I 

116TH CONGRESS 

1ST SESSION H. R. 471 

To provide for greater transfer of risk under the National Flood Insurance 

Program to private capital and reinsurance markets, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 10, 2019 

Mr. LUETKEMEYER introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To provide for greater transfer of risk under the National 

Flood Insurance Program to private capital and reinsurance markets, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Taxpayer Exposure 

5 Mitigation Act’’. 

6 SEC. 2. RISK TRANSFER REQUIREMENT. 

7 Subsection (e) of section 1345 of the National Flood 

8 Insurance Act of 1968 (42 U.S.C. 4081(e)) is amended— 

9 (1) by striking ‘‘(e) RISK TRANSFER.—The Ad10 ministrator’’ and inserting the following: 


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1 ‘‘(e) RISK TRANSFER.— 

2 ‘‘(1) AUTHORITY.—The Administrator’’; and 

3 (2) by adding at the end the following new 

4 paragraph: 

5 ‘‘(2) REQUIRED RISK TRANSFER COVERAGE.— 

6 ‘‘(A) REQUIREMENT.—Not later than the 

7 expiration of the 18-month period beginning 

8 upon the date of the enactment of this para9 graph and at all times thereafter, the Adminis10 trator shall annually cede a portion of the risk 

11 of the flood insurance program under this title 

12 to the private reinsurance or capital markets, or 

13 any combination thereof, and at rates and 

14 terms that the Administrator determines to be 

15 reasonable and appropriate, in an amount 

16 that— 

17 ‘‘(i) is sufficient to maintain the abil18 ity of the program to pay claims; and 

19 ‘‘(ii) manages and limits the annual 

20 exposure of the flood insurance program to 

21 flood losses in accordance with the prob22 able maximum loss target established for 

23 such year under subparagraph (B). 

24 ‘‘(B) PROBABLE MAXIMUM LOSS TAR25 GET.—The Administrator shall for each fiscal 


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1 year, establish a probable maximum loss target 

2 for the national flood insurance program that 

3 shall be the maximum probable loss under the 

4 national flood insurance program that is ex5 pected to occur in such fiscal year. 

6 ‘‘(C) CONSIDERATIONS.—In establishing 

7 the probable maximum loss target under sub8 paragraph (B) for each fiscal year and carrying 

9 out subparagraph (A), the Administrator shall 

10 consider— 

11 ‘‘(i) the probable maximum loss tar12 gets for other United States public natural 

13 catastrophe insurance programs, including 

14 as State wind pools and earthquake pro15 grams; 

16 ‘‘(ii) the probable maximum loss tar17 gets of other risk management organiza18 tions, including the Federal National Mort19 gage Association and the Federal Home 

20 Loan Mortgage Corporation; 

21 ‘‘(iii) catastrophic, actuarial, and 

22 other appropriate data modeling results of 

23 the national flood insurance program port24 folio; 


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1 ‘‘(iv) the availability of funds in the 

2 National Flood Insurance Fund established 

3 under section 1310 (42 U.S.C. 4017); 

4 ‘‘(v) the availability of funds in the 

5 National Flood Insurance Reserve Fund 

6 established under section 1310A (42 

7 U.S.C. 4017a); 

8 ‘‘(vi) the availability of borrowing au9 thority under section 1309 (42 U.S.C. 

10 4016); 

11 ‘‘(vii) the ability of the Administrator 

12 to repay outstanding debt; 

13 ‘‘(viii) amounts appropriated to the 

14 Administrator to carry out the national 

15 flood insurance program; 

16 ‘‘(ix) reinsurance, capital markets, ca17 tastrophe bonds, collateralized reinsurance, 

18 resilience bonds, and other insurance19 linked securities, and other risk transfer 

20 opportunities; and 

21 ‘‘(x) any other factor the Adminis22 trator determines appropriate. 

23 ‘‘(D) MULTI-YEAR CONTRACTS.—Nothing 

24 in this paragraph may be construed to prevent 

25 or prohibit the Administrator from complying 


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1 with the requirement under subparagraph (A) 

2 regarding ceding risk through contracts having 

3 a duration longer than one year.’’. 

Æ 


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