B) in clause (ii), by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(F) for the Program Year beginning January 1,
2016, and each Program Year thereafter, the lesser of--
``(i) the amount that is equal to the sum
of the insurer deductibles for the Program Year
for all insurers participating in the Program;
and
``(ii) the aggregate amount, for all
insurers, of insured losses during such Program
Year.''.
(b) Mandatory Recoupment.--
(1) Amount; timing.--Paragraph (7) of section 103(e) (15
U.S.C. 6701 note) is amended--
(A) by striking subparagraphs (A) and (B) and
inserting the following new subparagraph:
``(A) Mandatory recoupment amount.--For purposes of
this paragraph, the mandatory recoupment amount for
each of the periods referred to in subparagraphs (A)
through (F) of paragraph (6) shall be equal to the
lesser of--
``(i) the aggregate amount, for all
insurers, of insured losses during such period
that are compensated by the Federal Government
pursuant to paragraph (1); or
``(ii) the insurance marketplace aggregate
retention amount under paragraph (6) for such
period.'';
(B) in subparagraph (E)(i)(III), by striking
``after January 1, 2012'' and inserting ``before
December 31, 2014''; and
(C) by redesignating subparagraphs (C), (D), (E)
(as so amended), and (F) as subparagraphs (B), (C),
(D), and (E), respectively.
(2) Conforming amendments.--Section 103(e) (15 U.S.C. 6701
note) is amended--
(A) in paragraph (7)(D)(i), as so redesignated by
paragraph (1)(B) of this subsection, by striking
``subparagraph (C)'' and inserting ``subparagraph
(B)''; and
(B) in paragraph (8)--
(i) in subparagraph (C), by striking
``paragraph (7)(D)'' and inserting ``paragraph
(7)(C)''; and
(ii) in subparagraph (D)(ii), by striking
``paragraph (7)(E)'' and inserting ``paragraph
(7)(D)''.
SEC. 9. TERRORISM LOSS RISK-SPREADING PREMIUM.
(a) In General.--Section 103(e) (15 U.S.C. 6701 note) is amended by
striking paragraph (8) and inserting the following new paragraph:
``(8) Terrorism loss risk-spreading premiums.--
``(A) Establishment.--After an act of terrorism,
the Secretary shall, to the extent provided in
subparagraph (7)(C), and may, to the extent provided in
subparagraph (7)(D), establish terrorism loss risk-
spreading premiums, which shall be imposed as a
policyholder premium surcharge on property and casualty
insurance policies for all participating insurers in
force after the date of such establishment.
``(B) Collection.--The Secretary shall provide for
insurers to collect terrorism loss risk-spreading
premiums and remit such amounts collected to the
Secretary.
``(C) Determination of premiums.--In determining
the method and manner of imposing terrorism loss risk-
spreading premiums, including the amount of such
premiums, the Secretary shall--
``(i) impose such terrorism loss risk-
spreading premiums beginning with such period
of coverage during the year as the Secretary
determines appropriate, but shall commence
imposition of such premiums not later than 18
months after the occurrence of the act of
terrorism for which such premiums are imposed;
``(ii) base any terrorism loss risk-
spreading premium on a percentage of the
premium amount charged for property and
casualty insurance coverage under the policy;
and
``(iii) 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.
``(D) Percentage limitation.--A terrorism loss
risk-spreading premium collected on a discretionary
basis pursuant to paragraph (7)(D) shall not be less
than, on an annual basis, the amount equal to 3 percent
of the premium charged for property and casualty
insurance coverage under the policy.
``(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.''.
(b) Applicability.--The amendment made by subsection (a) shall
apply to the Program Year for the Terrorism Insurance Program
established by title I of the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note) that begins on January 1, 2016, and Program Years
thereafter.
SEC. 10. RISK-SHARING MECHANISMS.
(a) In General.--Section 103(e) (15 U.S.C. 6701 note) is amended by
adding at the end the following new paragraph:
``(9) Risk-sharing mechanisms.--
``(A) Finding; rule of construction.--The Congress
finds that it is desirable to encourage the growth of
nongovernmental, private market reinsurance capacity
for protection against losses arising from acts of
terrorism. Therefore, nothing in this title shall
prohibit insurers from developing risk-sharing
mechanisms (including mutual reinsurance facilities and
agreements, use of the capital markets, and insurance-
linked securities) to voluntarily reinsure terrorism
losses between and among themselves that are not
subject to reimbursement under this section.
``(B) Establishment of advisory committee.--The
Secretary shall appoint an Advisory Committee to--
``(i) encourage the creation and
development of such risk-sharing mechanisms;
``(ii) assist the Secretary and be
available to administer such risk-sharing
mechanisms; and
``(iii) develop articles of incorporation,
bylaws, and a plan of operation for any long-
term reinsurance facility authorized or created
in the future.
``(C) Membership.--The Advisory Committee shall be
composed of nine members who are directors, officers,
or other employees of insurers, reinsurers, or capital
market participants that are participating or that
desire to participate in such mechanisms, and who are
representative of the affected sectors of the insurance
industry, including commercial property insurance,
commercial casualty insurance, reinsurance, and
alternative risk transfer industries.''.
(b) Applicability.--The amendment made by subsection (a) shall
apply to the Program Year for the Terrorism Insurance Program
established by title I of the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note) that begins on January 1, 2015, and Program Years
thereafter.
SEC. 11. REPORTING OF TERRORISM INSURANCE DATA.
Section 104 (15 U.S.C. 6701 note) is amended by adding at the end
the following new subsection:
``(h) Reporting of Terrorism Insurance Data.--
``(1) Authority.--During the Program Year beginning on
January 1, 2016, and in each Program Year thereafter, the
Secretary shall require insurers participating in the Program
to submit to the Secretary such information regarding insurance
coverage for terrorism losses of such insurers as the Secretary
considers appropriate to analyze the effectiveness of the
Program, which shall include information regarding--
``(A) lines of insurance with exposure to such
losses;
``(B) premiums earned on such coverage;
``(C) geographical location of exposures;
``(D) pricing of such coverage;
``(E) the take-up rate for such coverage;
``(F) the amount of private reinsurance for acts of
terrorism purchased; and
``(G) such other matters as the Secretary considers
appropriate.
``(2) Reports.--Not later than 6 months after the
termination of the Program Year beginning on January 1, 2016,
and not later than 6 months after the termination of each
Program Year thereafter, the Secretary shall submit a report to
the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate that includes--
``(A) an analysis of the overall effectiveness of
the Program;
``(B) an evaluation of any changes or trends in the
data collected under paragraph (1);
``(C) an evaluation of whether any aspects of the
Program have the effect of discouraging or impeding
insurers from providing commercial property casualty
insurance coverage or coverage for acts of terrorism;
``(D) an evaluation of the impact of the Program on
workers' compensation insurers;
``(E) an evaluation of the impact on availability
and affordability of terrorism insurance coverage and
fiscal protection of the taxpayers of separate Federal
treatment under the Program for nuclear, biological,
chemical, and radiological terrorism; and
``(F) in the case of the data reported in paragraph
(1)(B), an updated estimate of the total amount earned
since the commencement of Program Year 1.
``(3) Protection of data.--To the extent possible, the
Secretary shall contract with an insurance statistical
aggregator to collect the information described in paragraph
(1), which shall keep any nonpublic information confidential
and provide it to the Secretary in an aggregate form or in such
other form or manner that does not permit identification of the
insurer submitting such information.
``(4) Advance coordination.--Before collecting any data or
information under paragraph (1) from an insurer, or affiliate
of an insurer, the Secretary shall coordinate with the
appropriate State insurance regulatory authorities or their
representatives and any relevant government agency or publicly
available sources to determine if the information to be
collected is available from, and may be obtained in a timely
manner by, individually or collectively, such entities. If the
Secretary determines that such data or information is
available, and may be obtained in a timely matter, from such
entities, the Secretary shall obtain the data or information
from such entities. If the Secretary determines that such data
or information is not so available, the Secretary may collect
such data or information from an insurer and affiliates.
``(5) Confidentiality.--
``(A) Retention of privilege.--The submission of
any non-publicly available data and information to the
Secretary and the sharing of any non-publicly available
data with or by the Secretary among other Federal
agencies, the State insurance regulatory authorities
and their collective agents, or any other entities
under this subsection shall not constitute a waiver of,
or otherwise affect, any privilege arising under
Federal or State law (including the rules of any
Federal or State court) to which the data or
information is otherwise subject.
``(B) Continued application of prior
confidentiality agreements.--Any requirement under
Federal or State law to the extent otherwise
applicable, or any requirement pursuant to a written
agreement in effect between the original source of any
non-publicly available data or information and the
source of such data or information to the Secretary,
regarding the privacy or confidentiality of any data or
information in the possession of the source to the
Secretary, shall continue to apply to such data or
information after the data or information has been
provided pursuant to this subsection.
``(C) Information-sharing agreement.--Any data or
information obtained by the Secretary under this
subsection may be made available to State insurance
regulatory authorities, individually or collectively
through an information-sharing agreement that--
``(i) shall comply with applicable Federal
law; and
``(ii) shall not constitute a waiver of, or
otherwise affect, any privilege under Federal
or State law (including any privilege referred
to in subparagraph (A) and the rules of any
Federal or State court) to which the data or
information is otherwise subject.
``(D) Agency disclosure requirements.--Section 552
of title 5, United States Code, including any
exceptions thereunder, shall apply to any data or
information submitted under this subsection to the
Secretary by an insurer or affiliate of an insurer.''.
SEC. 12. DELIVERY OF NOTICES TO POLICYHOLDERS.
Section 103(b)(2) (15 U.S.C. 6701 note) is amended--
(1) in subparagraph (B), by striking ``, purchase,''; and
(2) in subparagraph (C), by striking ``, purchase,''.
SEC. 13. DEFINITION OF CONTROL.
Paragraph (3) of section 102 (15 U.S.C. 6701 note) is amended--
(1) by redesignating subparagraphs (A), (B), and (C) as
clauses (i), (ii), and (iii), respectively and realigning such
clauses, as so redesignated, so as to be indented six ems from
the left margin;
(2) in the matter preceding clause (i) (as so
redesignated), by striking ``An entity has'' and inserting the
following:
``(A) In general.--An entity has''; and
(3) by adding at the end the following new subparagraph:
``(B) Rule of construction.--An entity, including
any affiliate thereof, does not have control over
another entity if, as of the date of the enactment of
the TRIA Reform Act of 2014, the entity is acting as an
attorney-in-fact, as defined by the Secretary, for the
other entity and such other entity is a reciprocal
insurer, provided that the entity is not, for reasons
other than the attorney-in-fact relationship, defined
as having control under subparagraph (A).''.
SEC. 14. ANNUAL STUDY OF SMALL INSURER MARKET COMPETITIVENESS.
Section 108 (15 U.S.C. 6701 note) is amended by adding at the end
the following new subsection:
``(h) Study of Small Insurer Market Competitiveness.--
``(1) In general.--The Secretary shall conduct an annual
study of small insurers participating in the Program, and
identify any competitive challenges small insurers face in the
terrorism risk insurance marketplace, including--
``(A) changes to the market share, premium volume,
and policyholder surplus of small insurers relative to
large insurers;
``(B) how the property and casualty insurance
market for terrorism risk differs between small and
large insurers, and whether such a difference exists
within other perils;
``(C) the impact of the Program's mandatory
availability requirement under section 103(c) and the
voluntary opt-out for small insurers;
``(D) the effect of increasing the trigger amount
for the Program under section 103(e)(1)(B)(iii)(I) on
small insurers;
``(E) the availability and cost of private
reinsurance for small insurers; and
``(F) the impact that State workers compensation
laws have on small insurers, particularly the impact of
mandatory, non-excludable participation and unlimited
financial liability.
``(2) Timing and report.--The Secretary shall complete the
first study under paragraph (1) and submit a report to the
Congress setting forth the findings and conclusions of the
study not later than June 30, 2016, and shall complete an
annual study under paragraph (1) and submit a report regarding
such study to the Congress by June 1 annually thereafter.''.
SEC. 15. CBO AND OMB STUDIES REGARDING BUDGETING FOR COSTS OF FEDERAL
INSURANCE PROGRAMS.
Not later than the expiration of the 12-month period beginning on
the date of the enactment of this Act, the Director of the
Congressional Budget Office and the Director of the Office of
Management and Budget shall each--
(1) conduct a study to determine the feasibility of
applying accrual accounting concepts to budgeting for the costs
of the Terrorism Risk Insurance Program and for the costs of
the other Federal insurance programs; and
(2) submit a report regarding such study to the Committees
on the Budget of the House of Representatives and the Senate,
which shall include a recommendation specifically addressing
the feasibility of applying fair value concepts to budgeting
for the costs of Federal insurance programs, including the
Terrorism Risk Insurance Program.
SEC. 16. GAO STUDY ON UPFRONT PREMIUMS AND CAPITAL RESERVE FUND.
(a) Study.--Not later than 2 years after the date of the enactment
of this Act, the Comptroller General of the United States shall
complete a study on the viability of the Federal Government--
(1) assessing and collecting upfront premiums on insurers
that participate in the Terrorism Risk Insurance Program
established under the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note) (in this section referred to as the
``Program''), which shall include a comparison of practices in
international markets to assess and collect premiums either
before or after terrorism losses are incurred; and
(2) creating a capital reserve fund under the Program and
requiring insurers participating in the Program to dedicate
capital specifically for terrorism losses before such losses
are incurred, which shall include a comparison of practices in
international markets to establish reserve funds.
(b) Required Content.--The study required under subsection (a)
shall examine, but shall not be limited to, the following issues:
(1) Upfront premiums.--With respect to upfront premiums
described in subsection (a)(1)--
(A) how the Federal Government could determine the
price of such upfront premiums on insurers that
participate in the Program;
(B) how the Federal Government could collect such
upfront premiums;
(C) how the Federal Government could ensure that
such upfront premiums are not spent for purposes other
than satisfying claims through the Program;
(D) how the assessment and collection of such
upfront premiums could affect take-up rates for
terrorism risk coverage in different regions and
industries;
(E) the effect of collecting such upfront premiums
on the private market for terrorism risk reinsurance;
and
(F) the size of the Federal Government subsidy
insurers currently receive through their participation
in the Program.
(2) Capital reserve fund.--With respect to the capital
reserve fund described in subsection (a)(2)--
(A) how the creation of a capital reserve fund
would affect the Federal Government's fiscal exposure
under the Terrorism Risk Insurance Program and the
ability of the Program to meet its statutory purposes;
(B) how a capital reserve fund would impact
insurers and reinsurers, including liquidity, insurance
pricing, and capacity to provide terrorism risk
coverage;
(C) the feasibility of segregating funds
attributable to terrorism risk from funds attributable
to other insurance lines;
(D) how a capital reserve fund would be viewed and
treated under current Financial Accounting Standards
Board accounting rules and the tax laws; and
(E) how a capital reserve fund would affect the
States' ability to regulate insurers participating in
the Program.
(3) International practices.--With respect to international
markets referred to in paragraphs (1) and (2) of subsection
(A), how other countries, if any--
(A) have established terrorism insurance
structures;
(B) charge premiums or otherwise collect funds to
pay for the costs of terrorism insurance structures,
including risk and administrative costs; and
(C) have established capital reserve funds to pay
for the costs of terrorism insurance structures.
(4) Duration.--With respect to the capital reserve fund
described in subsection (a)(2), how the duration of the Program
would affect the viability of such capital reserve fund.
(c) Report.--Upon completion of the study required under subsection
(a), the Comptroller General shall submit a report on the results of
such study to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives.
(d) Public Availability.--The study and report required under this
section shall be made available to the public in electronic form and
shall be published on the website of the Government Accountability
Office.
<all>