TERRORISM RISK INSURANCE ACT OF 2005 -- (Senate - December 16, 2005)

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Mr. SCHUMER. Mr. President, I express my unwavering support for S. 467, the Terrorism Risk Insurance Revision 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.

At long last builders and insurers of major projects in large cities, particularly New York, can breathe a sigh of relief; terrorism insurance will be renewed. It never should have taken this long, but at least we know this protection will be available for another 2 years.

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, 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.

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 Senators 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.

(At the request of Mr. REID, the following statement was ordered to be printed in the RECORD.)

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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. The product before the Senate today was amended in committee with the hard work and leadership of Banking Committee Chairman SHELBY and Ranking Member SARBANES. Additionally, S. 467 addresses many of the ideas and concerns raised by the House in its version of the legislation. I would like to thank House Financial Services Committee Chairman OXLEY and Ranking Member FRANK for their hard work in finding consensus on this measure.

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 also like to thank the staff who worked on this legislation, particularly Sarah Kline and Steve Harris from Senator SARBANE's staff, Mike Nielsen from Senator BENNETT's staff, Alex Sternhell from my staff and Jim Johnson, Andrew Olmem, Mark Oesterle and Kathy Casey from Senator SHELBY's staff.

Like many bills, this legislation is a document of compromise. We have carefully taken into consideration the recommendations of policyholders, insurers, consumers, academics, thinktanks, the Treasury Department and others to craft this important extension legislation.

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 events 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 Governmment 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 a 3-year program establishing a Federal backstop against catastrophic losses in the property and casualty insurance marketplace.

And we heard an ovehelming response trom 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

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, jobs are no longer in jeopardy as a result of the inability to receive terrorism insurance.

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.

Additionally, 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.

The enactment of this legislation will extend the TRIA program and will ensure that our Nation and its economy are best prepared to deal with a future terrorist attack. I urge my colleagues to support this important legislation.

Mr. FRIST. Mr. President, I ask unanimous consent the Senate concur in the House amendment with a further amendment which is at the desk, the amendment be agreed to, the motion to reconsider be laid upon the table, and any statements be printed in the RECORD.

The PRESIDING OFFICER. Without objection, it is so ordered.
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The amendment (No. 2689) was agreed to, as follows:

(Purpose: To provide for a complete substitute)
In lieu of the matter proposed to be inserted, insert the following:

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).''.

The bill (S. 467), as amended, was passed.
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