I 

113TH CONGRESS 

1ST SESSION H. R. 1101 

To strengthen America’s financial infrastructure, by requiring pre-funding 

for catastrophe losses using private insurance premium dollars to better 

prepare and protect homeowners from natural catastrophes and to protect 

taxpayers from massive bailouts, and to provide dedicated funding from 

insurance premiums to improve catastrophe preparedness, loss prevention 

and mitigation, and to improve the availability and affordability of private 

market homeowners insurance coverage for catastrophic events, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 12, 2013 

Mr. SIRES introduced the following bill; which was referred to the Committee 

on Financial Services, and in addition to the Committee on Transportation and Infrastructure, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To strengthen America’s financial infrastructure, by requiring pre-funding for catastrophe losses using private insurance premium dollars to better prepare and protect 

homeowners from natural catastrophes and to protect 

taxpayers from massive bailouts, and to provide dedicated funding from insurance premiums to improve catastrophe preparedness, loss prevention and mitigation, 

and to improve the availability and affordability of private market homeowners insurance coverage for catastrophic events, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

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

5 ‘‘Homeowners and Taxpayers Protection Act of 2013’’. 

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

7 this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Findings and purpose. 

Sec. 3. Definitions. 

TITLE I—TAXPAYER PROTECTION, PRE-FUNDED CATASTROPHE 

RECOVERY, AND MARKET STABILIZATION 

Sec. 101. National Commission on Natural Catastrophe Preparation and Protection. 

Sec. 102. Pre-funded and privately financed catastrophe recovery program. 

Sec. 103. Post-catastrophe market stabilization program for liquidity loans. 

Sec. 104. Termination. 

TITLE II—CATASTROPHE READINESS, CITIZEN AND COMMUNITY 

PREPAREDNESS, AND MITIGATION 

Sec. 201. National Readiness, Preparedness, and Mitigation Committee. 

8 SEC. 2. FINDINGS AND PURPOSE. 

9 (a) FINDINGS.—The Congress finds the following: 

10 (1) The economy of the United States, the 

11 American taxpayers, and all homeowners need to be 

12 better prepared for, and more protected from, major 

13 natural catastrophes. 

14 (2) Taking into consideration the current eco15 nomic and fiscal challenges facing the United States, 

16 it is more important than ever to fortify our Na17 tion’s financial infrastructure to be fully prepared 


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1 for major natural catastrophes and to mitigate the 

2 risk of catastrophe as much as possible. 

3 (3) When major catastrophes hit, the Federal 

4 Government is called upon to provide significant 

5 funding and services to support recovery. 

6 (4) The costs of post-catastrophe Federal ‘‘bail7 outs’’ are borne by all taxpayers and can create a 

8 disincentive to fully prepare for catastrophes. 

9 (5) Historically, the budget for Federal Govern10 ment has assumed there will be no natural catas11 trophes, and this lack of pre-funding for catas12 trophes contributed substantially to annual budget 

13 deficits and growing national debt. 

14 (6) The Budget Control Act of 2011 ends an 

15 era of unbudgeted recovery assistance and author16 izes a fixed level of annual funding for catastrophes 

17 relief. 

18 (7) The amount of future catastrophe relief 

19 funding is capped at the average amount spent on 

20 natural catastrophes during the previous 10 years 

21 with the high and low years removed. 

22 (8) By removing the high and low years, the 

23 law now caps catastrophes spending at a level that 

24 is less than 60 percent of the amount spent on ca25 tastrophe relief during the previous 10 years. 


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1 (9) Responsibly managing Government spend2 ing is a top congressional priority, especially in light 

3 of the unprecedented fiscal challenges facing the Na4 tion. 

5 (10) Natural catastrophes will continue to 

6 occur, and the exposure to catastrophe risk is grow7 ing. Scientists warn that future catastrophes will in8 evitably cause losses far in excess of prior events, 

9 and these losses could exceed the limited capacity in 

10 the private market to cover claims and remain viable 

11 to insure properties after massive catastrophic 

12 events. 

13 (11) In 2011, the earthquake centered in Vir14 ginia that shook the East Coast and the extreme 

15 weather and deadly super tornadoes that ripped 

16 across the country provided powerful reminders that 

17 natural catastrophes can strike unexpectedly, se18 verely damaging areas not thought to be at high 

19 risk, and no region is immune from the threat of 

20 natural catastrophe. 

21 (12) In 2012, the devastation caused by 

22 Superstorm Sandy demonstrated yet again the need 

23 for a mechanism to ensure that privately funded 

24 monies will be available if needed following mega-ca25 tastrophes. 


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1 (13) To successfully transition to a more lim2 ited and targeted Federal role in post-event catas3 trophe funding, communities must be better pre4 pared for future catastrophes, the risk of damage 

5 must be mitigated, and individuals must have great6 er access to private market protection against catas7 trophe risk. 

8 (14) The private insurance market alone does 

9 not have sufficient capacity to efficiently address the 

10 timing risk presented by major natural catastrophes, 

11 and there is no guarantee that the level of capacity 

12 that does exist will continue to be available from one 

13 year to the next or that consumers have the re14 sources to adjust to significant price swings in the 

15 cost of the capital for available capacity. 

16 (15) Disruptions in insurance availability and 

17 affordability will continue to harm economic activity 

18 in States exposed to major catastrophes and place 

19 significant burdens on residents of these States. 

20 (16) Consumers in many areas around the 

21 country cannot find homeowners insurance in the 

22 private market, and affordability and availability 

23 challenges will grow dramatically when future major 

24 catastrophes strike. 


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1 (17) Hurricane Katrina, Superstorm Sandy, 

2 and other recent catastrophes confirm that the eco3 nomic harm from natural catastrophes has a dis4 proportionate impact upon the poor and middle class 

5 because areas most frequently and adversely im6 pacted by catastrophic hurricanes have dispropor7 tionately high rates of poverty and housing stock 

8 valued well below State averages. 

9 (18) A new public-private partnership approach 

10 to deal more effectively with major natural catas11 trophes would more efficiently leverage the public 

12 sector and establish a limited, less expensive, more 

13 focused role for government while also maximizing 

14 the capabilities of the private sector. 

15 (19) A privately funded backstop can provide 

16 more protection at lower cost for consumers while 

17 also strengthening America’s financial infrastructure 

18 to deal with natural catastrophes by increasing ca19 pacity and providing more market stability after a 

20 catastrophe. 

21 (20) Cost savings can lower premiums for con22 sumers and be used to encourage better prevention 

23 and mitigation in lieu of post-event bailouts. 

24 (21) A financial backstop can be structured to 

25 be fully funded to protect taxpayers from bailouts 


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1 and insurance policyholders from subsidies upon 

2 which the current system relies. 

3 (22) A public-private partnership model, with 

4 an appropriately structured backstop, can protect 

5 against the timing risk presented by major natural 

6 catastrophes, spread risk more broadly, and enable 

7 private direct insurers to underwrite and price insur8 ance for large-scale catastrophes more efficiently and 

9 with less risk of insolvency or financial distress while 

10 making insurance more available and affordable for 

11 consumers. 

12 (23) A public-private partnership model can be 

13 structured to include and encourage participation by 

14 private market reinsurers. 

15 (24) Incentives and requirements can be cre16 ated to improve prevention and mitigation measures 

17 at the State and local levels, including strong build18 ing codes, effective retrofits for existing homes, and 

19 sensible land use policies to prohibit further develop20 ment in environmentally sensitive areas that are 

21 highly exposed to catastrophe. 

22 (25) For the majority of Americans, their home 

23 is their single biggest asset and protecting that in24 vestment is important to the economic health of milVerDate Mar 15 2010 05:54 Mar 16, 2013 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1101.IH H1101

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1 lions of Americans, to social stability; and to the 

2 health of the banking system and broader economy. 

3 (26) The financial crisis of 2008 and recent fis4 cal challenges confirm the value of taking action in 

5 advance to strengthen America’s financial infra6 structure through a privately funded backstop rather 

7 than waiting for a future crisis or collapse to take 

8 emergency action in the form of bailouts. 

9 (27) It is in the best interests of the Nation to 

10 take responsible action now to begin to build a fi11 nancial backstop that will help protect a recovering 

12 American economy and mitigate the economic or fi13 nancial shock that could result from a major cata14 strophic event. 

15 (b) PURPOSES.—The purposes of this Act are— 

16 (1) to better prepare and protect homeowners 

17 and taxpayers from major natural catastrophe; 

18 (2) to establish a fully funded program for ca19 tastrophe losses to strengthen the financial infra20 structure of the United States; 

21 (3) to protect taxpayers from bailouts and sub22 sidies related to the financing of post-catastrophe ca23 tastrophe relief; 

24 (4) to develop a public-private partnership that 

25 maximizes and supplements private market capacity, 


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1 increases the spread of risk, and increases market 

2 stability; 

3 (5) to reduce the size of State government in4 surance exposure; 

5 (6) to make private market homeowners insur6 ance more available and affordable; 

7 (7) to improve emergency preparedness; 

8 (8) to encourage individuals and communities to 

9 adopt mitigation and prevention measures that re10 duce losses from such catastrophes; and 

11 (9) to fortify the Nation’s capacity to assist in 

12 the financial recovery from major catastrophes. 

13 SEC. 3. DEFINITIONS. 

14 For purposes of this Act, the following definitions 

15 shall apply: 

16 (1) ACTUARIALLY SOUND.—The term ‘‘actuari17 ally sound’’ means, with respect to premiums, that 

18 premiums are determined according to principles of 

19 actuarial science to be adequate, but not excessive, 

20 in the aggregate to pay current and future obliga21 tions, including the expected annualized cost of all 

22 claims, loss adjustment expenses, and all administra23 tive costs. 

24 (2) COVERED EVENT.—The term ‘‘covered 

25 event’’ means the occurrence of one or more of the 


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1 events specified in section 102(c) that causes a loss 

2 or series of losses. 

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

4 States’’ means, with respect to a State plan, a State 

5 covered by the plan. 

6 (4) ELIGIBLE STATE PLAN.—The term ‘‘eligible 

7 State plan’’ means a State plan or multi-State plan 

8 that meets the requirements of section 102(d). 

9 (5) EMERGENCY RESPONSE PROVIDERS.—The 

10 term ‘‘emergency response providers’’ has the mean11 ing given such term in section 2 of the Homeland 

12 Security Act of 2002 (6 U.S.C. 101). 

13 (6) FUND.—The term ‘‘Fund’’ means the Ca14 tastrophe Preparedness Fund established under sec15 tion 102(g). 

16 (7) INSURED LOSS.—The term ‘‘insured loss’’ 

17 means any loss and associated loss adjustment ex18 pense insured or reinsured by an eligible State plan. 

19 (8) LIQUIDITY LOAN.—The term ‘‘liquidity 

20 loan’’ means a loan to an eligible State plan made 

21 under section 103. 

22 (9) MULTI-STATE PLAN.—The term ‘‘multi23 State plan’’ means a State plan described in para24 graph (13)(A)(ii) of this section. 


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1 (10) QUALIFIED ENTITY.—The term ‘‘qualified 

2 entity’’ means a private market reinsurer or other 

3 private sector entity that has satisfied the criteria 

4 established by the Secretary to be treated as a quali5 fied entity for the purposes of section 102(e). 

6 (11) SECRETARY.—The term ‘‘Secretary’’ 

7 means the Secretary of the Treasury except as spe8 cifically provided otherwise. 

9 (12) STATE.—The term ‘‘State’’ includes the 

10 several States of the United States, the District of 

11 Columbia, the Commonwealth of Puerto Rico, 

12 Guam, the Commonwealth of the Northern Mariana 

13 Islands, the United States Virgin Islands, and Amer14 ican Samoa, and any other territory or possession of 

15 the United States. 

16 (13) STATE PLAN.—The term ‘‘State plan’’ 

17 means a plan that— 

18 (A) is created or administered by— 

19 (i) a single State; or 

20 (ii) two or more States; and 

21 (B) provides insurance or reinsurance pro22 tection to address natural catastrophe prepared23 ness and protection, and in the case of a plan 

24 described in subparagraph (A)(ii), provides such 


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1 protection as part of a program covering mul2 tiple States. 

3 TITLE I—TAXPAYER PROTEC4 TION, PRE-FUNDED CATAS5 TROPHE RECOVERY, AND 

6 MARKET STABILIZATION 

7 SEC. 101. NATIONAL COMMISSION ON NATURAL CATAS8 TROPHE PREPARATION AND PROTECTION. 

9 (a) ESTABLISHMENT.—To effectuate a stronger pub10 lic-private partnership at the local, State, and national lev11 els regarding natural catastrophe preparation and protec12 tion, the Secretary of the Treasury, in consultation with 

13 the Secretary of Homeland Security, shall establish a com14 mission to be known as the National Commission on Nat15 ural Catastrophe Preparation and Protection (in this title 

16 referred to as the ‘‘Commission’’). 

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

18 purpose of advising the Secretary regarding the estimated 

19 loss costs associated with the contracts for reinsurance 

20 protection made available under this title and carrying out 

21 the functions specified in this Act, including— 

22 (1) the development and implementation of 

23 public education concerning the risks posed by nat24 ural catastrophes; 


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1 (2) the establishment of a research priority for 

2 the development and implementation of prevention, 

3 mitigation, recovery, and rebuilding strategies, that 

4 better prepare and protect the United States from 

5 natural catastrophes; 

6 (3) the establishment of a process for members 

7 of the Commission to deploy following every major 

8 catastrophe to inspect and evaluate the handling of 

9 such catastrophes; 

10 (4) conducting continuous analysis of the effec11 tiveness of this Act and recommending improve12 ments to the Congress so that the costs of providing 

13 natural catastrophe protection are decreased and so 

14 that the United States is better prepared; and 

15 (5) ensuring that the programs under this title 

16 are operated in a financially prudent manner and on 

17 an actuarially sound basis consistent with the provi18 sions of this title and is not dependent on subsidy 

19 from taxpayers or consumers in areas that do not 

20 reside in areas that have a high-risk to natural ca21 tastrophe loss, including by monitoring the expendi22 ture of funds for administrative purposes to promote 

23 efficiency and economy in the operation and admin24 istration of the program and to minimize the cost 

25 for participating States. 


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1 (c) MEMBERS.—The Commission shall consist of 14 

2 members, as follows: 

3 (1) HOMELAND SECURITY MEMBER.—The Sec4 retary of Homeland Security or the Secretary’s des5 ignee. 

6 (2) APPOINTED MEMBERS.—13 members ap7 pointed by the Secretary of the Treasury, who shall 

8 consist of— 

9 (A) the Director of the Federal Insurance 

10 Office of the Department of the Treasury, or 

11 the Director’s designee; 

12 (B) a member of a State legislature who 

13 can provide the perspective of State govern14 ment; 

15 (C) one individual who is an actuary; 

16 (D) one individual who is employed in en17 gineering; 

18 (E) one individual representing the sci19 entific community; 

20 (F) one individual representing property 

21 and casualty insurers; 

22 (G) one individual representing reinsurers; 

23 (H) one individual who is a member or 

24 former member of the National Association of 

25 Insurance Commissioners; 


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1 (I) two individuals who are consumers, in2 cluding one consumer who is a homeowner who 

3 resides in an area with relatively high exposure 

4 to natural catastrophe risk and one consumer 

5 who resides in an area with relatively low expo6 sure to natural catastrophe risk; 

7 (J) one individual who is an emergency re8 sponse expert; 

9 (K) one individual with expertise regarding 

10 capital markets; and 

11 (L) one individual representing the resi12 dential construction community. 

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

14 Each member of the Commission who is not otherwise em15 ployed by the Federal Government shall be considered a 

16 special Government employee for purposes of sections 202 

17 and 208 of title 18, United States Code. 

18 (e) EXPERTS AND CONSULTANTS.—The Commission 

19 may procure temporary and intermittent services from in20 dividuals or groups recognized as experts in the fields of 

21 actuarial science, meteorology, seismology, vulcanology, 

22 geology, structural engineering, wind engineering, seismic 

23 engineering and hydrology, emergency response, and other 

24 fields, under section 3109(b) of title 5, United States 

25 Code, but at rates not in excess of the daily equivalent 


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1 of the annual rate of basic pay payable for level V of the 

2 Executive Schedule, for each day during which the indi3 vidual procured is performing such services for the Com4 mission. The Commission may also procure, and the Con5 gress encourages the Commission to procure, experts from 

6 universities, research centers, foundations, and other ap7 propriate organizations that could study, research, and de8 velop methods and mechanisms that could be utilized to 

9 strengthen structures to better withstand the events cov10 ered by this Act. 

11 (f) COMPENSATION.—Each member of the Commis12 sion who is not an officer or employee of the Federal Gov13 ernment shall be compensated at a rate of basic pay pay14 able for level V of the Executive Schedule, for each day 

15 (including travel time) during which such member is en16 gaged in the performance of the duties of the Commission. 

17 All members of the Commission who are officers or em18 ployees of the United States shall serve without compensa19 tion in addition to that received for their services as offi20 cers or employees of the United States. 

21 (g) OBTAINING DATA.— 

22 (1) AUTHORITY.—The Commission and the 

23 Secretary may solicit loss and exposure data and 

24 such other information that they deem necessary to 

25 carry out their responsibilities under this Act from 


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1 eligible State plans, other governmental agencies, 

2 and bodies and organizations that act as statistical 

3 agents for the insurance industry. The Commission 

4 and the Secretary shall take such actions as are nec5 essary to ensure that confidential or proprietary in6 formation is disclosed only to authorized individuals 

7 working for the Commission or the Secretary. 

8 (2) CONFIDENTIALITY.— 

9 (A) IN GENERAL.—Information obtained 

10 by the Commission and the Secretary pursuant 

11 to this Act with reference to which a request for 

12 confidential treatment is made by the person 

13 furnishing such information— 

14 (i) shall be exempt from disclosure 

15 under section 552 of title 5, United States 

16 Code; and 

17 (ii) shall not be published or disclosed. 

18 (B) EXCEPTION.—Subparagraph (A) shall 

19 not apply with respect to the publication or dis20 closure of any data aggregated in a manner 

21 that ensures protection of the identity of the 

22 person furnishing such data. 

23 (h) AUTHORIZATION OF APPROPRIATIONS.—There is 

24 authorized to be appropriated— 


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1 (1) $10,000,000 for fiscal year 2013 for the ini2 tial expenses in establishing the Commission and the 

3 initial activities of the Commission during such fiscal 

4 year that cannot timely be covered by amounts that 

5 are deposited in the Fund pursuant to section 

6 102(e)(5)(D); and 

7 (2) for fiscal year 2014 and each fiscal year 

8 thereafter, such sums as may be necessary to carry 

9 out the activities of the Commission during each 

10 such fiscal year that cannot timely be covered by 

11 amounts that are deposited in the Fund pursuant to 

12 section 102(e)(5)(D). 

13 (i) TERMINATION.—The Commission shall terminate 

14 upon the date specified in section 104(c). 

15 SEC. 102. PRE-FUNDED AND PRIVATELY FINANCED CATAS16 TROPHE RECOVERY PROGRAM. 

17 (a) PROGRAM AUTHORITY.— 

18 (1) IN GENERAL.—The Secretary of the Treas19 ury, in consultation with the Secretary of Homeland 

20 Security, shall carry out a program under this sec21 tion that utilizes premiums from eligible State plans 

22 to provide additional capacity and stability in the 

23 homeowners insurance market and improve the 

24 availability and affordability of homeowners protec25 tion coverage to pre-fund future natural catastrophe 


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1 recovery by making available for purchase, only by 

2 eligible State plans, contracts for reinsurance cov3 erage under this section. 

4 (2) PURPOSE.—The program shall make avail5 able privately funded reinsurance coverage under 

6 this section— 

7 (A) to diversify and spread risk more effi8 ciently and leverage the economies of pooling 

9 reinsurance arrangements from different geo10 graphical areas of the country covering the 

11 events specified in subsection (c); 

12 (B) to generate additional capacity and 

13 provide stability to the homeowners insurance 

14 market by encouraging States to develop or ex15 pand plans that address current market chal16 lenges and assist homeowners in securing need17 ed protection; 

18 (C) to improve the availability and afford19 ability of homeowners insurance for the purpose 

20 of privately financing post-catastrophe recovery 

21 by facilitating the pooling and spreading the 

22 risk of catastrophic financial losses from nat23 ural catastrophes; 

24 (D) to improve the solvency, capacity, and 

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1 plement private market reinsurance, and in2 crease the spread of risk; 

3 (E) to encourage the development and im4 plementation of mitigation, prevention, recov5 ery, and rebuilding strategies to reduce future 

6 catastrophe losses; and 

7 (F) to recommend methods to continuously 

8 improve the way the United States prepares 

9 for, reacts to, and responds to catastrophes, in10 cluding improvements to the Catastrophe Pre11 paredness Fund established under section 

12 102(g). 

13 (3) CONTRACT PRINCIPLES.—Under the pro14 gram under this section, the Secretary shall offer re15 insurance coverage through contracts with eligible 

16 State plans, which contracts shall— 

17 (A) be priced on an actuarially sound basis 

18 as specified in this section; and 

19 (B) provide coverage based solely on in20 sured losses within the State or States partici21 pating in the eligible State plan purchasing the 

22 contract. 

23 (b) QUALIFIED LINES OF COVERAGE.—Each con24 tract for reinsurance coverage made available under this 

25 section shall provide coverage for insured property losses 


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1 covered under primary insurance contracts to home2 owners, mobile home owners, renters, and condominium 

3 owners for covered events. Nothing in this Act shall be 

4 interpreted to expand the terms, conditions, or scope of 

5 coverage or events covered under insurance policies issued 

6 by insurers or eligible State plans. 

7 (c) COVERED EVENTS.— 

8 (1) IN GENERAL.—Each contract for reinsur9 ance coverage made available under this section shall 

10 cover losses insured or reinsured by the eligible 

11 State plan purchasing the contract that are proxi12 mately caused by— 

13 (A) earthquakes; 

14 (B) events ensuing from earthquakes, in15 cluding fire and tsunami-related flood; 

16 (C) catastrophic wildfires unrelated to 

17 earthquakes; 

18 (D) tropical cyclones having maximum sus19 tained winds of at least 74 miles per hour, in20 cluding hurricanes and typhoons; 

21 (E) tornadoes; 

22 (F) volcanic eruptions; 

23 (G) catastrophic winter storms; and 


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1 (H) any other natural catastrophe insured 

2 or reinsured under the eligible State plan pur3 chasing the contract. 

4 (2) DEFINITIONS.—The Secretary shall, by reg5 ulation, define the natural catastrophe events identi6 fied under this subsection. 

7 (d) ELIGIBLE STATE PLANS.—A State plan shall be 

8 an eligible State plan for purposes of this section only if 

9 the State plan meets all of the following requirements: 

10 (1) PROGRAM DESIGN.—The entity for the cov11 ered State or States that is authorized to make such 

12 determinations certifies to the Secretary that the 

13 State plan is a program, established by the covered 

14 State or States, that provides— 

15 (A) insurance coverage for insured prop16 erty losses covered under primary insurance 

17 contracts for residential property located in any 

18 covered State; or 

19 (B) reinsurance coverage that is designed 

20 to improve availability or affordability, or both, 

21 in the private insurance markets that offers 

22 coverage for insured property losses covered 

23 under primary insurance contracts for residen24 tial property located in any covered State. 


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1 (2) OPERATION.—The entity for the covered 

2 State or States that is authorized to make such de3 terminations certifies to the Secretary that the State 

4 plan complies with the following requirements: 

5 (A) ESTABLISHMENT; GOVERNING BODY.— 

6 The State plan shall be established by the cov7 ered State or States and a majority of the 

8 members of the governing body of the State 

9 plan shall be public officials or appointed by 

10 public officials. 

11 (B) REPAYMENT.—If any covered State 

12 has at any time appropriated amounts from the 

13 fund of the State plan for any purpose other 

14 than payments made in connection with the ac15 tivities authorized under the State plan, the 

16 State shall have repaid such amounts to the 

17 State fund, together with interest on such 

18 amounts. 

19 (C) NONDISCRIMINATION IN COVERAGE.— 

20 Insurance or reinsurance coverage, as applica21 ble, provided under the eligible State plan shall 

22 be made available on a nondiscriminatory basis 

23 to all qualifying residents of any covered State. 

24 (D) PROHIBITION OF CROSS-SUBSIDIZA25 TION.—The State plan may not, except for 


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1 charges or assessments related to post-event fi2 nancing or bonding, involve cross-subsidization 

3 between any separate property and casualty 

4 lines covered under the plan. 

5 (E) REINSURANCE PREMIUMS.—In the 

6 case of State plans providing reinsurance cov7 erage, the plan or the law in effect in each cov8 ered State shall require that to the extent that 

9 reinsurance coverage made available under the 

10 program under this section results in cost sav11 ings in providing insurance coverage for risks in 

12 such State, such cost savings be reflected in 

13 premium rates charged to consumers for such 

14 coverage. 

15 (F) TERMINATION.—The State plan shall 

16 include provisions that authorize the entity for 

17 the covered State or States that is authorized 

18 to make such a determination to terminate the 

19 State plan or, in the case of a multi-State plan, 

20 membership in such Plan, if such entity deter21 mines that the State plan is no longer necessary 

22 to ensure the availability or affordability of resi23 dential property insurance for all residents of 

24 any covered State. 


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1 (G) ACTUARIAL SOUNDNESS.—The State 

2 plan shall have actuarially sound rates. 

3 (3) TREATMENT OF EARNINGS.—The entity for 

4 the covered State or States that is authorized to 

5 make such determinations certifies to the Secretary 

6 that the State plan does not provide for redistribu7 tion of any part of any net profits under the State 

8 plan to any insurer that participates in the State 

9 plan. 

10 (4) SUPPORT FOR MITIGATION AND PREVEN11 TION.— 

12 (A) REQUIREMENTS.—Except as provided 

13 in subparagraph (B), the Secretary determines 

14 that, for any year for which the coverage is in 

15 effect, the provision of reinsurance coverage 

16 under the program under this section to the 

17 State plan supports mitigation and prevention 

18 of risk associated with covered events and that 

19 the State plan meets all of the following re20 quirements: 

21 (i) BUILDING CODES.—Each covered 

22 State has in effect, or appropriate local 

23 governments within each covered State 

24 have in effect, and enforce building codes 


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1 and standards that offer risk responsive 

2 resistance to earthquakes or high winds. 

3 (ii) MITIGATION.—Each covered State 

4 has taken actions to mitigate losses caused 

5 by natural catastrophes. 

6 (iii) PROHIBITION OF PRICE

7 GOUGING.—Each covered State has in ef8 fect laws or regulations sufficient to pro9 hibit price gouging, during the term of re10 insurance coverage provided under the pro11 gram under this section for the State plan 

12 in any catastrophe area located within the 

13 covered State. 

14 (iv) HOMEOWNERS INSURANCE

15 RATES.—For any covered State that has in 

16 effect laws that require insurers providing 

17 homeowners insurance to file their rates 

18 for review or regulatory approval, the cov19 ered State has confirmed that homeowners 

20 insurance rates associated with catastrophe 

21 coverage for covered events are actuarially 

22 sound. 

23 (v) LAND USE AND ZONING PLANS.— 

24 Each covered State, to the extent feasible, 

25 shall encourage State and local government 


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1 units to develop, comprehensive land use 

2 and zoning plans that are designed to limit 

3 additional natural hazard exposure and 

4 promote natural hazard mitigation. 

5 (vi) EMERGENCY PREPAREDNESS AC6 TIONS.—Each covered State, in consulta7 tion and cooperation with localities in the 

8 State, the Administrator of the Federal 

9 Emergency Management Agency, and 

10 other appropriate agencies and organiza11 tions, shall have taken actions to continu12 ously improve emergency preparedness. 

13 (B) TRANSITION PERIOD.—To provide suf14 ficient time for adoption of the provisions of 

15 this subsection and to support implementation 

16 of prevention and mitigation measures set forth 

17 in subparagraph (A) of this paragraph, during 

18 the 5-year period that begins on the date of the 

19 enactment of this Act, a State plan shall not be 

20 precluded from qualifying as an eligible State 

21 plan because the Secretary is unable to make 

22 any of the determinations required under sub23 paragraph (A). 


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1 (e) TERMS OF REINSURANCE CONTRACTS.—Each 

2 contract for reinsurance coverage under this section shall 

3 be subject to the following terms and conditions: 

4 (1) MATURITY.—The contract shall have a min5 imum term of 1 year or such longer duration as the 

6 Secretary may determine. 

7 (2) PAYMENT CONDITION.—The contract shall 

8 authorize claims payments only for eligible losses to 

9 the eligible State plan purchasing the coverage. 

10 (3) RETAINED LOSSES REQUIREMENT.—For 

11 each covered event, the contract shall not reimburse 

12 any losses until the total incurred covered losses ex13 ceeds the applicable attachment point established 

14 pursuant to subsection (f)(2). 

15 (4) MULTIPLE EVENTS.—The contract shall 

16 cover any eligible losses from one or more covered 

17 events that may occur during the term of the con18 tract and shall provide that if multiple events occur, 

19 the retained losses requirement under paragraph (f) 

20 shall apply in the aggregate and not separately to 

21 each individual event. 

22 (5) PRICING.—The price of reinsurance cov23 erage under the contract shall be an amount estab24 lished by the Secretary as follows: 


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1 (A) RECOMMENDATIONS.—The Secretary 

2 shall take into consideration the recommenda3 tions of the Commission in establishing the 

4 price, but the price may not be less than the 

5 amount recommended by the Commission. 

6 (B) FAIRNESS TO TAXPAYERS.—The price 

7 shall be established at an actuarially sound level 

8 that protects taxpayers from liability and takes 

9 into consideration models that estimate losses 

10 from covered events. 

11 (C) SELF-SUFFICIENCY.—The rates for re12 insurance coverage for an eligible State plan 

13 shall be established at an actuarially sound level 

14 that produces expected premiums sufficient to 

15 pay— 

16 (i) the expected annualized cost of all 

17 claims; 

18 (ii) loss adjustment expenses; 

19 (iii) the cost of funding emergency 

20 preparedness and mitigation efforts; and 

21 (iv) the costs of operating the Com22 mission and all administrative costs of re23 insurance coverage offered under this sub24 section. 


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1 The expected annualized cost of all claims shall 

2 be comparable to amounts being included in the 

3 price for similar layers of coverage in the pri4 vate sector, taking into account the savings as5 sociated with the funding mechanisms and the 

6 non-profit and tax-exempt status of the Fund. 

7 (D) OFFSET.—The Secretary shall ensure, 

8 to the maximum extent practicable, that in each 

9 fiscal year an amount equal to any amount ap10 propriated pursuant to section 101(h) for such 

11 fiscal year is obtained from purchasers of rein12 surance coverage under this section by incor13 porating the costs described in subparagraph 

14 (C)(iv) of this paragraph into the pricing of the 

15 contracts for such coverage. 

16 (6) TAXPAYER PROTECTION, RAPID CASH

17 BUILD-UP, AND POST-EVENT PRICING ADJUST18 MENTS.— 

19 (A) FIRST 5 YEARS.—Notwithstanding any 

20 other provision of this section, during the first 

21 five years of the program under this section, 

22 the Secretary shall increase the price that is 

23 charged for reinsurance coverage provided 

24 under the program under this section by at 

25 least five percent, or such higher amount as the 


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1 Secretary deems, above the actuarially sound 

2 price calculated under paragraph (5), to facili3 tate and accelerate the accumulation of reserves 

4 and to support the creation of the readiness, 

5 preparedness, and mitigation grant program 

6 under section 201. 

7 (B) POST-EVENT.—Notwithstanding any 

8 other provision of this section, after any covered 

9 event triggering any payment under a contract 

10 for reinsurance coverage that requires the Fund 

11 to issue obligations under subsection (g)(4) to 

12 make such payment and to provide additional 

13 taxpayer protection and ensure that the pro14 gram under this section is fully funded on an 

15 ongoing basis, the Secretary shall require the 

16 inclusion of an additional amount in the price 

17 that is charged for reinsurance coverage pro18 vided under the program equal to at least five 

19 percent of the actuarially sound price calculated 

20 under paragraph (5) to ensure that the pro21 gram collects all revenue necessary— 

22 (i) to provide the reinsurance coverage 

23 authorized under this section; 

24 (ii) to administer the program under 

25 this section, and 


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1 (iii) to account for any losses paid 

2 with funds acquired from obligations 

3 issued under subsection (g)(4) during a pe4 riod having a duration not longer than five 

5 years, if feasible. 

6 Any such obligations issued under subsection 

7 (g)(4) shall be repaid in full from the sur8 charges assessed under this paragraph. 

9 (7) INFORMATION.—The contract shall contain 

10 a condition providing that the Commission may re11 quire the eligible State plan that is covered under 

12 the contract to submit to the Commission all infor13 mation regarding the eligible State plan relevant to 

14 the duties of the Commission, as determined by the 

15 Secretary. 

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

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

20 by the Secretary at the beginning of the term, sub21 ject to the limitations under subsection (f), at the 

22 prices at which such contracts were offered at the 

23 beginning of the term, prorated based upon the re24 maining term as determined by the Secretary. Such 

25 additional contracts shall provide coverage beginning 


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1 on a date 15 days after the date of purchase, but 

2 shall not provide coverage for losses for an event 

3 that has already occurred. Eligible State plans may 

4 arrange for prospective contracts for planning pur5 poses and to enhance stability and predictability in 

6 managing risk and accounting for costs associated 

7 with risk transfer. 

8 (9) OTHER TERMS.—The contract shall contain 

9 such other terms as the Secretary considers nec10 essary to carry out this Act and to ensure the long11 term financial integrity of the program under this 

12 section. The contract shall also specify how payouts 

13 shall be administered if multiple events occur that 

14 affect more than one eligible State plan. 

15 (10) ENCOURAGEMENT FOR PRIVATE SECTOR

16 TO PARTICIPATE.— 

17 (A) ESTABLISHMENT OF COMPETITIVE

18 PROCEDURE.—The Congress encourages private 

19 market reinsurers and other private sector enti20 ties to participate in the program under this 

21 section. Accordingly, the Secretary shall estab22 lish, by regulation, a competitive procedure 

23 under this paragraph that provides qualified en24 tities an opportunity, on a basis consistent with 

25 the contract cycle established under this section 


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1 by the Secretary, to offer to provide, in lieu of 

2 reinsurance coverage under this section, rein3 surance coverage that is substantially similar to 

4 coverage otherwise made available under this 

5 section. 

6 (B) COMPETITIVE PROCEDURE.—Under 

7 the procedure established under this para8 graph— 

9 (i) the Secretary shall establish cri10 teria for private insurers, reinsurers, and 

11 capital market companies, and consortia of 

12 such entities to be treated as qualified en13 tities for purposes of this paragraph, which 

14 criteria shall require such an entity to have 

15 at all times capital sufficient to satisfy the 

16 terms of the reinsurance contracts and 

17 shall include such other industry and cred18 it rating standards as the Secretary con19 siders appropriate; 

20 (ii) not less than 30 days before the 

21 beginning of each contract cycle during 

22 which any reinsurance coverage under this 

23 section is to be made available, the Sec24 retary may request proposals and shall 

25 publish in the Federal Register the rates 


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1 and terms for contracts for coverage under 

2 this section that are to be made available 

3 during such contract cycle; 

4 (iii) the Secretary shall provide quali5 fied entities a period of not less than 10 

6 days (which shall terminate not less than 

7 20 days before the beginning of the con8 tract cycle) to submit to the Secretary a 

9 written expression of interest in providing 

10 reinsurance coverage in lieu of the cov11 erage otherwise to be made available under 

12 this section; 

13 (iv) the Secretary shall provide any 

14 qualified entity submitting an expression of 

15 interest during the period referred to in 

16 clause (iii) a period of not less than 20 

17 days (which shall terminate before the be18 ginning of the contract cycle) to submit to 

19 the Secretary an offer to provide, in lieu of 

20 the reinsurance coverage otherwise to be 

21 made available under this section, coverage 

22 that is substantially similar to such cov23 erage; 

24 (v) if the Secretary determines that 

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1 ferred to in clause (iii) is a bona fide offer 

2 to provide reinsurance coverage during the 

3 contract cycle at rates and terms that are 

4 substantially similar to the rates and terms 

5 for reinsurance coverage otherwise to be 

6 provided under this section by the Sec7 retary, the Secretary shall accept the offer 

8 (if still outstanding) and, notwithstanding 

9 any other provision of this Act, provide for 

10 such entity to make reinsurance coverage 

11 available in accordance with the offer; and 

12 (vi) if the Secretary accepts an offer 

13 pursuant to clause (v) to make reinsurance 

14 coverage available, notwithstanding any 

15 other provision of this Act, the Secretary 

16 shall reduce, to an equivalent extent, the 

17 amount of reinsurance coverage available 

18 under this section during the contract cycle 

19 to which the offer relates, unless and until 

20 the Secretary determines that the entity is 

21 not complying with the terms of the ac22 cepted offer. 

23 (11) PARTICIPATION BY MULTI-STATE PLANS.— 

24 The Congress hereby explicitly encourages States to 

25 create and maintain catastrophe funds for their 


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1 States or with other States, and nothing in this Act 

2 may be interpreted to prohibit or discourage the cre3 ation of multi-State plans, or the participation by 

4 such plans in the program established pursuant to 

5 subsection (a). The Secretary shall, by regulation, 

6 provide for the application of the provisions of this 

7 Act to multi-State catastrophe insurance and rein8 surance plans. The Commission shall develop a proc9 ess to evaluate and encourage the creation of re10 gional programs and approaches to advance the pur11 poses of this Act through the establishment of multi12 State plans. 

13 (f) TREATMENT OF INSURED LOSSES AND MAXIMUM

14 FEDERAL LIABILITY.— 

15 (1) AVAILABLE LEVELS OF RETAINED

16 LOSSES.—In making reinsurance coverage available 

17 under this section, the Secretary shall make avail18 able for purchase contracts for such coverage that 

19 require the sustainment of retained losses from cov20 ered events (as required under subsection (e)(3) for 

21 payment of eligible losses) in various amounts, as 

22 the Secretary, in consultation with the Commission, 

23 determines appropriate and subject to the require24 ments under paragraph (2). 

25 (2) STANDARD ATTACHMENT POINT.— 


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1 (A) ESTABLISHMENT.—The Secretary, in 

2 consultation with the Commission, shall estab3 lish a standard attachment point at which cov4 erage is provided to eligible State plans for all 

5 contracts. 

6 (B) CONSIDERATIONS.—In setting a stand7 ard attachment point, the Secretary and the 

8 Commission shall take into consideration— 

9 (i) how many and which eligible State 

10 plans are seeking contracts for reinsurance 

11 coverage under this section; 

12 (ii) the capital and surplus positions 

13 of the eligible State plans; 

14 (iii) the coverage preferences of eligi15 ble State plans; 

16 (iv) the availability and price of rein17 surance in the private market; 

18 (v) that pooling reinsurance from dif19 ferent geographic locations and covering 

20 different events is more efficient than 

21 stand-alone programs; 

22 (vi) affordability of homeowners insur23 ance; and 


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1 (vii) other factors deemed appropriate 

2 to operating a long-term national reinsur3 ance backstop program. 

4 (C) USE.—The standard attachment point 

5 established pursuant to this paragraph shall be 

6 used in establishing reinsurance contracts for 

7 each eligible State plan, unless the Secretary, in 

8 consultation with the Commission, determines 

9 that market conditions or the financial position 

10 of an eligible State plan warrants a lower at11 tachment point in a contract for such eligible 

12 State plan in a given year. 

13 (D) LOWER ATTACHMENT POINTS.—If a 

14 reinsurance contract is contemplated for an eli15 gible State plan having an attachment point 

16 lower than the standard attachment point, the 

17 cost of such contract shall include or otherwise 

18 take into account the additional costs associated 

19 with such additional layer of protection. 

20 (3) MINIMUM LEVEL OF RETAINED LOSSES.— 

21 For each covered event, the minimum level of re22 tained losses shall be the amount of cash available 

23 to the eligible State plan to pay covered losses. 

24 (4) CEILING COVERAGE LEVEL.—Notwith25 standing any other provision of law and subject to 


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1 any limitations in future appropriations Acts, the 

2 aggregate potential liability for payment of claims 

3 under all contracts for reinsurance coverage sold 

4 under this title to any single eligible State plan dur5 ing a 12-month period shall not exceed the dif6 ference between— 

7 (A) the amount equal to the covered loss 

8 projected to be incurred once every 600 years 

9 from a single event by the eligible State plan; 

10 and 

11 (B) the amount equal to the cash available 

12 in the eligible State plan to pay covered losses. 

13 (g) CATASTROPHE PREPAREDNESS FUND FOR PRE14 FUNDING PREPAREDNESS AND RECOVERY.— 

15 (1) ESTABLISHMENT.—There is established 

16 within the Treasury of the United States a fund to 

17 be known as the ‘‘Catastrophe Preparedness Fund’’. 

18 (2) CREDITS.—The Fund shall be credited 

19 with— 

20 (A) amounts received from the sale of con21 tracts for reinsurance coverage under this sec22 tion; 

23 (B) any amounts borrowed under para24 graph (4); 


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1 (C) any amounts earned on investments of 

2 the Fund pursuant to paragraph (5); and 

3 (D) such other amounts as may be cred4 ited to the Fund. 

5 (3) USES.—Amounts in the Fund shall be 

6 available to the Secretary only for the following pur7 poses: 

8 (A) CONTRACT PAYMENTS.—For payments 

9 to covered purchasers under contracts for rein10 surance coverage under this section for eligible 

11 losses under such contracts. 

12 (B) COMMISSION COSTS.—For the oper13 ating costs of the Commission. 

14 (C) ADMINISTRATIVE EXPENSES.—For the 

15 administrative expenses incurred by the Sec16 retary in carrying out the reinsurance program 

17 under this Act. 

18 (D) COST OF NATIONAL READINESS, PRE19 PAREDNESS, AND MITIGATION COMMITTEE.— 

20 For the operating costs of the National Readi21 ness, Preparedness, and Mitigation Committee 

22 established under section 201 and for disburse23 ments under section 201(f)(2) for catastrophe 

24 readiness, preparedness, prevention, and mitiga25 tion. 


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1 (E) TERMINATION.—Upon termination 

2 under section 104, as provided in such section. 

3 (4) LIQUIDITY.— 

4 (A) AUTHORITY.—To the extent that the 

5 amounts in the Fund are insufficient to pay 

6 claims and expenses under paragraph (3), the 

7 Secretary may issue such obligations of the 

8 Fund as may be necessary to cover the insuffi9 ciency and shall purchase any such obligations 

10 issued. 

11 (B) PUBLIC DEBT TRANSACTION.—For the 

12 purpose of purchasing any such obligations, the 

13 Secretary may use as a public debt transaction 

14 the proceeds from the sale of any securities 

15 issued under chapter 31 of title 31, United 

16 States Code, and the purposes for which securi17 ties are issued under such chapter are hereby 

18 extended to include any purchase by the Sec19 retary of such obligations under this paragraph. 

20 (C) CHARACTERISTICS OF OBLIGATIONS.— 

21 Obligations issued under this paragraph shall 

22 be in such forms and denominations, bear such 

23 maturities, bear interest at such rate and be 

24 subject to such other terms and conditions as 

25 the Secretary shall determine. 


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1 (D) TREATMENT.—All redemptions, pur2 chases, and sales by the Secretary of obligations 

3 under this paragraph shall be treated as public 

4 debt transactions of the United States. 

5 (E) REPAYMENT.—Any obligations issued 

6 under this paragraph shall be repaid, including 

7 interest, from the Fund and shall be recouped 

8 from surcharges under subsection (e)(6)(B) on 

9 premiums for reinsurance coverage provided 

10 under this section. 

11 (5) INVESTMENT.—The Secretary shall invest 

12 accumulated amounts in the Fund as the Secretary 

13 considers advisable in obligations issued or guaran14 teed by the United States. 

15 (6) PROHIBITION ON FEDERAL APPROPRIA16 TIONS.—Except for amounts made available pursu17 ant to paragraph (4)(A) of this subsection and sec18 tion 101(h), no Federal funds shall be authorized or 

19 appropriated for the Fund or for carrying out the 

20 reinsurance liquidity protection program under this 

21 section. 

22 SEC. 103. POST-CATASTROPHE MARKET STABILIZATION 

23 PROGRAM FOR LIQUIDITY LOANS. 

24 (a) PURPOSES.—The purposes of this section are to 

25 establish a program— 


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1 (1) to expedite the payment of claims under 

2 State catastrophe insurance programs and better as3 sist the financial recovery from significant natural 

4 catastrophes by authorizing the Secretary to issue 

5 loans for such purposes; and 

6 (2) to promote the availability of private capital 

7 to provide liquidity and capacity to State catas8 trophe insurance programs and to augment the ef9 forts of such programs. 

10 (b) LIQUIDITY LOANS.—The Secretary may make li11 quidity loans under this section to State plans for the pur12 poses of this section, and shall have the powers and au13 thorities necessary to make such loans, subject to the re14 quirements of this section. 

15 (c) CONDITIONS FOR LOAN ELIGIBILITY.—A loan 

16 under this section may be made to a State plan only if— 

17 (1) the plan has a capital liquidity shortage, in 

18 accordance with regulations that the Secretary shall 

19 establish, such that the obligations of the plan re20 sulting from a covered event exceed the amount of 

21 cash available to the plan to pay covered losses; 

22 (2) the plan cannot access capital in the private 

23 market at a cost lower and for similar duration than 

24 that provided under a loan under this section, as de25 termined by the Secretary; and 


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1 (3)(A) the plan is an eligible State plan; and 

2 (B) the loan complies with the requirements 

3 under subsection (e). 

4 The Secretary may not require an eligible State plan to 

5 purchase reinsurance coverage made available under the 

6 program under section 102 to be eligible for a liquidity 

7 loan under this section. 

8 (d) STATES WITH ELIGIBLE STATE PLANS.— 

9 (1) CONTRACTS.—The Secretary may enter into 

10 contracts with eligible State plans to carry out the 

11 purposes of this section by providing for liquidity 

12 loans for such plans, as the Secretary may deem ap13 propriate. 

14 (2) ELIGIBLE STATE PLAN PRE-CERTIFI15 CATION.—The Secretary shall establish procedures 

16 and standards for State plans to apply to the Sec17 retary at any time for pre-certification (and recertifi18 cation) as eligible State plans, which procedures and 

19 standards shall provide as follows: 

20 (A) The Secretary shall administer the 

21 pre-certification (and recertification) of State 

22 plans as eligible State plans. 

23 (B) State plans that are pre-certified as el24 igible State plans may enter into contracts de25 scribed in paragraph (1). 


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1 (3) INTEREST RATE.—Subject to subsection 

2 (h), a liquidity loan made under this section to an 

3 eligible State plan shall bear interest at an annual 

4 rate to be established by the Secretary, in consulta5 tion with the Commission, which shall be equal to 

6 the rate of interest on State and local government 

7 series securities have the same duration as the li8 quidity loan outstanding as of the date the loan is 

9 made. 

10 (4) MANDATORY ASSISTANCE FOR ELIGIBLE

11 STATE PLANS.—The Secretary shall, upon the re12 quest of an eligible State plan and subject to para13 graphs (1) and (2) of subsection (c), make a loan for 

14 such plan in the amount requested by such plan 

15 (subject to the limitations under subsection (f)). 

16 (e) STATES WITHOUT ELIGIBLE STATE PLANS.— 

17 (1) AUTHORITY.—Subject to subsection (c), the 

18 Secretary may make a liquidity loan under this sec19 tion to a State plan that is not an eligible State 

20 plan, but only if the Secretary determines that— 

21 (A) the loan is necessary to avoid a capital 

22 shortfall; and 

23 (B) the provisions providing for repayment 

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1 payment of liquidity loans under this section by 

2 eligible State plans. 

3 (2) INTEREST RATE.—Subject to subsection 

4 (h), a liquidity loan made under this section to a 

5 State plan that is not an eligible State plan shall 

6 bear interest at an annual rate that exceeds the rate 

7 required under subsection (d)(3) for a loan made to 

8 an eligible State plan. Such rate shall be determined 

9 in accordance with a schedule of interest rates, 

10 which shall be established by the Secretary and shall 

11 provide lower rates for loans to State plans that 

12 comply with more of the requirements for eligible 

13 State plans under section 102(d) and higher rates 

14 for loans to State plans that comply with fewer of 

15 such requirements. 

16 (f) AMOUNT.—The principal amount of a liquidity 

17 loan under this subsection may not exceed the difference 

18 between the applicable attachment point as determined by 

19 the Secretary in section 102(f)(2) and the amount of 

20 funds the eligible State plan had to pay losses at the time 

21 of the covered event for which the loan is made. 

22 (g) USE.—Amounts from a liquidity loan under this 

23 section may be used only to pay losses covered by the State 

24 plan to which the loan is made. 


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1 (h) EXCEPTION TO INTEREST RATE LIMITATION.— 

2 In the case of liquidity loan under this section made pur3 suant to a large covered event that occurs early in the 

4 existence of a State plan, the Secretary may charge an 

5 interest rate for the loan that allows the State plan to 

6 repay the loan and interest without causing significant in7 creases in the cost of insurance for covered events in the 

8 covered State or States. 

9 (i) PREMIUMS UNDER STATE PLAN.— 

10 (1) DETERMINATION OF ACTUARIALLY SOUND

11 PREMIUMS.—In making a request for a liquidity 

12 loan under this section, a State plan shall determine, 

13 and the Secretary, in consultation with the Commis14 sion, shall approve, a premium amount for the cov15 erage layer under the State plan for which the li16 quidity loan is sought that is actuarially sound. 

17 (2) CHARGEABLE PREMIUMS.—Unless other18 wise provided by the Secretary, a State plan shall 

19 charge, for the coverage layer under the State plan 

20 for which the liquidity loan is made an annual pre21 mium, for coverage during the period that begins 

22 upon the making of the liquidity loan and ends upon 

23 full repayment of the loan, in an amount that is not 

24 less than 150 percent of the actuarially sound pre25 mium determined pursuant to paragraph (1). 


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1 (j) REPAYMENT OF LOANS.— 

2 (1) IN GENERAL.—Any liquidity loan made 

3 under this section to a State plan shall be repaid 

4 solely through premiums charged by such plan in ac5 cordance with subsection (i)(2), unless alternative 

6 arrangements have been made pursuant to para7 graph (3). The Secretary, in consultation with the 

8 Commission, shall determine the expected duration 

9 of each loan and monitor repayment of such loans. 

10 (2) AMOUNT OF PAYMENT.—To repay a liquid11 ity loan under this section, the State plan shall pay 

12 to the Fund, from all amounts collected for the cov13 erage layer referred to in subsection (i)(2) during 

14 the period referred to in such subsection, an amount 

15 equal to a minimum of 100 percent of the actuari16 ally sound premium determined under subsection 

17 (j)(1) for such coverage layer, and shall retain the 

18 remainder of such amount collected to build reserves 

19 for future events, or such other amount or percent20 age of such amounts as the Secretary, in consulta21 tion with the Commission and State plans, deter22 mines is appropriate. 

23 (3) OTHER OPTIONS.—A State plan may peti24 tion the Secretary for other repayment terms, in25 cluding repayment from sources such as dedicated 


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1 State sales taxes or other means, and the Secretary 

2 may, in consultation with the Commission, agree to 

3 such other terms. 

4 (k) REGULATIONS.—The Secretary shall issue any 

5 regulations necessary to carry out the program under this 

6 section. 

7 SEC. 104. TERMINATION. 

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

9 (b), the Secretary may not— 

10 (1) provide any new reinsurance coverage under 

11 section 102 that covers any period after the expira12 tion of the 20-year period beginning on the date of 

13 the enactment of this Act; or 

14 (2) make any new liquidity loan under section 

15 103 having a term to maturity that concludes after 

16 the expiration of such 20-year period. 

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

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

19 the Commission, determines that continuation of the pro20 gram for reinsurance coverage under section 102 or for 

21 liquidity loans under section 103 is necessary or appro22 priate to carry out the purposes this Act because of insuf23 ficient growth of capacity in the private homeowners in24 surance market, the Secretary shall continue to make such 

25 coverage and loans available and subsection (a) shall be 


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1 applied by substituting ‘‘25-year period’’ for ‘‘20-year pe2 riod’’ each place such term appears. 

3 (c) REPEAL.—Effective upon the first date that rein4 surance coverage under section 102 is no longer available 

5 or in force and that liquidity loans under section 103 are 

6 no longer available or outstanding, pursuant to subsection 

7 (a) or (b), this Act (except for this section) is repealed. 

8 (d) DEFICIT REDUCTION.—The Secretary shall pay 

9 into the General Fund of the Treasury any amounts re10 maining in the Fund upon the repeal of this Act under 

11 subsection (c). 

12 TITLE II—CATASTROPHE READI13 NESS, CITIZEN AND COMMU14 NITY PREPAREDNESS, AND 

15 MITIGATION 

16 SEC. 201. NATIONAL READINESS, PREPAREDNESS, AND 

17 MITIGATION COMMITTEE. 

18 (a) ESTABLISHMENT.—There is established a Na19 tional Readiness, Preparedness and Mitigation Committee 

20 (in this section referred to as the ‘‘Committee’’). 

21 (b) MEMBERS.—The Committee shall consist of 9 

22 members appointed by the Secretary of Housing and 

23 Urban Development or the Secretary’s designee, as fol24 lows: 


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1 (1) Three individuals from nationally recognized 

2 organizations representing State or local catastrophe 

3 response providers or catastrophe management pro4 fessionals. 

5 (2) Three individuals representing nationally 

6 recognized non-profits active in catastrophe pre7 paredness and response. 

8 (3) Three individuals representing nationally 

9 recognized organizations with expertise in contin10 gency planning, residential construction, building 

11 code development and implementation, and land use 

12 policy. 

13 (c) TERMS.— 

14 (1) IN GENERAL.—Except as provided in para15 graphs (2) and (3), each member of the Committee 

16 shall be appointed for a term of 3 years. 

17 (2) INITIAL MEMBERS.—Of the members ini18 tially appointed to the Committee— 

19 (A) one member appointed under each of 

20 paragraphs (1), (2), and (3) of subsection (b) 

21 shall be appointed for a term of 1 year; 

22 (B) one member appointed under each of 

23 paragraphs (1), (2), and (3) of subsection (b) 

24 shall be appointed for a term of 2 years; and 


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1 (C) one member appointed under each of 

2 paragraphs (1), (2), and (3) of subsection (b) 

3 shall be appointed for a term of 3 years. 

4 (3) VACANCIES.—A member appointed to fill an 

5 unexpired term shall serve the remainder of that 

6 term. 

7 (4) TERMINATION.—In the event that the Com8 mittee terminates, all appointments shall terminate. 

9 (d) PROHIBITION OF COMPENSATION; REIMBURSE10 MENT.—Members of the Committee shall receive no com11 pensation by reason of their service on the Committee, but 

12 shall be reimbursed as provided by rules and by-laws es13 tablished by the National Commission on Natural Catas14 trophe Preparation and Protection established under sec15 tion 101. 

16 (e) DUTIES.—The members of the Committee shall 

17 administer the program under subsection (f) and conduct 

18 oversight of the program and activities under such pro19 gram. 

20 (f) READINESS, PREPAREDNESS, AND MITIGATION

21 GRANT PROGRAM.— 

22 (1) ALLOCATION OF AMOUNT.—Beginning upon 

23 the expiration of the 12-month period that begins on 

24 the date of the enactment of this Act, the Secretary 

25 shall ensure that, to the extent provided in approVerDate Mar 15 2010 05:54 Mar 16, 2013 Jkt 029200 PO 00000 Frm 00053 Fmt 6652 Sfmt 6201 E:\BILLS\H1101.IH H1101

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1 priation Acts, approximately 35 percent of the an2 nual net investment income of the Fund under sec. 

3 102(g), but not less than $15,000,000, and not 

4 more than 20 percent of the premium charged for 

5 reinsurance coverage under section 102 in any given 

6 year, shall be used for grants to States, units of 

7 local government, nonprofit organizations, and other 

8 appropriate public and private entities to develop, 

9 enhance, or maintain programs and initiatives to im10 prove and maintain catastrophe response, citizen 

11 preparedness and protection, and prevention and 

12 mitigation of losses from natural catastrophes. 

13 (2) PROGRAM ELEMENTS.—The amounts made 

14 available under paragraph (1) shall be allocated for 

15 each of the following purposes in equal amounts: 

16 (A) CATASTROPHE RESPONSE READI17 NESS.—For catastrophe response readiness pro18 grams, which shall include national initiatives 

19 that develop, enhance, or maintain the capacity 

20 of a public safety agency or other organization 

21 to be better prepared, equipped, and trained to 

22 respond to natural catastrophes. 

23 (B) CITIZEN AND COMMUNITY PREPARED24 NESS.—For citizen and community prepared25 ness, which shall include programs and initiaVerDate Mar 15 2010 05:54 Mar 16, 2013 Jkt 029200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 E:\BILLS\H1101.IH H1101

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1 tives, such as those offered by the American 

2 Red Cross, to improve education and training 

3 to ensure that citizens and organizations in 

4 their community are better prepared for natural 

5 catastrophes. 

6 (C) PREVENTION AND MITIGATION.—For 

7 prevention and mitigation of loss from natural 

8 catastrophes, which shall include methods to re9 duce loss of life and property, including appro10 priate measures to— 

11 (i) encourage awareness of the risk 

12 factors and what steps can be taken to 

13 eliminate or reduce them; 

14 (ii) identify location of risks, by giving 

15 careful consideration to the natural risks 

16 for the location of the property and pro17 viding that information to the builder, de18 veloper and homeowner; and 

19 (iii) provide for construction relative 

20 to the risk and hazards, including— 

21 (I) establishment and adoption of 

22 State, or locally mandated building 

23 codes, as amended by the governing 

24 body; 


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1 (II) adequate enforcement of the 

2 building codes; and 

3 (III) focusing on prevention and 

4 mitigation for existing homes, with an 

5 emphasis on how structures can be 

6 retrofitted cost-effectively to make 

7 them compliant with building codes. 

8 (g) CONTINUOUS IMPROVEMENT, COORDINATION

9 AND INTEGRATION.—The National Commission on Nat10 ural Catastrophe Preparation and Protection established 

11 under section 101 shall work with eligible State plans and 

12 the Committee to continuously improve, coordinate, and 

13 integrate catastrophe readiness, citizen and community 

14 preparedness, and loss prevention and mitigation at the 

15 local, State, regional, and national levels. 

Æ 


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