A bipartisan group of senators has agreed on a bill that would extend the federal government's terrorism insurance backstop program for seven years.

The program, created by the Terrorism Risk Insurance Act of 2002 and extended in 2005 and 2007, is slated to expire Dec. 31. Under a bill being introduced Thursday, the program would be extended for seven years with two major changes.

According to a description of the bill released by Sen. Charles Schumer, D-N.Y., the changes involve insurers' copay in the event of a catastrophic terrorist attack and recoupment.

Under current law, in the event of a terrorist attack, insurers would first be obligated to pay 20% of the prior year's direct earned premium for covered commercial lines as a deductible. Following that deductible payment, the program currently requires that the federal government cover 85% of each company's losses until the amount of losses totals $100 billion, leaving insurers to cover the remaining 15%.

The proposed legislation would increase insurers' copay after the deductible to 20% from 15%, with the government still covering 80% of each insurer's additional losses, with the increase being phased in incrementally over five years.

The current law's provision dealing with recoupment would also change. When aggregate insured losses are less than $27.5 billion, the TRIA program currently imposes mandatory policy surcharges that require recoupment of federal payments made under the program — in other words, recoupment by the federal government is mandatory if the insurance industry's aggregate uncompensated loss is less than $27.5 billion.

The proposed legislation would raise the mandatory recoupment threshold to $37.5 billion, so that when the insurance industry's aggregate uncompensated losses are below $37.5 billion the government will be required to recoup from insurers its TRIA payments outlaid to insurers.

Sen. Schumer's office said that the changes were necessary to get Republican support for the bill.

The measure is co-sponsored by Sens. Dean Heller, R-Nev., Mike Johanns, R-Neb., Mark Kirk, R-Ill., Christopher Murphy, D-Conn., and Jack Reed, D-R.I.

Three bills that would extend the program have already been introduced in the House of Representatives.