To extend the terrorism insurance program of the Department of the Treasury.

March 8, 2005

Mr. CAPUANO (for himself, Mr. ISRAEL, Mr. FRANK of Massachusetts, Mr. KANJORSKI, and Mr. CROWLEY) introduced the following bill; which was referred to the Committee on Financial Services

To extend the terrorism insurance program of the Department of the Treasury.

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 Insurance Backstop Extension Act of 2005'.

SEC. 2. EXTENSION OF TERRORISM INSURANCE PROGRAM.

(a) Program Years 4 and 5- Paragraph (11) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following new subparagraphs:

`(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.'.

(b) Insurer Deductible- Paragraph (7) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) by redesignating subparagraph (E) as subparagraph (H);

(2) in subparagraph (D), by striking `and' at the end;

(3) by inserting after subparagraph (D) the following new subparagraphs:

`(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 15 percent;

`(F) for Program Year 5, the value of an insurer's direct earned premiums over the calendar year immediately preceding Program Year 4, multiplied by 20 percent; and';

(4) in subparagraph (H) (as so redesignated by paragraph (1) of this subsection)--

(A) by striking `(D)' and inserting `(F)'; and

(B) by striking `or Program Year 3' and inserting `Program Year 3, Program Year 4, or Program Year 5'.

(c) Mandatory Availability- Subsection (c) of section 103 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) by striking all of the matter that precedes subparagraph (A) of paragraph (1) and inserting the following:

`(c) Mandatory Availability- During the Program, each entity that meets the definition of an insurer under section 102--';

(2) by striking paragraph (2); and

(3) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2) and realigning such paragraphs, as so redesignated, so as to be indented 2 ems from the left margin.

(d) Insured Loss Shared Compensation- Subsection (e) of section 103 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(1) in paragraph (2)(A), by striking `or Program Year 3' and inserting `, Program Year 3, Program Year 4, Program Year 5, or the final Program Year';

(2) in paragraph (3), by striking `or Program Year 3' and inserting `, Program Year 3, Program Year 4, Program Year 5, or the final Program Year';

(3) in paragraph (6)--

(A) in subparagraph (B), by striking `and' at the end;

(B) in subparagraph (C) by striking the period at the end and inserting a semicolon; and

(C) by adding at the end the following new subparagraphs:

`(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;

`(E) for each of Program Year 5 and the Final Program Year, the lesser of--

`(i) $20,000,000,000; and

`(ii) the aggregate amount, for all insurers, of insured losses during such Program Year; and'; and

(4) in paragraph (7)--

(A) in subparagraph (A), by striking `and (C)' and inserting `(C), (D), and (E)'; and

(B) in subparagraphs (B) and (C), by striking `or (C)' each place such term appears and inserting `(C), (D), or (E)'.

(e) Coverage of Group Life Insurance-

(1) IN GENERAL- Paragraph (5) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended in the matter that precedes subparagraph (A) by inserting `or group life' after `property and casualty'.

(2) TECHNICAL AND CONFORMING AMENDMENTS- The Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended--

(A) in section 102--

(i) in paragraph (1)--

(I) in subparagraph (B)(i), by inserting `or group life insurance' after `workers' compensation'; and

(II) in subparagraph (B)(ii), by inserting `and group life insurance' after `property and casualty insurance';

(ii) in paragraph (4)--

(I) by inserting `or for group life insurance' after `property and casualty insurance'; and

(II) by striking `paragraph (5)' and inserting `paragraph (6)';

(iii) in paragraph (5), by inserting `and group life insurance' after `workers' compensation'; and

(iv) in paragraph (6)--

(I) in subparagraph (A)(i), by inserting `property and casualty or group life' after `excess';

(II) in subparagraph (B), by inserting `or group life insurance coverage' after `property and casualty insurance coverage';

(v) by redesignating paragraphs (5) through (16) as paragraphs (6) through (17), respectively; and

(vi) by inserting after paragraph (4), the following new paragraph:

`(5) GROUP LIFE INSURANCE- 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.';

(B) in section 103--

(i) in subsection (b)(1), by inserting `(including a named beneficiary in the case of a group life insurance policy)' before the second comma;

(ii) in subsection (c)--

(I) in paragraph (1) (as so redesignated by subsection (c)(3) of this section), by inserting `and group life' after `property and casualty'; and

(II) in paragraph (2) (as so redesignated by subsection (c)(3) of this section), by inserting `and group life' after `property and casualty';

(iii) in subsection (e)--

(I) in paragraph (6), by striking `For' and inserting `Except as provided in subparagraph (F) of this paragraph, for';

(II) in paragraph (6), by inserting after subparagraph (E) (as added by subsection (d)(3)(C) of this section) the following new subparagraph:

`(F) for each of the periods referred to in subparagraphs (A) through (E), the amounts provided under such subparagraphs, as such amounts shall be increased by the Secretary before the expiration of the 90-day period beginning on the date of the enactment of the Terrorism Insurance Backstop Extension Act of 2005, based on the increase in the size of the Program caused by the inclusion of group life insurance pursuant to such Act, in proportion to the increased premiums involved.';

(III) in paragraph (7)(C), by inserting `or group life insurance' after `workers compensation';

(IV) in paragraph (8)(A)(i), by inserting `and group life' after `property and casualty'; and

(V) in paragraph (8), by inserting `or group life' after `property and casualty' each place such term appears in subparagraphs (A)(iii) and (C); and

(iv) by striking subsection (h);

(C) in section 105(c), by inserting `or group life' after `property and casualty'; and

(D) in section 108(d)(1), by inserting `and the group life insurance industry' after `property and casualty insurance industry'.

(3) REQUIRED RULEMAKING- Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall issue final regulations to carry out this subsection.

(f) Study on Long-Term Solutions- Section 103 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking subsection (i) and inserting the following new subsection:

`(h) Study on Long-Term Solutions- By September 1, 2005, the Secretary shall conduct a study and submit a report to the Congress on alternatives for expanding the availability and affordability of terrorism insurance after the termination of the Program that do not involve a Federal financial backstop.'.

(g) Termination of Program-

(1) TERMINATION- Subsection (a) of section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by striking `December 31, 2005' and inserting `December 31, 2007'.

(2) FINAL GAO STUDY AND REPORT- Subsection (d) of section 108 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding at the end the following new paragraph:

`(3) FINAL GAO STUDY AND REPORT- The Comptroller General of the United States shall conduct an assessment of the matters referred to in paragraph (1) and shall submit a report to the Congress, not later than June 30, 2007, on the results of such study.'.

SEC. 3. FINAL PROGRAM YEAR.

(a) Definition- Paragraph (11) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note), as amended by the preceding provisions of this Act, is further amended by adding at the end the following new subparagraph:

`(G) FINAL PROGRAM YEAR- The term `Final Program Year' means the period beginning on January, 1, 2008 and ending on December 31, 2008.'. '.

(b) Insured Losses- Paragraph (5) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note) is amended by adding after and below subparagraph (B) the following new sentence:

`With respect to the Final Program Year, such term means only such losses as are described in the preceding sentence that are covered by primary or excess property and casualty insurance or group life insurance, that is issued before January 1, 2008, and expires not later than December 31, 2008; except that the Secretary may exclude from insured losses for the Final Program Year losses covered by a policy for such insurance if the Secretary determines that the primary purpose in establishing the particular term of the policy was obtaining compensation under the Program for losses covered by the policy.'.

(c) Insurer Deductible- Paragraph (7) of section 102 of the Terrorism Risk Insurance Act of 2002 (15 U.S.C. 6701 note), as amended by the preceding provisions of this Act, is further amended by inserting after subparagraph (F) the following new subparagraph:

`(G) for the Final Program Year, the value of an insurer's direct earned premiums for the terms remaining under any policies for insurance described in the last sentence of paragraph (5) as of the occurrence of the act of terrorism during such Year that results in insured losses, as determined by the Secretary, multiplied by 20 percent; and'.

END