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”.
Title I — Extension of Terrorism Insurance Program
TITLE I Extension of Terrorism Insurance Program
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)—
by striking “ a certified act” and inserting “ certified acts”;
by striking “ such certified act” and inserting “ such certified acts”; and
by striking “ exceed” and all that follows through clause (ii) and inserting the following:
“(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—
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
in paragraph (7)—
in subparagraph (A)—
in the matter preceding clause (i), by striking “ for each of the periods referred to in subparagraphs (A) through (E) of paragraph (6)”; and
in clause (i), by striking “ for such period”;
by striking subparagraph (B) and inserting the following:
“(B) [Reserved.]”
in subparagraph (C)—
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
by inserting “ as calculated under subparagraph (A)” after “ mandatory recoupment amount”; and
in subparagraph (E)(i)—
in subclause (I)—
by striking “ 2010” and inserting “ 2017”; and
by striking “ 2012” and inserting “ 2019”;
in subclause (II)—
by striking “ 2011” and inserting “ 2018”;
by striking “ 2012” and inserting “ 2019”; and
by striking “ 2017” and inserting “ 2024”; and
in subclause (III)—
by striking “ 2012” and inserting “ 2019”; and
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—
in section 102—
in paragraph (3)—
by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively;
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
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).”
in paragraph (7)—
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”
by redesignating subparagraph (G) as subparagraph (B); and
in subparagraph (B), as so redesignated by clause (ii)—
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
by striking “ Period or Program Year” and inserting “ calendar year”;
by striking paragraph (11); and
by redesignating paragraphs (12) through (16) as paragraphs (11) through (15), respectively; and
in section 103—
in subsection (b)(2)—
in subparagraph (B), by striking “ , purchase,”; and
in subparagraph (C), by striking “ , purchase,”;
in subsection (c), by striking “ Program Year” and inserting “ calendar year”;
in subsection (e)—
in paragraph (1)(A), as previously amended by section 102—
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”;
by striking the comma after “ 80 percent”; and
by striking “ such Transition Period or such Program Year” and inserting “ such calendar year”;
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
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
in subsection (g)(2)—
by striking “ the Transition Period or a Program Year” each place that term appears and inserting “ the calendar year”;
by striking “ such period” and inserting “ the calendar year”; and
by striking “ that period” and inserting “ the calendar year”.
SEC. 107. Improving the Certification Process.
Definitions.— As used in this section—
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);
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
the term “Secretary” means the Secretary of the Treasury.
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.
Required Content.— The study required under subsection (a) shall include an examination and analysis of—
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;
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;
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;
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
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.
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.
Rulemaking.— Section 102(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended—
by redesignating subparagraph (D) as subparagraph (E); and
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.
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—
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
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.
Required Content.— The study required under subsection (a) shall examine, but shall not be limited to, the following issues:
Upfront premiums.— With respect to upfront premiums described in subsection (a)(1)—
how the Federal Government could determine the price of such upfront premiums on insurers that participate in the Program;
how the Federal Government could collect and manage such upfront premiums;
how the Federal Government could ensure that such upfront premiums are not spent for purposes other than claims through the Program;
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;
the effect of collecting such upfront premiums on insurers both large and small;
the effect of collecting such upfront premiums on the private market for terrorism risk reinsurance; and
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.
Capital reserve fund.— With respect to the capital reserve fund described in subsection (a)(2)—
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;
how a capital reserve fund would impact insurers and reinsurers, including liquidity, insurance pricing, and capacity to provide terrorism risk coverage;
the feasibility of segregating funds attributable to terrorism risk from funds attributable to other insurance lines;
how a capital reserve fund would be viewed and treated under current Financial Accounting Standards Board accounting rules and the tax laws; and
how a capital reserve fund would affect the States’ ability to regulate insurers participating in the Program.
International practices.— With respect to international markets referred to in paragraphs (1) and (2) of subsection (a), how other countries, if any—
have established terrorism insurance structures;
charge premiums or otherwise collect funds to pay for the costs of terrorism insurance structures, including risk and administrative costs; and
have established capital reserve funds to pay for the costs of terrorism insurance structures.
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.
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.
SEC. 109. Membership of Board of Governors of the Federal Reserve System.
In General.— The first undesignated paragraph of section 10 of the Federal Reserve Act (12 U.S.C. 241) is amended by inserting after the second sentence the following: “ In selecting members of the Board, the President shall appoint at least 1 member with demonstrated primary experience working in or supervising community banks having less than $10,000,000,000 in total assets.”.
Effective Date.— The amendment made by this section shall take effect on the date of enactment of this Act and apply to appointments made on and after that effective date, excluding any nomination pending in the Senate on that date.
SEC. 110. Advisory Committee on Risk-Sharing Mechanisms.
Finding; Rule of Construction.—
Finding.— 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.
Rule of construction.— Nothing in this Act, any amendment made by this Act, or the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) shall prohibit insurers from developing risk-sharing mechanisms to voluntarily reinsure terrorism losses between and among themselves.
Advisory Committee on Risk-Sharing Mechanisms.—
Establishment.— The Secretary of the Treasury shall establish and appoint an advisory committee to be known as the “Advisory Committee on Risk-Sharing Mechanisms” (referred to in this subsection as the “Advisory Committee”).
Duties.— The Advisory Committee shall provide advice, recommendations, and encouragement with respect to the creation and development of the nongovernmental risk-sharing mechanisms described under subsection (a).
Membership.— The Advisory Committee shall be composed of 9 members who are directors, officers, or other employees of insurers, reinsurers, or capital market participants that are participating or that desire to participate in the nongovernmental risk-sharing mechanisms described under subsection (a), 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.
SEC. 111. 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 calendar year beginning on January 1, 2016, and in each calendar 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 June 30, 2016, and every other June 30 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; and
“(E) in the case of the data reported in paragraph (1)(B), an updated estimate of the total amount earned since January 1, 2003.
“(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 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, 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. 112. 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.—Not later than June 30, 2017, and every other June 30 thereafter, the Secretary shall conduct a study of small insurers (as such term is defined by regulation by the Secretary) 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) on small insurers;
“(D) the effect of increasing the trigger amount for the Program under section 103(e)(1)(B) 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 and workers compensation carriers in the terrorism risk insurance marketplace.
“(2) Report.—The Secretary shall submit a report to the Congress setting forth the findings and conclusions of each study required under paragraph (1).”