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Week Ending December 9, 2005

H.R.4314 To extend the applicability of the Terrorism Risk Insurance Act of 2002.

BRIEF

The bill would first establish in the Treasury Department the Terrorism Insurance Program (TIP) that would manage the Federal share of loss compensation due to acts of terror. Private insurers would be required to participate in the program.

TIP would also carry out a formula defining the Federal share of compensations. That formula for compensating insurance carriers is based on aggregate loss of all claims carried by all participants in the program and is described as such:

`(i) 80 percent of the aggregate industry insured losses of less than $10,000,000,000;

`(ii) 85 percent of the aggregate industry insured losses between $10,000,000,000 and $20,000,000,000;

`(iii) 90 percent of the aggregate industry insured losses between $20,000,000,000 and $40,000,000,000; and

`(iv) 95 percent of the aggregate industry insured losses above industry losses above $40,000,000,000;

The US Treasury must inform Congress if it must pay out more than $100 billion.

Sponsor: Representative Richard H. Baker (R-LA-6^th)

Vote:

Cost to the taxpayers:

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