II Calendar No. 287 109th CONGRESS 1st Session S. 467 IN THE SENATE OF THE UNITED STATES February 18, 2005 Mr. Dodd (for himself, Mr. Bennett, Mr. Schumer, Mr. Hagel, Mr. Corzine, Mr. Bunning, Mr. Reed, Mr. Lugar, Mrs. Clinton, Mr. Nelson of Nebraska, Mr. Carper, Mrs. Dole, Mr. Chambliss, Mr. Lautenberg, Mr. Bayh, Ms. Stabenow, Mr. Chafee, Mr. Lieberman, Mr. Salazar, Mr. Obama, Mr. Kerry, Mr. Allen, Mr. Durbin, Mr. Coleman, Mrs. Murray, Mr. Reid, Mr. Dayton, Mr. Byrd, Mr. Conrad, Mr. Smith, Mr. Bingaman, Mr. Johnson, Mr. Kennedy, and Mr. Talent) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs November 16, 2005 Reported by Mr. Shelby, with an amendment Strike out all after the enacting clause and insert the part printed in italic A BILL To extend the applicability of the Terrorism Risk Insurance Act of 2002.

1.

Short title

This Act may be cited as the Terrorism Risk Insurance Extension Act of 2005..

2.

Extension of terrorism risk insurance program

(a)

Extension of program years

Section 108(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2336) is amended by striking 2005 and inserting 2007. (b)

Continuing authority of the Secretary

Section 108(b) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2336) is amended by striking arising out of and all that follows through this title.

3.

Conforming amendments

(a)

Definitions

(1)

Program years

Section 102(11) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2326) is amended by adding at the end the following: (E)

Program Year 4

The term Program Year 4 means the period beginning on January 1, 2006 and ending on December 31, 2006. (F)

Program Year 5

The term Program Year 5 means the period beginning on January 1, 2007 and ending on December 31, 2007. (G)

Other program years

Except when used as provided in subparagraphs (B) through (F), the term Program Year means, as the context requires, any of Program Year 1, Program Year 2, Program Year 3, Program Year 4, or Program Year 5. . (2)

Insured losses

Section 102(5) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2324) is amended— (A)by inserting on or before December 31, 2007, as required by this title, before if such loss; (B)by striking (A) occurs within and inserting the following: (A)occurs on or before the earlier of the expiration date of the insurance policy or December 31, 2008; and (B)occurs— (i)within ; and (C)by striking occurs to an air carrier and inserting the following: (ii)to an air carrier . (3)

Conforming amendments

Section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2323) is amended— (A)in paragraph (1)(A)(iii)(I), by striking (5)(B) and inserting (5)(B)(ii); and (B)in paragraph (4), by striking subparagraphs (A) and (B) and inserting subparagraph (B). (b)

Applicable insurer deductibles

Section 102(7) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2325) is amended— (1)in subparagraph (D)— (A)by inserting and each Program Year thereafter before , the value; and (B)by striking preceding Program Year 3 and inserting preceding that Program Year; and (2)in subparagraph (E), by striking for the Transition and all that follows through Program Year 3 and inserting the following: for the Transition Period or any Program Year. (c)

Continuation of mandatory availability

Section 103(c)(1) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2327) is amended— (1)by striking last day of Program Year 2 and inserting termination date established under section 108(a); and (2)by striking the paragraph heading and inserting In general.—. (d)

Duration of policies

Section 103(c) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2327) is amended— (1)by redesignating paragraph (2) as paragraph (3); and (2)by inserting after paragraph (1) the following: (2)

Mandatory duration

Coverage for insured losses required by paragraph (1) under a policy issued at any time during Program Year 5 shall remain in effect for not less than 1 year following the date of issuance of the policy, except that no loss occurring after the earlier of the expiration date of the subject insurance policy or December 31, 2008, shall be considered to be an insured loss for purposes of this title. . (e)

Insured loss shared compensation

Section 103(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2328) is amended— (1)in paragraph (2)(A), by striking ending on and all that follows through Program Year 3 and inserting ending on the termination date established under section 108(a); and (2)in paragraph (3), by striking ending on and all that follows through Program Year 3 and inserting ending on the termination date established under section 108(a). (f)

Aggregate retention amount

Section 103(e)(6) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2328) is amended— (1)in subparagraph (B), by striking and at the end; (2)in subparagraph (C), by striking the period at the end and inserting a semicolon; and (3)by adding at the end the following: (D)for Program Year 4, the lesser of— (i)$17,500,000,000; and (ii)the aggregate amount, for all insurers, of insured losses during such Program Year; and (E)for Program Year 5, the lesser of— (i)$20,000,000,000; and (ii)the aggregate amount, for all insurers, of insured losses during such Program Year. .

4.

Coverage of group life insurance

Section 103 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2327) is amended by striking subsection (h) and inserting the following: (h)

Applicability to group life insurance

(1)

In general

The Secretary shall, by rule, apply the provisions of this title to providers of group life insurance, in the manner determined appropriate by the Secretary, consistent with the purposes of this title. (2)

Consistent application

The rules of the Secretary under this subsection shall, to the extent practicable, apply the provisions of this title to providers of group life insurance in a similar manner as those provisions apply to an insurer otherwise under this title. (3)

Considerations

In determining the applicability of this title to providers of group life insurance, and the manner of such application, the Secretary shall consider the overall group life insurance market size, and shall consider the establishment of separate retention amounts for such providers. (4)

Rulemaking required

Not later than 90 days after the date of enactment of the Terrorism Risk Insurance Extension Act of 2005, the Secretary shall issue final regulations to carry out this subsection. (5)

Rule of construction

Nothing in this subsection may be construed to affect or otherwise alter the applicability of this title to any insurer, as defined in section 102. (6)

Definition

As used in this subsection, the term group life insurance means an insurance contract that provides term life insurance coverage, accidental death coverage, or a combination thereof, for a number of persons under a single contract, on the basis of a group selection of risks. .

5.

Recommendations for Long-Term solutions

Section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note, 116 Stat. 2328) is amended by adding at the end the following: (e)

Recommendations for Long-Term solutions

The Presidential Working Group on Financial Markets shall, in consultation with the NAIC, representatives of the insurance industry, and representatives of policy holders, not later than June 30, 2006, submit a report to Congress containing recommendations for legislation to address the long-term availability and affordability of insurance for terrorism risk. .

1.

Short title

This Act may be cited as the Terrorism Risk Insurance Extension Act of 2005.

2.

Extension of Terrorism Risk Insurance Program

(a)

Program extension

Section 108(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2336) is amended by striking 2005 and inserting 2007. (b)

Mandatory availability

Section 103(c) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2327) is amended— (1)by striking paragraph (2); (2)by striking Availability.— and all that follows through each entity and inserting Availability.—During each Program Year, each entity; and (3)by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and moving the margins 2 ems to the left.

3.

Amendments to Defined Terms

(a)

Covered acts of terrorism

Section 102(1)(B)(ii) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2324) is amended by inserting before the period , with respect to an act occurring before Program Year 4, $50,000,000 with respect to an act occurring in Program Year 4, or $100,000,000 with respect to an act occurring in Program Year 5. (b)

Program years

Section 102(11) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2326) is amended by adding at the end the following: (E)

Program year 4

The term Program Year 4 means the period beginning on January 1, 2006 and ending on December 31, 2006. (F)

Program year 5

The term Program Year 5 means the period beginning on January 1, 2007 and ending on December 31, 2007. . (c)

Exclusions from covered lines

(1)

In general

Section 102(12)(B) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2326) is amended— (A)in clause (vi), by striking or at the end; (B)in clause (vii), by striking the period at the end and inserting a semicolon; and (C)by adding at the end the following: (viii)commercial automobile insurance; (ix)burglary and theft insurance; (x)surety insurance; (xi)professional liability insurance; or (xii)farm owners multiple peril insurance. . (2)

Conforming amendments

Section 102(12)(A) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2326) is amended— (A)by striking , and surety insurance; and (B)by striking , worker's and inserting and worker's. (d)

Insurer deductibles

Section 102(7) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2325) is amended— (1)in subparagraph (D), by striking and at the end; (2)by redesignating subparagraph (E) as subparagraph (G); (3)by inserting after subparagraph (D), the following: (E)for Program Year 4, the value of an insurer's direct earned premiums over the calendar year immediately preceding Program Year 4, multiplied by 17.5 percent; (F)for Program Year 5, the value of an insurer's direct earned premiums over the calendar year immediately preceding Program Year 5, multiplied by 20 percent; and ; and (4)in subparagraph (G), as so redesignated, by striking through (D) and all that follows through Year 3and inserting the following: through (F), for the Transition Period or any Program Year.

4.

Insured Loss Shared Compensation

Section 103(e) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2328) is amended— (1)in paragraph (1)— (A)by inserting through Program Year 4 before shall be equal; and (B)by inserting , and during Program Year 5 shall be equal to 85 percent, after 90 percent; and (2)in each of paragraphs (2) and (3), by striking Program Year 2 or Program Year 3 each place that term appears and inserting any of Program Years 2 through 5.

5.

Aggregate retention amounts and recoupment of federal share

(a)

Aggregate retention amounts

Section 103(e)(6) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2329) is amended— (1)in subparagraph (B), by striking and at the end; (2)in subparagraph (C), by striking the period at the end and inserting a semicolon; and (3)by adding at the end the following: (D)for Program Year 4, the lesser of— (i)$17,500,000,000; and (ii)the aggregate amount, for all insurers, of insured losses during such Program Year; and (E)for Program Year 5, the lesser of— (i)$20,000,000,000; and (ii)the aggregate amount, for all insurers, of insured losses during such Program Year. . (b)

Recoupment of Federal Share

Section 103(e)(7) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2329) is amended— (1)in subparagraph (A), by striking , (B), and (C) and inserting through (E); and (2)in each of subparagraphs (B) and (C), by striking subparagraph (A), (B), or (C) each place that term appears and inserting any of subparagraphs (A) through (E).

6.

Litigation management

Section 107(a) of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2335) is amended by adding at the end the following: (6)

Authority of the secretary

Procedures and requirements established by the Secretary under section 50.82 of part 50 of title 31 of the Code of Federal Regulations (as in effect on the date of issuance of that section in final form) shall apply to any cause of action described in paragraph (1) of this subsection. .

7.

Analysis and Report on Terrorism Risk Coverage Conditions and Solutions

Section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 116 Stat. 2336) is amended by adding at the end the following: (e)

Analysis of market conditions for terrorism risk insurance

(1)

In general

The President's Working Group on Financial Markets, in consultation with the National Association of Insurance Commissioners, representatives of the insurance industry, representatives of the securities industry, and representatives of policy holders, shall perform an analysis regarding the long-term availability and affordability of insurance for terrorism risk, including— (A)group life coverage; and (B)coverage for chemical, nuclear, biological, and radiological events. (2)

Report

Not later than September 30, 2006, the President's Working Group on Financial Markets shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on its findings pursuant to the analysis conducted under subsection (a). .

November 16, 2005 Reported with an amendment