I 
109TH CONGRESS 
2D SESSION 
H. R. 5891 
To establish a bipartisan commission on insurance reform. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 26, 2006 
Ms. WASSERMAN SCHULTZ (for herself, Mr. CASTLE, Mr. MELANCON, Mr. 
MCHENRY, Mrs. MCCARTHY, Ms. HOOLEY, Mr. ACKERMAN, Mr. ISRAEL, 
Mr. BISHOP of New York, and Mr. CROWLEY) introduced the following 
bill; which was referred to the Committee on Financial Services 
A BILL 
To establish a bipartisan commission on insurance reform. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Catastrophic Disaster 
Risk and Insurance Commission Act of 2006’’. 
SEC. 2. FINDINGS. 
The Congress finds the following: 
(1) Hurricanes Katrina, Rita, and Wilma, 
which struck the United States in 2005, caused 
more than $200 billion in total economic losses, in-
cluding insured and uninsured losses. 
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(2) In the United States, expanded development 
in exposed geographic areas and rising property val-
ues have combined to result in dramatic increases in 
both insured and economic losses resulting from na-
tional catastrophes. Nationally recognized experts in 
risk management expect these trends to continue. 
According to a 2004 study based on United States 
Census data and published by the National Oceanic 
and Atmospheric Administration, 53 percent of the 
population of the United States (153 million people) 
lived in coastal counties (including those that abut 
the Great Lakes) in 2003. This compares to the 
1960 average of 187 people living on each square 
mile of the United States coast, excluding Alaska. In 
1994, that figure was 274 persons per square mile, 
and it is expected to reach 327 people by 2015. 
(3) Although private sector insurance is cur-
rently available to spread some catastrophe-related 
losses throughout the United States and abroad, 
most experts believe there will be significant insur-
ance and reinsurance shortages, resulting in dra-
matic rate increases for consumers and businesses, 
and the unavailability of catastrophe insurance. 
(4) The Federal Government has provided and 
will continue to provide billions of dollars and re-
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sources to pay for losses from catastrophes, includ-
ing hurricanes, volcanic eruptions, tsunamis, tor-
nados, and other disasters, at huge costs to Amer-
ican taxpayers. 
(5) The Federal Government has a critical in-
terest in ensuring that the management of catas-
trophes is appropriate and fiscally responsible, and 
to mitigate, reduce and prevent, where possible, cost 
to taxpayers. Mortgages require reliable property in-
surance, and the unavailability of reliable property 
insurance would make most real estate transactions 
impossible. In addition, the public health, safety, 
and welfare demand that structures damaged or de-
stroyed in a catastrophe be reconstructed as soon as 
possible. Therefore, the potential of unmitigated cost 
to the American taxpayer and the inability of the 
private sector insurance and reinsurance markets to 
maintain sufficient capacity to enable Americans to 
obtain property insurance coverage in the private 
sector endanger the national economy and the public 
health, safety, and welfare. 
(6) Multiple proposals have been introduced in 
the United States Congress over the past decade to 
address catastrophic risk insurance, including the 
creation of a national catastrophic reinsurance fund 
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and the revision of the Federal tax code to allow in-
surers to use tax-deferred catastrophe funds, yet 
Congress has failed to act on any of these proposals. 
(7) To the extent the United States faces in-
creased risks from catastrophe exposure, essential 
technical information about market capacity, finan-
cial structures, risk management structures, and in-
novations in the catastrophe insurance market is 
needed. 
(8) The most efficient and effective approach to 
assessing the catastrophe insurance problem in the 
public policy context is to establish a bipartisan com-
mission of experts to study the management of cata-
strophic disaster risk, and to require such commis-
sion to timely report its recommendations to Con-
gress so that Congress can quickly craft a solution 
to protect the American people. 
SEC. 3. ESTABLISHMENT. 
There is established a bipartisan Catastrophic Dis-
aster Risk and Insurance Commission (in this Act referred 
to as the ‘‘Commission’’). 
SEC. 4. MEMBERSHIP. 
(a) MEMBERS.—The Commission shall be composed 
of the following: 
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(1) 2 members who shall be former members of 
Congress that were members of a committee of ap-
propriate jurisdiction, of whom— 
(A) one shall be a Republican; and 
(B) one shall be a Democrat. 
(2) The Secretary of the Treasury or a designee 
of the Secretary. 
(3) The Director of the Federal Emergency 
Management Agency or a designee of the Director. 
(4) The Administrator of the National Oceanic 
and Atmospheric Administration or a designee of the 
Administrator. 
(5) 12 additional members or their designees of 
whom one shall be— 
(A) a representative of a consumer group; 
(B) a representative of a primary property 
and casualty insurance company; 
(C) a representative of a reinsurance com-
pany; 
(D) an independent insurance agent with 
experience in writing property and casualty in-
surance policies; 
(E) a representative of a national realty 
company; 
(F) a State insurance regulator; 
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(G) a State emergency operations official; 
(H) a physical scientist with expertise in 
natural disasters; 
(I) a faculty member of an accredited uni-
versity with experience in risk management; 
(J) a member of nationally recognized 
think tank with experience in risk management; 
(K) a homebuilder with experience in 
structural engineering; 
(L) a lender with expertise in both com-
mercial and residential mortgage lending; and 
(M) a licensed attorney who is a nationally 
recognized expert in antitrust law. 
(b) MANNER OF APPOINTMENT.— 
(1) IN GENERAL.—Any member of the Commis-
sion described under paragraph (1) or (5) of sub-
section (a) shall be appointed only upon unanimous 
agreement of— 
(A) the majority leader of the Senate; 
(B) the minority leader of the Senate; 
(C) the Speaker of the House of Rep-
resentatives; and 
(D) the minority leader of the House of 
Representatives. 
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(2) CONSULTATION.—In making any appoint-
ment under paragraph (1), each individual described 
in paragraph (1) shall consult with the President. 
(3) TIME OF APPOINTMENT.—Members of the 
commission appointed under this subsection shall be 
appointed not later than 30 days after the date of 
the enactment of this Act. 
(c) ELIGIBILITY LIMITATION.—Except as provided in 
subsection (a), no member or officer of the Congress, or 
other member or officer of the Executive Branch of the 
United States Government or any State government may 
be appointed to be a member of the Commission. 
(d) PERIOD OF APPOINTMENT.— 
(1) IN GENERAL.—Each member of the Com-
mission shall be appointed for the life of the Com-
mission. 
(2) VACANCIES.—A vacancy on the Commission 
shall not affect its powers, but shall be filled in the 
same manner as the original appointment was made. 
(e) QUORUM.— 
(1) MAJORITY.—A majority of the members of 
the Commission shall constitute a quorum, but a 
lesser number may hold hearings. 
(2) APPROVAL ACTIONS.—All recommendations 
and reports of the Commission required by this Act 
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shall be approved only by a majority vote of a 
quorum of the Commission. 
(f) CHAIR AND VICE CHAIR.—The majority leader of 
the Senate, the minority leader of the Senate, the Speaker 
of the House of Representatives, and the minority leader 
of the House of Representatives shall jointly select 1 mem-
ber appointed pursuant to subsection (a)(1) to serve as 
the Chair of the Commission and the other member ap-
pointed pursuant to subsection (a)(1) to serve as the Vice 
Chair. 
(g) MEETINGS.—The Council shall meet at the call 
of its Chairperson or a majority of its members at any 
time. 
SEC. 5. DUTIES OF COMMISSION. 
The Commission shall— 
(1) assess— 
(A) the condition of the property and cas-
ualty insurance and reinsurance markets in the 
aftermath of Hurricanes Katrina, Rita, and 
Wilma in 2005, and the 4 major hurricanes 
that struck the United States in 2004; and 
(B) the ongoing exposure of the United 
States to hurricanes, typhoons, earthquakes, 
volcanic eruptions, tsunamis, floods, wild fires, 
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and other extreme weather events or natural 
disasters as determined by the Commission; and 
(2) recommend and report, as required under 
section 6, any necessary legislative and regulatory 
changes that will— 
(A) improve the participation of domestic 
and international market participants and in-
crease competitiveness of such markets; 
(B) assure consumers of the— 
(i) availability of adequate private in-
surance coverage when an insured event 
occurs; and 
(ii) best possible range of insurance 
products at fair and competitive prices; 
and 
(C) minimize liability to the Federal Gov-
ernment and taxpayers by— 
(i) reducing the likelihood of fraud 
and abuse of a federal repayment program; 
and 
(ii) hedging the risk exposure as-
sumed by the Federal Government by the 
adoption of a national catastrophe pro-
gram. 
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SEC. 6. REPORT. 
(a) IN GENERAL.—Not later than 180 days after the 
appointment of Commission members under section 4, the 
Commission shall submit to the President and the Con-
gress a final report containing a detailed statement of its 
findings, together with any recommendations for legisla-
tion or administrative action that the Commission con-
siders appropriate, in accordance with the requirements 
of section 5. 
(b) CONSIDERATIONS.—In developing any rec-
ommendations under subsection (a), the Commission shall 
consider— 
(1) the catastrophic insurance and reinsurance 
market structures and the relevant commercial prac-
tices in such insurance industries in providing insur-
ance protection to different sectors of the American 
population; 
(2) the constraints and opportunities in imple-
menting a catastrophic insurance system that can 
resolve key obstacles currently impeding broader im-
plementation of catastrophe risk management and 
financing with insurance; 
(3) methods to improve risk underwriting prac-
tices, including— 
(A) analysis of modalities of risk transfer 
for potential financial losses; 
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(B) assessment of private securitization of 
insurances risks; 
(C) private-public partnerships to increase 
insurance capacity in constrained markets; and 
(D) the financial feasibility and sustain-
ability of a national catastrophe pool or regional 
catastrophe pools designed to provide adequate 
insurance coverage and increased underwriting 
capacity to insurers and reinsurers; 
(4) approaches for implementing a public insur-
ance scheme for low-income communities, in order to 
promote risk reduction and explicit insurance cov-
erage in such communities; 
(5) methods to strengthen insurance regulatory 
requirements and supervision of such requirements, 
including solvency for catastrophic risk reserves; 
(6) methods to promote public insurance poli-
cies linked to programs for loss reduction in the un-
insured sectors of the American population; 
(7) methods to strengthen the risk assessment 
and enforcement of structural mitigation and vulner-
ability reduction measures, such as zoning and 
building code compliance; 
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(8) methods that incentivize the public to pur-
chase and retain risk insurance coverage throughout 
the ownership of insured property; 
(9) the appropriate role for States in stabilizing 
the property and casualty insurance and reinsurance 
markets, with an analysis of— 
(A) the best way to allow, or whether it is 
in the best interest to allow, a State govern-
ment to set up a method to address the risks 
facing such State; and 
(B) any lessons learned from the success 
or failure of a State in setting up such method; 
(10) the appropriate role for the Federal Gov-
ernment in stabilizing the property and casualty in-
surance and reinsurance markets, with an analysis 
of— 
(A) options such as— 
(i) a reinsurance mechanism; 
(ii) the modernization of Federal tax-
ation policies; and 
(iii) an ‘‘insurance of last resort’’ 
mechanism; 
(B) how to fund such options; 
(C) how best to hedge any risk exposure 
assumed by the Federal Government; and 
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(D) how the establishment of a Federal 
disaster plan would affect existing State dis-
aster plans; 
(11) the merits of the legislative proposals cur-
rently pending in the 109th Congress, including pro-
posals for— 
(A) the creation of a Federal catastrophe 
fund to act as a backup to State catastrophe 
funds; 
(B) tax-deferred catastrophe accounts for 
insurers; and 
(C) tax-free catastrophe accounts for pol-
icyholders; and 
(12) the merits of pursuing a policy for the 
Federal Government to hedge its risk exposure. 
SEC. 7. POWERS OF THE COMMISSION. 
(a) HEARINGS.—The Commission or, at the direction 
of the Commission, any subcommittee or member of the 
Commission, may, for the purpose of carrying out this 
Act— 
(1) hold such public hearings in such cities and 
countries, sit and act at such times and places, take 
such testimony, receive such evidence, and admin-
ister such oaths or affirmations as the Commission 
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or such subcommittee or member considers advis-
able; and 
(2) require, by subpoena or otherwise, the at-
tendance and testimony of such witnesses and the 
production of such books, records, correspondence, 
memoranda, papers, documents, tapes, and materials 
as the Commission or such subcommittee or member 
considers advisable. 
(b) 
ISSUANCE
AND
ENFORCEMENT
OF
SUB-
POENAS.— 
(1) ISSUANCE.—Subpoenas issued under sub-
section (a) shall bear the signature of the Chair-
person of the Commission and shall be served by any 
person or class of persons designated by the Chair-
person for that purpose. 
(2) ENFORCEMENT.—In the case of contumacy 
or failure to obey a subpoena issued under sub-
section (a), the United States district court for the 
judicial district in which the subpoenaed person re-
sides, is served, or may be found may issue an order 
requiring such person to appear at any designated 
place to testify or to produce documentary or other 
evidence. Any failure to obey the order of the court 
may be punished by the court as a contempt of that 
court. 
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(3) CONFIDENTIALITY.— 
(A) IN
GENERAL.—Information obtained 
under a subpoena issued under subsection (a) 
which is deemed confidential, or with reference 
to which a request for confidential treatment is 
made by the person furnishing such informa-
tion— 
(i) shall be exempt from disclosure 
under section 552 of title 5, United States 
Code; and 
(ii) shall not be published or disclosed 
unless the Commission determines that the 
withholding of such information is contrary 
to the interest of the United States. 
(B) EXCEPTION.—The requirements of 
subparagraph (A) shall not apply to the publi-
cation or disclosure of any data aggregated in 
a manner that ensures protection of the identity 
of the person furnishing such data. 
(c) AUTHORITY OF MEMBERS OR AGENTS OF THE 
COMMISSION.—Any member or agent of the Commission 
may, if authorized by the Commission, take any action 
which the Commission is authorized to take by this Act. 
(d) OBTAINING OFFICIAL DATA.— 
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(1) AUTHORITY.—Notwithstanding any provi-
sion of section 552a of title 5, United States Code, 
the Commission may secure directly from any de-
partment or agency of the United States any infor-
mation necessary to enable the Commission to carry 
out the purposes of this Act. 
(2) PROCEDURE.—Upon request of the Chair-
person of the Commission, the head of that depart-
ment or agency shall furnish the information re-
quested to the Commission. 
(e) POSTAL SERVICES.—The Commission may use 
the United States mails in the same manner and under 
the same conditions as other departments and agencies of 
the Federal Government. 
(f) ADMINISTRATIVE SUPPORT SERVICES.—Upon the 
request of the Commission, the Administrator of General 
Services shall provide to the Commission, on a reimburs-
able basis, any administrative support services necessary 
for the Commission to carry out its responsibilities under 
this Act. 
(g) GIFTS.— 
(1) IN
GENERAL.—The Commission may ac-
cept, use, and dispose of gifts or donations of serv-
ices or property. 
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