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necessary. To the maximum extent practicable, such rates
shall be actuarially sound and shall result in a minimum
of cross-subsidization, consistent with the infrequency of
catastrophic hurricanes, earthquakes, volcanic eruptions,
and tsunamis. In setting and adjusting the rates, the Di-
rector shall provide that, over an extended period of time,
expected expenditures from the Reinsurance Fund under
section 815(c) do not exceed expected receipts of the Rein-
surance Fund under section 815(b).
‘‘(b) CONSULTATION.—In carrying out this section,
the Director shall consult with the Federal Insurance and
Reinsurance Advisory Committee established in section
822 and may enter into contracts, agreements, or other
arrangements to utilize the services of the United States
Geological Survey, the National Oceanic and Atmospheric
Administration, and other relevant Federal, State, and
local governmental agencies, and other persons.
‘‘(c) CONSIDERATIONS—In setting or adjusting such
actuarially sound rates, the Director shall provide for a
minimum degree of cross-subsidization among classes of
reinsureds by reasonably reflecting the differences in risk
of and vulnerability to loss from hurricanes, earthquakes,
and volcanic eruptions that would be subject to payment
from the Reinsurance Fund established under section 815,
by giving due consideration to the following:
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‘‘(1) The premium rate volume of the reinsured
by line of insurance under section 813(a) by hurri-
cane, seismic, or volcanic zone or State in which the
risks insured or reinsured by the reinsurer are lo-
cated.
‘‘(2) The proportion of the total expected
amount of payments for qualifying losses and loss
adjustment expenses by line of insurance under sec-
tion 813(a) by hurricane, seismic, or volcanic zone
or State expected for each reinsured.
‘‘(3) The nature, scope, and adequacy of the
private reinsurance or retrocessional reinsurance
purchased by the private insurer, private reinsurer,
State workers’ compensation fund, or State residual
insurance pooling program in light of its manage-
ment expertise and the number, size, concentration,
and location of its risk exposures by lines of insur-
ance under section 813(a).
‘‘(4) The payback of losses sustained by the Re-
insurance Fund established under section 815 due to
payments made to a private insurer, private rein-
surer, State workers’ compensation fund, or State
residual insurance pooling program.
‘‘(5) The ratio between subject net written pre-
mium and consolidated surplus as regards policy-
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holders for each private insurer and reinsurer during
the most recent calendar year.
‘‘(6) The nature of the risk for each private in-
surer and reinsurer insured under coverages re-
ported in the National Association of Insurance
Commissioners Fire and Casualty Annual Statement
filed with the applicable State department of insur-
ance for the most recent calendar year and covering
the lines of businesses listed in section 813(a).
‘‘(d) LIMITATION.—Any rate classification system
used by the Director under this section shall be cost-effec-
tive and shall not impose costs for the initial establishment
or the subsequent administration of the rating plan that
are disproportionate to the size of the insurance premiums
collected.
‘‘(e) QUARTERLY PAYMENT.—Premiums paid to the
Reinsurance Fund for reinsurance coverage under this
subtitle shall be paid on a quarterly basis and shall be
accumulated in the Reinsurance Fund, to be managed
pursuant to section 815.
‘‘SEC. 815. REINSURANCE FUND.
‘‘(a) ESTABLISHMENT.—There is established in the
Treasury of the United States the Reinsurance Fund for
the purposes of carrying out the Reinsurance Program
under this subtitle.
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‘‘(b) CREDITS OF FUND.—The Reinsurance Fund
shall be credited with—
‘‘(1) any reinsurance premiums received by the
Director under the Reinsurance Program;
‘‘(2) any amounts borrowed under section 816;
and
‘‘(3) any amounts earned under subsection (d).
‘‘(c) USE OF FUND.—The Reinsurance Fund shall be
available to the Director for—
‘‘(1) payments for qualifying losses under the
Reinsurance Program under this subtitle;
‘‘(2) any and all administrative and operating
expenses in carrying out the Reinsurance Program;
and
‘‘(3) principal and interest payments on
amounts borrowed from the Treasury under section
816, if any.
‘‘(d) INVESTMENT.—The Director shall request the
Secretary of the Treasury to invest any amounts in the
Reinsurance Fund in obligations issued or guaranteed by
the United States, as the Director considers appropriate.
‘‘(e) STATUS OF FUNDS.—Any reinsurance premiums
collected for deposit in the Reinsurance Fund shall be ex-
empt from all taxation now or hereafter imposed by the
United States, by any territory, dependency or possession
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thereof, or by any State, county, municipality, or local tax-
ing authority.
‘‘SEC. 816. BORROWING FROM TREASURY.
‘‘(a) AUTHORITY.—To the extent that the accumu-
lated assets, including any return on investments, in the
Reinsurance Fund are insufficient to pay claims and ex-
penses, the Director shall issue, from time-to-time, to the
Secretary of the Treasury, notes and other obligations to
cover the insufficiency; except that the amounts of such
obligations outstanding at any one time shall not exceed
such sums as the Congress may provide acting upon the
recommendation of the Director.
‘‘(b) INTEREST RATE.—Obligations under subsection
(a) shall bear interest at a rate determined by the Sec-
retary of the Treasury, taking into consideration the cur-
rent average market yield on outstanding marketable obli-
gations of the United States or comparable maturities.
‘‘(c) DEPOSITS.—Any amounts borrowed by the Di-
rector under this section shall be deposited in the Reinsur-
ance Fund.
‘‘(d) REPAYMENT.—Any amounts borrowed pursuant
to this section shall be recouped, including interest on the
borrowed funds, in future rates for excess reinsurance cov-
erage pursuant to the plan of operation established under
section 821. The Secretary of the Treasury shall grant ex-
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tensions in repayment schedules that the Director advises
the Secretary are necessary.
‘‘Subtitle C—Program Administration
‘‘SEC. 821. PLAN OF OPERATION.
‘‘(a) DEVELOPMENT.—The Director shall develop a
plan of operation to ensure the fair, reasonable, and equi-
table administration of the Primary Insurance Program
Fund established under section 805, the Reinsurance
Fund established under section 815, and other activities
under this title.
‘‘(b) CONTENTS.—The plan of operation shall set
forth the specific policy and programmatic details for op-
erating the Primary Insurance Program created under
subtitle A and the Reinsurance Program created under
subtitle B, including all guidelines, criteria, definitions,
clarifications, and procedures necessary to carry out this
title.
‘‘(c) ESTABLISHMENT.—
‘‘(1) SUBMISSION OF DRAFT TO ADVISORY COM-
MITTEE.—Not later than the expiration of the 12-
month period beginning on the date of the enact-
ment of the Natural Disaster Protection Act of
1993, the Director shall submit a draft of the plan
of operation to the Federal Insurance and Reinsur-
ance Advisory Committee established under section
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‘‘(3) 
SUBSEQUENT
CHANGES.—Any 
future
changes to the plan of operation shall be made in ac-
cordance with the process described in paragraphs
(1) and (2).
‘‘(d) ADDITIONAL REGULATIONS.—In addition to the
regulations establishing the plan of operation, the Director
may issue any regulations necessary to carry out this title,
pursuant to the provisions of subchapter II of chapter 5
of title 5, United States Code.
‘‘(e) SUITS.—Any lawsuits by or against the Director
(or employees of the Federal Emergency Management
Agency) in connection with activities under this title shall
be brought in the district court of the United States with
jurisdiction over the action, except that any action by an
insurer or reinsurer against the Director (or employees of
the Federal Emergency Management Agency) shall be
brought in the United States District Court for the Dis-
trict of Columbia.
‘‘SEC. 822. FEDERAL INSURANCE AND REINSURANCE ADVI-
SORY COMMITTEE.
‘‘(a) ESTABLISHMENT.—There is established an inde-
pendent advisory committee within the executive branch
to be known as the Federal Insurance and Reinsurance
Advisory Committee (in this section referred to as the
Committee). To the extent not contradicted by the provi-
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sions of this section, the Committee shall be subject to
the provisions of the Federal Advisory Committee Act (5
U.S.C. Appendix 2). The establishment of the Committee
shall not result in the creation of any new permanent staff
or new office facilities.
‘‘(b) MEMBERSHIP.—The Committee shall be com-
posed of 7 members appointed by the Director. The mem-
bers shall be chosen from among citizens of the United
States and shall include—
‘‘(1) 1 individual who represents the interests of
consumers;
‘‘(2) 1 individual who is a State emergency
planner;
‘‘(3) 1 individual who is a State insurance com-
missioner;
‘‘(4) 1 individual who represents the interests of
the private insurers;
‘‘(5) 1 individual who represents the interests of
the private reinsurers;
‘‘(6) 1 individual who represents the interests of
the insurance agents; and
‘‘(7) 1 individual who is a professional actuary.
‘‘(c) VACANCIES.—A vacancy in the Commission shall
be filled in the manner in which the original appointment
was made.
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‘‘(d) CHAIRPERSON.—The Director shall designate a
chairperson of the Committee from among members se-
lected for appointment to the Committee.
‘‘(e) SELECTION.—Not later than 180 days after the
date of the enactment of the Natural Disaster Protection
Act of 1993 and after consulting with the insurance indus-
try and the State and local emergency management com-
munity, the Director shall appoint the members of the
Committee.
‘‘(f) FUNCTIONS OF THE COMMITTEE.—The Com-
mittee shall review the draft plan of operation established
under section 821. Within 120 days after receiving the
draft plan of operation, the Committee shall submit to the
Director written comments and recommendations for any
changes to the plan. After regulations establishing the
plan of operation have been issued, the committee shall
submit a written report not less than once every 180 days
to the Director and the Congress evaluating the operation
of the Federal insurance programs established under this
title and making recommendations for any actions relating
to such programs. The Committee shall provide counsel
to the Director regarding actuarial and insurance related
services pursuant to sections 804(b) and 814(b). The
Committee shall respond as soon as practicable to all re-
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quests of the Director made pursuant to subsection (g)
or section 821(c).
‘‘(g) RESPONSIBILITIES
OF
THE DIRECTOR.—The
Director shall fully cooperate with the Committee and pro-
vide the Committee with access to personnel and informa-
tion as the Committee considers necessary to carry out
its functions. The Director shall request comments from
the Committee on any questions regarding operation of
the Federal insurance programs established under this
title.’’.
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