II 

109TH CONGRESS 

2D SESSION S. 3114 

To establish a bipartisan commission on insurance reform. 

IN THE SENATE OF THE UNITED STATES 

MAY 25, 2006 

Mr. NELSON of Florida (for himself and Ms. LANDRIEU) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To establish a bipartisan commission on insurance reform. 

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 ‘‘Commission on Cata5 strophic Disaster Risk and Insurance Act of 2006’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Hurricanes Katrina, Rita, and Wilma, 

9 which struck the United States in 2005, caused over 

10 $200 billion in total economic losses, including in11 sured and uninsured losses. 


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1 (2) Although private sector insurance is cur2 rently available to spread some catastrophe-related 

3 losses throughout the Nation and internationally, 

4 most experts believe there will be significant insur5 ance and reinsurance shortages, resulting in dra6 matic rate increases for consumers and businesses, 

7 and the unavailability of catastrophe insurance. 

8 (3) The Federal Government has provided and 

9 will continue to provide billions of dollars and re10 sources to pay for losses from catastrophes, includ11 ing hurricanes, volcanic eruptions, tsunamis, tor12 nados, and other disasters, at huge costs to Amer13 ican taxpayers. 

14 (4) The Federal Government has a critical in15 terest in ensuring appropriate and fiscally respon16 sible risk management of catastrophes. Mortgages 

17 require reliable property insurance, and the unavail18 ability of reliable property insurance would make 

19 most real estate transactions impossible. In addition, 

20 the public health, safety, and welfare demand that 

21 structures damaged or destroyed in a catastrophe be 

22 reconstructed as soon as possible. Therefore, the in23 ability of the private sector insurance and reinsur24 ance markets to maintain sufficient capacity to en25 able Americans to obtain property insurance covVerDate Aug 31 2005 04:32 Jun 01, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S3114.IS S3114

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1 erage in the private sector endangers the national 

2 economy and the public health, safety, and welfare. 

3 (5) Multiple proposals have been introduced in 

4 the United States Congress over the past decade to 

5 address catastrophic risk insurance, including the 

6 creation of a national catastrophic reinsurance fund 

7 and the revision of the Federal tax code to allow in8 surers to use tax-deferred catastrophe funds, yet 

9 Congress has failed to act on any of these proposals. 

10 (6) To the extent the United States faces high 

11 risks from catastrophe exposure, essential technical 

12 information on financial structures and innovations 

13 in the catastrophe insurance market is needed. 

14 (7) The most efficient and effective approach to 

15 assessing the catastrophe insurance problem in the 

16 public policy context is to establish a bipartisan com17 mission of experts to study the management of cata18 strophic disaster risk, and to require such commis19 sion to timely report its recommendations to Con20 gress so that Congress can quickly craft a solution 

21 to protect the American people. 

22 SEC. 3. ESTABLISHMENT. 

23 There is established a bipartisan Commission on Cat24 astrophic Disaster Risk and Insurance (in this Act re25 ferred to as the ‘‘Commission’’). 


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1 SEC. 4. MEMBERSHIP. 

2 (a) MEMBERS.—The Commission shall be composed 

3 of the following: 

4 (1) The Director of the Federal Emergency 

5 Management Agency or a designee of the Director. 

6 (2) The Administrator of the National Oceanic 

7 and Atmospheric Administration or a designee of the 

8 Administrator. 

9 (3) 12 additional members or their designees of 

10 whom one shall be— 

11 (A) a representative of a consumer group; 

12 (B) a representative of a primary insur13 ance company; 

14 (C) a representative of a reinsurance com15 pany; 

16 (D) an independent insurance agent with 

17 experience in writing property and casualty in18 surance policies; 

19 (E) a State insurance regulator; 

20 (F) a State emergency operations official; 

21 (G) a scientist; 

22 (H) a faculty member of an accredited uni23 versity with experience in risk management; 

24 (I) a member of nationally recognized 

25 think tank with experience in risk management; 


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1 (J) a homebuilder with experience in struc2 tural engineering; 

3 (K) a mortgage lender; and 

4 (L) a nationally recognized expert in anti5 trust law. 

6 (b) MANNER OF APPOINTMENT.— 

7 (1) IN GENERAL.—Any member of the Commis8 sion described under subsection (a)(3) shall be ap9 pointed only upon unanimous agreement of— 

10 (A) the majority leader of the Senate; 

11 (B) the minority leader of the Senate; 

12 (C) the Speaker of the House of Rep13 resentatives; and 

14 (D) the minority leader of the House of 

15 Representatives. 

16 (2) CONSULTATION.—In making any appoint17 ment under paragraph (1), each individual described 

18 in paragraph (1) shall consult with the President. 

19 (c) ELIGIBILITY LIMITATION.—Except as provided in 

20 subsection (a), no member or officer of the Congress, or 

21 other member or officer of the Executive Branch of the 

22 United States Government or any State government may 

23 be appointed to be a member of the Commission. 

24 (d) PERIOD OF APPOINTMENT.— 


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1 (1) IN GENERAL.—Each member of the Com2 mission shall be appointed for the life of the Com3 mission. 

4 (2) VACANCIES.—A vacancy on the Commission 

5 shall not affect its powers, but shall be filled in the 

6 same manner as the original appointment was made. 

7 (e) QUORUM.— 

8 (1) MAJORITY.—A majority of the members of 

9 the Commission shall constitute a quorum, but a 

10 lesser number may hold hearings. 

11 (2) APPROVAL ACTIONS.—All recommendations 

12 and reports of the Commission required by this Act 

13 shall be approved only by a majority vote of a 

14 quorum of the Commission. 

15 (f) CHAIRPERSON.—The majority leader of the Sen16 ate, the minority leader of the Senate, the Speaker of the 

17 House of Representatives, and the minority leader of the 

18 House of Representatives shall jointly select 1 member ap19 pointed pursuant to subsection (a) to serve as the Chair20 person of the Commission. 

21 (g) MEETINGS.—The Council shall meet at the call 

22 of its Chairperson or a majority of its members at any 

23 time. 

24 SEC. 5. DUTIES OF THE COMMISSION. 

25 The Commission shall— 


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1 (1) assess— 

2 (A) the condition of the property and cas3 ualty insurance and reinsurance markets in the 

4 aftermath of Hurricanes Katrina, Rita, and 

5 Wilma in 2005, and the 4 major hurricanes 

6 that struck the United States in 2004; and 

7 (B) the ongoing exposure of the United 

8 States to earthquakes, volcanic eruptions, 

9 tsunamis, and floods; and 

10 (2) recommend and report, as required under 

11 section 6, any necessary legislative and regulatory 

12 changes that will— 

13 (A) improve the domestic and international 

14 financial health and competitiveness of such 

15 markets; and 

16 (B) assure consumers of the— 

17 (i) availability of adequate insurance 

18 coverage when an insured event occurs; 

19 and 

20 (ii) best possible range of insurance 

21 products at competitive prices. 

22 SEC. 6. REPORT. 

23 (a) IN GENERAL.—Not later than 90 days after the 

24 appointment of Commission members under section 4, the 

25 Commission shall submit to the President and the ConVerDate Aug 31 2005 04:32 Jun 01, 2006 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3114.IS S3114

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1 gress a final report containing a detailed statement of its 

2 findings, together with any recommendations for legisla3 tion or administrative action that the Commission con4 siders appropriate, in accordance with the requirements 

5 of section 5. 

6 (b) CONSIDERATIONS.—In developing any rec7 ommendations under subsection (a), the Commission shall 

8 consider— 

9 (1) the catastrophic insurance and reinsurance 

10 market structures and the relevant commercial prac11 tices in such insurance industries in providing insur12 ance protection to different sectors of the American 

13 population; 

14 (2) the constraints and opportunities in imple15 menting a catastrophic insurance system that can 

16 resolve key obstacles currently impeding broader im17 plementation of catastrophe risk management and 

18 financing with insurance; 

19 (3) methods to improve risk underwriting prac20 tices, including— 

21 (A) analysis of modalities of risk transfer 

22 for potential financial losses; 

23 (B) assessment of private securitization of 

24 insurances risks; 


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1 (C) private-public partnerships to increase 

2 insurance capacity in constrained markets; and 

3 (D) the financial feasibility and sustain4 ability of a national catastrophe pool or regional 

5 catastrophe pools designed to provide adequate 

6 insurance coverage and increased underwriting 

7 capacity to insurers and reinsurers; 

8 (4) approaches for implementing a public insur9 ance scheme for low-income communities, in order to 

10 promote risk reduction and explicit insurance cov11 erage in such communities; 

12 (5) methods to strengthen insurance regulatory 

13 requirements and supervision of such requirements, 

14 including solvency for catastrophic risk reserves; 

15 (6) methods to promote public insurance poli16 cies linked to programs for loss reduction in the un17 insured sectors of the American population; 

18 (7) methods to strengthen the risk assessment 

19 and enforcement of structural mitigation and vulner20 ability reduction measures, such as zoning and 

21 building code compliance; 

22 (8) the appropriate role for the Federal Govern23 ment in stabilizing the property and casualty insur24 ance and reinsurance markets, with an analysis— 

25 (A) of options such as— 


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1 (i) a reinsurance mechanism; 

2 (ii) the modernization of Federal tax3 ation policies; and 

4 (iii) an ‘‘insurance of last resort’’ 

5 mechanism; and 

6 (B) how to fund such options; and 

7 (9) the merits of the 3 principle legislative pro8 posals currently pending in the 109th Congress, 

9 namely: 

10 (A) The creation of a Federal catastrophe 

11 fund to act as a backup to State catastrophe 

12 funds; 

13 (B) Tax-deferred catastrophe accounts for 

14 insurers; and 

15 (C) Tax-free catastrophe accounts for pol16 icyholders. 

17 SEC. 7. POWERS OF THE COMMISSION. 

18 (a) HEARINGS.—The Commission or, at the direction 

19 of the Commission, any subcommittee or member of the 

20 Commission, may, for the purpose of carrying out this 

21 Act— 

22 (1) hold such public hearings in such cities and 

23 countries, sit and act at such times and places, take 

24 such testimony, receive such evidence, and admin25 ister such oaths or affirmations as the Commission 


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1 or such subcommittee or member considers advis2 able; and 

3 (2) require, by subpoena or otherwise, the at4 tendance and testimony of such witnesses and the 

5 production of such books, records, correspondence, 

6 memoranda, papers, documents, tapes, and materials 

7 as the Commission or such subcommittee or member 

8 considers advisable. 

9 (b) ISSUANCE AND ENFORCEMENT OF SUB10 POENAS.— 

11 (1) ISSUANCE.—Subpoenas issued under sub12 section (a) shall bear the signature of the Chair13 person of the Commission and shall be served by any 

14 person or class of persons designated by the Chair15 person for that purpose. 

16 (2) ENFORCEMENT.—In the case of contumacy 

17 or failure to obey a subpoena issued under sub18 section (a), the United States district court for the 

19 judicial district in which the subpoenaed person re20 sides, is served, or may be found may issue an order 

21 requiring such person to appear at any designated 

22 place to testify or to produce documentary or other 

23 evidence. Any failure to obey the order of the court 

24 may be punished by the court as a contempt of that 

25 court. 


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1 (3) CONFIDENTIALITY.— 

2 (A) IN GENERAL.—Information obtained 

3 under a subpoena issued under subsection (a) 

4 which is deemed confidential, or with reference 

5 to which a request for confidential treatment is 

6 made by the person furnishing such informa7 tion— 

8 (i) shall be exempt from disclosure 

9 under section 552 of title 5, United States 

10 Code; and 

11 (ii) shall not be published or disclosed 

12 unless the Commission determines that the 

13 withholding of such information is contrary 

14 to the interest of the United States. 

15 (B) EXCEPTION.—The requirements of 

16 subparagraph (A) shall not apply to the publi17 cation or disclosure of any data aggregated in 

18 a manner that ensures protection of the identity 

19 of the person furnishing such data. 

20 (c) AUTHORITY OF MEMBERS OR AGENTS OF THE

21 COMMISSION.—Any member or agent of the Commission 

22 may, if authorized by the Commission, take any action 

23 which the Commission is authorized to take by this Act. 

24 (d) OBTAINING OFFICIAL DATA.— 


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1 (1) AUTHORITY.—Notwithstanding any provi2 sion of section 552a of title 5, United States Code, 

3 the Commission may secure directly from any de4 partment or agency of the United States any infor5 mation necessary to enable the Commission to carry 

6 out the purposes of this Act. 

7 (2) PROCEDURE.—Upon request of the Chair8 person of the Commission, the head of that depart9 ment or agency shall furnish the information re10 quested to the Commission. 

11 (e) POSTAL SERVICES.—The Commission may use 

12 the United States mails in the same manner and under 

13 the same conditions as other departments and agencies of 

14 the Federal Government. 

15 (f) ADMINISTRATIVE SUPPORT SERVICES.—Upon the 

16 request of the Commission, the Administrator of General 

17 Services shall provide to the Commission, on a reimburs18 able basis, any administrative support services necessary 

19 for the Commission to carry out its responsibilities under 

20 this Act. 

21 (g) GIFTS.— 

22 (1) IN GENERAL.—The Commission may ac23 cept, use, and dispose of gifts or donations of serv24 ices or property. 


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1 (2) REGULATIONS.—The Commission shall 

2 adopt internal regulations governing the receipt of 

3 gifts or donations of services or property similar to 

4 those described in part 2601 of title 5, Code of Fed5 eral Regulations. 

6 SEC. 8. COMMISSION PERSONNEL MATTERS. 

7 (a) COMPENSATION OF MEMBERS.—Each member of 

8 the Commission who is not an officer or employee of the 

9 Federal Government shall be compensated at a rate equal 

10 to the daily equivalent of the annual rate of basic pay pre11 scribed for GS–18 of the General Schedule under section 

12 5332 of title 5, United States Code, for each day (includ13 ing travel time) during which such member is engaged in 

14 the performance of the duties of the Commission. All 

15 members of the Commission who are officers or employees 

16 of the United States shall serve without compensation in 

17 addition to that received for their services as officers or 

18 employees of the United States. 

19 (b) TRAVEL EXPENSES.—The members of the Com20 mission shall be allowed travel expenses, including per 

21 diem in lieu of subsistence, at rates authorized for employ22 ees of agencies under subchapter I of chapter 57 of title 

23 5, United States Code, while away from their homes or 

24 regular places of business in the performance of services 

25 for the Commission. 


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1 (c) SUBCOMMITTEES.—The Commission may estab2 lish subcommittees and appoint persons to such sub3 committees as the Commission considers appropriate. 

4 (d) STAFF.—Subject to such policies as the Commis5 sion may prescribe, the Chairperson of the Commission 

6 may appoint and fix the pay of such additional personnel 

7 as the Chairperson considers appropriate to carry out the 

8 duties of the Commission. 

9 (e) APPLICABILITY OF CERTAIN CIVIL SERVICE

10 LAWS.—Subcommittee members and staff of the Commis11 sion may be— 

12 (1) appointed without regard to the provisions 

13 of title 5, United States Code, governing appoint14 ments in the competitive service; and 

15 (2) paid without regard to the provisions of 

16 chapter 51 and subchapter III of chapter 53 of that 

17 title relating to classification and General Schedule 

18 pay rates, except that an individual so appointed 

19 may not receive pay in excess of the annual rate of 

20 basic pay prescribed for GS–18 of the General 

21 Schedule under section 5332 of that title. 

22 (f) EXPERTS AND CONSULTANTS.—In carrying out 

23 its objectives, the Commission may procure temporary and 

24 intermittent services of consultants and experts under sec25 tion 3109(b) of title 5, United States Code, at rates for 


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1 individuals which do not exceed the daily equivalent of the 

2 annual rate of basic pay prescribed for GS–18 of the Gen3 eral Schedule under section 5332 of that title. 

4 (g) DETAIL OF GOVERNMENT EMPLOYEES.—Upon 

5 request of the Chairperson of the Commission, any Fed6 eral Government employee may be detailed to the Commis7 sion to assist in carrying out the duties of the Commis8 sion— 

9 (1) on a reimbursable basis; and 

10 (2) such detail shall be without interruption or 

11 loss of civil service status or privilege. 

12 SEC. 9. TERMINATION. 

13 The Commission shall terminate 60 days after the 

14 date on which the Commission submits its report under 

15 section 6. 

16 SEC. 10. AUTHORIZATION OF APPROPRIATIONS. 

17 There are authorized to be appropriated $5,000,000 

18 to carry out the purposes of this Act. 

Æ 


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