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[House Report 111-551]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-551

======================================================================

 
                  MULTIPLE PERIL INSURANCE ACT OF 2009

                                _______
                                

 July 19, 2010.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1264]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1264) to amend the National Flood Insurance Act 
of 1968 to provide for the national flood insurance program to 
make available multiperil coverage for damage resulting from 
windstorms or floods, and for other purposes, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Performance Goals and Objectives.................................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     6
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     8
Constitutional Authority Statement...............................     8
Applicability to Legislative Branch..............................     8
Earmark Identification...........................................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     9
Dissenting Views.................................................    15

                          Purpose and Summary

    H.R. 1264, the Multiple Peril Insurance Act of 2009, would 
amend the National Flood Insurance Act to create a public 
option for property owners to purchase flood and wind coverage 
in one policy. Through the National Flood Insurance Program, 
property owners will have access to a public option to buy 
windstorm insurance and know that hurricane and tropical storm 
losses will be covered without delays, disputes, and lawsuits 
over what damage was caused by flooding and what damage was 
caused by wind. The new public option would be available only 
where local governments opt in and adopt International Building 
Codes or the equivalent.

                  Background and Need for Legislation

    In the aftermath of and in light of his personal 
experiences following Hurricane Katrina, Representative Gene 
Taylor of Mississippi originally introduced the Multiple Peril 
Insurance Act in the 110th Congress as H.R. 920. The text of 
the Multiple Peril Insurance Act passed the House on September 
27, 2007 as part of larger flood insurance program reform 
legislation, the Flood Insurance Reform and Modernization Act 
of 2007 (H.R. 3121). Legislative text substantially similar to 
the provisions of H.R. 920 was introduced in the Senate by 
Senator Roger Wicker as an amendment to S. 2284, the Flood 
Insurance Reform and Modernization Act of 2007. The amendment 
failed by a vote of 19 to 74 during consideration of S. 2284. 
Rep. Taylor reintroduced a substantially similar bill on March 
3, 2009 as H.R. 1264. Both the Bush and Obama Administrations 
have expressed opposition to the Multiple Peril Insurance Act 
throughout its legislative history.\1\ Additional background 
information regarding multiple peril determination issues is 
available in two comprehensive reports prepared by the 
Government Accountability Office.\2\
---------------------------------------------------------------------------
    \1\For the Bush Administration's opposition, see, http://
www.whitehouse.gov/omb/legislative/sap/110-1/hr3121sap-r.pdf; for the 
Obama Administration's opposition, see, http://www.reinsurance.org/
files/public/060209_review_1.pdf.
    \2\For the two GAO reports, see, ``Natural Catastrophe Insurance: 
Analysis of a Proposed Combined Federal Flood and Wind Insurance 
Program'' at http://www.gao.gov/new.items/d08504.pdf; and ``National 
Flood Insurance Program: Greater Transparency and Oversight of Wind and 
Flood Damage Determinations Are Needed'' at http://www.gao.gov/
new.items/d0828.pdf.
---------------------------------------------------------------------------
    By eliminating gaps in insurance coverage and eliminating 
the delays and disputes over wind or flood damage, the new 
public insurance option created by the Multiple Peril Insurance 
Act is intended to reduce future disaster assistance costs 
after hurricanes. After Hurricane Katrina, the federal 
government spent more than $34 billion on rental assistance, 
vouchers, trailers and other manufactured housing, grants to 
homeowners, and Small Business Administration disaster loans to 
homeowners. A portion of those costs may have been avoided were 
a public option available to allow property owners to purchase 
insurance that provided seamless coverage of hurricane losses 
that would have paid claims promptly and in full.
    The Multiple Peril Insurance Act is also intended to create 
a more stable and efficient, public option for insurance in 
coastal areas. The Multiple Peril Insurance Act is also 
intended to reallocate resources and spread coastal wind and 
flood risk geographically so that a small portion of policies 
would be affected by a single event. Currently, the private 
insurance marketplace forces each coastal state to operate its 
own wind pool that would have to pay on a substantial 
proportion of policies from a single event. None of the single-
state pools is capable of building up sufficient reserves to 
cover a major hurricane making a direct hit on a large 
population center. The public option created by the Multiple 
Peril Insurance Act would free the states of these private 
market forces and allocate risk and resources among multiple 
states through a Federal umbrella. The bill requires premiums 
for the new, public, optional coverage to be risk-based and 
actuarially sound, so that the program would be required to 
collect enough premiums to pay claims.
    Multiple peril policies would be available where local 
governments agree to adopt and enforce building codes and 
standards designed and determined by FEMA to minimize wind 
damage, in addition to the existing Federal flood program 
requirements for flood plain management. Any community 
participating in the public flood insurance program could opt 
into the multiple peril, public insurance option, but the 
greatest demand for the optional coverage product will be in 
coastal areas that face both flood and wind risk from 
hurricanes and tropical storms.
    The Multiple Peril Insurance Act would allow homeowners to 
buy insurance and know that their damage from both wind and 
water will be covered. This is primarily a concern after a 
hurricane where the worst destruction is typically caused by a 
combination of wind and flooding. Homeowners would not have to 
hire lawyers, engineers, and adjusters to determine what damage 
was caused by wind and what was caused by flooding.
    This bill would set residential policy limits at $500,000 
for the structure and $150,000 for contents and loss of use. 
Nonresidential properties could be covered to $1,000,000 for 
structure and $750,000 for contents and business interruption.
    Once the new optional coverage program is enacted, it is 
hoped that, unlike what has happened after 40 years of the 
National Flood Insurance Program, a private insurance market 
would develop to offer coverage above the limits. This would 
allow insurance companies to design policies that would have 
the equivalent of a $500,000 deductible for residential 
properties or a $1 million deductible for nonresidential 
properties.

                                Hearings

    The Subcommittee on Housing and Community Development held 
a hearing entitled ``Legislative Proposals to Reform the 
National Flood Insurance Program'' on April 21, 2010. At the 
hearing, the following witnesses testified:
           The Honorable Jerry Costello, Member of 
        Congress
           The Honorable Doris Matsui, Member of 
        Congress
           The Honorable Steve Scalise, Member of 
        Congress
           The Honorable Gene Taylor, Member of 
        Congress
           The Honorable Craig Fugate, Administrator, 
        Federal Emergency Management Administration
           Ms. Orice Williams Brown, Director, 
        Financial Markets and Community Investment, U.S. 
        Government Accountability Office
           Mr. David R. Conrad, Senior Water Resources 
        Specialist, National Wildlife Federation
           Mr. Mark Davey, President and Chief 
        Executive Officer, Fidelity National Financial 
        Specialty Insurance Group, on behalf of the Write Your 
        Own Coalition
           Mr. Larry Larson, Executive Director, 
        Association of State Flood Plain Managers
           Mr. John Rollins, President, Rollins 
        Analytics, Inc.
           Mr. Barry Rutenberg, Second Vice Chairman of 
        the Board, National Association of Homebuilders
           Mr. Maurice ``Moe'' Veissi, Veissi & 
        Associates, First Vice President, National Association 
        of REALTORS
    In the 110th Congress, the Subcommittee on Housing and 
Community Opportunity held a legislative hearing entitled 
``H.R. 920, the Multiple Peril Insurance Act of 2007'' on July 
17, 2007. At the hearing, the following witnesses testified:
           The Honorable Richard H. Baker, Member of 
        Congress
           The Honorable Gene Taylor, Member of 
        Congress
           The Honorable Charlie Melancon, Member of 
        Congress
           The Honorable Bobby Jindal, Member of 
        Congress
           Mr. David I. Maurstad, Assistant 
        Administrator for Mitigation, Federal Emergency 
        Management Agency
           Ms. Pam Pogue, Vice Chair, Association of 
        State Floodplain Managers
           Ms. Sandy Praeger, Commissioner, Kansas 
        Insurance Department, on behalf of the National 
        Association of Insurance Commissioners
           Mr. Ted A. Majewski, Senior Vice President, 
        Harleysville Insurance, on behalf of the Property 
        Casualty Insurers, American Insurance Association, and 
        National Association of Mutual Insurance Companies
           Ms. Cheryl Small, Policy Advisor, National 
        Flood Determination Association
           Mr. Mark Cumbest, President, Cumbest Realty
           Mr. W. Anderson Baker, III, CPCU, ARM, 
        Gillis, Ellis & Baker Inc
           Dr. Robert P. Hartwig, Ph.D., CPCU, 
        President and Chief Economist, Insurance Information 
        Institute
           Mr. David Conrad, Senior Water Resources 
        Specialist, National Wildlife Federation

                        Committee Consideration

    The Committee on Financial Services met in open session on 
April 27, 2010, and ordered H.R. 1264, Multiple Peril Insurance 
Act of 2009, favorably reported to the House by a record vote 
of 40 yeas and 25 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill to the House with a 
favorable recommendation was agreed to by a record vote of 40 
yeas and 25 nays (Record vote no. FC-116). The names of Members 
voting for and against follow:

                                             RECORD VOTE NO. FC-116
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....  ........        X   .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................  ........  ........  .........  Mr. Lucas........  ........        X   .........
Ms. Velazquez..................        X   ........  .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......  ........        X   .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........  ........  .........
Mr. Hinojosa...................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................        X   ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Price (GA)...  ........  ........  .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....  ........        X   .........
Ms. Moore (WI).................  ........  ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................  ........  ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........        X   .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................        X   ........  .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................        X   ........  .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    No amendments were offered or considered during the 
Committee's consideration of the bill.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 1264 amends the National Flood Insurance Act to create 
a public option for property owners to purchase flood and wind 
coverage in one policy. Property owners will have access to a 
public option to buy windstorm insurance and know that 
hurricane and tropical storm losses will be covered without 
delays, disputes, and law suits over what damage was caused by 
flooding and what damage was caused by wind.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                     July 19, 2010.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1264, the Multiple 
Peril Insurance Act of 2009.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 1264-Multiple Peril Insurance Act of 2009

    H.R. 1264 would expand the National Flood Insurance Program 
(NFIP) to offer coverage for wind damage to property owners 
located in certain communities. Coverage would be offered at a 
premium sufficient to cover the future expected cost of that 
coverage. Enacting H.R. 1264 would affect direct spending; 
therefore, pay-as-you-go procedures would apply to the 
legislation. However, CBO estimates that enacting H.R. 1264 
would have no significant impact on the federal budget for each 
year and no net effect over the next 10 years.
    H.R. 1264 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The legislation would authorize the NFIP to sell two new 
types of insurance policies to residential and nonresidential 
properties owners--multiperil and windstorm. Multiperil 
policies would cover property damage resulting from flood or 
wind. Windstorm policies would cover property damage resulting 
from wind only. Both lines of coverage would be available for 
properties located in communities that have adopted wind 
mitigation measures consistent with international building 
codes. Windstorm coverage would only be available for 
properties also insured by a separate NFIP flood policy. (While 
properties covered by separate flood and windstorm policies 
would be insured by the program for the same events as those 
covered by a multiperil policy, the aggregate premium offered 
to the property owner could differ due to existing subsidies 
for some flood insurance policies.)
    H.R. 1264 would direct the NFIP to charge actuarial (that 
is, unsubsidized) premiums for new multiperil and windstorm 
policies. The timing and magnitude of future claims payments 
cannot be forecast with certainty because of the nature of 
actuarial pricing and the uncertainty about when damages might 
occur that would result in claims. The NFIP might collect 
aggregate premiums that are above or below amounts necessary to 
pay expenses in a given year (particularly if a major event 
were to occur soon after enactment of the legislation) and over 
time\1\ In years that the program collects more premiums than 
necessary to meet ongoing costs, the NFIP would record a 
surplus (recorded in the budget as a net reduction in direct 
spending). In years of insufficient premium collection, the 
program would draw upon its reserves or available borrowing 
authority from the Treasury (recorded in the budget as an 
increase in direct spending).\2\
---------------------------------------------------------------------------
    \1\See Congressional Budget Office, The National Flood Insurance 
Program: Factors Affecting Actuarial Soundness (November 2009).
    \2\As of July 2010, the NFIP had $18.8 billion in outstanding debt 
to the Treasury. Under current law, the program may borrow up to $20.7 
billion. CBO estimates that remaining borrowing authority (about $2 
billion) will be exhausted by the end of fiscal year 2013.
---------------------------------------------------------------------------
    For this estimate, CBO assumes that actuarially based 
premiums calculated by the NFIP would generate a sufficient 
amount to cover future costs. As such, increased claims 
payments made by the program would be roughly offset by 
additional premiums, resulting in no net change to direct 
spending.
    The CBO staff contact for this estimate is Daniel Hoople. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 1264 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation

Section 1. Short title

    This Act may be cited as the ``Multiple Peril Insurance Act 
of 2009''.

Sec. 2--Coverage for windstorms

    This section would create a program within the NFIP that 
would provide optional multiple peril coverage for physical 
damage from floods or windstorms, or optional windstorm 
coverage for physical damage from windstorms. Duplicative 
multiple peril and flood insurance coverage is prohibited. 
Windstorm coverage will only be provided to those structures 
that already have flood insurance. Coverage shall be made 
available only at chargeable risk premium rates that are 
required in order to make such coverage available on an 
actuarial basis for the type and class of properties covered.
    The FEMA Director shall provide by regulation the general 
terms and conditions of insurability applicable to properties 
eligible for multiple peril and windstorm coverage. For 
multiple peril policies, residential policy limits would be set 
at $500,000 for the structure and $150,000 for contents and 
loss of use. Nonresidential properties could be covered to 
$1,000,000 for structure and $750,000 for contents and business 
interruption. For separate windstorm policies, regulations will 
provide that coverage shall not exceed the amount such that the 
aggregate liability under flood insurance and windstorm 
coverage does not exceed the coverage limit applicable to 
multiple peril coverage. This section becomes effective six 
months after enactment.

Sec. 3--Prohibition against duplicative coverage

    This section provides that flood insurance may not be 
provided to any structure if that structure is covered by 
multiple peril insurance.

Sec. 4--Compliance with State and local law

    This section provides that no new multiple peril coverage 
shall be provided for any property that has been declared by a 
State or local zoning authority to be in violation of State or 
local laws, regulations, or ordinances, which are intended to 
reduce damage caused by windstorms.

Sec. 5--Criteria for land management and use

    This section directs FEMA to carry out studies to determine 
appropriate measures in wind events as to wind hazard 
prevention. FEMA is directed to encourage the adoption and 
application of any measures identified.

Sec. 6--Definitions

    Windstorms are defined as any hurricane, tornado, cyclone, 
typhoon, or other wind event.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                  NATIONAL FLOOD INSURANCE ACT OF 1968

                  TITLE XIII--NATIONAL FLOOD INSURANCE

                              SHORT TITLE

  Sec. 1301. This title may be cited as the ``National Flood 
Insurance Act of 1968''.

           *       *       *       *       *       *       *

            CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM

                            BASIC AUTHORITY

  Sec. 1304. (a) * * *

           *       *       *       *       *       *       *

  (c) Multiperil Coverage for Damage From Flood or Windstorm 
and Separate Coverage for Windstorm.--
          (1) In general.--The national flood insurance program 
        established pursuant to subsection (a) shall enable the 
        purchase of the following coverages:
                  (A) Multiperil coverage.--Optional insurance 
                against loss resulting from physical damage to 
                or loss of real property or personal property 
                related thereto located in the United States 
                arising from any flood or windstorm, subject to 
                the limitations in this subsection and section 
                1306(b); and
                  (B) Separate windstorm coverage.--Optional 
                insurance against loss resulting from physical 
                damage to or loss of real property or personal 
                property related thereto located in the United 
                States arising from any windstorm, subject to 
                the limitations in this subsection and section 
                1306(b).
          (2) Community participation requirement.--Multiperil 
        coverage pursuant to paragraph (1)(A) and windstorm 
        coverage pursuant to paragraph (1)(B) may not be 
        provided in any area (or subdivision thereof) unless an 
        appropriate public body shall have adopted adequate 
        mitigation measures (with effective enforcement 
        provisions) which the Director finds are consistent 
        with the criteria for construction described in the 
        International Code Council building codes relating to 
        wind mitigation.
          (3) Relationship to flood insurance coverage.--
                  (A) Prohibition against duplicative 
                coverage.--Multiperil coverage pursuant to 
                paragraph (1)(A) may not be provided with 
                respect to any structure (or the personal 
                property related thereto) for any period during 
                which such structure is covered, at any time, 
                by flood insurance coverage made available 
                under this title.
                  (B) Requirement to maintain flood insurance 
                coverage.--Windstorm coverage pursuant to 
                paragraph (1)(B) may be provided only with 
                respect to a structure (and the personal 
                property related thereto) that is covered by 
                flood insurance coverage made available under 
                this title and only during the period that such 
                structure (and personal property) are so 
                covered.
          (4) Nature of coverage.--
                  (A) Multiperil coverage.--Multiperil coverage 
                pursuant to paragraph (1)(A) shall--
                          (i) cover losses only from physical 
                        damage resulting from flooding or 
                        windstorm; and
                          (ii) provide for approval and payment 
                        of claims under such coverage upon 
                        proof that such loss must have resulted 
                        from either windstorm or flooding, but 
                        shall not require for approval and 
                        payment of a claim that the specific 
                        cause of the loss, whether windstorm or 
                        flooding, be distinguished or 
                        identified.
                  (B) Separate windstorm coverage.--Windstorm 
                coverage pursuant to paragraph (1)(B) shall--
                          (i) cover losses only from physical 
                        damage resulting from windstorm; and
                          (ii) provide for approval and payment 
                        of claims under such coverage or under 
                        the flood insurance coverage required 
                        to be maintained under paragraph (3)(B) 
                        upon a determination that such loss is 
                        from windstorm or flooding, 
                        respectively, but shall not require for 
                        approval and payment of a claim that 
                        the insured distinguish or identify the 
                        specific cause of the loss, whether 
                        windstorm or flooding.
          (5) Actuarial rates.--Multiperil coverage pursuant to 
        paragraph (1)(A) and windstorm coverage pursuant to 
        paragraph (1)(B) shall be made available for purchase 
        for a property only at chargeable risk premium rates 
        that, based on consideration of the risks involved and 
        accepted actuarial principles, and including operating 
        costs and allowance and administrative expenses, are 
        required in order to make such coverage available on an 
        actuarial basis for the type and class of properties 
        covered.
          (6) Terms of coverage.--The Director shall, after 
        consultation with persons and entities referred to in 
        section 1306(a), provide by regulation for the general 
        terms and conditions of insurability applicable to 
        properties eligible for multiperil coverage pursuant to 
        paragraph (1)(A) and such terms and conditions 
        applicable to properties eligible for windstorm 
        coverage pursuant to paragraph (1)(B), subject to the 
        provisions of this subsection, including--
                  (A) the types, classes, and locations of any 
                such properties which shall be eligible for 
                such coverages, which shall include residential 
                and nonresidential properties;
                  (B) subject to paragraph (7), the nature and 
                limits of loss or damage in any areas (or 
                subdivisions thereof) which may be covered by 
                such coverages;
                  (C) the classification, limitation, and 
                rejection of any risks which may be advisable;
                  (D) appropriate minimum premiums;
                  (E) appropriate loss deductibles; and
                  (F) any other terms and conditions relating 
                to insurance coverage or exclusion that may be 
                necessary to carry out this subsection.
          (7) Limitations on amount of coverage.--
                  (A) Multiperil coverage.--The regulations 
                issued pursuant to paragraph (6) shall provide 
                that the aggregate liability under multiperil 
                coverage made available under this subsection 
                shall not exceed the lesser of the replacement 
                cost for covered losses or the following 
                amounts, as applicable:
                          (i) Residential structures.--In the 
                        case of residential properties, which 
                        shall include structures containing 
                        multiple dwelling units that are made 
                        available for occupancy by rental 
                        (notwithstanding any treatment or 
                        classification of such properties for 
                        purposes of section 1306(b))--
                                  (I) for any single-family 
                                dwelling, $500,000;
                                  (II) for any structure 
                                containing more than one 
                                dwelling unit, $500,000 for 
                                each separate dwelling unit in 
                                the structure, which limit, in 
                                the case of such a structure 
                                containing multiple dwelling 
                                units that are made available 
                                for occupancy by rental, shall 
                                be applied so as to enable any 
                                insured or applicant for 
                                insurance to receive coverage 
                                for the structure up to a total 
                                amount that is equal to the 
                                product of the total number of 
                                such rental dwelling units in 
                                such property and the maximum 
                                coverage limit per dwelling 
                                unit specified in this clause; 
                                and
                                  (III) $150,000 per dwelling 
                                unit for--
                                          (aa) any contents 
                                        related to such unit; 
                                        and
                                          (bb) any necessary 
                                        increases in living 
                                        expenses incurred by 
                                        the insured when losses 
                                        from flooding or 
                                        windstorm make the 
                                        residence unfit to live 
                                        in.
                          (ii) Nonresidential properties.--In 
                        the case of nonresidential properties 
                        (including church properties)--
                                  (I) $1,000,000 for any single 
                                structure; and
                                  (II) $750,000 for--
                                          (aa) any contents 
                                        related to such 
                                        structure; and
                                          (bb) in the case of 
                                        any nonresidential 
                                        property that is a 
                                        business property, any 
                                        losses resulting from 
                                        any partial or total 
                                        interruption of the 
                                        insured's business 
                                        caused by damage to, or 
                                        loss of, such property 
                                        from flooding or 
                                        windstorm, except that 
                                        for purposes of such 
                                        coverage, losses shall 
                                        be determined based on 
                                        the profits the covered 
                                        business would have 
                                        earned, based on 
                                        previous financial 
                                        records, had the flood 
                                        or windstorm not 
                                        occurred.
                  (B) Separate windstorm coverage.--The 
                regulations issued pursuant to paragraph (6) 
                shall provide that windstorm coverage pursuant 
                to paragraph (1)(B) for a property shall not 
                exceed the amount such that the aggregate 
                liability under flood insurance coverage 
                required to be maintained under paragraph 
                (3)(B) for the property and such windstorm 
                coverage for the property does not exceed the 
                applicable coverage limit for the property set 
                forth in subparagraph (A) of this paragraph.
          (8) Effective date.--This subsection shall take 
        effect on, and shall apply beginning on, the expiration 
        of the 6-month period that begins on the date of the 
        enactment of the Multiple Peril Insurance Act of 2009.
  [(c)] (d) In carrying out the flood insurance program the 
Director shall, to the maxmium extent practicable, encourage 
and arrange for--
          (1) * * *

           *       *       *       *       *       *       *

                PROHIBITION AGAINST DUPLICATIVE COVERAGE

  Sec. 1314. Flood insurance under this title may not be 
provided with respect to any structure (or the personal 
property related thereto) for any period during which such 
structure is covered, at any time, by multiperil insurance 
coverage made available pursuant to section 1304(c)(1)(A).

           *       *       *       *       *       *       *

             PROPERTIES IN VIOLATION OF STATE AND LOCAL LAW

  Sec. 1316. (a) Flood Protection Measures.--No new flood 
insurance coverage shall be provided under this title for any 
property which the Director finds has been declared by a duly 
constituted State or local zoning authority, or other 
authorized public body, to be in violation of State or local 
laws, regulations or ordinances which are intended to 
discourage or otherwise restrict land development or occupancy 
in flood-prone areas.
  (b) Windstorm Protection Measures.--No new multiperil 
coverage shall be provided under section 1304(c) for any 
property that the Director finds has been declared by a duly 
constituted State or local zoning authority, or other 
authorized public body to be in violation of State or local 
laws, regulations, or ordinances, which are intended to reduce 
damage caused by windstorms.

           *       *       *       *       *       *       *

   CHAPTER III--COORDINATION OF FLOOD INSURANCE WITH LAND-MANAGEMENT 
PROGRAMS IN FLOOD-PRONE AREAS

           *       *       *       *       *       *       *

                  CRITERIA FOR LAND MANAGEMENT AND USE

  Sec. 1361. (a) * * *

           *       *       *       *       *       *       *

  (d) Windstorms.--
          (1) Studies and investigations.--The Director shall 
        carry out studies and investigations under this section 
        to determine appropriate measures in wind events as to 
        wind hazard prevention, and may enter into contracts, 
        agreements, and other appropriate arrangements to carry 
        out such activities. Such studies and investigations 
        shall include laws, regulations, and ordinance relating 
        to the orderly development and use of areas subject to 
        damage from windstorm risks, and zoning building codes, 
        building permits, and subdivision and other building 
        restrictions for such areas.
          (2) Coordination with state and local governments.--
        The Director shall work closely with and provide any 
        necessary technical assistance to State, interstate, 
        and local governmental agencies, to encourage the 
        application of measures identified pursuant to 
        paragraph (1) and the adoption and enforcement of such 
        measures.

           *       *       *       *       *       *       *

        CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS

                              DEFINITIONS

  Sec. 1370. (a) * * *

           *       *       *       *       *       *       *

  (14) the term ``servicer'' means the person responsible for 
receiving any scheduled periodic payments from a borrower 
pursuant to the terms of a loan, including amounts for taxes, 
insurance premiums, and other charges with respect to the 
property securing the loan, and making the payments of 
principal and interest and such other payments with respect to 
the amounts received from the borrower as may be required 
pursuant to the terms of the loan; [and]
  (15) the term ``substantially damaged structure'' means a 
structure covered by a contract for flood insurance that has 
incurred damage for which the cost of repair exceeds an amount 
specified in any regulation promulgated by the Director, or by 
a community ordinance, whichever is lower [.]; and
  (16) the term ``windstorm'' means any hurricane, tornado, 
cyclone, typhoon, or other wind event.

           *       *       *       *       *       *       *

                            DISSENTING VIEWS

    H.R. 1264, the Multiple Peril Insurance Act of 2009, 
proposes to expand the federal government's role in the private 
insurance market by creating a massive new program to offer 
government-provided coverage backed by taxpayer dollars against 
property losses from hurricanes that could shift enormous costs 
onto American taxpayers. This unwarranted and ill-advised 
legislation would amend the National Flood Insurance Act of 
1968, which created the National Flood Insurance Program 
(NFIP), by adding windstorm insurance to the scope of insurance 
coverage offered by the federal government, obligating it to 
pay potentially billions of dollars in property damage claims 
resulting from windstorms in addition to flooding.
    We strongly oppose the expansion of the National Flood 
Insurance Program to include windstorm damage. Transferring 
these liabilities from the private sector to the NFIP would be 
fiscally irresponsible. Federal government insurance would 
supplant insurance that is already provided by the private 
market. Expansion of the NFIP would also undermine economic 
incentives to mitigate risks because the program would likely 
distort rates from their market-determined values. Individuals 
would be encouraged to take on risks that are imprudent, 
putting themselves in harm's way because they would not have to 
bear the full costs of any subsequent damages. Finally, the 
inclusion of windstorm damage insurance in the NFIP would mean 
that all taxpayers would be subsidizing insurance rates for the 
benefit of those people in high-risk areas.
    The NFIP currently owes the U.S. Treasury $18.75 billion, 
the amount it has been forced to borrow from taxpayers to pay 
claims and expenses in excess of premiums collected. Since 
2006, the Government Accountability Office (GAO) has included 
the NFIP on its list of ``high-risk'' federal government 
programs in need of comprehensive reforms. By its own account, 
the NFIP will likely never be able to repay its debt to 
taxpayers. For this reason alone, H.R. 1264 is unworthy of 
support.
    It is our view that fundamental reform of the National 
Flood Insurance Program should be the priority of this 
Congress, including the removal of subsidies over time to 
improve the long-term solvency of the program. In contrast, 
H.R. 1264 would dramatically increase the scope of the NFIP at 
a time when the program is essentially insolvent and remains 
grossly underfunded.
    During the recent debate on H.R. 5114, the Flood Insurance 
Priorities Act of 2010, which passed the House on July 15th, 
there was bipartisan consensus on the need for major reform of 
the NFIP. As approved by the House, H.R. 5114 would phase out 
several categories of subsidies, but many Republicans believed 
the reforms did not go far enough to put the program on a solid 
path to self-sufficiency. We reiterate that the chief objective 
for this Congress should be achieving fundamental reform of the 
current flood insurance program, rather than embarking on a 
massive expansion by the federal government into the wind 
insurance business.
    We are convinced that H.R. 1264 represents a poor public 
policy choice for America, even if the NFIP were able to pay 
back its debt and function as a self-sustaining program. If 
H.R. 1264 were enacted, for example, it could result in 
significant adverse selection for the multiple-peril program. 
Because wind is a standard component of most private 
homeowners' insurance policies, the initial demand for 
government-backed wind coverage would most likely be 
concentrated in regions where the risk of windstorm damage is 
the greatest. As a result, if there was another large hurricane 
or storm that caused both flood and wind losses, the cost to 
taxpayers would be enormous and the NFIP's debt would increase 
exponentially.
    Obama Administration officials have echoed these concerns. 
Last year, Secretary of Homeland Security Janet Napolitano, 
wrote to Chairman Frank stating the Administration's opposition 
to the expansion of the NFIP contemplated by H.R. 1264:

          The Administration strongly opposes the provision in 
        the House bill establishing insurance coverage for 
        multiple perils. The Administration objects to this 
        coverage for a number of reasons. Coverage is available 
        in the private sector and through state wind pools. 
        Property owners are served by the private market, which 
        provides catastrophic windstorm coverage without the 
        need for Federal aid. The Administration, opposes 
        extending the Federal Government's role and increasing 
        its liability for an insurance program that is readily 
        available in the private sector and through state 
        insurance plans . . . Wind coverage would greatly 
        increase the NFIP's exposure to catastrophic risks at a 
        time when the program has a growing debt and accrued 
        interest of over $19 billion . . .

    More recently, in testimony before the Subcommittee on 
Housing and Community Opportunity on April 21, 2010, the top 
Administration official responsible for our nation's emergency 
preparedness and management of major catastrophic events such 
as floods and hurricanes reiterated the Administration's strong 
opposition to H.R. 1264. In the words of Craig Fugate, 
Administrator of the Federal Emergency Management Agency:

          We are concerned that under a multi-peril Federal 
        program, the liability for multi-peril insurance, which 
        is currently absorbed by the private property insurance 
        market, would be transferred to the U.S. Treasury and, 
        ultimately, to the American taxpayer. Notwithstanding 
        the bill's language, a Federal program will face 
        pressures to set aside risk-based pricing and offer 
        subsidized government insurance. If it lowered 
        insurance prices below the actuarially-fair value, a 
        Federal program would encourage people to take on more 
        risk than if they faced the full expected costs of 
        damages. In addition to the riskier behavior, Federal 
        Government participation in the wind insurance market 
        would displace private markets, and mandate an unfair 
        cross-subsidy burden on taxpayers.

    At that same hearing, a representative of the Association 
of State Flood Plain Managers (ASFPM), the nationwide network 
of state and local officials who manage activities in 
floodplains to protect our communities against natural 
disasters, also criticized H.R. 1264:

          The ASFPM has testified in the past to voice its 
        strong opposition to proposals that would add the 
        unknown exposure of an optional wind and flood policy 
        to the NFIP. While intended to benefit the narrow strip 
        of properties subject to both hurricane storm surge and 
        wind damage, this proposed policy change could 
        conceivably result in coverage of a property in a flood 
        zone that was destroyed by winds elsewhere in the 
        nation. While it is true that many Americans live in 
        coastal counties, relatively few of those are subject 
        to both storm surge and wind damage, so this concept 
        would involve a major cross subsidy of a small group at 
        risk of both wind and flood damage by policy holders 
        throughout the nation.

    While Congress should examine market-based initiatives to 
encourage more competitive markets for private property 
insurance in high-risk areas, it would be fiscally 
irresponsible to force the NFIP to take on new risks for wind 
insurance, as it could expose taxpayers to further losses and 
add billions of dollars to the Federal budget deficit. 
Accordingly, we join the Obama Administration in strongly 
opposing H.R. 1264.
                                   Erik Paulsen.
                                   Randy Neugebauer.
                                   Mike Castle.
                                   Judy Biggert.
                                   Spencer Bachus.
                                   Jeb Hensarling.
                                   Patrick T. McHenry.
                                   Ron Paul.
                                   Scott Garrett.
                                   Donald A. Manzullo
                                   Thaddeus G. McCotter.
                                   Michele Bachmann.
                                   Shelley Moore Capito.
                                   Peter T. King.
                                   John Campbell.

                                  
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