Defines "Program Year 4" as calendar 2006 and "Program Year 5" as calendar 2007.

Extends coverage for insured losses under a policy issued during Program Year 5 through December 31, 2008, at the latest.

Increases the insurance marketplace aggregate retention amount for Program Years 4 and 5.

Directs the Secretary to apply TRIA to providers of group life insurance.

Instructs the Presidential Working Group on Financial Markets to report to Congress its recommendations for legislation to address the long-term availability and affordability of insurance for terrorism risk.

Raises the property and casualty insurance loss threshold that qualifies for certification by the Secretary of the Treasury as an act of terrorism with respect to Program Year 4 and Program Year 5.

Defines Program Year 5 as ending on December 31, 2007.

Excludes from covered lines of insurance: (1) commercial automobile insurance; (2) burglary and theft insurance; (3) surety insurance; (4) professional liability insurance; and (5) farm owners multiple peril insurance.

Prescribes formulae for insurer deductibles for Program Years 4 and 5.

Sets the federal share of insured loss compensation for Program Year 5 at 85% (Year 4 is currently 90%) of the amount of insured losses exceeding the applicable insurer deductible.

Specifies for Program Years 4 and 5 increasing maximum aggregate retention amounts in the formula for mandatory recoupment of the federal share of insured loss compensation paid.

States that procedures and requirements for advance approval of settlements established by the Secretary are applicable to any cause of action for damages in connection with a determination by the Secretary that an act of terrorism has occurred.

Directs the President's Working Group on Financial Markets to analyze and report to certain congressional committees on the long-term availability and affordability of insurance for terrorism risk, including: (1) group life coverage; and (2) coverage for chemical, nuclear, biological, and radiological events.

Raises the property and casualty insurance loss threshold that qualifies for certification by the Secretary of the Treasury as an act of terrorism with respect to Program Year 4 and Program Year 5.

Defines Program Year 5 as ending on December 31, 2007.

Excludes from covered lines of insurance: (1) commercial automobile insurance; (2) burglary and theft insurance; (3) surety insurance; (4) professional liability insurance; and (5) farm owners multiple peril insurance.

Prescribes formulae for insurer deductibles for Program Years 4 and 5.

Sets the federal share of insured loss compensation for Program Year 5 at 85% (Year 4 is currently 90%) of the amount of insured losses exceeding the applicable insurer deductible.

Specifies for Program Years 4 and 5 increasing maximum aggregate retention amounts in the formula for mandatory recoupment of the federal share of insured loss compensation paid.

States that procedures and requirements for advance approval of settlements established by the Secretary are applicable to any cause of action for damages in connection with a determination by the Secretary that an act of terrorism has occurred.

Directs the President's Working Group on Financial Markets to analyze and report to certain congressional committees on the long-term availability and affordability of insurance for terrorism risk, including: (1) group life coverage; and (2) coverage for chemical, nuclear, biological, and radiological events.

Redefines "act of terrorism" to repeal the $5 million minimum for an act to be certified by the Secretary of the Treasury.

Redefines: (1) "casualty insurance"; and (2) "exempt commercial purchaser."

Sets forth a statutory formula for insurer deductibles for Program Year 4 and additional Program Years.

(Sec. 103) Revises mandatory availability guidelines to include NBCR terrorism (terrorism involving nuclear, biological, chemical, and/or radioactive reactions, releases, or contaminations, to the extent any insured losses are caused by any of them).

Instructs the Secretary to issue regulations that apply the provisions of TRIA title I to state workers' compensation reinsurance pools.

Revamps guidelines governing the federal share of compensation covering insured losses of an insurer. Establishes a Program trigger for such federal share.

Prescribes guidelines under which an insurer may establish a TRIA Capital Reserve Fund (CRF) in which it may hold funds in a fiduciary capacity on behalf of the Secretary.

Directs the Secretary to collect and use CRF funds offset the federal share of compensation.

States that TRIA title I does not prohibit insurers from developing risk-sharing mechanisms (including mutual reinsurance facilities and agreements) to voluntarily reinsure certain terrorism losses among themselves.

Requires the Secretary to appoint an Advisory Committee to encourage the creation and development of such mechanisms.

Provides for full recoupment of federal financial assistance provided in connection with all acts of terrorism.

Requires the Comptroller General to study and report to Congress on: (1) the exposure of personal lines (including homeowners insurance) to terrorism risk, the coverage currently available, and potential policy responses; (2) the extent to which risks associated with nuclear, biological, chemical, or radioactive events are measurable and insurable at the federal or private sector level, or both; and (3) the need for a federal program that provides for a system of shared public and private compensation for insured losses resulting from natural disaster.

Requires the latter study to analyze whether such program should incorporate tax-free capital reserves, voluntary mutual reinsurance pools, a distinction between sophisticated and non-sophisticated commercial purchasers for the purposes of exemption from regulation, or federal support for the purchase of reinsurance by state disaster insurance programs.

Establishes the Commission on Terrorism Risk Insurance (Commission) to identify and report to Congress on the following: (1) actions to encourage, facilitate, and sustain provision by the domestic private insurance industry of affordable coverage for losses due to acts of terrorism; (2) the utility and viability of TRIA Capital Reserve Funds; (3) any risk sharing mechanism created or made available under this Act; and (4) a federally created or mandated reinsurance facility (which shall issue pre-event and post-event financing bonds, assessments, single or multiple pooling arrangements, and other risk sharing arrangements).

Directs the Commission to report to Congress on whether there is a need for a federal terrorism risk insurance program and, if so, to make a specific, detailed recommendation for the replacement of the Program, including specific, detailed recommendations for the creation of a terrorism reinsurance facility or facilities or single or multiple pooling arrangements, or both.

Sets limitations upon state regulatory authority in connection with mandatory availability of terrorism risk insurance.

Declares that Congress intends that all states will implement by December 31, 2007, the System for Electronic Rate and Form Filing and streamlined surplus lines diligent search policies.

Revises the termination date of the Program from December 31, 2007, to December 31, 2008, unless the Commission has not satisfied its obligations, in which case the termination date is December 31, 2007.

Defines Program Year 5 as ending on December 31, 2007.

Excludes from covered lines of insurance: (1) commercial automobile insurance; (2) burglary and theft insurance; (3) surety insurance; (4) professional liability insurance; and (5) farm owners multiple peril insurance.

Prescribes formulae for insurer deductibles for Program Years 4 and 5.

Sets the federal share of insured loss compensation for Program Year 5 at 85% (Year 4 is currently 90%) of the amount of insured losses exceeding the applicable insurer deductible.

Specifies for Program Years 4 and 5 increasing maximum aggregate retention amounts in the formula for mandatory recoupment of the federal share of insured loss compensation paid.

States that compensation for a certified act of terrorism occurring after March 31, 2006, shall be paid only if the aggregate industry insured losses exceed either: (1) $50 million occurring in Program Year 4; or (2) $100 million occurring in Program Year 5.

States that procedures and requirements for advance approval of settlements established by the Secretary are applicable to any cause of action for damages in connection with a determination by the Secretary that an act of terrorism has occurred.

Directs the President's Working Group on Financial Markets to analyze and report to certain congressional committees on the long-term availability and affordability of insurance for terrorism risk, including: (1) group life coverage; and (2) coverage for chemical, nuclear, biological, and radiological events.

Terrorism Risk Insurance Extension Act of 2005 - Amends the Terrorism Risk Insurance Act of 2002 to extend the terrorism risk insurance program from 2005 through 2007.

Defines Program Year 5 as ending on December 31, 2007.

Excludes from covered lines of insurance: (1) commercial automobile insurance; (2) burglary and theft insurance; (3) surety insurance; (4) professional liability insurance; and (5) farm owners multiple peril insurance.

Prescribes formulae for insurer deductibles for Program Years 4 and 5.

Sets the federal share of insured loss compensation for Program Year 5 at 85% (Year 4 is currently 90%) of the amount of insured losses exceeding the applicable insurer deductible.

Specifies for Program Years 4 and 5 increasing maximum aggregate retention amounts in the formula for mandatory recoupment of the federal share of insured loss compensation paid.

States that compensation for a certified act of terrorism occurring after March 31, 2006, shall be paid only if the aggregate industry insured losses exceed either: (1) $50 million occurring in Program Year 4; or (2) $100 million occurring in Program Year 5.

States that procedures and requirements for advance approval of settlements established by the Secretary are applicable to any cause of action for damages in connection with a determination by the Secretary that an act of terrorism has occurred.

Directs the President's Working Group on Financial Markets to analyze and report to certain congressional committees on the long-term availability and affordability of insurance for terrorism risk, including: (1) group life coverage; and (2) coverage for chemical, nuclear, biological, and radiological events.