Signed Legislation: H.R.26 Terrorism Risk Insurance Program Reauthorization Act of 2015

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114TH CONGRESS

1ST SESSION H. R. 26

AN ACT

To extend the termination date of the Terrorism Insurance Program established under 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 "Terrorism Risk Insurance Program Reauthorization Act of 2015"
(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:

Sec. 1. Short title and table of contents.

TITLE I—EXTENSION OF TERRORISM INSURANCE PROGRAM

Sec. 101. Extension of Terrorism Insurance Program.
Sec. 102. Federal share.
Sec. 103. Program trigger.
Sec. 104. Recoupment of Federal share of compensation under the program.
Sec. 105. Certification of acts of terrorism; consultation with Secretary of Homeland Security.
Sec. 106. Technical amendments.
Sec. 107. Improving the certification process.
Sec. 108. GAO study.
Sec. 109. Membership of Board of Governors of the Federal Reserve System.
Sec. 110. Advisory Committee on Risk-Sharing Mechanisms.
Sec. 111. Reporting of terrorism insurance data.
Sec. 112. Annual study of small insurer market competitiveness.

TITLE II—NATIONAL ASSOCIATION OF REGISTERED AGENTS AND BROKERS REFORM

Sec. 201. Short title.
Sec. 202. Reestablishment of the National Association of Registered Agents
and Brokers.

TITLE III—BUSINESS RISK MITIGATION AND PRICE STABILIZATION

Sec. 301. Short title.
Sec. 302. Margin requirements.
Sec. 303. Implementation.
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TITLE I--EXTENSION OF TERRORISM INSURANCE PROGRAM

SEC. 101. EXTENSION OF TERRORISM INSURANCE PROGRAM.

Section 108(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking `December 31, 2014' and inserting `December 31, 2020'.

SEC. 102. FEDERAL SHARE.

Section 103(e)(1)(A) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by inserting `and beginning on January 1, 2016, shall decrease by 1 percentage point per calendar year until equal to 80 percent' after `85 percent'.

SEC. 103. PROGRAM TRIGGER.

Subparagraph (B) of section 103(e)(1) (15 U.S.C. 6701 note) is amended in the matter preceding clause (i)--

(1) by striking `a certified act' and inserting `certified acts';

(2) by striking `such certified act' and inserting `such certified acts'; and

(3) by striking `exceed' and all that follows through clause (ii) and inserting the following: `exceed--

`(i) $100,000,000, with respect to such insured losses occurring in calendar year 2015;

`(ii) $120,000,000, with respect to such insured losses occurring in calendar year 2016;

`(iii) $140,000,000, with respect to such insured losses occurring in calendar year 2017;

`(iv) $160,000,000, with respect to such insured losses occurring in calendar year 2018;

`(v) $180,000,000, with respect to such insured losses occurring in calendar year 2019; and

`(vi) $200,000,000, with respect to such insured losses occurring in calendar year 2020 and any calendar year thereafter.'.

SEC. 104. RECOUPMENT OF FEDERAL SHARE OF COMPENSATION UNDER THE PROGRAM.

Section 103(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) by amending paragraph (6) to read as follows:

`(6) INSURANCE MARKETPLACE AGGREGATE RETENTION AMOUNT-

`(A) IN GENERAL- For purposes of paragraph (7), the insurance marketplace aggregate retention amount shall be the lesser of--

`(i) $27,500,000,000, as such amount is revised pursuant to this paragraph; and

`(ii) the aggregate amount, for all insurers, of insured losses during such calendar year.

`(B) REVISION OF INSURANCE MARKETPLACE AGGREGATE RETENTION AMOUNT-

`(i) PHASE-IN- Beginning in the calendar year of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2015, the amount set forth under subparagraph (A)(i) shall increase by $2,000,000,000 per calendar year until equal to $37,500,000,000.

`(ii) FURTHER REVISION- Beginning in the calendar year that follows the calendar year in which the amount set forth under subparagraph (A)(i) is equal to $37,500,000,000, the amount under subparagraph (A)(i) shall be revised to be the amount equal to the annual average of the sum of insurer deductibles for all insurers participating in the Program for the prior 3 calendar years, as such sum is determined by the Secretary under subparagraph (C).

`(C) RULEMAKING- Not later than 3 years after the date of enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2015, the Secretary shall--

`(i) issue final rules for determining the amount of the sum described under subparagraph (B)(ii); and

`(ii) provide a timeline for public notification of such determination.'; and

(2) in paragraph (7)--

(A) in subparagraph (A)--

(i) in the matter preceding clause (i), by striking `for each of the periods referred to in subparagraphs (A) through (E) of paragraph (6)'; and

(ii) in clause (i), by striking `for such period';

(B) by striking subparagraph (B) and inserting the following:

`(B) [Reserved.]';

(i) by striking `occurring during any of the periods referred to in any of subparagraphs (A) through (E) of paragraph (6), terrorism loss risk-spreading premiums in an amount equal to 133 percent' and inserting `, terrorism loss risk-spreading premiums in an amount equal to 140 percent'; and

(ii) by inserting `as calculated under subparagraph (A)' after `mandatory recoupment amount'; and

(D) in subparagraph (E)(i)--

(i) in subclause (I)--

(I) by striking `2010' and inserting `2017'; and

(II) by striking `2012' and inserting `2019';

(ii) in subclause (II)--

(I) by striking `2011' and inserting `2018';

(II) by striking `2012' and inserting `2019'; and

(III) by striking `2017' and inserting `2024'; and

(iii) in subclause (III)--

(I) by striking `2012' and inserting `2019'; and

(II) by striking `2017' and inserting `2024'.

SEC. 105. CERTIFICATION OF ACTS OF TERRORISM; CONSULTATION WITH SECRETARY OF HOMELAND SECURITY.

Paragraph (1)(A) of section 102 (15 U.S.C. 6701 note) is amended in the matter preceding clause (i), by striking `concurrence with the Secretary of State' and inserting `consultation with the Secretary of Homeland Security'.

SEC. 106. TECHNICAL AMENDMENTS.

The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) in section 102--

(A) in paragraph (3)--

(i) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively;

(ii) 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

(iii) 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 enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2015, 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).';

(B) in paragraph (7)--

(i) by striking subparagraphs (A) through (F) and inserting the following:

`(A) the value of an insurer's direct earned premiums during the immediately preceding calendar year, multiplied by 20 percent; and';

(ii) by redesignating subparagraph (G) as subparagraph (B); and

(iii) in subparagraph (B), as so redesignated by clause (ii)--

(I) by striking `notwithstanding subparagraphs (A) through (F), for the Transition Period or any Program Year' and inserting `notwithstanding subparagraph (A), for any calendar year'; and

(II) by striking `Period or Program Year' and inserting `calendar year';

(D) by redesignating paragraphs (12) through (16) as paragraphs (11) through (15), respectively; and

(2) in section 103--

(A) in subsection (b)(2)--

(i) in subparagraph (B), by striking `, purchase,'; and

(ii) in subparagraph (C), by striking `, purchase,';

(B) in subsection (c), by striking `Program Year' and inserting `calendar year';

(i) in paragraph (1)(A), as previously amended by section 102--

(I) by striking `the Transition Period and each Program Year through Program Year 4 shall be equal to 90 percent, and during Program Year 5 and each Program Year thereafter' and inserting `each calendar year';

(II) by striking the comma after `80 percent'; and

(III) by striking `such Transition Period or such Program Year' and inserting `such calendar year';

(ii) in paragraph (2)(A), by striking `the period beginning on the first day of the Transition Period and ending on the last day of Program Year 1, or during any Program Year thereafter' and inserting `a calendar year'; and

(iii) in paragraph (3), by striking `the period beginning on the first day of the Transition Period and ending on the last day of Program Year 1, or during any other Program Year' and inserting `any calendar year'; and

(D) in subsection (g)(2)--

(i) by striking `the Transition Period or a Program Year' each place that term appears and inserting `the calendar year';

(ii) by striking `such period' and inserting `the calendar year'; and

(iii) by striking `that period' and inserting `the calendar year'.

SEC. 107. IMPROVING THE CERTIFICATION PROCESS.

(a) Definitions- As used in this section--

(1) the term `act of terrorism' has the same meaning as in section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note);

(2) the term `certification process' means the process by which the Secretary determines whether to certify an act as an act of terrorism under section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note); and

(3) the term `Secretary' means the Secretary of the Treasury.

(b) Study- Not later than 9 months after the date of enactment of this Act, the Secretary shall conduct and complete a study on the certification process.

(1) the establishment of a reasonable timeline by which the Secretary must make an accurate determination on whether to certify an act as an act of terrorism;

(2) the impact that the length of any timeline proposed to be established under paragraph (1) may have on the insurance industry, policyholders, consumers, and taxpayers as a whole;

(3) the factors the Secretary would evaluate and monitor during the certification process, including the ability of the Secretary to obtain the required information regarding the amount of projected and incurred losses resulting from an act which the Secretary would need in determining whether to certify the act as an act of terrorism;

(4) the appropriateness, efficiency, and effectiveness of the consultation process required under section 102(1)(A) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) and any recommendations on changes to the consultation process; and

(5) the ability of the Secretary to provide guidance and updates to the public regarding any act that may reasonably be certified as an act of terrorism.

(d) Report- Upon completion of the study required under subsection (a), the Secretary 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.

(e) Rulemaking- Section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) by redesignating subparagraph (D) as subparagraph (E); and

(2) by inserting after subparagraph (C) the following:

`(D) TIMING OF CERTIFICATION- Not later than 9 months after the report required under section 107 of the Terrorism Risk Insurance Program Reauthorization Act of 2015 is submitted to the appropriate committees of Congress, the Secretary shall issue final rules governing the certification process, including establishing a timeline for which an act is eligible for certification by the Secretary on whether an act is an act of terrorism under this paragraph.'.

SEC. 108. GAO STUDY.

(a) Study- Not later than 2 years after the date of enactment of this Act, the Comptroller General of the United States shall complete a study on the viability and effects of the Federal Government--

(1) assessing and collecting upfront premiums on insurers that participate in the Terrorism Insurance Program established under the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) (hereafter 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 and manage such upfront premiums;

(C) how the Federal Government could ensure that such upfront premiums are not spent for purposes other than 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 and how it could impact small businesses and consumers in both metropolitan and non-metropolitan areas;

(E) the effect of collecting such upfront premiums on insurers both large and small;

(F) the effect of collecting such upfront premiums on the private market for terrorism risk reinsurance; and

(G) the size of any Federal Government subsidy insurers may receive through their participation in the Program, taking into account the Program's current post-event recoupment structure.

(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) 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.

Download a PDF of HR 26 Terrorism Risk Insurance Program Reauthorization Act of 2015 here

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