[Congressional Record (Bound Edition), Volume 151 (2005), Part 20]
[Senate]
[Pages 27195-27200]
[From the U.S. Government Publishing Office, www.gpo.gov]




             TERRORISM RISK INSURANCE EXTENSION ACT OF 2005

  Mr. FRIST. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 287, S. 467.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The legislative clerk read as follows:

       A bill (S. 467) to extend the applicability of the 
     Terrorism Risk Insurance Act of 2002.

  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on Banking, Housing, and 
Urban Affairs with an amendment, as follows:
  (Strike the part shown in black brackets and insert the part shown in 
italic.)

                                 S. 467

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     [SECTION 1. SHORT TITLE.

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

     [SEC. 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''.

     [SEC. 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

[[Page 27196]]

       ``[(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.''.

     [SEC. 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.''.

     [SEC. 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.''.

     SECTION 1. SHORT TITLE.

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

     SEC. 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.

     SEC. 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 3''and 
     inserting the following: ``through (F), for the Transition 
     Period or any Program Year''.

     SEC. 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''.

     SEC. 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)''.

     SEC. 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.''.

     SEC. 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).''.

  Mr. SHELBY. Mr. President, I rise today in support of S. 467, the 
Terrorism Risk Insurance Extension Act of 2005, introduced by my 
colleagues on the Banking Committee, Senators Dodd and Bennett and 
reported out unanimously by the Banking Committee.
  In the wake of the events of September 11, Congress passed the 
Terrorism Risk Insurance Act, also known as ``TRIA.'' The law was 
intended to ensure the continued availability and affordability of 
property and casualty insurance for terrorism risk, and to provide for 
a transitional period to allow private markets to stabilize.
  At this point in time, it seems that this program has largely 
achieved both of its stated objectives. Over the last 3 years, the 
property and casualty insurance market has rebounded and is now far 
more profitable and competitive.

[[Page 27197]]

Indeed, despite the enormous losses incurred as a result of the 
hurricanes, insurer capital has grown tremendously and now greatly 
exceeds pre-September 11 levels.
  While the private insurance markets have made tremendous strides 
during the course of the TRIA program, however, the private insurance 
marketplace has not yet entirely stabilized.
  As a result, without some form of backstop, it is very likely that 
there would be gaps in some terrorism insurance coverage.
  S. 467 extends the TRIA program and addresses this market 
dysfunction. Additionally and importantly, it also recognizes the 
positive developments in the insurance markets and contains reforms to 
the original law intended to require more private sector responsibility 
and to facilitate further recovery in the insurance markets. It strikes 
the proper balance between ensuring that terrorism insurance remains 
available and affordable, while also protecting the American taxpayer.
  I note that I did not support enactment of TRIA when it was first 
considered 4 years ago. My reservations were based on concerns about 
the Government intruding into private markets. While my concerns are 
not entirely diminished, I believe that the Banking Committee has 
produced a responsible, targeted product that will help the marketplace 
smoothly transition to efficient function.
  This bill, this bipartisan compromise package, could never have been 
achieved without the cooperation and commitment of the members of the 
Banking Committee. Specifically, I commend Senators Dodd and Bennett, 
the original cosponsors of this bill, for their leadership, their 
effort and their willingness to work together. I also thank Senator 
Sarbanes, who, in his usual manner, was extremely helpful to achieving 
this result.
  Additionally, I thank the various staffers whose hard work behind the 
scenes helped get this bill done. Particularly, I want to commend the 
efforts of Alex Sternhell from Senator Dodd's staff, Sarah Kline and 
Steve Harris from Senator Sarbanes's staff, Mike Nielsen from Senator 
Bennett's staff, and Jim Johnson, Andrew Olmem, Mark Oesterle and Kathy 
Casey from my staff.
  Mr. SARBANES. Mr. President, I join my colleagues in support of the 
Terrorism Risk Insurance Extension Act of 2005. Three years ago, we 
passed the Terrorism Risk Insurance Act to stabilize the insurance 
marketplace after the shock of the September 11 attacks. TRIA, as that 
Act became known, established a partnership between the insurance 
industry and the Federal Government to share the risk of significant 
losses from terrorism. TRIA is scheduled to expire at the end of this 
year. The bill that is now pending before the Senate would extend TRIA 
for an additional 2 years while requiring the insurance industry to 
take on progressively more of the terrorism risk.
  This bill is the product of a great deal of effort by the Banking 
Committee to accommodate the widely differing views of many members on 
the structure of a TRIA extension. I thank the chairman of the 
Committee, Senator Shelby, for his willingness to reach across the 
aisle in developing this bill. Under his skillful guidance, we have 
been able to develop a product that has won unanimous support in the 
Banking Committee. I also want to recognize Senator Dodd for his 
dedication to this issue. He was instrumental in 2002 in the 
development and passage of the original TRIA legislation, and he has 
been a strong and effective leader this year as well.
  The original TRIA was designed to address the adverse impact on the 
terrorism insurance marketplace of the sudden lack of terrorism 
reinsurance after the September 11 attacks. Reinsurance is a mechanism 
by which insurance companies spread their own risks, allowing them to 
write more policies. Without it, insurers' capacity to offer coverage 
for losses due to terrorism shrank considerably. By all accounts, the 
Federal backstop provided by TRIA achieved its goal of making terrorism 
insurance coverage available and affordable once again. The Treasury 
Department reported this summer, ``TRIA was effective in terms of the 
purposes it was designed to achieve. TRIA provided a transitional 
period during which insurers had enhanced financial capacity to write 
terrorism risk insurance coverage. . . . More generally, TRIA provided 
an adjustment period allowing both insurers and policyholders to adjust 
to the post-September 11th view of terrorism risk.''
  As discussions began over a possible extension of TRIA, it became 
clear that there are serious disagreements as to what would be the most 
efficient, effective, and equitable way to assure the continued 
availability of terrorism insurance. A number of studies have concluded 
that the reinsurance market has not rebounded to any great extent since 
the attacks of 2001. These studies conclude that if the backstop 
provided by the Federal Government does not continue, insurers will 
write fewer terrorism policies or charge much higher prices for them, 
creating a drag on our nation's economy and leaving companies uninsured 
against a terrorist attack. On the other hand, the administration and 
others argue that the insurance industry is now better prepared to 
handle the risk of terrorism than it was three years ago, and that any 
extension of TRIA should therefore be significantly narrower than the 
current program to avoid crowding out additional private sector 
activity.
  These are issues that deserve careful analysis, which is why this 
extension bill contains a requirement for a study by the President's 
Working Group on Financial Markets on the long-term availability and 
affordability of terrorism risk insurance. I hope that this requirement 
will result in a thorough examination of the issues which will help us 
answer the question of how to insure against terrorism over the 
longterm.
  To allow time for that examination to take place, the pending 
legislation continues the TRIA program for two additional years, with 
certain modifications, which I will briefly summarize.
  This bill narrows the scope of the TRIA program, further targeting 
the program toward the types of terrorism insurance that are the most 
difficult to provide. Under the terms of the extension, the Federal 
backstop will no longer be available for insurance policies covering 
commercial automobiles, professional liability, burglary and theft, 
farmowners' multiple peril, and surety.
  Just as the original TRIA did, this exteusion places more of the risk 
on the insurance industry, and correspondingly less on the federal 
government, in each year. For example, in 2005, under the current 
program, the amount of terrorism losses that an insurer must cover 
before Federal assistance becomes available is 15 percent of the 
premiums collected by that insurer in lines covered by the TRIA 
program. Under this extension, this ``insurance company deductible'' 
will rise to 17.5 percent of premiums in 2006, and 20 percent of 
premiums in 2007. Moreover, the amount that insurers must pay above 
their deductible also increases, rising from 10 percent of losses in 
2006, to 15 percent of losses in 2007.
  In addition to the individual insurance companies' deductible, tbe 
insurance industry as a whole must cover a certain amount of losses 
before federal assistance becomes available. In 2005, the last year of 
the current TRIA program, that amount is $15 billion. Under this 
legislation, that will rise to $17.5 billion in 2006, and $20 billion 
in 2007.
  Also, starting in 2006, no Federal assistance will be available at 
all under tbe program for a terrorist attack in which total losses do 
not exceed $50 million, a level which rises to $100 million in 2007.
  Finally, I want to emphasize that the extension retains a critically 
important piece of the current TRIA program: the requirement that 
insurers make terrorism coverage available to policyholders in all of 
the lines covered by TRIA.
  These provisions follow the framework of the existing TRIA program, 
keeping the Federal backstop in place so that insurers will continue 
writing terrorism policies, while placing progressively more of the 
costs onto the industry itself. I want to take just a

[[Page 27198]]

moment to acknowledge the hard work that the staff has put into this 
bill, particularly Sarah Kline from my Banking Committee staff, Alex 
Sternhell with Senator Dodd, Kathy Casey and Mark Oesterle with 
Chairman Shelby, and Mike Nielson with Senator Bennett. As with any 
compromise product, no one would say that the legislation is perfect. 
But it is a serious effort to address the concerns we have heard raised 
regarding TRIA and the potential effects of its expiration, and I urge 
my colleagues to join me in supporting it.
  Mr. REID. Mr. President, yesterday the Senate Banking Committee 
reported the Terrorism Risk Insurance Extension Act of 2005, and I look 
forward to the full Senate passing this legislation that is so vital to 
the economic well-being of this country.
  In 2002 I cosponsored, and Congress passed, the Terrorism Risk 
Insurance Act, commonly referred to as TRIA. This important legislation 
provided a Government backstop for the terrorism insurance market that 
disappeared after the attacks of September 11.
  The primary purpose behind TRIA, and the reason it needs to be 
extended, is to make sure that the American economy and markets 
function in the face of a terrorist threat. September 11 proved that 
there needs to be a mechanism in place to allow the economy to rebound 
more quickly and to protect American jobs in the unfortunate event of 
another terrorist attack here in the United States. Since it became 
law, TRIA has proven to be an effective program that has made terrorism 
risk insurance available and provided businesses meaningful access to 
coverage in a post-9/11 world.
  TRIA is a temporary program set to expire at the end of this year, 
which created significant uncertainty in the terrorism insurance market 
and threatened to stall construction and building projects across the 
country. Most lenders who finance these projects require borrowers to 
have terrorism risk coverage, but in the face of TRIA's looming 
expiration, that coverage became more difficult and expensive to get, 
making those projects infeasible. Recognizing these problems early in 
the year, Senator Dodd and Senator Bennett drafted TRIA extension 
legislation, which I cosponsored.
  Mr. President, although slightly different from the bill that Senator 
Dodd introduced earlier this Congress, and that I and other Democrats 
cosponsored, the legislation that passed out of the committee yesterday 
essentially maintains the structure of TRIA and extends the program 
through the end of 2007. I am disappointed that group life insurance 
will not be covered under the program and that other lines originally 
covered have been excluded. But my colleagues, Senators Dodd, Sarbanes, 
Shelby, and Bennett, worked closely with others on the Banking 
Committee to construct a product that all of us in the Senate should be 
able to support. I am hopeful the Senate action on this bill today will 
break the logjam over this legislation so it can be signed into law 
before the Congress adjourns this year.
  Mr. DODD. Mr President, I rise to lend my strong support for S. 467, 
the Terrorism Risk Insurance Extension Act of 2005, which I originally 
introduced with Senator Bennett and 34 cosponsors earlier this year. 
Our legislation was amended in committee with the hard work and 
leadership of Banking Committee Chairman Shelby and Ranking Member 
Sarbanes to develop the product before the Senate today.
  I would like to commend the members on the Banking Committee: 
Senators Johnson, Reed, Schumer, Bayh, Carper, Stabenow, Corzine, 
Hagel, Bunning, and Dole as well as the other cosponsors of the 
legislation for recognizing--very early on--how important extending the 
Terrorism Risk Insurance Act, TRIA, was to our Nation's economy and for 
their efforts on this legislation.
  I would especially like to commend Chairman Shelby for his work on 
this legislation. This is not the bill I would have written, nor is it 
the bill that he would have written. For example, it was my hope that 
we could have included group life as a covered line in this 
legislation. However, I am acutely aware that the chairman has had 
concerns about the TRIA program and what the role of the Federal 
Government should be in this area--and I would like to thank him and 
his staff for helping to craft a compromise that not only adheres to 
his principles but also satisfies the concerns of so many Members of 
this body who believe it is imperative to pass an extension of TRIA.
  Like many bills, this legislation is a document of compromise. We 
have carefully taken into consideration the recommendations of 
policyholders, insurers, consumers, academics, think-tanks, the 
Treasury Department and others to craft this important extension 
legislation.
  And I think that this product is very good one.
  Let me take a few brief moments to provide my colleagues with a 
little background on TRIA and why it needs to be extended today.
  As a result of the tragic terrorist acts of 9/11, we repeatedly heard 
from businesses, large and small, from labor unions and manufacturers, 
from hospitals to hotels, from professional sports teams to utility 
companies, from insurers and the insured about the need for the Federal 
Government to act to help them receive financial protection from future 
terrorist attacks.
  Congress listened, and we acted--creating the Terrorism Risk 
Insurance Act--TRIA.
  In November 2002, TRIA was passed by both the House and Senate by 
significant margins and was signed into law. It created 3-year program 
establishing a Federal backstop against catastrophic losses in the 
property and casualty insurance marketplace.
  And we heard an overwhelming response from policyholders across the 
country--TRIA has worked. It has achieved its primary goal--continued 
availability and affordability of insurance against future terrorist 
attacks.
  Industries as diverse as commercial real estate, shipping, 
construction, manufacturing, and even ``mom and pop'' retailers require 
insurance to obtain credit, loans, and investments necessary for their 
normal business operations. TRIA was designed to do just that--restore 
``business as usual'' in every State across our Nation.
  I believe that the greatest indicator of the success of TRIA is what 
we have not heard over the past 3 years since the enactment of TRIA 
public outcry from businesses and workers whose livelihoods are 
threatened by their inability to purchase coverage against acts of 
terror.
  Construction projects are no longer stalled, mortgages are no longer 
in doubt, and jobs are no longer in jeopardy as a result of the 
inability to receive terrorism insurance.
  Insurance isn't something we think about every day, yet it is vital 
to the overall health of our economy. By protecting people and 
property, goods and services in every sector of America's $10 trillion-
plus economy, insurance provides the stability and certainty required 
to keep our economic engine humming. Every prospective homeowner needs 
insurance to obtain a mortgage from a bank. Insurance of all types is a 
critical component of our capital markets.
  Not only has TRIA been effective in ensuring that terrorism is 
available and affordable, and that our economy remains vibrant, it is 
also an incredibly important taxpayer protection law. With relatively 
little money necessary to fund the administration of the TRIA program, 
we have ensured that insurers and policyholders take the first $30 to 
$40 billion of losses of a potential terrorist attack.
  According to a recent study conducted by the RAND Institute, ``Based 
on our analysis (of TRIA), the role of taxpayers is expected to be 
minimal, unless there is are several large events in a single year.''
  TRIA has essentially provided that in the unfortunate event of a 
future terrorist attack a $30 to $40 billion check is written to U.S. 
taxpayers. TRIA has not only worked to help provide available and 
affordable terrorism risk insurance, it has also protected our Nation's 
taxpayers.

[[Page 27199]]

  With the expiration of TRIA in less than 45 days, and this session 
near completion, it is essential that Congress extend TRIA immediately.
  I would like to bring to your attention a letter from 28 Governors 
across the Nation urging us to extend the TRIA program.
  There is one provision in this legislation that I believe is an 
important component--the mandate for the President's Working Group--our 
Nation's Federal financial regulators--to do an analysis of the long-
term availability and affordability of terrorism risk insurance.
  This legislation provides for a 2-year extension of TRIA--and in 
these next 2 years we need to find a long-term solution to this issue. 
It may be determined that this is an unwritable risk for the private 
sector, and that a continued Federal role is needed or we may find that 
insurers are able to return to underwriting this risk without a Federal 
backstop. But we need to start work on developing this information and 
potential solutions as soon as possible.
  Since the enactment of TRIA, our Nation has been fortunate enough not 
to suffer the tremendous loss of life or destruction of property that 
we endured on September 11, 2001. But by no means has the political 
climate, either domestically or abroad, returned to a sense of 
normalcy. We are engaged in a violent conflict in Iraq and we have seen 
despicable terrorist attacks abroad in Europe and elsewhere.
  We have heard repeated dire warnings that terrorism will return to 
U.S. soil. We must be prepared against this threat. Providing insurance 
against terrorist attacks, which allows our economy to function, is a 
critical part of our preparedness.
  But we cannot fail to extend TRIA. We cannot afford--and we should do 
everything in our power to avoid--restoring the tremendous uncertainty 
and instability to businesses and workers and our economy as a whole.
  The enactment of this legislation will ensure that our Nation and its 
economy are best prepared to deal with a future terrorist attack. I 
urge the my colleagues to support this legislation.
  Mr. REED. Mr. President, the Senate is undertaking a long awaited 
debate on S. 467, Terrorism Risk Insurance Extension Act of 2005. This 
bill extends the important program that allows for the Federal 
Government to share the risk of loss from future terrorist attacks with 
the insurance industry for 2 more years, to 2007.
  As we all know, terrorism remains a clear and present danger. The 
need for terrorism insurance is real, pressing, and a long-term issue. 
In the post-9/11 world, it is important to keep the existing TRIA 
program in place, while continuing to work with the private sector--
both policyholders and insurers--to craft a longer term program that 
addresses all the needs of policyholders.
  I want to particularly commend Minority Leader Reid, Chairman Shelby, 
Senators Sarbanes, Dodd, Bennett, and their staffs for their tireless 
efforts in bringing this issue to the forefront of the Senate's 
legislative agenda.
  The need for terrorism insurance coverage has been widely established 
as an economic issue, rather than just simply an insurance issue. In 
the past year, we have heard that many American businesses--
policyholders--are already receiving exclusion notices from insurers 
informing them that they will not be covered on policies beyond TRIA's 
sunset date. As a result, there has been increasing uncertainty about 
the availability of adequate terrorism coverage beyond 2005. Clearly, a 
Federal backstop is vital to ensuring the ongoing availability of 
terrorism risk coverage.
  The other key reason to act on this issue is the fact that should 
another catastrophic event occur, the Federal Government will likely be 
on the hook for the total amount of the damage.
  An important aspect of this debate is making certain that terrorism 
insurance coverage is available in the workers' compensation market. 
Workers' compensation is unique insurance coverage in that law requires 
that it cover acts of terrorism and war. For close to a century now, 
workers' compensation has been a safety net available to all workers 
and their families, replacing lost wages, and paying for medical needs 
and death benefits regardless of the cause of the workplace injury or 
death. A strong workers' compensation system is integral to helping 
victims and their families rebuild their lives.
  In my State of Rhode Island, the burden of providing workers' 
compensation falls to one mutual insurance compan, Beacon Mutual, which 
was created by the State to ensure that there will always be workers' 
compensation available to companies in the State. With less 
availability of reinsurance, the concern for one company conceivably 
underwriting the entire market for workers' compensation was 
significant and would have created a very tenuous situation for the 
company, the State, and its residents. Extending TRIA will address the 
various problems that employers, insurance companies, and State workers 
compensation pools alike have had to endure in the absence of a Federal 
backstop.
  I would note, however, that although S. 467 is an improvement on the 
administration's proposal for the trigger for a terrorist incident--$50 
million in the first year of the extension and $100 million in the 
last, down from $500 million, I remain concerned that because of the 
concentration of risk and their small capitalization, a higher trigger 
level for State fund companies put these funds uniquely at risk. A 
number of terrorist targets could create a result where workers' 
compensation losses could exceed property losses, but still not reach 
the proposed higher trigger. As we move towards finding a long-term 
solution to terrorism insurance coverage, I hope we can work to better 
address this issue.
  There remains a great need to do something because, as it has been 
stated very plainly during this debate, the situation without a Federal 
terrorism risk insurance program could be very dire. Extending TRIA is 
absolutely the right thing to do to protect the economic security of 
our country. I urge my colleagues to support this bill, and I look 
forward to its speedy adoption and signature into law.
  Mr. SCHUMER. Mr. President, I rise today to express my unwavering 
support for S. 467, the Terrorism Risk Insurance Extension Act of 2005, 
introduced by my friend, Senator Dodd of Connecticut.
  I would like to commend Senators Dodd, Bennett, Shelby and Sarbanes 
for getting a bill done that we can all stand here and be proud to 
support. A bill that is good for this country and good for the State of 
New York.
  We still live in America, and particularly in my city of New York, in 
the shadow of 9/11, of the terrorism that occurred. Obviously, the 
thousands of families who have had a loved one taken from their midst 
live with it every moment of their remaining lives, but the rest of us 
live with it, too, not only in empathy for them but also in terms of 
the economic consequences of terrorism.
  The bottom line is very simple, and that is, because of terrorism, 
the insurance industry, in terms of insuring risk of large structures 
in America--whether it be large buildings that make us so proud of the 
Manhattan skyline or large arenas such as the football stadiums that 
dot America or larger facilities such as Disneyland, Disney World, and 
amusement parks--all have difficulty getting insurance.
  Insurers are worried that if, God forbid, another terrorist act 
occurs, it will be so devastating that it will put them out of 
business.
  So 2 years ago, the Senate, House, and the President got together at 
sort of the end of the day, just like today, and passed terrorism risk 
insurance.
  It has been a large success. That, no one can dispute.
  Insurance rates have come down, terrorism insurance is available, and 
insurance companies know, if, God forbid, the worst happens, there will 
be a backstop, and they are willing to issue policies.
  In turn, that meant developers, builders who wanted to build new 
large structures in America, did so, employing thousands and thousands 
of people,

[[Page 27200]]

creating profits and new businesses as well.
  Well, today we are all here to do the right thing. Yesterday, the 
Banking Committee, of which I am member, passed unanimously a bill to 
extend the TRIA. In this bill, we have kept the trigger levels 
manageable for the policyholder community. We kept the retention levels 
at a responsible level for the private market, retaining the public/
private nature of the program.
  The bottom line is that we have made some necessary modifications to 
the program without losing the major protections. We did not all agree 
what should have been in the bill. Many of us felt strongly about 
including group life and protections against nuclear, biological, 
chemical and radiological attacks. But the beauty of the process is 
that it is a negotiation where we all give and take.
  This bill is a good compromise.
  The continuation of this program is vital to our Nation's economic 
stability. By passing this bill on the floor today, we will be sending 
a message to the world that our financial markets will be protected, 
that our country will be able to bounce back in the event of any 
disruptions or financial dislocation caused by another possible 
terrorist attack.
  It is still my strong belief that there needs to be a long-term 
solution--a permanent program. The President has continued to say that 
we are fighting a war on terrorism.
  The bombing in Jordan last week, the London bombings this past July, 
and the recent threat to the New York subway system are a few examples 
of why we must continue fighting this war on terrorism.
  So it would have been my preference to get a bill that extended 
beyond 2 years. But I am at least pleased to know that there was a 
serious effort to address this concern by including a provision to 
create a commission that would begin to analyze the long-term 
availability and affordability of insurance for terrorism risk.
  I would particularly like to thank Chairman Dodd and Shelby for 
specifically including the language I requested which directs the 
President's working group to analyze the long-term affordability and 
availability of coverage for chemical, nuclear, biological, and 
radiological events.
  This is an issue of great importance to many New Yorkers. Many 
retailers and business owners in Lower Manhattan are afraid of a 
possible dirty bombs attack and the availability of insurance for such 
an event. This must be addressed and right away.
  The bottom line is that financial dislocation caused by another 
possible terrorist attack--God forbid--is too much for our country to 
risk. I urge the entire Senate to pass this legislation today. It is 
only right that we let the markets, let the insurance world, and, most 
of all, let jobs and construction go forth.
  Mr. FRIST. Mr. President, very briefly, I want to comment on this 
bill as well. This is the Terrorism Risk Insurance Extension Act of 
2005. We are doing this by unanimous consent which reflects a 
tremendous amount of work by a range of Senators over the course of the 
last several months, weeks, days, and especially over the last few 
hours. This is a bill that has been subjected to a lot of debate, and 
that debate has culminated in a lot of agreement. I appreciate the 
great work of Senator Shelby, Senator Dodd, and so many others. The 
House hopefully will act on terrorism risk insurance shortly. It is a 
very important bill to our economy.
  I ask unanimous consent that the amendment at the desk be agreed to; 
the committee reported amendment, as amended, be agreed to; the bill, 
as amended, be read a third time and passed; the motion to reconsider 
be laid upon the table; and that any statements relating to the bill be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 2600) was agreed to as follows:

       Modify section 3(c)(2) of the bill to read as follows:
       (2) Conforming amendment.--Section 102(12)(A) of the 
     Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note; 
     116 Stat. 2326) is amended by striking ``surety insurance'' 
     and inserting ``directors and officers liability insurance''.

  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The bill (S. 467), as amended, was read the third time and passed.
  (The bill will be printed in a future edition of the Record.)

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