I 

113TH CONGRESS 

1ST SESSION H. R. 737 

To establish a national catastrophic risk consortium to ensure the availability 

and affordability of homeowners’ insurance coverage for catastrophic events. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 14, 2013 

Ms. WILSON of Florida (for herself and Ms. BROWN of Florida) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To establish a national catastrophic risk consortium to ensure the availability and affordability of homeowners’ 

insurance coverage for catastrophic events. 

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; TABLE OF CONTENTS. 

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

5 ‘‘Homeowners’ Defense Act of 2013’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Findings and purposes. 

Sec. 3. Establishment; status; principal office; membership. 

Sec. 4. Functions. 

Sec. 5. Powers. 


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Sec. 6. Nonprofit entity; conflicts of interest; audits. 

Sec. 7. Management. 

Sec. 8. Staff; experts and consultants. 

Sec. 9. Federal liability. 

Sec. 10. Authorization of appropriations. 

1 SEC. 2. FINDINGS AND PURPOSES. 

2 (a) FINDINGS.—The Congress finds that— 

3 (1) the United States has a history of cata4 strophic natural disasters, including hurricanes, tor5 nadoes, flood, fire, earthquakes, and volcanic erup6 tions; 

7 (2) although catastrophic natural disasters 

8 occur infrequently, they will continue to occur and 

9 are predictable; 

10 (3) such disasters generate large economic 

11 losses and a major component of those losses comes 

12 from damage and destruction to homes; 

13 (4) for the majority of Americans, their invest14 ment in their home represents their single biggest 

15 asset and the protection of that investment is para16 mount to economic and social stability; 

17 (5) the United States needs to take and support 

18 State actions to be better prepared for and better 

19 protected from catastrophes; 

20 (6) as the risk of catastrophic losses grows, so 

21 do the risks that any premiums collected by private 

22 insurers for extending coverage will be insufficient to 

23 cover future catastrophes, and private insurers, in 


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1 an effort to protect their shareholders and policy2 holders (in the case of mutually owned companies), 

3 have thus significantly raised premiums and cur4 tailed insurance coverage in States exposed to major 

5 catastrophes; 

6 (7) such effects on the insurance industry have 

7 been harmful to economic activity in States exposed 

8 to major catastrophes and have placed significant 

9 burdens on residents of such States; 

10 (8) Hurricanes Katrina, Rita, and Wilma 

11 struck the United States in 2005, causing over 

12 $200,000,000,000 in total economic losses, and in13 sured losses to homeowners in excess of 

14 $50,000,000,000; 

15 (9) while the total costs of Hurricane Sandy 

16 have not yet been calculated, Fitch Ratings, a global 

17 credit ratings agency, has estimated that insured 

18 losses will amount to between $20,000,000,000 and 

19 $25,000,000,000; 

20 (10) the Federal Government has provided and 

21 will continue to provide resources to pay for losses 

22 from future catastrophes; and 

23 (11) it is the proper role of the Federal Govern24 ment to prepare for and protect its citizens from ca25 tastrophes and to facilitate consumer protection, vicVerDate Mar 15 2010 21:46 Feb 22, 2013 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H737.IH H737

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1 tim assistance, and recovery, including financial re2 covery. 

3 (b) PURPOSES.—The purpose of this Act is to estab4 lish a national catastrophic risk consortium to ensure the 

5 availability and affordability of homeowners’ insurance 

6 coverage for catastrophic events. 

7 SEC. 3. ESTABLISHMENT; STATUS; PRINCIPAL OFFICE; 

8 MEMBERSHIP. 

9 (a) ESTABLISHMENT.—There is established an entity 

10 to be known as the ‘‘National Catastrophe Risk Consor11 tium’’ (in this Act referred to as the ‘‘Consortium’’). 

12 (b) STATUS.—The Consortium is not a department, 

13 agency, or instrumentality of the United States Govern14 ment. 

15 (c) PRINCIPAL OFFICE.—The principal office and 

16 place of business of the Consortium shall be such location 

17 within the United States determined by the Board of Di18 rectors to be the most advantageous for carrying out the 

19 purpose and functions of the Consortium. 

20 (d) MEMBERSHIP.—Any State that has established a 

21 reinsurance fund or has authorized the operation of a 

22 State residual insurance market entity, or State-sponsored 

23 provider of natural catastrophe insurance, shall be eligible 

24 to participate in the Consortium. 


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1 SEC. 4. FUNCTIONS. 

2 The Consortium shall— 

3 (1) work with all States, particularly those par4 ticipating in the Consortium, to gather and maintain 

5 an inventory of catastrophe risk obligations held by 

6 State reinsurance funds, State residual insurance 

7 market entities, and State-sponsored providers of 

8 natural catastrophe insurance; 

9 (2) at the discretion of the affected members 

10 and on a conduit basis, issue securities and other fi11 nancial instruments linked to the catastrophe risks 

12 insured or reinsured through members of the Con13 sortium in the capital markets; 

14 (3) coordinate reinsurance contracts between 

15 participating, qualified reinsurance funds and pri16 vate parties; 

17 (4) act as a centralized repository of State risk 

18 information that can be accessed by private-market 

19 participants seeking to participate in the trans20 actions described in paragraphs (2) and (3) of this 

21 section; 

22 (5) establish a catastrophe risk database to per23 form research and analysis that encourages stand24 ardization of the risk-linked securities market; 

25 (6) perform any other functions, other than as26 suming risk or incurring debt, that are deemed necVerDate Mar 15 2010 21:46 Feb 22, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H737.IH H737

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1 essary to aid in the transfer of catastrophe risk from 

2 participating States to private parties; and 

3 (7) submit annual reports to Congress describ4 ing the activities of the Consortium for the pre5 ceding year, and the first such annual report shall 

6 include an assessment of the costs to States and re7 gions associated with catastrophe risk and an anal8 ysis of the costs and benefits, for States not partici9 pating in the Consortium, of such nonparticipation. 

10 SEC. 5. POWERS. 

11 The Consortium— 

12 (1) may make and perform such contracts and 

13 other agreements with any individual or other pri14 vate or public entity however designated and wher15 ever situated, as may be necessary for carrying out 

16 the functions of the Consortium; and 

17 (2) shall have such other powers, other than the 

18 power to assume risk or incur debt, as may be nec19 essary and incident to carrying out this Act. 

20 SEC. 6. NONPROFIT ENTITY; CONFLICTS OF INTEREST; AU21 DITS. 

22 (a) NONPROFIT ENTITY.—The Consortium shall be 

23 a nonprofit entity and no part of the net earnings of the 

24 Consortium shall inure to the benefit of any member, 

25 founder, contributor, or individual. 


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1 (b) CONFLICTS OF INTEREST.—No director, officer, 

2 or employee of the Consortium shall in any manner, di3 rectly or indirectly, participate in the deliberation upon or 

4 the determination of any question affecting his or her per5 sonal interests or the interests of any Consortium, part6 nership, or organization in which he or she is directly or 

7 indirectly interested. 

8 (c) AUDITS.— 

9 (1) ANNUAL AUDIT.—The financial statements 

10 of the Consortium shall be audited annually in ac11 cordance with generally accepted auditing standards 

12 by independent certified public accountants. 

13 (2) REPORTS.—The report of each annual audit 

14 pursuant to paragraph (1) shall be included in the 

15 annual report submitted in accordance with section 

16 4(7). 

17 (d) PROHIBITION ON ELECTION AND LOBBYING AC18 TIVITIES.— 

19 (1) FEDERAL.—The Consortium may not— 

20 (A) make any contribution to a candidate 

21 for election for Federal office or to a political 

22 committee; 

23 (B) employ or retain— 


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1 (i) a registered lobbyist under the 

2 Lobbying Disclosure Act of 1995 (2 U.S.C. 

3 1601 et seq.); or 

4 (ii) an organization that employs one 

5 or more lobbyists and is registered under 

6 section 4(a)(2) of such Act (2 U.S.C. 

7 1603(a)(2)); or 

8 (C) provide any thing of value, other than 

9 educational materials or information, to any 

10 elected official of the Federal Government. 

11 For purposes of this paragraph, the terms ‘‘con12 tribution’’, ‘‘candidate’’, ‘‘Federal office’’, and ‘‘po13 litical committee’’ have the meanings given such 

14 terms in section 301 of the Federal Election Cam15 paign Act of 1971 (2 U.S.C. 431). 

16 (2) CONSORTIUM.—The Consortium may not— 

17 (A) make any contribution to a candidate 

18 for election for any State or local office or to 

19 any committee, club, association, or other group 

20 that receives contributions or makes expendi21 tures for the purpose of influencing any such 

22 election; 

23 (B) employ or retain any person who en24 gages in influencing legislating (as such term is 

25 defined in section 4911(d) of the Internal RevVerDate Mar 15 2010 21:46 Feb 22, 2013 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H737.IH H737

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1 enue Code of 1986 (26 U.S.C. 4911(d))) of any 

2 State or local legislative body; or 

3 (C) provide any thing of value, other than 

4 educational materials or information, to any 

5 elected official of any State or local government. 

6 SEC. 7. MANAGEMENT. 

7 (a) BOARD OF DIRECTORS; MEMBERSHIP; DESIGNA8 TION OF CHAIRPERSON.— 

9 (1) BOARD OF DIRECTORS.—The management 

10 of the Consortium shall be vested in a board of di11 rectors (referred to in this Act as the ‘‘Board’’) com12 posed of not less than 3 members. 

13 (2) CHAIRPERSON.—The Secretary of the 

14 Treasury, or the designee of the Secretary, shall 

15 serve as the chairperson of the Board. 

16 (3) MEMBERSHIP.—The members of the Board 

17 shall include— 

18 (A) the Secretary of Homeland Security 

19 and the Secretary of Commerce, or the des20 ignees of such Secretaries, respectively, but only 

21 during such times as there are fewer than two 

22 States participating in the Consortium; and 

23 (B) a member from each State partici24 pating in the Consortium, who shall be ap25 pointed by such State. 


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1 (b) BYLAWS.—The Board may prescribe, amend, and 

2 repeal such bylaws as may be necessary for carrying out 

3 the functions of the Consortium. 

4 (c) COMPENSATION, ACTUAL, NECESSARY, AND

5 TRANSPORTATION EXPENSES.— 

6 (1) NON-FEDERAL EMPLOYEES.—A member of 

7 the Board who is not otherwise employed by the 

8 Federal Government shall be entitled to receive the 

9 daily equivalent of the annual rate of basic pay pay10 able for level IV of the Executive Schedule under 

11 section 5315 of title 5, United States Code, as in ef12 fect from time to time, for each day (including travel 

13 time) during which such member is engaged in the 

14 actual performance of duties of the Consortium. 

15 (2) FEDERAL EMPLOYEES.—A member of the 

16 Board who is an officer or employee of the Federal 

17 Government shall serve without additional pay (or 

18 benefits in the nature of compensation) for service 

19 as a member of the Consortium. 

20 (3) TRAVEL EXPENSES.—Members of the Con21 sortium shall be entitled to receive travel expenses, 

22 including per diem in lieu of subsistence, equivalent 

23 to those set forth in subchapter I of chapter 57 of 

24 title 5, United States Code. 


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1 (d) QUORUM.—A majority of the Board shall con2 stitute a quorum. 

3 (e) EXECUTIVE DIRECTOR.—The Board shall ap4 point an executive director of the Consortium on such 

5 terms as the Board may determine. 

6 SEC. 8. STAFF; EXPERTS AND CONSULTANTS. 

7 (a) STAFF.— 

8 (1) APPOINTMENT.—The Board of the Consor9 tium may appoint and terminate such other staff as 

10 are necessary to enable the Consortium to perform 

11 its duties. 

12 (2) COMPENSATION.—The Board of the Con13 sortium may fix the compensation of the executive 

14 director and other staff. 

15 (b) EXPERTS AND CONSULTANTS.—The Board shall 

16 procure the services of experts and consultants as the 

17 Board considers appropriate. 

18 SEC. 9. FEDERAL LIABILITY. 

19 The Federal Government and the Consortium shall 

20 not bear any liabilities arising from the actions of the Con21 sortium. Participating States shall retain all catastrophe 

22 risk until the completion of a transaction described in 

23 paragraphs (2) and (3) of section 4. 


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1 SEC. 10. AUTHORIZATION OF APPROPRIATIONS. 

2 There are authorized to be appropriated to carry out 

3 this Act $20,000,000 for each of fiscal years 2014 through 

4 2018. 

Æ 


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