Sec. 108. GAO study
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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.
The study required under subsection
(a)shall examine, but shall not be limited to, the following issues: 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. 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. 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. 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. 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.
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U.S. Code