I

103D CONGRESS

1ST SESSION H. R. 764

To require the Director of the Federal Emergency Management Agency to

develop a plan and submit a report to the Congress regarding establishing

a national windstorm insurance program.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 3, 1993

Mr. DE LUGO (for himself and Mr. APPLEGATE) introduced the following bill;

which was referred jointly to the Committees on Public Works and Transportation and Banking, Finance and Urban Affairs

A BILL

To require the Director of the Federal Emergency Management Agency to develop a plan and submit a report

to the Congress regarding establishing a national windstorm insurance program.

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 ‘‘Windstorm Hazard

5 Reduction Plan Act of 1993’’.

6 SEC. 2. CONGRESSIONAL FINDINGS.

7 The Congress finds that—
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1 (1) in 1992, the property and casualty insur2 ance industry suffered more losses caused by natural

3 disasters than in any other year;

4 (2) a substantial portion of the losses were

5 caused by windstorms, such as hurricanes and tor6 nadoes; and

7 (3) because of the windstorms in 1992 and re8 cent years, in certain regions of the United States

9 and the territories of the United States, including

10 the Virgin Islands, property and casualty insurers

11 are withdrawing underwriting capacity from the

12 market by refusing to issue new policies or renew ex13 isting policies, or by increasing premiums to

14 unaffordable levels.

15 SEC. 3. DEVELOPMENT OF INSURANCE PLAN.

16 (a) IN GENERAL.—Not later than the expiration of

17 the 90-day period beginning on the date of the enactment

18 of this Act, the Director of the Federal Emergency Man19 agement Agency (in this Act referred to as the ‘‘Director’’)

20 shall develop a detailed written plan under this Act for

21 establishing and carrying out a national windstorm insur22 ance program.

23 (b) CONTENTS.—The plan required under subsection

24 (a) shall be designed—
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1 (1) to supplement Federal disaster relief and

2 emergency assistance provided pursuant to the Rob3 ert T. Stafford Disaster Relief and Emergency As4 sistance Act and other laws for damage and loss

5 caused by winds from hurricanes, tornadoes, and

6 other windstorms;

7 (2) to make affordable insurance coverage avail8 able to protect against loss resulting from physical

9 damage to, or loss of, residential structures arising

10 from wind damage;

11 (3) to provide such insurance coverage for resi12 dential structures through a program that pro13 vides—

14 (A) insurance coverage for damage caused

15 by winds from hurricanes, tornadoes, and any

16 other windstorms, but not for water damage

17 arising from any such windstorms;

18 (B) insurance coverage at premium rates

19 affordable to homeowners in areas at risk of

20 such wind damage;

21 (C) appropriate building and structural re22 quirements and other wind damage-mitigation

23 measures;

24 (D) appropriate measures to carry out

25 mitigation efforts; and
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1 (E) schedules of the amount of coverage

2 available for various residential structures;

3 (4) to provide incentives for private property

4 and casualty insurers to reenter markets from which

5 they have previously withdrawn; and

6 (5) to make insurance coverage available, if the

7 Director determines that such coverage would be

8 feasible, for other types or classes of properties in9 cluding—

10 (A) public infrastructure facilities and

11 properties owned by State and local govern12 ments, which may include airports, roads,

13 bridges, dams, sewer systems, governmental

14 buildings, and other facilities and structures;

15 (B) other residential properties;

16 (C) business properties;

17 (D) agricultural properties; and

18 (E) properties owned by private nonprofit

19 organizations.

20 (c) CONSIDERATIONS.—The national windstorm in21 surance program contained in the plan required under

22 subsection (a) may—

23 (1) provide for participation of the private in24 surance industry in carrying out the program;
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1 (2) provide coinsurance by the Director and pri2 vate insurers for covered losses and reinsurance for

3 losses sustained by private insurers;

4 (3) define—

5 (A) the areas in which such coverage is

6 made available by establishing requirements for

7 the eligibility or participation of communities or

8 by other means;

9 (B) the types of residential properties,

10 business properties, agricultural properties,

11 properties owned by private nonprofit organiza12 tions, and public infrastructure facilities and

13 properties owned by State and local govern14 ments, for which such coverage is made avail15 able; and

16 (C) the availability or coverage of such in17 surance in any other manner;

18 (4) establish premium rates for coverage that

19 are actuarially based on the risk of wind-caused

20 damage or subsidized premium rates that are less

21 than such actuarially based rates;

22 (5) adjust the availability of Federal loan guar23 antees, loan insurance, or direct loans, or Federal

24 construction or disaster relief assistance (under the

25 Robert T. Stafford Disaster Relief and Emergency
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1 Assistance Act and other laws), based on the pur2 chase of a policy for windstorm insurance; and

3 (6) provide community-based and other incen4 tives for participation in the program.

5 (d) CONSULTATION.—In developing the plan required

6 under subsection (a), the Director shall consult with—

7 (1) the heads of any Federal agencies author8 ized to provide disaster relief;

9 (2) the chief executive officers of the States and

10 territories of the United States, that suffered signifi11 cant losses caused by windstorms occurring after the

12 beginning of 1989; and

13 (3) representatives of private insurers that are

14 withdrawing underwriting capacity from the markets

15 in the States and territories referred to in paragraph

16 (2).

17 SEC. 4. REPORT.

18 Not later than the expiration of the 90-day period

19 beginning on the date of the enactment of this Act, the

20 Director shall submit to the Committee on Public Works

21 and Transportation and the Committee on Banking, Fi22 nance and Urban Affairs, of the House of Representatives,

23 and to the Committee on Environment and Public Works

24 and the Committee on Banking, Housing, and Urban

25 Affairs, of the Senate, a report containing—
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1 (1) the written plan required under section 3;

2 (2) a statement of the amount of disaster as3 sistance provided pursuant to the Robert T. Stafford

4 Disaster Relief and Emergency Assistance Act and

5 other Acts during each of fiscal years 1989, 1990,

6 1991, and 1992 for property damage caused by

7 winds from hurricanes, tornadoes, and other wind8 storms to residential properties, business properties,

9 agricultural properties, properties owned by private

10 nonprofit organizations, and public infrastructure

11 facilities and properties owned by State and local

12 governments;

13 (3) an estimate of the cost to the Federal Gov14 ernment of carrying out the national windstorm in15 surance program under the plan, by making cov16 erage available only for residential structures;

17 (4) a description of any circumstances or situa18 tions that, in the determination of the Director,

19 would be a sufficient basis for making coverage

20 available under the national windstorm insurance

21 program for public infrastructure facilities and prop22 erties owned by State and local governments, other

23 residential properties, business properties, agricul24 tural properties, and properties owned by private

25 nonprofit organizations.
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1 (5) an estimate of the cost to the Federal Gov2 ernment of carrying out the national windstorm in3 surance program under the plan, by making cov4 erage available for residential structures and for

5 public infrastructure and properties owned by State

6 and local governments, other residential properties,

7 business properties, agricultural properties, and

8 properties owned by private nonprofit organizations.

9 (6) an estimate of the effects that implementing

10 the national windstorm insurance program would

11 have on the amount of disaster assistance provided

12 by the Federal Government;

13 (7) an estimate of the effects that implementing

14 the national windstorm insurance program would

15 have on the private insurance industry and the avail16 ability of residential and other property insurance

17 and insurance against windstorm damage;

18 (8) a description of any amendments to the

19 Robert T. Stafford Disaster Relief and Emergency

20 Assistance Act and other Acts relating to disaster

21 assistance that would be necessary or appropriate in

22 the event of the implementation of the national

23 windstorm insurance program; and

24 (9) any other information that the Director

25 considers appropriate.
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