I 
113TH CONGRESS 
1ST SESSION 
H. R. 240 
To establish a program to provide reinsurance for State natural catastrophe 
insurance programs to help the United States better prepare for and 
protect its citizens against the ravages of natural catastrophes, to encour-
age and promote mitigation and prevention for, and recovery and rebuild-
ing from such catastrophes, and to better assist in the financial recovery 
from such catastrophes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 14, 2013 
Mr. ROSS introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To establish a program to provide reinsurance for State 
natural catastrophe insurance programs to help the 
United States better prepare for and protect its citizens 
against the ravages of natural catastrophes, to encourage 
and promote mitigation and prevention for, and recovery 
and rebuilding from such catastrophes, and to better 
assist in the financial recovery from such catastrophes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Homeowners Insurance Protection Act of 2013’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Congressional findings. 
Sec. 3. National Commission on Catastrophe Preparation and Protection. 
Sec. 4. Program authority. 
Sec. 5. Qualified lines of coverage. 
Sec. 6. Covered perils. 
Sec. 7. Contracts for reinsurance coverage for eligible State programs. 
Sec. 8. Treatment of insured losses and maximum Federal liability. 
Sec. 9. Catastrophe capital reserve funds. 
Sec. 10. Consumer Hurricane, Earthquake, Loss Protection (HELP) Fund. 
Sec. 11. Annual study concerning benefits of reinsurance program. 
Sec. 12. Definitions. 
Sec. 13. Regulations. 
Sec. 14. Termination. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that— 
(1) the United States needs to take actions to 
be better prepared for and better protected from ca-
tastrophes; 
(2) the hurricane seasons of 2004 and 2005 are 
startling reminders of both the human and economic 
devastation that hurricanes, flooding, and other nat-
ural disasters can cause; 
(3) if a hurricane similar to the deadly 1900 
Galveston hurricane occurred again it could cause 
over $36,000,000,000 in loss; 
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(4) if the 1904 San Francisco earthquake oc-
curred again it could cause over $400,000,000,000 
in loss; 
(5) if a Category 5 hurricane were to hit Miami 
it could cause over $50,000,000,000 in loss and dev-
astate the insurance industry in the United States; 
(6) if the 1938 ‘‘Long Island Express’’ were to 
occur again it could cause over $30,000,000,000 in 
damage and if a hurricane that strong were to di-
rectly 
hit 
Manhattan 
it 
could 
cause 
over 
$150,000,000,000 in damage and cause irreparable 
harm to our Nation’s economy; 
(7) a more comprehensive and integrated ap-
proach to dealing with catastrophes is needed; 
(8) using history as a guide, natural catas-
trophes will inevitably place a tremendous strain on 
homeowners’ insurance markets in many areas, will 
raise costs for consumers, and will jeopardize the 
ability of many consumers to adequately insure their 
homes and possessions; 
(9) the lack of sufficient insurance capacity and 
the inability of private insurers to build enough cap-
ital, in a short amount of time, threatens to increase 
the number of uninsured homeowners, which, in 
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turn, increases the risk of mortgage defaults and the 
strain on the Nation’s banking system; 
(10) some States have intervened to ensure the 
continued availability and affordability of home-
owners’ insurance for all residents; 
(11) it is appropriate that efforts to improve in-
surance availability be designed and implemented at 
the State level; 
(12) while State insurance programs may be 
adequate to cover losses from most natural disasters, 
a small percentage of events are likely to exceed the 
financial capacity of these programs and the local 
insurance markets; 
(13) making available limited Federal reinsur-
ance would improve the effectiveness of State insur-
ance programs and private insurance markets and 
would increase the likelihood that homeowners’ in-
surance claims will be fully paid in the event of a 
large natural catastrophe and that routine claims 
that occur after a mega-catastrophe will also con-
tinue to be paid; 
(14) it is necessary to provide a Federal rein-
surance program on a temporary basis that will pro-
vide more protection at an overall lower cost and 
that will promote stability in the homeowners’ insur-
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ance market in the short term and encourage growth 
of reinsurance capacity by the private and capital 
markets as soon as practical; 
(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-
tim assistance, and recovery, including financial re-
covery; 
(16) any Federal reinsurance program must be 
founded upon sound actuarial principles and priced 
in a manner that minimizes the potential impact on 
the Treasury of the United States, encourages the 
creation of State funds and maximizes the buying 
potential of these State funds, encourages and pro-
motes prevention and mitigation, recovery and re-
building, and consumer education, and emphasizes 
continuous analysis and improvement; and 
(17) such a Federal reinsurance program 
should not remain in existence longer than necessary 
for the private entities or the capital markets, or 
both, to provide adequate reinsurance capacity to 
address the homeowners’ insurance market. 
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SEC. 3. NATIONAL COMMISSION ON CATASTROPHE PREPA-
RATION AND PROTECTION. 
(a) ESTABLISHMENT.—The Secretary of the Treas-
ury shall establish a commission to be known as the Na-
tional Commission on Catastrophe Preparation and Pro-
tection. 
(b) DUTIES.—The Commission shall meet for the 
purpose of advising the Secretary regarding the estimated 
loss costs associated with the contracts for reinsurance 
coverage available under this Act and carrying out the 
functions specified in this Act, including— 
(1) the development and implementation of 
public education concerning the risks posed by nat-
ural catastrophes; 
(2) the development and implementation of pre-
vention, mitigation, recovery, and rebuilding stand-
ards that better prepare and protect the United 
States from catastrophes; 
(3) the establishment of requirements under 
section 7(e) to ensure that cost savings resulting 
from this Act inure to the benefit of consumers; and 
(4) conducting continuous analysis of the effec-
tiveness of this Act and recommending improve-
ments to the Congress so that the costs of providing 
catastrophe protection are decreased and so that the 
United States is better prepared. 
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(c) MEMBERS.— 
(1) APPOINTMENT AND QUALIFICATION.—The 
Commission shall consist of 9 members, as follows: 
(A) HOMELAND SECURITY MEMBER.—The 
Secretary of Homeland Security or the Sec-
retary’s designee. 
(B) APPOINTED
MEMBERS.—Eight mem-
bers appointed by the Secretary, who shall con-
sist of— 
(i) one individual who is an actuary; 
(ii) one individual who is employed in 
engineering; 
(iii) one individual representing the 
scientific community; 
(iv) one individual representing prop-
erty and casualty insurers; 
(v) one individual representing rein-
surers; 
(vi) one individual who is a member or 
former member of the National Association 
of Insurance Commissioners; and 
(vii) two individuals who are con-
sumers. 
(2) PREVENTION
OF
CONFLICTS
OF
INTER-
EST.—Members shall have no personal or financial 
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interest at stake in the deliberations of the Commis-
sion. 
(d) TREATMENT
OF NON-FEDERAL MEMBERS.— 
Each member of the Commission who is not otherwise em-
ployed by the Federal Government shall be considered a 
special Government employee for purposes of sections 202 
and 208 of title 18, United States Code. 
(e) EXPERTS AND CONSULTANTS.—The Commission 
may procure temporary and intermittent services from in-
dividuals or groups recognized as experts in the fields of 
meteorology, seismology, vulcanology, geology, structural 
engineering, wind engineering, and hydrology, and other 
fields, under section 3109(b) of title 5, United States 
Code, but at a rate not in excess of the daily equivalent 
of the annual rate of basic pay payable for level V of the 
Executive Schedule, for each day during which the indi-
vidual procured is performing such services for the Com-
mission. The Commission may also procure, and the Con-
gress encourages the Commission to procure, experts from 
universities, research centers, foundations, and other ap-
propriate organizations who could study, research, and de-
velop methods and mechanisms that could be utilized to 
strengthen structures to better withstand the perils cov-
ered by this Act. 
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(f) COMPENSATION.—Each member of the Commis-
sion who is not an officer or employee of the Federal Gov-
ernment shall be compensated at a rate of basic pay pay-
able for level V of the Executive Schedule, for each day 
(including travel time) during which such member is en-
gaged in the performance of the duties of the Commission. 
All members of the Commission who are officers or em-
ployees of the United States shall serve without compensa-
tion in addition to that received for their services as offi-
cers or employees of the United States. 
(g) OBTAINING DATA.—The Commission and the 
Secretary may solicit loss exposure data and such other 
information either deems necessary to carry out its re-
sponsibilities from governmental agencies and bodies and 
organizations that act as statistical agents for the insur-
ance industry. The Commission and the Secretary shall 
take such actions as are necessary to ensure that informa-
tion that either deems is confidential or proprietary is dis-
closed only to authorized individuals working for the Com-
mission or the Secretary. No company which refuses to 
provide information requested by the Commission or the 
Secretary may participate in the program for reinsurance 
coverage authorized under this Act, nor may any State 
insurance or reinsurance program participate if any gov-
ernmental agency within that State has refused to provide 
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information requested by the Commission or the Sec-
retary. 
(h) FUNDING.— 
(1) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated— 
(A) $10,000,000 for fiscal year 2014 for 
the initial expenses in establishing the Commis-
sion and the initial activities of the Commission 
that cannot timely be covered by amounts ob-
tained pursuant to section 7(b)(6)(B)(iii), as 
determined by the Secretary; 
(B) such additional sums as may be nec-
essary to carry out subsequent activities of the 
Commission; 
(C) $10,000,000 for fiscal year 2014 for 
the initial expenses of the Secretary in carrying 
out the program authorized under section 4; 
and 
(D) such additional sums as may be nec-
essary to carry out subsequent activities of the 
Secretary under this Act. 
(2) OFFSET.—The Secretary shall provide, to 
the maximum extent practicable, that an amount 
equal to any amount appropriated under paragraph 
(1) is obtained from purchasers of reinsurance cov-
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erage under this Act and deposited in the Fund es-
tablished under section 10. Such amounts shall be 
obtained by inclusion of a provision for the Sec-
retary’s and the Commission’s expenses incorporated 
into the pricing of the contracts for such reinsurance 
coverage, pursuant to section 7(b)(6)(B)(iii). 
(i) TERMINATION.—The Commission shall terminate 
upon the effective date of the repeal under section 14(c). 
SEC. 4. PROGRAM AUTHORITY. 
(a) IN GENERAL.—The Secretary of the Treasury, in 
consultation with the Secretary of Homeland Security, 
shall carry out a program under this Act to improve the 
availability and affordability of homeowners protection 
coverage by making available for purchase, only by eligible 
State programs, contracts for reinsurance coverage under 
section 7. 
(b) PURPOSE.—The program shall be designed to 
make reinsurance coverage under this Act available— 
(1) to improve the availability and affordability 
of homeowners’ insurance for the purpose of facili-
tating the pooling, and spreading the risk, of cata-
strophic financial losses from natural catastrophes; 
(2) to improve the solvency and capacity of 
homeowners’ insurance markets; 
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(3) to encourage the development and imple-
mentation of mitigation, prevention, recovery, and 
rebuilding standards; and 
(4) to recommend methods to continuously im-
prove the way the United States reacts and responds 
to catastrophes, including improvements to the 
HELP Fund established under section 10. 
(c) CONTRACT PRINCIPLES.—Under the program 
under this Act, the Secretary shall offer reinsurance cov-
erage through contracts with covered purchasers, which 
contracts— 
(1) shall not displace or compete with the pri-
vate insurance or reinsurance markets or the capital 
market; 
(2) shall minimize the administrative costs of 
the Federal Government; and 
(3) shall provide coverage based solely on in-
sured losses within the State for the eligible State 
program purchasing the contract. 
SEC. 5. QUALIFIED LINES OF COVERAGE. 
Each contract for reinsurance coverage made avail-
able under this Act shall provide insurance coverage 
against residential property losses to homes (including 
dwellings owned under condominium and cooperative own-
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ership arrangements) and the contents of apartment 
buildings. 
SEC. 6. COVERED PERILS. 
Each contract for reinsurance coverage made avail-
able under this Act shall cover losses insured or reinsured 
by the eligible State program purchasing the contract that 
are proximately caused by— 
(1) earthquakes; 
(2) perils ensuing from earthquakes, including 
fire and tsunamis; 
(3) tropical cyclones having maximum sustained 
winds of at least 74 miles per hour, including hurri-
canes and typhoons; 
(4) tornadoes; 
(5) volcanic eruptions; 
(6) catastrophic winter storms; and 
(7) any other natural catastrophe (not including 
any flood) insured or reinsured under the eligible 
State program for which reinsurance coverage under 
section 7 is provided. 
The Secretary shall, by regulation, define the natural ca-
tastrophe perils under this section. 
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SEC. 7. CONTRACTS FOR REINSURANCE COVERAGE FOR 
ELIGIBLE STATE PROGRAMS. 
(a) ELIGIBLE STATE PROGRAMS.—A program shall 
be eligible to purchase a contract under this section for 
reinsurance coverage under this Act only if the State enti-
ty authorized to make such determinations certifies to the 
Secretary that the program complies with the following re-
quirements: 
(1) PROGRAM DESIGN.—The program shall be a 
State-operated— 
(A) insurance program that— 
(i) offers coverage for homes (which 
may include dwellings owned under condo-
minium and cooperative ownership ar-
rangements) and the contents of apart-
ments to State residents; and 
(ii) is authorized by State law; or 
(B) reinsurance program that is designed 
to improve private insurance markets that offer 
coverage for homes (which may include dwell-
ings owned under condominium and cooperative 
ownership arrangements) and the contents of 
apartments because of a finding by the State 
insurance commissioner or other State entity 
authorized to make such a determination that 
such program is necessary in order to provide 
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for the continued availability of such residential 
coverage for all residents. 
(2) OPERATION.—The program shall meet the 
following requirements: 
(A) A majority of the members of the gov-
erning body of the program shall be public offi-
cials. 
(B) The State shall have a financial inter-
est in the program, which shall not include a 
program authorized by State law or regulation 
that requires insurers to pool resources to pro-
vide property insurance coverage for covered 
perils. 
(C) If the State has at any time appro-
priated amounts from the State fund for the 
State program for any purpose other than pay-
ments under the program, the State shall have 
repaid such amounts to the State fund, together 
with interest on such amounts. 
(3) TAX STATUS.—The program shall be struc-
tured and carried out in a manner so that the pro-
gram is exempt from all Federal taxation. 
(4) COVERAGE.—The program shall cover all 
perils specified in section 6. 
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(5) EARNINGS.—The program may not provide 
for, nor shall have ever made, any redistribution of 
any part of any net profits of the program to any 
insurer that participates in the program. 
(6) PREVENTION AND MITIGATION.—The pro-
gram shall include prevention and mitigation provi-
sions that require that not less than $10,000,000 
and not more than 35 percent of the net investment 
income of the State insurance or reinsurance pro-
gram be used for programs to mitigate losses from 
natural catastrophes for which the State insurance 
or reinsurance program was established. For pur-
poses of this paragraph, prevention and mitigation 
shall include methods to reduce losses of life and 
property, including appropriate measures to ade-
quately reflect— 
(A) encouragement of awareness about the 
risk factors and what can be done to eliminate 
or reduce them; 
(B) location of the risk, by giving careful 
consideration of the natural risks for the loca-
tion of the property before allowing building 
and considerations if structures are allowed; 
and 
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(C) construction relative to the risk and 
hazards, which act upon— 
(i) State mandated building codes ap-
propriate for the risk; 
(ii) adequate enforcement of the risk- 
appropriate building codes; 
(iii) building materials that prevent or 
significantly lessen potential damage from 
the natural catastrophes; 
(iv) building methods that prevent or 
significantly lessen potential damage from 
the natural catastrophes; and 
(v) a focus on prevention and mitiga-
tion for any substantially damaged struc-
ture, with an emphasis on how structures 
can be retrofitted so as to make them 
building code compliant. 
(7) REQUIREMENTS REGARDING COVERAGE.— 
(A) IN GENERAL.—The program— 
(i) may not, except for charges or as-
sessments related to post-event financing 
or bonding, involve cross-subsidization be-
tween any separate property and casualty 
lines covered under the program unless the 
elimination of such activity in an existing 
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program would negatively impact the eligi-
bility of the program to purchase a con-
tract for reinsurance coverage under this 
Act pursuant to paragraph (3); 
(ii) shall include provisions that au-
thorize the State insurance commissioner 
or other State entity authorized to make 
such a determination to terminate the pro-
gram if the insurance commissioner or 
other such entity determines that the pro-
gram is no longer necessary to ensure the 
availability of homeowners’ insurance for 
all residents of the State; and 
(iii) shall provide that, for any insur-
ance coverage for homes (which may in-
clude dwellings owned under condominium 
and cooperative ownership arrangements) 
and the contents of apartments that is 
made available under the State insurance 
program and for any reinsurance coverage 
for such insurance coverage made available 
under the State reinsurance program, the 
premium rates charged shall be amounts 
that, at a minimum, are sufficient to cover 
the full actuarial costs of such coverage, 
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based on consideration of the risks involved 
and accepted actuarial and rate making 
principles, anticipated administrative ex-
penses, and loss and loss-adjustment ex-
penses. 
(B) APPLICABILITY.—This paragraph shall 
apply after the expiration of the 2-year period 
beginning on the date of the enactment of this 
Act. 
(8) PROHIBITION OF COMPETITION WITH PRI-
VATE MARKET.—Any insurance or reinsurance cov-
erage, as applicable, made available through the 
State program shall not supplant coverage that is 
otherwise reasonably available and affordable in the 
private market. 
(9) OTHER QUALIFICATIONS.— 
(A) IN
GENERAL.—The State program 
shall (for the year for which the coverage is in 
effect) comply with regulations that shall be 
issued under this paragraph by the Secretary, 
in consultation with the Commission. The regu-
lations shall establish criteria for State pro-
grams to qualify to purchase reinsurance under 
this section, which are in addition to the re-
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quirements under the other paragraphs of this 
subsection. 
(B) CONTENTS.—The regulations issued 
under this paragraph shall include requirements 
that— 
(i) the State program shall have pub-
lic members on its board of directors or 
have an advisory board with public mem-
bers; 
(ii) the State program provide ade-
quate insurance or reinsurance protection, 
as applicable, for the perils covered, which 
shall include a range of deductibles and 
premium costs that reflect the applicable 
risks to eligible properties; 
(iii) insurance or reinsurance cov-
erage, as applicable, provided by the State 
program is made available on a non-
discriminatory basis to all qualifying resi-
dents; 
(iv) any new construction, substantial 
rehabilitation, and renovation insured or 
reinsured by the program complies with 
applicable State or local government build-
ing, fire, and safety codes; 
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(v) the State, or appropriate local gov-
ernments within the State, have in effect 
and enforce nationally recognized model 
building, fire, and safety codes and con-
sensus-based standards that offer risk re-
sponsive resistance that is substantially 
equivalent or greater than the resistance to 
earthquakes or high winds; 
(vi) the State has taken actions to es-
tablish an insurance rate structure that 
takes into account measures to mitigate in-
surance losses; 
(vii) there are in effect, in such State, 
laws or regulations sufficient to prohibit 
price gouging, during the term of reinsur-
ance coverage under this Act for the State 
program in any disaster area located with-
in the State; and 
(viii) the State program complies with 
such other requirements that the Secretary 
considers necessary to carry out the pur-
poses of this Act. 
(b) TERMS OF CONTRACTS.—Each contract under 
this section for reinsurance coverage under this Act shall 
be subject to the following terms and conditions: 
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(1) MATURITY.—The term of the contract shall 
not exceed 1 year or such other term as the Sec-
retary may determine. 
(2) PAYMENT CONDITION.—The contract shall 
authorize claims payments only for eligible losses to 
the eligible State program purchasing the coverage. 
(3) RETAINED
LOSSES
REQUIREMENT.—For 
each event of a covered peril, the contract shall 
make a payment for the event only if the total 
amount of insurance claims for losses, which are 
covered by qualified lines, occur to properties located 
within the State covered by the contract, and that 
result from insured losses (as defined in section 12) 
for the State program, exceeds the amount of re-
tained losses provided under the contract (pursuant 
to section 8(a)) purchased by the eligible State pro-
gram. 
(4) MULTIPLE
EVENTS.—The contract shall 
cover any eligible losses from one or more covered 
events that may occur during the term of the con-
tract and shall provide that if multiple events occur, 
the retained losses requirement under paragraph (3) 
shall apply on a calendar year basis, in the aggre-
gate and not separately to each individual event. 
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(5) TIMING
OF
ELIGIBLE
LOSSES.—Eligible 
losses under the contract shall include only insur-
ance claims for property covered by qualified lines 
that are reported to the eligible State program with-
in the 3-year period beginning upon the event or 
events for which payment under the contract is pro-
vided. 
(6) PRICING.— 
(A) DETERMINATION.—The price of rein-
surance coverage under the contract shall be an 
amount established by the Secretary as follows: 
(i) RECOMMENDATIONS.—The Sec-
retary shall take into consideration the rec-
ommendations of the Commission in estab-
lishing the price, but the price may not be 
less than the amount recommended by the 
Commission. 
(ii) FAIRNESS
TO
TAXPAYERS.—The 
price shall be established at a level that is 
designed to reflect the risks and costs 
being borne under each reinsurance con-
tract issued under this Act and that takes 
into consideration empirical models of nat-
ural disasters and the capacity of private 
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markets to absorb insured losses from nat-
ural disasters. 
(iii) SELF-SUFFICIENCY.—The rates 
for reinsurance coverage shall be estab-
lished at a level that annually produces ex-
pected premiums that shall be sufficient to 
pay the expected annualized cost of all 
claims, loss adjustment expenses, and all 
administrative costs of reinsurance cov-
erage offered under this section. 
(B) COMPONENTS.—The price shall consist 
of the following components: 
(i) RISK-BASED PRICE.—A risk-based 
price, which shall reflect the anticipated 
annualized payout of the contract accord-
ing to the actuarial analysis and rec-
ommendations of the Commission. 
(ii) RISK LOAD.—A risk load in an 
amount that is not less than the risk-based 
price under clause (i). In establishing risk 
loads under this clause, the Secretary shall 
take into consideration comparable private 
risk loads. 
(iii) ADMINISTRATIVE COSTS.—A sum 
sufficient to provide for the operation of 
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the Commission and the administrative ex-
penses incurred by the Secretary in car-
rying out this Act. 
(7) INFORMATION.—The contract shall contain 
a condition providing that the Commission may re-
quire the State program that is covered under the 
contract to submit to the Commission all informa-
tion on the State program relevant to the duties of 
the Commission, as determined by the Secretary. 
(8) ADDITIONAL CONTRACT OPTION.—The con-
tract shall provide that the purchaser of the contract 
may, during the term of such original contract, pur-
chase additional contracts from among those offered 
by the Secretary at the beginning of the term, sub-
ject to the limitations under section 8, at the prices 
at which such contracts were offered at the begin-
ning of the term, prorated based upon the remaining 
term as determined by the Secretary. Such addi-
tional contracts shall provide coverage beginning on 
a date 15 days after the date of purchase but shall 
not provide coverage for losses for an event that has 
already occurred. 
(9) OTHERS.—The contract shall contain such 
other terms as the Secretary considers necessary to 
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carry out this Act and to ensure the long-term fi-
nancial integrity of the program under this Act. 
(c) PRIVATE SECTOR RIGHT TO PARTICIPATE.— 
(1) ESTABLISHMENT OF COMPETITIVE PROCE-
DURE.—The Secretary shall establish, by regulation, 
a competitive procedure under this subsection that 
provides qualified entities an opportunity, on a basis 
consistent with the contract cycle established under 
this Act by the Secretary, to offer to provide, in lieu 
of reinsurance coverage under this section, reinsur-
ance coverage that is substantially similar to cov-
erage otherwise made available under this section. 
(2) COMPETITIVE
PROCEDURE.—Under the 
procedure established under this subsection— 
(A) the Secretary shall establish criteria 
for private insurers, reinsurers, and capital 
market companies, and consortia of such enti-
ties to be treated as qualified entities for pur-
poses of this subsection, which criteria shall re-
quire such an entity to have at all times capital 
sufficient to satisfy the terms of the reinsurance 
contracts and shall include such other industry 
and credit rating standards as the Secretary 
considers appropriate; 
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(B) not less than 30 days before the begin-
ning of each contract cycle during which any re-
insurance coverage under this section is to be 
made available, the Secretary may request pro-
posals and shall publish in the Federal Register 
the rates and terms for contracts for reinsur-
ance coverage under this section that are to be 
made available during such contract cycle; 
(C) the Secretary shall provide qualified 
entities a period of not less than 10 days (which 
shall terminate not less than 20 days before the 
beginning of the contract cycle) to submit to 
the Secretary a written expression of interest in 
providing reinsurance coverage in lieu of the 
coverage otherwise to be made available under 
this section; 
(D) the Secretary shall provide any quali-
fied entity submitting an expression of interest 
during the period referred to in subparagraph 
(C) a period of not less than 20 days (which 
shall terminate before the beginning of the con-
tract cycle) to submit to the Secretary an offer 
to provide, in lieu of the reinsurance coverage 
otherwise to be made available under this sec-
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tion, coverage that is substantially similar to 
such coverage; 
(E) if the Secretary determines that an 
offer submitted during the period referred to in 
subparagraph (D) is a bona fide offer to pro-
vide reinsurance coverage during the contract 
cycle at rates and terms that are substantially 
similar to the rates and terms for reinsurance 
coverage otherwise to be provided under this 
section by the Secretary, the Secretary shall ac-
cept the offer (if still outstanding) and, not-
withstanding any other provision of this Act, 
provide for such entity to make reinsurance cov-
erage available in accordance with the offer; 
and 
(F) if the Secretary accepts an offer pur-
suant to subparagraph (E) to make reinsurance 
coverage available, notwithstanding any other 
provision of this Act, the Secretary shall reduce, 
to an equivalent extent, the amount of reinsur-
ance coverage available under this section dur-
ing the contract cycle to which the offer relates, 
unless and until the Secretary determines that 
the entity is not complying with the terms of 
the accepted offer. 
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(d) PARTICIPATION BY MULTI-STATE CATASTROPHE 
FUND PROGRAMS.—Nothing in this Act shall prohibit the 
creation of multi-State catastrophe insurance or reinsur-
ance programs, or the participation by such programs in 
the program established pursuant to section 4. The Sec-
retary shall, by regulation, apply the provisions of this Act 
to multi-State catastrophe insurance and reinsurance pro-
grams. 
(e) 
REQUIREMENT
FOR
INSURERS
TO
PASS 
THROUGH SAVINGS
TO CONSUMERS.—Notwithstanding 
any other provision of this Act, a State program shall not 
be eligible to purchase a contract for reinsurance coverage 
made available under this Act unless such State has in 
effect such laws, regulations, or other requirements, as the 
Secretary shall by regulation require, that— 
(1) to the extent that reinsurance coverage 
made available under the program under this Act re-
sults in any cost savings in providing insurance cov-
erage for risks in such State, such cost savings be 
reflected in premium rates charged to consumers for 
such coverage; and 
(2) the State take such actions as the Secretary 
considers appropriate to ensure that the requirement 
under paragraph (1) is carried out and enforced. 
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SEC. 8. TREATMENT OF INSURED LOSSES AND MAXIMUM 
FEDERAL LIABILITY. 
(a) AVAILABLE LEVELS OF RETAINED LOSSES.—In 
making reinsurance coverage available under this Act, the 
Secretary shall make available for purchase contracts for 
such coverage that require the sustainment of retained 
losses from covered perils (as required under section 
7(b)(3) for payment of eligible losses) in various amounts, 
as the Secretary, in consultation with the Commission, de-
termines appropriate and subject to the requirements 
under subsection (b). 
(b) MINIMUM LEVEL OF RETAINED LOSSES.— 
(1) AMOUNT.—Subject to paragraph (2) and 
notwithstanding any other provision of this Act, a 
contract for reinsurance coverage under section 7 for 
an eligible State program that offers insurance or 
reinsurance coverage described in subparagraph (A) 
or (B), respectively, of section 7(a)(1) may not be 
made available or sold unless the contract requires 
that the State program sustain an amount of re-
tained losses from covered perils in the following 
amount: 
(A) IN
GENERAL.—The State program 
shall sustain an amount of retained losses of 
not less than the greater of— 
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(i) the claims-paying capacity of the 
eligible State program, as determined by 
the Secretary; and 
(ii) an amount, determined by the 
Secretary in consultation with the Commis-
sion, that is the amount equal to the eligi-
ble losses projected to be incurred once 
every 200 years on an annual basis from 
covered perils. 
(B) TRANSITION
RULE
FOR
NEW
PRO-
GRAMS.— 
(i) 200-YEAR EVENT.—The Secretary 
may provide that, in the case of an eligible 
State program that, after the date of the 
enactment of this Act, commences offering 
insurance or reinsurance coverage, during 
the 7-year period beginning on the date 
that reinsurance coverage under section 7 
is first made available, the minimum level 
of retained losses applicable under this 
paragraph shall be the amount determined 
for the State under subparagraph (A)(i), 
except that such minimum level shall be 
adjusted annually as provided in clause (ii) 
of this subparagraph. 
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(ii) ANNUAL ADJUSTMENT.—Each an-
nual adjustment under this clause shall in-
crease the minimum level of retained losses 
applicable under this subparagraph to an 
eligible State program described in clause 
(i) in a manner such that— 
(I) during the course of such 7- 
year period, the applicable minimum 
level of retained losses approaches the 
minimum level that, under subpara-
graph (A)(ii), will apply to the eligible 
State program upon the expiration of 
such period; and 
(II) each such annual increase is 
a substantially similar amount, to the 
extent practicable. 
(C) REDUCTION
BECAUSE
OF
REDUCED 
CLAIMS-PAYING CAPACITY.— 
(i) 
AUTHORITY.—Notwithstanding 
subparagraphs (A), (B), and (C) or the 
terms contained in a contract for reinsur-
ance pursuant to such subparagraphs, if 
the Secretary determines that the claims- 
paying capacity of an eligible State pro-
gram has been reduced because of payment 
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for losses due to an event, the Secretary 
may reduce the minimum level of retained 
losses. 
(ii) TERM OF REDUCTION.—The Sec-
retary may extend the 5-year period for 
not more than 5 additional 1-year periods 
if the Secretary determines that losses in-
curred by the State program as a result of 
covered perils create excessive hardship on 
the State program. The Secretary shall 
consult with the appropriate officials of the 
State program regarding the required 
schedule and any potential 1-year exten-
sions. 
(D) CLAIMS-PAYING CAPACITY.—For pur-
poses of this paragraph, the claims-paying ca-
pacity of a State-operated insurance or reinsur-
ance program under section 7(a)(1) shall be de-
termined by the Secretary, in consultation with 
the Commission, taking into consideration the 
claims-paying capacity as determined by the 
State program, retained losses to private insur-
ers in the State in an amount assigned by the 
State insurance commissioner, the cash surplus 
of the program, and the lines of credit, reinsur-
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ance, and other financing mechanisms of the 
program established by law. 
(2) INITIAL ADJUSTMENT BASED ON PRIVATE 
MARKET.—The Secretary may, before making con-
tracts for reinsurance coverage under this Act ini-
tially available under section 7, raise the minimum 
level of retained losses from the amount required 
under paragraph (1) for an eligible State program to 
ensure, as determined by the Secretary, that such 
contracts comply with the principle under section 
4(c)(1). 
(c) 90 PERCENT COVERAGE OF INSURED LOSSES IN 
EXCESS OF RETAINED LOSSES.—Each contract for rein-
surance coverage under this Act for a covered purchaser 
shall provide that the amount paid out under the contract 
shall, subject to subsection (d), be equal to 90 percent of 
the amount of insured losses of the eligible State program 
of the purchaser in excess of the amount of retained losses 
that the contract requires, pursuant to subsection (b), to 
be incurred by such program. 
(d) MAXIMUM FEDERAL LIABILITY.— 
(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Secretary may sell only con-
tracts for reinsurance coverage under this Act in 
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various amounts that comply with the following re-
quirements: 
(A) ESTIMATE
OF
AGGREGATE
LIABIL-
ITY.—The aggregate liability for payment of 
claims under all such contracts in any single 
year is unlikely to exceed $200,000,000,000 (as 
such amount is adjusted under paragraph (2)). 
(B) ELIGIBLE LOSS COVERAGE SOLD.—El-
igible losses covered by all contracts sold within 
a State during a 12-month period do not exceed 
the difference between the following amounts 
(each of which shall be determined by the Sec-
retary in consultation with the Commission): 
(i) The amount equal to the eligible 
loss projected to be incurred once every 
500 years from a single event in the State. 
(ii) The amount equal to the eligible 
loss projected to be incurred once every 
200 years from a single event in the State. 
(2) ANNUAL
ADJUSTMENTS.—The Secretary 
shall annually adjust the amount under paragraph 
(1)(A) (as it may have been previously adjusted) to 
provide for inflation in accordance with an inflation 
index that the Secretary determines to be appro-
priate. 
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SEC. 9. CATASTROPHE CAPITAL RESERVE FUNDS. 
(a) ESTABLISHMENT.—Any insurer who participates 
in an eligible State program under section 7(a) may estab-
lish a Catastrophe Capital Reserve Fund (in this section 
referred to as a ‘‘reserve fund’’) in which it may hold 
funds in a fiduciary capacity on behalf of the Secretary. 
(b) FUNDING.—An insurer may fund a reserve fund 
by making an election, in advance, to treat some or all 
of the premiums received for such coverage as charges im-
posed by the Secretary for participation in, and operation 
of, the program for reinsurance coverage under this Act. 
Any such premiums for which such an election has been 
made shall be maintained in a segregated account in a 
fiduciary capacity on behalf of the Secretary. Such funds 
may be invested in any otherwise legally permissible man-
ner but all interest, dividends, and capital accumulations 
also shall be retained in such segregated account on behalf 
of the Secretary. 
(c) USE.—Amounts in a reserve fund established pur-
suant to this section shall be collected and used by the 
Secretary to offset, in whole or in part, the cost to the 
Secretary of claims paid under reinsurance coverage pro-
vided under the program, except that, in the case only of 
a single event that results in an amount of eligible losses 
to insurers that is equal to or greater than the amount 
of such losses projected to be incurred from a single event 
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having an extent of such losses such that the event has 
a 1.0 percent chance of occurring in any year, an insurer 
may first use the funds in a reserve fund of the insurer 
to satisfy any one or more of the following: 
(1) The retained losses for the insurer required 
under section 8(b). 
(2) The portion of the insurer’s losses that ex-
ceed the required retained losses but are not com-
pensated under a reinsurance contract made avail-
able under the Program pursuant to section 8(c). 
(3) The insurer’s obligations to pay for insured 
losses if any conditions precedent to payment under 
a contract for reinsurance made available under the 
Program are not met. 
(4) Any risk-sharing obligations that the in-
surer may have entered into. 
(d) TERMINATION.— 
(1) TERMINATION OF PROGRAM.—Upon termi-
nation under section 14 of the program under this 
Act, and subject to the continuing authority of the 
Secretary to adjust claims in satisfaction of con-
tracts for reinsurance in force under the Program, 
10 percent of each insurer’s reserve funds shall be 
remitted to the Secretary and the remainder shall be 
remitted to the insurer. The Secretary shall deter-
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mine the manner in which the remittance of such in-
come to the insurer shall be made. 
(2) ELIMINATION OF COVERAGE OF INSURED 
LOSSES IN EXCESS OF RETAINED LOSSES.—If at any 
time the Program remains in effect but contracts for 
reinsurance under the Program do not provide any 
payment for insured losses in excess of retained 
losses, the reserve funds shall be retained and used 
for the purposes set forth in subsection (c) of this 
section. At such time as an insurer’s liability for in-
sured losses under the Program terminates, as a 
consequence of the insurer’s termination of its busi-
ness or otherwise, the insurer shall remit any 
amounts remaining in its reserve funds to the Sec-
retary. 
SEC. 10. CONSUMER HURRICANE, EARTHQUAKE, LOSS PRO-
TECTION (HELP) FUND. 
(a) ESTABLISHMENT.—There is established within 
the Treasury of the United States a fund to be known 
as the Consumer HELP Fund (in this section referred 
to as the ‘‘Fund’’). 
(b) CREDITS.—The Fund shall be credited with— 
(1) amounts received annually from the sale of 
contracts for reinsurance coverage under this Act; 
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(2) any amounts borrowed under subsection 
(d); 
(3) any amounts earned on investments of the 
Fund pursuant to subsection (e); and 
(4) such other amounts as may be credited to 
the Fund. 
(c) USES.—Amounts in the Fund shall be available 
to the Secretary only for the following purposes: 
(1) CONTRACT PAYMENTS.—For payments to 
covered purchasers under contracts for reinsurance 
coverage for eligible losses under such contracts. 
(2) COMMISSION COSTS.—To pay for the oper-
ating costs of the Commission. 
(3) ADMINISTRATIVE EXPENSES.—To pay for 
the administrative expenses incurred by the Sec-
retary in carrying out the reinsurance program 
under this Act. 
(4) TERMINATION.—Upon termination under 
section 14, as provided in such section. 
(d) BORROWING.— 
(1) AUTHORITY.—To the extent that the 
amounts in the Fund are insufficient to pay claims 
and expenses under subsection (c), the Secretary 
may issue such obligations of the Fund as may be 
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necessary to cover the insufficiency and shall pur-
chase any such obligations issued. 
(2) PUBLIC DEBT TRANSACTION.—For the pur-
pose of purchasing any such obligations, the Sec-
retary may use as a public debt transaction the pro-
ceeds from the sale of any securities issued under 
chapter 31 of title 31, United States Code, and the 
purposes for which securities are issued under such 
chapter are hereby extended to include any purchase 
by the Secretary of such obligations under this sub-
section. 
(3) CHARACTERISTICS OF OBLIGATIONS.—Obli-
gations issued under this subsection shall be in such 
forms and denominations, bear such maturities, bear 
interest at such rate, and be subject to such other 
terms and conditions, as the Secretary shall deter-
mine. 
(4) TREATMENT.—All redemptions, purchases, 
and sales by the Secretary of obligations under this 
subsection shall be treated as public debt trans-
actions of the United States. 
(5) REPAYMENT.—Any obligations issued under 
this subsection shall be repaid including interest, 
from the Fund and shall be recouped from pre-
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miums charged for reinsurance coverage provided 
under this Act. 
(e) INVESTMENT.—If the Secretary determines that 
the amounts in the Fund are in excess of current needs, 
the Secretary may invest such amounts as the Secretary 
considers advisable in obligations issued or guaranteed by 
the United States. 
(f) PROHIBITION OF FEDERAL FUNDS.—Except for 
amounts made available pursuant to subsection (d) and 
section 3(h), no further Federal funds shall be authorized 
or appropriated for the Fund or for carrying out the rein-
surance program under this Act. 
SEC. 11. ANNUAL STUDY CONCERNING BENEFITS OF REIN-
SURANCE PROGRAM. 
(a) IN GENERAL.—The Secretary shall, on an annual 
basis, conduct a study and submit to the Congress a report 
that— 
(1) analyzes the cost and availability of home-
owners’ insurance for losses resulting from cata-
strophic natural disasters covered by the reinsurance 
program under this Act; 
(2) describes the efforts of the participating 
States in— 
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(A) enacting preparedness, prevention, 
mitigation, recovery, and rebuilding standards; 
and 
(B) educating the public on the risks asso-
ciated with natural catastrophe; and 
(3) makes recommendations regarding ways to 
improve the program under this Act and its adminis-
tration. 
(b) CONTENTS.—Each annual study under this sec-
tion shall also determine and identify, on an aggregate 
basis— 
(1) for each State or region, the capacity of the 
private homeowners’ insurance market with respect 
to coverage for losses from catastrophic natural dis-
asters; 
(2) for each State or region, the percentage of 
homeowners who have such coverage, the catas-
trophes covered, and the average cost of such cov-
erage; and 
(3) for each State or region, the effects this Act 
is having on the availability and affordability of such 
insurance. 
(c) TIMING.—Each annual report under this section 
shall be submitted not later than March 30 of the year 
after the year for which the study was conducted. 
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(d) COMMENCEMENT
OF
REPORTING
REQUIRE-
MENT.—The Secretary shall first submit an annual report 
under this section not later than two years after the date 
of the enactment of this Act. 
SEC. 12. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) COMMISSION.—The term ‘‘Commission’’ 
means the National Commission on Catastrophe 
Risks and Insurance Loss Costs established under 
section 3. 
(2) COVERED PERILS.—The term ‘‘covered per-
ils’’ means the natural disaster perils under section 
6. 
(3) COVERED PURCHASER.—The term ‘‘covered 
purchaser’’ means an eligible State-operated insur-
ance or reinsurance program that purchases reinsur-
ance coverage made available under a contract under 
section 7. 
(4) DISASTER AREA.—The term ‘‘disaster area’’ 
means a geographical area, with respect to which— 
(A) a covered peril specified in section 6 
has occurred; and 
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(B) a declaration that a major disaster ex-
ists, as a result of the occurrence of such 
peril— 
(i) has been made by the President of 
the United States; and 
(ii) is in effect. 
(5) ELIGIBLE
LOSSES.—The term ‘‘eligible 
losses’’ means, with respect to a contract for rein-
surance coverage made available under this Act for 
a covered purchaser, the insured losses of the cov-
ered purchaser that exceed the amount of retained 
losses that the contract requires, pursuant to section 
8(b), to be incurred by the eligible State program of 
such purchaser, as defined by the Secretary after 
consultation with the Commission. 
(6) ELIGIBLE STATE PROGRAM.—The term ‘‘eli-
gible State program’’ means a State program that, 
pursuant to section 7(a), is eligible to purchase rein-
surance coverage made available through contracts 
under section 7, or a multi-State program that is eli-
gible to purchase such coverage pursuant to section 
7(c). 
(7) INSURED LOSS.—The term ‘‘insured loss’’ 
means, with respect to contract for reinsurance cov-
erage made available under this Act for a covered 
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purchaser, any loss resulting from a covered peril 
that is covered by insurance or reinsurance made 
available under the eligible State program of the 
covered purchaser. 
(8) 
PRICE
GOUGING.—The 
term 
‘‘price 
gouging’’ means the providing of any consumer good 
or service by a supplier related to repair or restora-
tion of property damaged from a catastrophe for a 
price that the supplier knows or has reason to know 
is greater, by at least the percentage set forth in a 
State law or regulation prohibiting such act (not-
withstanding any real cost increase due to any at-
tendant business risk and other reasonable expenses 
that result from the major catastrophe involved), 
than the price charged by the supplier for such con-
sumer good or service immediately before the dis-
aster. 
(9) QUALIFIED
LINES.—The term ‘‘qualified 
lines’’ means lines of insurance coverage for which 
losses are covered under section 5 by reinsurance 
coverage under this Act. 
(10) REINSURANCE COVERAGE.—The term ‘‘re-
insurance coverage under this Act’’ means coverage 
under contracts made available under section 7. 
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(11) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of the Treasury. 
(12) STATE.—The term ‘‘State’’ means the 
States of the United States, the District of Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam, 
the Virgin Islands, American Samoa, and any other 
territory or possession of the United States. 
SEC. 13. REGULATIONS. 
The Secretary, in consultation with the Secretary of 
the Department of Homeland Security, shall issue any 
regulations necessary to carry out the program for rein-
surance coverage under this Act. 
SEC. 14. TERMINATION. 
(a) IN GENERAL.—Except as provided in subsection 
(b), the Secretary may not provide any reinsurance cov-
erage under this Act covering any period after the expira-
tion of the 20-year period beginning on the date of the 
enactment of this Act. 
(b) EXTENSION.—If upon the expiration of the period 
under subsection (a) the Secretary, in consultation with 
the Commission, determines that continuation of the pro-
gram for reinsurance coverage under this Act is necessary 
or appropriate to carry out the purpose of the program 
under section 4(b) because of insufficient growth of capac-
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ity in the private homeowners’ insurance market, the Sec-
retary shall continue to provide reinsurance coverage 
under this Act until the expiration of the 5-year period 
beginning upon the expiration of the period under sub-
section (a). 
(c) REPEAL.—Effective upon the date that reinsur-
ance coverage under this Act is no longer available or in 
force pursuant to subsection (a) or (b), this Act (except 
for this section) is repealed. 
(d) DEFICIT REDUCTION.—The Secretary shall cover 
into the General Fund of the Treasury any amounts re-
maining in the Fund under section 9 upon the repeal of 
this Act under subsection (c). 
Æ 
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