I 

108TH CONGRESS 

1ST SESSION H. R. 1552

To establish a Federal program to provide reinsurance to improve the 

availability of homeowners’ insurance. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 1, 2003

Mr. WELDON of Florida (for himself and Mr. JOHN) introduced the following 

bill; which was referred to the Committee on Financial Services 

A BILL

To establish a Federal program to provide reinsurance to 

improve the availability of homeowners’ insurance.

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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Homeowners’ Insurance Availability Act of 2003’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows:

Sec. 1. Short title and table of contents. 

Sec. 2. Program authority. 

Sec. 3. Qualified lines of coverage. 

Sec. 4. Covered perils. 

Sec. 5. Auction of contracts for reinsurance coverage. 

Sec. 6. Minimum level of retained losses and maximum Federal liability. 

Sec. 7. Disaster Reinsurance Fund. 
2

•HR 1552 IH 

Sec. 8. National Commission on Catastrophe Risks and Insurance Loss Costs. 

Sec. 9. Definitions. 

Sec. 10. Regulations. 

Sec. 11. Termination. 

Sec. 12. Annual study of cost and availability of disaster insurance and program need.

1 SEC. 2. PROGRAM AUTHORITY. 

2 (a) IN GENERAL.—The Secretary of the Treasury 

3 shall carry out a program under this Act to make reinsur4 ance coverage available through contracts for reinsurance 

5 coverage under section 5, which shall be made available 

6 for purchase by purchasers under section 5(a)(1) only 

7 through auctions under section 5(a). 

8 (b) PURPOSE.—The program shall be designed to 

9 make reinsurance coverage under this Act available to im10 prove the availability of homeowners’ insurance for the 

11 purpose of facilitating the pooling, and spreading the risk, 

12 of catastrophic financial losses from disasters and to im13 prove the solvency of homeowners’ insurance markets. 

14 (c) CONTRACT PRINCIPLES.—Under the program 

15 under this Act, the Secretary shall offer reinsurance cov16 erage through contracts with covered purchasers, which 

17 contracts—

18 (1) shall not displace or compete with the pri19 vate insurance or reinsurance markets or capital 

20 markets; 

21 (2) shall minimize the administrative costs of 

22 the Federal Government; and 
3

•HR 1552 IH 

1 (3) shall provide coverage based solely on in2 sured losses within the region established pursuant 

3 to section 5(a) for which the auction is held. 

4 SEC. 3. QUALIFIED LINES OF COVERAGE. 

5 Each contract for reinsurance coverage made avail6 able under this Act shall provide insurance coverage 

7 against residential property losses to homes (including 

8 dwellings owned under condominium and cooperative own9 ership arrangements) and the contents of apartment 

10 buildings. 

11 SEC. 4. COVERED PERILS. 

12 Each contract for reinsurance coverage made avail13 able under this Act shall cover losses that are proximately 

14 caused by—

15 (1) earthquakes; 

16 (2) perils ensuing from earthquakes, including 

17 fire and tsunamis; and 

18 (3) tropical cyclones having maximum sustained 

19 winds of at least 74 miles per hour, including hurri20 canes and typhoons. 

21 The Secretary shall, by regulation, define the disaster per22 ils under this section. 
4

•HR 1552 IH 

1 SEC. 5. AUCTION OF CONTRACTS FOR REINSURANCE COV2 ERAGE. 

3 (a) AUCTION PROGRAM REQUIREMENTS.—The Sec4 retary shall carry out a program to auction contracts for 

5 reinsurance coverage under this Act made available pursu6 ant to section 2(a), which shall comply with the following 

7 requirements: 

8 (1) PURCHASERS.—The auction program shall 

9 provide for auctioning all contracts made available 

10 under this section to private insurers and reinsurers, 

11 State insurance and reinsurance programs, and 

12 other interested entities. 

13 (2) REGIONAL AUCTIONS.—The auction pro14 gram shall provide for auctions on a regional basis. 

15 The Secretary shall divide the States into not less 

16 than 6 regions for the purpose of holding such re17 gional auctions, which shall include separate regions 

18 for all or part of the State of California and all or 

19 part of the State of Florida. In determining the 

20 boundaries for such regions, the Secretary shall con21 sider which areas have greater risks of losses from 

22 covered perils and which areas have lesser risks of 

23 losses from covered perils, and shall attempt not to 

24 combine those different types of areas. Auctions for 

25 each region shall be conducted not less often than 

26 annually. 
5

•HR 1552 IH 

1 (3) RESERVE PRICE.—In auctioning contracts 

2 under this section for reinsurance coverage, the Sec3 retary shall set, for each contract, a reserve price 

4 that is the minimum price at which the contract may 

5 be sold, based upon the recommendations of the 

6 Commission. The reserve price shall be determined 

7 on the basis of the following components: 

8 (A) RISK-BASED PRICE.—A risk-based 

9 price, which shall reflect the anticipated 

10 annualized payout of the contract according to 

11 the actuarial analysis and recommendations of 

12 the Commission. 

13 (B) RISK LOAD.—A risk load in an 

14 amount that is not less than the risk-based 

15 price under subparagraph (A). 

16 (C) ADMINISTRATIVE COSTS.—A sum suf17 ficient to provide for the operation of the Com18 mission and the administrative expenses in19 curred by the Secretary in carrying out this sec20 tion. 

21 (D) MITIGATION.—An adjustment based 

22 on an actuarial analysis that takes into account

23 any efforts that are being made to reduce losses 

24 to property in the region in which the contract 

25 is being sold. 
6

•HR 1552 IH 

1 (4) PRICE GOUGING PROTECTIONS.—The auc2 tion program may provide reinsurance coverage for 

3 losses incurred only for property located in a State 

4 for which the State entity authorized to make such 

5 determinations has certified to the Secretary that 

6 there are in effect, in such State, laws or regulations 

7 sufficient to prohibit price gouging, during the term 

8 of such reinsurance coverage, in any disaster area 

9 located within the State. 

10 (5) MITIGATION REQUIREMENTS.—

11 (A) IN GENERAL.—The auction program 

12 shall require each purchaser of a contract, as a 

13 condition of such purchase, to contribute an 

14 amount, that the Secretary (in consultation 

15 with the Director of the Federal Emergency 

16 Management Agency) shall establish and which 

17 shall not exceed 5 percent of the price paid for 

18 the contract, to communities that—

19 (i) are located in the State in which 

20 the reinsurance coverage under the con21 tract is provided (or in the case of multiple 

22 States, among such States, as determined 

23 by the Secretary); 

24 (ii) are designated by the Director of 

25 the Federal Emergency Management 
7

•HR 1552 IH 

1 Agency and the appropriate emergency 

2 management agency for the State as 

3 Project Impact communities (for purposes 

4 of the pre-disaster mitigation program of 

5 such Agency); and 

6 (iii) are participating in such pro7 grams or initiatives as the Secretary may 

8 require that provide incentives for con9 struction of structures and communities 

10 that are resistant to damage from covered 

11 perils, which shall include the Building 

12 Code Effectiveness Grading Schedule of 

13 the Insurance Services Office. 

14 (B) USE OF CONTRIBUTIONS.—Amounts 

15 contributed to communities pursuant to the re16 quirement under subparagraph (A) shall be 

17 used only—

18 (i) for activities to reduce losses from 

19 covered perils to properties covered under 

20 the reinsurance contract purchased under 

21 the auction program that are located in 

22 such communities; and 

23 (ii) in accordance with such require24 ments as the Secretary, in consultation 

25 with the Director of the Federal Emer-
8

•HR 1552 IH 

1 gency Management Agency and appro2 priate State agencies, shall establish to en3 sure cost-effective use of such amounts. 

4 (C) ALLOCATION.—The Secretary, in con5 sultation with the Director of the Federal 

6 Emergency Management Agency, shall establish 

7 requirements for allocation of contributions 

8 among communities eligible under subpara9 graph (A) to receive such contributions. 

10 (6) OTHER REQUIREMENTS.—The Secretary 

11 may establish such other requirements for the auc12 tion program as the Secretary considers necessary to 

13 carry out this Act. 

14 (b) CONTRACT TERMS AND CONDITIONS.—Each con15 tract for reinsurance coverage under this Act shall include 

16 the following terms and conditions: 

17 (1) MATURITY.—The term of each such con18 tract shall not exceed 1 year or such other term as 

19 the Secretary may determine. 

20 (2) TRANSFERABILITY.—The contract shall at 

21 all times be fully transferable, assignable, and divis22 ible. 

23 (3) THRESHOLD OF COVERAGE.—The contract 

24 shall provide that the covered purchaser may receive 

25 a payment for losses covered under the contract if, 
9

•HR 1552 IH 

1 under a process specified in the contract, the Sec2 retary determines that the insurance industry will, 

3 as a result of a single event of a covered peril, incur 

4 losses within the coverage area for the region estab5 lished under subsection (a)(2) for which the contract 

6 was auctioned that are covered by one or more lines 

7 of insurance under section 4 in an aggregate 

8 amount, for such event, greater than the level of re9 tained losses specified in section 6. 

10 (4) MULTIPLE EVENTS.—The contract shall 

11 cover any eligible losses from one or more covered 

12 events that may occur during the term of the con13 tract and shall provide that if multiple events occur, 

14 the retained losses requirement under paragraph (3) 

15 shall apply to each event. 

16 (5) ADDITIONAL CONTRACT OPTION.—The con17 tract shall provide that the purchaser of the contract 

18 may, during the term of such original contract, pur19 chase additional contracts from among those offered 

20 by the Secretary at the beginning of the term, sub21 ject to the limitations under section 6, at the prices 

22 at which such contracts were offered at the begin23 ning of the term, prorated based upon the remaining 

24 term as determined by the Secretary. Such addi25 tional contracts shall provide coverage beginning on 
10

•HR 1552 IH 

1 a date 15 days after the date of purchase but shall 

2 not provide coverage for losses for an event that has 

3 already occurred. 

4 (6) SUBMISSION OF INFORMATION.—The con5 tract shall include terms that—

6 (A) require the purchaser to notify the 

7 Secretary of any sale, transfer, assignment, or 

8 division of the contract or any interest in the 

9 contract, identify the interest involved, and 

10 identify the price paid or compensation pro11 vided; and 

12 (B) authorize the disclosures required 

13 under subsection (c)(2). 

14 (7) OTHER TERMS.—The contract shall contain 

15 such other terms as the Secretary considers nec16 essary to carry out this Act and to ensure the long17 term financial integrity of the program under this 

18 Act. 

19 (c) GAO AUDIT.—

20 (1) IN GENERAL.—For each fiscal year, the 

21 Comptroller General of the United States shall con22 duct an audit of prices for contracts made available 

23 under the auction program under this section during 

24 such fiscal year that determines—
11

•HR 1552 IH 

1 (A) the reserve prices established for such 

2 contracts; 

3 (B) the prices paid for such contracts that 

4 are purchased; 

5 (C) the prices paid, or compensation pro6 vided, in any sales, transfers, assignments, or 

7 divisions of any such contracts (or any interests 

8 in such contracts) in the secondary market or 

9 to any third party; and 

10 (D) pursuant to the information obtained 

11 under subparagraphs (A) through (C), the ap12 propriate reserve prices for such contracts that 

13 are to be made available in the succeeding fiscal 

14 year. 

15 (2) USE OF INFORMATION.—The Secretary 

16 shall provide any information referred to in sub17 section (b)(6) that is obtained by the Secretary to 

18 the Comptroller General, the Director of the Con19 gressional Budget Office, and the Director of the Of20 fice of Management and Budget, and shall make 

21 such information publicly available. The Secretary, 

22 the Director of the Congressional Budget Office, the 

23 Director of the Office of Management and Budget 

24 shall each take such information into consideration 

25 in preparing any budget, report, estimate, or rec-
12

•HR 1552 IH 

1 ommendation to the extent it relates to the auction 

2 program under this section, and in any determina3 tions relating to the Budget of the United States or 

4 the concurrent resolution on the budget (as such 

5 term is defined in section 3 of the Congressional 

6 Budget Act of 1974). The Secretary shall take such 

7 information into consideration in establishing reserve 

8 prices for contracts made available under this sec9 tion. 

10 (d) PRIVATE SECTOR RIGHT TO PARTICIPATE.—

11 (1) ESTABLISHMENT OF COMPETITIVE PROCE12 DURE.—The Secretary shall establish, by regulation, 

13 a competitive procedure under this subsection that 

14 provides qualified entities an opportunity, on a basis 

15 consistent with the regional auction procedure and 

16 contract cycle established under this section by the 

17 Secretary, to offer to provide, in lieu of reinsurance 

18 coverage under this Act made available by the Sec19 retary, reinsurance coverage that is substantially 

20 similar to such coverage. 

21 (2) COMPETITIVE PROCEDURE.—Under the 

22 procedure established under this subsection—

23 (A) the Secretary shall establish criteria 

24 for private insurers, reinsurers, and capital 

25 market companies, and consortia of such enti-
13

•HR 1552 IH 

1 ties to be treated as qualified entities for pur2 poses of this subsection, which criteria shall re3 quire such an entity to have at all times capital 

4 sufficient to satisfy the terms of the reinsurance 

5 contracts and shall include such other industry 

6 and credit rating standards as the Secretary 

7 considers appropriate; 

8 (B) not less than 30 days before the begin9 ning of each regional auction during which any 

10 reinsurance coverage under this Act is to be 

11 made available, the Secretary shall publish in 

12 the Federal Register the reserve prices and 

13 terms for contracts for such reinsurance cov14 erage that are to be made available during the 

15 auction; 

16 (C) the Secretary shall provide qualified 

17 entities a period of not less than 10 days (which 

18 shall terminate not less than 20 days before the 

19 beginning of the auction) to submit to the Sec20 retary a written expression of interest in pro21 viding reinsurance coverage in lieu of the cov22 erage otherwise to be made available under this 

23 Act by the Secretary; 

24 (D) the Secretary shall provide any quali25 fied entity submitting an expression of interest 
14

•HR 1552 IH 

1 during the period referred to in subparagraph 

2 (C) a period of not less than 20 days (which 

3 shall terminate before the commencement of the 

4 auction) to submit to the Secretary an offer to 

5 provide, in lieu of the reinsurance coverage 

6 under this Act otherwise to be made available 

7 under an auction under this section, coverage 

8 that is substantially similar to such coverage; 

9 (E) if the Secretary determines that an 

10 offer submitted during the period referred to in 

11 subparagraph (D) is a bona fide offer to pro12 vide reinsurance coverage to be made available 

13 during the auction for the same contract cycle 

14 and at a reserve price and terms that are sub15 stantially similar to the reserve price and terms 

16 for reinsurance coverage otherwise to be made 

17 available at the auction under this section by 

18 the Secretary, the Secretary shall accept the 

19 offer (if still outstanding) and, notwithstanding 

20 any other provision of this Act, provide that the 

21 reinsurance coverage provided by such entity in 

22 accordance with the offer shall be made avail23 able at the auction; and 

24 (F) if the Secretary accepts an offer pur25 suant to subparagraph (E) to make reinsurance 
15

•HR 1552 IH 

1 coverage available at the auction, notwith2 standing any other provision of this Act, the 

3 Secretary shall reduce, to an equivalent extent, 

4 the amount of reinsurance coverage otherwise 

5 to be made available under this Act by the Sec6 retary at the auction, unless and until the Sec7 retary determines that the entity is not com8 plying with the terms of the accepted offer. 

9 SEC. 6. MINIMUM LEVEL OF RETAINED LOSSES AND MAX10 IMUM FEDERAL LIABILITY. 

11 (a) AVAILABLE LEVELS OF RETAINED LOSSES.—In 

12 making reinsurance coverage available under this Act, the 

13 Secretary shall make available for purchase contracts for 

14 such coverage that require the sustainment of retained 

15 losses from a single event of a covered peril (as required 

16 under section 5(b)(3) for payment of eligible losses) in var17 ious amounts, as the Secretary, in consultation with the 

18 Commission, determines appropriate and subject to the re19 quirements under subsection (b) of this section. 

20 (b) MINIMUM LEVEL OF RETAINED LOSSES.—

21 (1) CUMULATIVE AMOUNT.—Subject to para22 graphs (2), (3), and (4) and notwithstanding any 

23 other provision of this Act, a contract for reinsur24 ance coverage may not be made available or sold 

25 under section 5 through a regional auction unless 
16

•HR 1552 IH 

1 the contract requires that the insurance industry in 

2 the region for which the auction was conducted sus3 tains a cumulative amount of retained losses (in cov4 ered lines resulting from covered perils) of not less 

5 than an amount, determined by the Secretary in 

6 consultation with the Commission, that is in the 

7 range between the amount equal to the eligible loss 

8 projected to be incurred once every 100 years from 

9 a single event in the region and the amount equal 

10 to the eligible loss projected to be incurred once 

11 every 250 years from such an event. 

12 (2) INITIAL ADJUSTMENT BASED ON PRIVATE

13 MARKET.—The Secretary may, before making con14 tracts for reinsurance coverage under this Act ini15 tially available under section 5, raise the minimum 

16 level of retained losses from the amount required 

17 under paragraph (1) for a region to ensure, as de18 termined by the Secretary, that such contracts com19 ply with the principle under section 2(c)(1). 

20 (3) ANNUAL ADJUSTMENT.—The Secretary 

21 may annually raise the minimum level of retained 

22 losses established under paragraph (1) for a region 

23 to reflect, as determined by the Secretary—
17

•HR 1552 IH 

1 (A) changes in the capacity of public rein2 surance programs or the private insurance and 

3 reinsurance market; 

4 (B) increases in the market value of prop5 erties; or 

6 (C) such other situations as the Secretary 

7 considers appropriate. 

8 The Secretary shall consider the minimum level of 

9 retained losses requirement in paragraph (1) as a 

10 minimum requirement only and shall have full au11 thority, effective on the date of the enactment of this 

12 Act, to establish levels of required minimum retained 

13 losses in any amount greater than the amounts spec14 ified in such paragraph. In making any determina15 tion under this paragraph in the minimum level of 

16 retained losses, the Secretary shall establish such 

17 level at an amount such that the program under this 

18 Act for making reinsurance coverage available does 

19 not displace or compete with the private insurance 

20 or reinsurance markets or capital markets, as deter21 mined by the Secretary after the Secretary has pro22 vided interested parties an opportunity to submit to 

23 the Commission market information relevant to such 

24 determination and has provided the Commission 
18

•HR 1552 IH 

1 with an opportunity to advise the Secretary regard2 ing such information and determination. 

3 (4) OPTIONAL ANNUAL INFLATIONARY OR EX4 POSURE ADJUSTMENT.—The Secretary may, on an 

5 annual basis, raise the minimum level of retained 

6 losses established under paragraph (1) for each re7 gion to reflect the annual rate of inflation or growth 

8 in exposures, whichever is greater. Any such raise 

9 shall be made in accordance with an inflation index 

10 or exposure index, as appropriate, that the Secretary 

11 determines to be appropriate. The first such raise 

12 may be made one year after contracts for reinsur13 ance coverage under this Act are first made avail14 able for purchase. 

15 (c) MAXIMUM FEDERAL LIABILITY.—

16 (1) IN GENERAL.—Notwithstanding any other 

17 provision of law, the Secretary may sell only con18 tracts for reinsurance coverage under this Act in 

19 various amounts which comply with the following re20 quirements: 

21 (A) ESTIMATE OF AGGREGATE LIABIL22 ITY.—The aggregate liability for payment of 

23 claims under all such contracts in any single 

24 year is unlikely to exceed $25,000,000,000 (as 

25 such amount is adjusted under paragraph (2)). 
19

•HR 1552 IH 

1 (B) ELIGIBLE LOSS COVERAGE SOLD.—El2 igible losses covered by all contracts sold within 

3 a State or region during a 12-month period do 

4 not exceed the difference between the following 

5 amounts (each of which shall be determined by 

6 the Secretary in consultation with the Commis7 sion): 

8 (i) The amount equal to the eligible 

9 loss projected to be incurred once every 

10 500 years from a single event in the State 

11 or region. 

12 (ii) The amount equal to the eligible 

13 loss projected to be incurred once every 

14 100 years from a single event in the State 

15 or region. 

16 (2) ANNUAL ADJUSTMENTS.—The Secretary 

17 shall annually adjust the amount under paragraph 

18 (1)(A) (as it may have been previously adjusted) to 

19 provide for inflation in accordance with an inflation 

20 index that the Secretary determines to be appro21 priate. 

22 (d) LIMITATION ON PERCENTAGE OF RISK IN EX23 CESS OF RETAINED LOSSES.—

24 (1) IN GENERAL.—The Secretary may not 

25 make available for purchase contracts for reinsur-
20

•HR 1552 IH 

1 ance coverage under this Act that would pay out 

2 more than 50 percent of eligible losses in excess of 

3 retained losses for the region for which the contract 

4 was made available. 

5 (2) PAYOUT.—For purposes of this subsection, 

6 the amount of payout from a reinsurance contract 

7 shall be the amount of eligible losses in excess of re8 tained losses multiplied by the percentage under 

9 paragraph (1). 

10 SEC. 7. DISASTER REINSURANCE FUND. 

11 (a) ESTABLISHMENT.—There is established within 

12 the Treasury of the United States a fund to be known 

13 as the Disaster Reinsurance Fund (in this section referred 

14 to as the ‘‘Fund’’). 

15 (b) CREDITS.—The Fund shall be credited with—

16 (1) amounts received annually from the sale of 

17 contracts for reinsurance coverage under this Act; 

18 (2) any amounts borrowed under subsection 

19 (d); 

20 (3) any amounts earned on investments of the 

21 Fund pursuant to subsection (e); and

22 (4) such other amounts as may be credited to 

23 the Fund. 

24 (c) USES.—Amounts in the Fund shall be available 

25 to the Secretary only for the following purposes: 
21

•HR 1552 IH 

1 (1) CONTRACT PAYMENTS.—For payments to 

2 covered purchasers under contracts for reinsurance 

3 coverage under this Act for eligible losses under such 

4 contracts. 

5 (2) COMMISSION COSTS.—To pay for the oper6 ating costs of the Commission.

7 (3) ADMINISTRATIVE EXPENSES.—To pay for 

8 the administrative expenses incurred by the Sec9 retary in carrying out the reinsurance program 

10 under this Act. 

11 (4) TERMINATION.—Upon termination under 

12 section 11, as provided in such section. 

13 (d) BORROWING.—

14 (1) AUTHORITY.—To the extent that the 

15 amounts in the Fund are insufficient to pay claims 

16 and expenses under subsection (c), the Secretary 

17 may issue such obligations of the Fund as may be 

18 necessary to cover the insufficiency and shall pur19 chase any such obligations issued. 

20 (2) PUBLIC DEBT TRANSACTION.—For the pur21 pose of purchasing any such obligations, the Sec22 retary may use as a public debt transaction the pro23 ceeds from the sale of any securities issued under 

24 chapter 31 of title 31, United States Code, and the 

25 purposes for which securities are issued under such 
22

•HR 1552 IH 

1 chapter are hereby extended to include any purchase 

2 by the Secretary of such obligations under this sub3 section. 

4 (3) CHARACTERISTICS OF OBLIGATIONS.—Obli5 gations issued under this subsection shall be in such 

6 forms and denominations, bear such maturities, bear 

7 interest at such rate, and be subject to such other 

8 terms and conditions, as the Secretary shall deter9 mine. 

10 (4) TREATMENT.—All redemptions, purchases, 

11 and sales by the Secretary of obligations under this 

12 subsection shall be treated as public debt trans13 actions of the United States. 

14 (5) REPAYMENT.—Any obligations issued under 

15 this subsection shall be repaid, including interest, 

16 from the Fund and shall be recouped from pre17 miums charged for reinsurance coverage provided 

18 under this Act.

19 (e) INVESTMENT.—If the Secretary determines that 

20 the amounts in the Fund are in excess of current needs, 

21 the Secretary may invest such amounts as the Secretary 

22 considers advisable in obligations issued or guaranteed by 

23 the United States. 

24 (f) PROHIBITION OF FEDERAL FUNDS.—Except for 

25 amounts made available pursuant to subsection (d) of this 
23

•HR 1552 IH 

1 section and section 8(h), no Federal funds shall be author2 ized or appropriated for the Fund or for carrying out the 

3 reinsurance program under this Act. 

4 SEC. 8. NATIONAL COMMISSION ON CATASTROPHE RISKS 

5 AND INSURANCE LOSS COSTS. 

6 (a) ESTABLISHMENT.—The Secretary shall establish 

7 a commission to be known as the National Commission 

8 on Catastrophe Risks and Insurance Loss Costs. 

9 (b) DUTIES.—The Commission shall meet for the sole 

10 purpose of advising the Secretary regarding the estimated 

11 loss costs associated with the contracts for reinsurance 

12 coverage under this Act and carrying out the functions 

13 specified in this Act. 

14 (c) MEMBERS.—The Commission shall consist of not 

15 more than 5 members, who shall be appointed by the Sec16 retary and shall be broadly representative of the public 

17 interest. Members shall have no personal, professional, or 

18 financial interest at stake in the deliberations of the Com19 mission. The membership of the Commission shall at all 

20 times include at least 1 representative of a nationally rec21 ognized consumer organization. 

22 (d) TREATMENT OF NON-FEDERAL MEMBERS.—

23 Each member of the Commission who is not otherwise em24 ployed by the Federal Government shall be considered a 
24

•HR 1552 IH 

1 special Government employee for purposes of sections 202 

2 and 208 of title 18, United States Code. 

3 (e) EXPERTS AND CONSULTANTS.—The Commission 

4 may procure temporary and intermittent services under 

5 section 3109(b) of title 5, United States Code, but at a 

6 rate not in excess of the daily equivalent of the annual 

7 rate of basic pay payable for level V of the Executive 

8 Schedule, for each day during which the individual pro9 cured is performing such services for the Commission. 

10 (f) COMPENSATION.—Each member of the Commis11 sion who is not an officer or employee of the Federal Gov12 ernment shall be compensated at a rate of basic pay pay13 able for level V of the Executive Schedule, for each day 

14 (including travel time) during which such member is en15 gaged in the performance of the duties of the Commission. 

16 All members of the Commission who are officers or em17 ployees of the United States shall serve without compensa18 tion in addition to that received for their services as offi19 cers or employees of the United States. 

20 (g) OBTAINING DATA.—The Commission and the 

21 Secretary may solicit loss exposure data and such other 

22 information either deems necessary to carry out its re23 sponsibilities from governmental agencies and bodies and 

24 organizations that act as statistical agents for the insur25 ance industry. The Commission and the Secretary shall 
25

•HR 1552 IH 

1 take such actions as are necessary to ensure that informa2 tion that either deems is confidential or proprietary is dis3 closed only to authorized individuals working for the Com4 mission or the Secretary. No company which refuses to 

5 provide information requested by the Commission or the 

6 Secretary may participate in the program for reinsurance 

7 coverage authorized under this Act, nor may any State 

8 insurance or reinsurance program participate if any gov9 ernmental agency within that State has refused to provide 

10 information requested by the Commission or the Sec11 retary. 

12 (h) FUNDING.—

13 (1) AUTHORIZATION OF APPROPRIATIONS.—

14 There are authorized to be appropriated—

15 (A) $1,000,000 for fiscal year 2004 for the 

16 initial expenses in establishing the Commission 

17 and the initial activities of the Commission that 

18 cannot timely be covered by amounts obtained 

19 pursuant to section 5(a)(3)(C), as determined 

20 by the Secretary;

21 (B) such additional sums as may be nec22 essary to carry out subsequent activities of the 

23 Commission; 
26

•HR 1552 IH 

1 (C) $1,000,000 for fiscal year 2004 for the 

2 initial expenses of the Secretary in carrying out 

3 the program authorized under section 2; and 

4 (D) such additional sums as may be nec5 essary to carry out subsequent activities of the 

6 Secretary under this Act. 

7 (2) OFFSET.—The Secretary shall provide, to 

8 the maximum extent practicable, that an amount 

9 equal to any amount appropriated under paragraph 

10 (1) is obtained from purchasers of reinsurance cov11 erage under this Act and deposited in the Fund es12 tablished under section 7. Such amounts shall be ob13 tained by inclusion of a provision for the Secretary’s 

14 and the Commission’s expenses incorporated into the 

15 pricing of the contracts for such reinsurance cov16 erage, pursuant to section 5(a)(3)(C). 

17 (i) TERMINATION.—The Commission shall terminate 

18 upon the effective date of the repeal under section 11(c). 

19 SEC. 9. DEFINITIONS. 

20 For purposes of this Act, the following definitions 

21 shall apply: 

22 (1) COMMISSION.—The term ‘‘Commission’’ 

23 means the National Commission on Catastrophe 

24 Risks and Insurance Loss Costs established under 

25 section 8. 
27

•HR 1552 IH 

1 (2) COVERED PERILS.—The term ‘‘covered per2 ils’’ means the disaster perils under section 4. 

3 (3) COVERED PURCHASER.—The term ‘‘covered 

4 purchaser’’ means, with respect to reinsurance cov5 erage made available under a contract under section 

6 5, the purchaser of the contract auctioned under 

7 such section or any subsequent holder or holders of 

8 the contract. 

9 (4) DISASTER AREA.—The term ‘‘disaster area’’ 

10 means a geographical area, with respect to which—

11 (A) a covered peril has occurred; and 

12 (B) a declaration that a major disaster ex13 ists, as a result of the occurrence of such 

14 peril—

15 (i) has been made by the President of 

16 the United States; and

17 (ii) is in effect. 

18 (5) ELIGIBLE LOSSES.—The term ‘‘eligible 

19 losses’’ means losses in excess of the sustained and 

20 retained losses, as defined by the Secretary after 

21 consultation with the Commission. 

22 (6) PRICE GOUGING.—The term ‘‘price 

23 gouging’’ means the providing of any consumer good 

24 or service by a supplier for a price that the supplier 

25 knows or has reason to know is greater, by at least 
28

•HR 1552 IH 

1 the percentage set forth in a State law or regulation 

2 prohibiting such act (notwithstanding any real cost 

3 increase due to any attendant business risk and 

4 other reasonable expenses that result from the major 

5 disaster involved), than the price charged by the 

6 supplier for such consumer good or service imme7 diately before the disaster. 

8 (7) QUALIFIED LINES.—The term ‘‘qualified 

9 lines’’ means lines of insurance coverage for which 

10 losses are covered under section 3 by reinsurance 

11 coverage under this Act. 

12 (8) REINSURANCE COVERAGE.—The term ‘‘re13 insurance coverage under this Act’’ means coverage 

14 under contracts made available under section 5 by 

15 the Secretary. 

16 (9) SECRETARY.—The term ‘‘Secretary’’ means 

17 the Secretary of the Treasury. 

18 (10) STATE.—The term ‘‘State’’ means the 

19 States of the United States, the District of Colum20 bia, the Commonwealth of Puerto Rico, the Com21 monwealth of the Northern Mariana Islands, Guam, 

22 the Virgin Islands, American Samoa, and any other 

23 territory or possession of the United States. 
29

•HR 1552 IH 

1 SEC. 10. REGULATIONS. 

2 The Secretary shall issue any regulations necessary 

3 to carry out the program for reinsurance coverage under 

4 this Act. 

5 SEC. 11. TERMINATION. 

6 (a) IN GENERAL.—Except as provided in subsection 

7 (b), the Secretary may not provide any reinsurance cov8 erage under this Act covering any period after the expira9 tion of the 10-year period beginning on the date of the 

10 enactment of this Act. 

11 (b) EXTENSION.—If upon the expiration of the period 

12 under subsection (a) the Secretary, in consultation with 

13 the Commission, determines that continuation of the pro14 gram for reinsurance coverage under this Act is necessary 

15 to carry out the purpose of this Act under section 2(b) 

16 because of insufficient growth of capacity in the private 

17 homeowners’ insurance market, the Secretary shall con18 tinue to provide reinsurance coverage under this Act until 

19 the expiration of the 5-year period beginning upon the ex20 piration of the period under subsection (a). 

21 (c) REPEAL.—Effective upon the date that reinsur22 ance coverage under this Act is no longer available or in 

23 force pursuant to subsection (a) or (b), this Act (except 

24 for this section) is repealed. 

25 (d) DEFICIT REDUCTION.—The Secretary shall cover 

26 into the General Fund of the Treasury any amounts re-
30

•HR 1552 IH 

1 maining in the Fund under section 7 upon the repeal of 

2 this Act. 

3 SEC. 12. ANNUAL STUDY OF COST AND AVAILABILITY OF 

4 DISASTER INSURANCE AND PROGRAM NEED. 

5 (a) IN GENERAL.—The Secretary shall, on an annual 

6 basis, conduct a study and submit to the Congress a report 

7 on the cost and availability of homeowners’ insurance for 

8 losses resulting from catastrophic disasters covered by the 

9 reinsurance program under this Act. 

10 (b) CONTENTS.—Each annual study under this sec11 tion shall determine and identify, on an aggregate basis—

12 (1) for each State or region, the capacity of the 

13 private homeowners’ insurance market with respect 

14 to coverage for losses from catastrophic disasters; 

15 (2) for each State or region, the percentage of 

16 homeowners who have such coverage, the disasters 

17 covered, and the average cost of such coverage; 

18 (3) for each State or region, the progress that 

19 private reinsurers and capital markets have made in 

20 providing reinsurance for such homeowners’ insur21 ance; 

22 (4) for each State or region, the effects of the 

23 Federal reinsurance program under this Act on the 

24 availability and affordability of such insurance; and 
31

•HR 1552 IH 

1 (5) the appropriate time for termination of the 

2 Federal reinsurance program under this Act. 

3 (c) TIMING.—Each annual report under this section 

4 shall be submitted not later than March 30 of the year 

5 after the year for which the study was conducted. 

6 (d) COMMENCEMENT OF REPORTING REQUIRE7 MENT.—The Secretary shall first submit an annual report 

8 under this section not later than 2 years after the date 

9 of the enactment of this Act.

Æ