A bill to extend the applicability of the Terrorism Risk Insurance Act of 2002.

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) 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.''.
    (b) 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 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''.
    (c) 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) $25,000,000,000; 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) $27,500,000,000; 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. PROGRAM TRIGGER.

    Section 103(e)(1) of the Terrorism Risk Insurance Act of 2002 (15 
U.S.C. note, 116 Stat. 2328) is amended--
        (1) by redesignating subparagraph (B) as subparagraph (C); and
        (2) by inserting after subparagraph (A) the following:
            ``(B) Program trigger.--In the case of a certified act of 
        terrorism occurring after March 31, 2006, no compensation shall 
        be paid by the Secretary under subsection (a), unless the 
        aggregate industry insured losses resulting from such certified 
        act of terrorism exceed--
                ``(i) $50,000,000, with respect to such insured losses 
            occurring in Program Year 4; or
                ``(ii) $100,000,000, with respect to such insured 
            losses occurring in Program Year 5.''.

SEC. 7. 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. 8. 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).''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.

Summary: 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 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.