IB 
Union Calendar No. 306 
111TH CONGRESS 
2D SESSION 
H. R. 2555 
[Report No. 111–534] 
To ensure the availability and affordability of homeowners’ insurance coverage 
for catastrophic events. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 21, 2009 
Mr. KLEIN of Florida (for himself, Mr. FRANK of Massachusetts, Mr. GRAY-
SON, Ms. KOSMAS, Mr. LARSON of Connecticut, Mr. CLYBURN, Mr. 
CROWLEY, Mrs. TAUSCHER, Mr. HARE, Mr. MEEK of Florida, Mr. 
WELCH, Ms. CASTOR of Florida, Mr. WEXLER, Mr. DELAHUNT, Mr. 
KENNEDY, Ms. GINNY BROWN-WAITE of Florida, Mr. ABERCROMBIE, 
Mr. POSEY, Ms. ROS-LEHTINEN, Mr. BUCHANAN, Mr. GRIFFITH, Mr. 
MELANCON, Mr. SCHIFF, Mr. WALZ, Ms. BERKLEY, Ms. JACKSON-LEE 
of Texas, Mr. HASTINGS of Florida, Mr. BRALEY of Iowa, Mr. BOYD, Mr. 
RYAN
of Ohio, Ms. WASSERMAN
SCHULTZ, Mr. BERMAN, Mr. 
CRENSHAW, 
Mr. 
INSLEE, 
Mr. 
KAGEN, 
Mr. 
MCNERNEY, 
Mr. 
PERLMUTTER, Ms. CORRINE BROWN of Florida, Ms. HARMAN, Mr. LIN-
COLN DIAZ-BALART of Florida, Mr. ACKERMAN, Mr. YARMUTH, Mr. 
ROONEY, and Mr. DONNELLY of Indiana) introduced the following bill; 
which was referred to the Committee on Financial Services 
JULY 13, 2010 
Additional sponsors: Mr. JOHNSON of Georgia, Mr. CAPUANO, Mr. ELLISON, 
Ms. HIRONO, Mr. MORAN of Virginia, Mr. PIERLUISI, Mr. MARIO DIAZ- 
BALART of Florida, Ms. GIFFORDS, Mr. HILL, Mr. SIRES, Mr. CONYERS, 
Mr. COHEN, Ms. DEGETTE, Mr. CAMPBELL, Mr. MOORE of Kansas, Ms. 
WOOLSEY, Mr. CHILDERS, Ms. LORETTA SANCHEZ of California, Mr. 
PAYNE, Mr. ANDREWS, Mr. WEINER, Mr. JACKSON of Illinois, Mr. 
CUMMINGS, Mr. CLAY, Mr. MEEKS of New York, Mr. COSTA, Mr. BACA, 
Mr. MILLER of Florida, Mr. YOUNG of Florida, Mr. DAVIS of Illinois, Mr. 
FILNER, Mr. MICA, Mr. DEUTCH, Mr. BISHOP of Georgia, Ms. RICHARD-
SON, and Ms. ESHOO 
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JULY 13, 2010 
Deleted sponsor: Mr. SHULER (added September 9, 2009; deleted July 1, 
2010) 
JULY 13, 2010 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on May 21, 2009] 
A BILL 
To ensure the availability and affordability of homeowners’ 
insurance coverage for catastrophic events. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Homeowners’ Defense Act of 2010’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purposes. 
TITLE I—NATIONAL CATASTROPHE RISK CONSORTIUM 
Sec. 101. Establishment; status; principal office; membership. 
Sec. 102. Functions. 
Sec. 103. Powers. 
Sec. 104. Nonprofit entity; conflicts of interest; audits. 
Sec. 105. Management. 
Sec. 106. Staff; experts and consultants. 
Sec. 107. Federal liability. 
Sec. 108. Authorization of appropriations. 
TITLE II—CATASTROPHE OBLIGATION GUARANTEES 
Sec. 201. Purposes. 
Sec. 202. Establishment of debt guarantee program. 
Sec. 203. Effect of guarantee. 
Sec. 204. Full faith and credit. 
Sec. 205. Fees for guarantees; amount; collection. 
Sec. 206. Payment of losses. 
Sec. 207. Regulations. 
TITLE III—REINSURANCE COVERAGE FOR ELIGIBLE STATE 
PROGRAMS 
Sec. 301. Program authority. 
Sec. 302. Contract principles. 
Sec. 303. Terms of reinsurance contracts. 
Sec. 304. Maximum Federal liability. 
Sec. 305. Federal Natural Catastrophe Reinsurance Fund. 
Sec. 306. Regulations. 
TITLE IV—MITIGATION GRANT PROGRAM 
Sec. 401. Mitigation grant program. 
TITLE V—GENERAL PROVISIONS 
Sec. 501. Eligible State programs. 
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Sec. 502. Study and conditional coverage of commercial residential lines of insur-
ance. 
Sec. 503. Study of risk-based pricing and State program rates. 
Sec. 504. Definitions. 
Sec. 505. Regulations. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds that— 
(1) the United States has a history of cata-
strophic natural disasters, including hurricanes, tor-
nadoes, flood, fire, earthquakes, and volcanic erup-
tions; 
(2) although catastrophic natural disasters occur 
infrequently, they will continue to occur and are pre-
dictable; 
(3) such disasters generate large economic losses 
and a major component of those losses comes from 
damage and destruction to homes; 
(4) for the majority of Americans, their invest-
ment in their home represents their single biggest 
asset and the protection of that investment is para-
mount to economic and social stability; 
(5) the United States needs to take and support 
State actions to be better prepared for and better pro-
tected from catastrophes; 
(6) as the risk of catastrophic losses grows, so do 
the risks that any premiums collected by private in-
surers for extending coverage will be insufficient to 
cover future catastrophes, and private insurers, in an 
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effort to protect their shareholders and policyholders 
(in the case of mutually owned companies), have thus 
significantly raised premiums and curtailed insur-
ance coverage in States exposed to major catastrophes; 
(7) such effects on the insurance industry have 
been harmful to economic activity in States exposed 
to major catastrophes and have placed significant 
burdens on residents of such States; 
(8) Hurricanes Katrina, Rita, and Wilma struck 
the 
United 
States 
in 
2005, 
causing 
over 
$200,000,000,000 in total economic losses, and in-
sured 
losses 
to 
homeowners 
in 
excess 
of 
$50,000,000,000; 
(9) the Federal Government has provided and 
will continue to provide resources to pay for losses 
from future catastrophes; 
(10) when Federal assistance is provided to the 
States, accountability for Federal funds disbursed is 
paramount; 
(11) the Government Accountability Office or 
other appropriate agencies must have the means in 
place to confirm that Federal funds for catastrophe 
relief have reached the appropriate victims and have 
contributed to the recovery effort as efficiently as pos-
sible so that taxpayer funds are not misspent and 
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citizens are enabled to rebuild and resume productive 
activities as quickly as possible; 
(12) States that are recipients of Federal funds 
must be responsible to account for and provide an ef-
ficient means for distribution of funds to homeowners 
to enable the rapid rebuilding of local economies after 
a catastrophic event without unduly burdening tax-
payers who live in areas seldom affected by natural 
disasters; 
(13) State insurance and reinsurance programs 
can provide a mechanism for States to exercise that 
responsibility if they appropriately underwrite and 
price risk, and if they pay claims quickly and within 
established contractual terms; 
(14) making available Federal guarantees to en-
hance the capability of eligible State programs to 
issue debt will minimize the exposure of State and 
Federal taxpayers who otherwise may bear the con-
sequences of underfunded programs or under-insured 
communities following catastrophic events, especially 
during today’s historic market turmoil; and 
(15) it is the proper role of the Federal Govern-
ment to prepare for and protect its citizens from ca-
tastrophes and to facilitate consumer protection, vic-
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tim assistance, and recovery, including financial re-
covery. 
(b) PURPOSES.—The purposes of this Act are to estab-
lish a program to provide Federal support for State-spon-
sored insurance programs to help homeowners prepare for 
and recover from the damages caused by natural catas-
trophes, to encourage mitigation and prevention for such 
catastrophes, to promote the use of private market capital 
as a means to insure against such catastrophes, to expedite 
the payment of claims and better assist in the financial 
recovery from such catastrophes. 
TITLE 
I—NATIONAL 
CATAS-
TROPHE RISK CONSORTIUM 
SEC. 101. ESTABLISHMENT; STATUS; PRINCIPAL OFFICE; 
MEMBERSHIP. 
(a) ESTABLISHMENT.—There is established an entity 
to be known as the ‘‘National Catastrophe Risk Consor-
tium’’ (in this title referred to as the ‘‘Consortium’’). 
(b) STATUS.—The Consortium is not a department, 
agency, or instrumentality of the United States Govern-
ment. 
(c) PRINCIPAL OFFICE.—The principal office and 
place of business of the Consortium shall be such location 
within the United States determined by the Board of Direc-
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tors to be the most advantageous for carrying out the pur-
pose and functions of the Consortium. 
(d) MEMBERSHIP.—Any State that has established a 
reinsurance fund or has authorized the operation of a State 
residual insurance market entity, or State-sponsored pro-
vider of natural catastrophe insurance, shall be eligible to 
participate in the Consortium. 
SEC. 102. FUNCTIONS. 
The Consortium shall— 
(1) work with all States, particularly those par-
ticipating in the Consortium, to gather and maintain 
an inventory of catastrophe risk obligations held by 
State reinsurance funds, State residual insurance 
market entities, and State-sponsored providers of nat-
ural catastrophe insurance; 
(2) at the discretion of the affected members and 
on a conduit basis, issue securities and other finan-
cial instruments linked to the catastrophe risks in-
sured or reinsured through members of the Consor-
tium in the capital markets; 
(3) coordinate reinsurance contracts between 
participating, qualified reinsurance funds and pri-
vate parties; 
(4) act as a centralized repository of State risk 
information that can be accessed by private-market 
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participants seeking to participate in the transactions 
described in paragraphs (2) and (3) of this section; 
(5) establish a catastrophe risk database to per-
form research and analysis that encourages standard-
ization of the risk-linked securities market; 
(6) perform any other functions, other than as-
suming risk or incurring debt, that are deemed nec-
essary to aid in the transfer of catastrophe risk from 
participating States to private parties; and 
(7) submit annual reports to Congress describing 
the activities of the Consortium for the preceding 
year, and the first such annual report shall include 
an assessment of the costs to States and regions asso-
ciated with catastrophe risk and an analysis of the 
costs and benefits, for States not participating in the 
Consortium, of such nonparticipation. 
SEC. 103. POWERS. 
The Consortium— 
(1) may make and perform such contracts and 
other agreements with any individual or other private 
or public entity however designated and wherever sit-
uated, as may be necessary for carrying out the func-
tions of the Consortium; and 
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(2) shall have such other powers, other than the 
power to assume risk or incur debt, as may be nec-
essary and incident to carrying out this Act. 
SEC. 104. NONPROFIT ENTITY; CONFLICTS OF INTEREST; 
AUDITS. 
(a) NONPROFIT ENTITY.—The Consortium shall be a 
nonprofit entity and no part of the net earnings of the Con-
sortium shall inure to the benefit of any member, founder, 
contributor, or individual. 
(b) CONFLICTS OF INTEREST.—No director, officer, or 
employee of the Consortium shall in any manner, directly 
or indirectly, participate in the deliberation upon or the 
determination of any question affecting his or her personal 
interests or the interests of any Consortium, partnership, 
or organization in which he or she is directly or indirectly 
interested. 
(c) AUDITS.— 
(1) ANNUAL AUDIT.—The financial statements of 
the Consortium shall be audited annually in accord-
ance with generally accepted auditing standards by 
independent certified public accountants. 
(2) REPORTS.—The report of each annual audit 
pursuant to paragraph (1) shall be included in the 
annual report submitted in accordance with section 
102(7). 
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(d) PROHIBITION ON ELECTION AND LOBBYING AC-
TIVITIES.— 
(1) FEDERAL.—The Consortium may not— 
(A) make any contribution to a candidate 
for election for Federal office or to a political 
committee; 
(B) employ or retain— 
(i) a registered lobbyist under the Lob-
bying Disclosure Act of 1995 (2 U.S.C. 1601 
et seq.); or 
(ii) an organization that employs one 
or more lobbyists and is registered under 
section 4(a)(2) of such Act (2 U.S.C. 
1603(a)(2)); or 
(C) provide any thing of value, other than 
educational materials or information, to any 
elected official of the Federal Government. 
For purposes of this paragraph, the terms ‘‘contribu-
tion’’, ‘‘candidate’’, ‘‘Federal office’’, and ‘‘political 
committee’’ have the meanings given such terms in 
section 301 of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431). 
(2) CONSORTIUM.—The Consortium may not— 
(A) make any contribution to a candidate 
for election for any State or local office or to any 
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