IB
Union Calendar No. 292
106TH CONGRESS
2D SESSION
H. R. 21
[Report No. 106–526]
To establish a Federal program to provide reinsurance for State disaster
insurance programs.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. LAZIO (for himself, Mr. MCCOLLUM, Mr. BENTSEN, Mr. LAFALCE, Mr.
BAKER, Mr. WEYGAND, Mr. SHERMAN, Mr. LEACH, Mrs. ROUKEMA, Mr.
CAMPBELL, Mr. METCALF, Mrs. KELLY, Mr. WELDON of Florida, Mr.
ACKERMAN, Mr. MALONEY of Connecticut, Ms. HOOLEY of Oregon, Mr.
COOKSEY, Mr. DREIER, Mr. YOUNG of Alaska, Mr. FROST, Mr. FARR of
California, Mr. MCCRERY, Mrs. MEEK of Florida, Ms. CHRISTIAN-
GREEN, Mr. CANADY
of Florida, Mr. CALVERT, Mr. SHAW, Mr.
CUNNINGHAM, Mr. EWING, Mr. DAVIS of Florida, Mr. PRICE of North
Carolina, Mr. MCKEON, Mr. BILIRAKIS, Mr. BOYD, Mrs. FOWLER, Mr.
LOBIONDO, Mr. BLUNT, Mr. LAHOOD, Mrs. THURMAN, Mr. WEXLER,
Ms. ROS-LEHTINEN, Mr. KNOLLENBERG, Mr. MICA, Mr. DEUTSCH, Mr.
STEARNS, Mr. TRAFICANT, and Mr. PORTER) introduced the following
bill; which was referred to the Committee on Banking and Financial
Services
MARCH 15, 2000
Additional sponsors: Mr. DIAZ-BALART, Mr. LATOURETTE, Mr. HASTINGS of
Florida, Mr. FOLEY, Mr. WELDON of Pennsylvania, Ms. VELA´ZQUEZ, Mr.
MARTINEZ, Mr. DICKEY, Mr. RADANOVICH, Mr. PICKETT, Mr. HERGER,
Mr. SMITH of Washington, Mr. WELLER, Mr. PALLONE, Mr. DOOLEY of
California, Mr. OSE, Mr. LEWIS of Kentucky, Mr. CRANE, Ms. SANCHEZ,
Mr. DEAL of Georgia, Mrs. EMERSON, Mr. GEKAS, Mr. TALENT, Mr.
CLYBURN, Mr. FILNER, Mr. QUINN, Mr. MINGE, Mr. GARY MILLER of
California, Mr. WISE, Mr. RILEY, Mr. POMBO, Mr. LARSON, Mr. AN-
DREWS, Mr. CALLAHAN, Mr. SHOWS, Mr. RAHALL, Mr. NETHERCUTT,
Mr. THORNBERRY, Mr. COOK, Mr. MATSUI, Mr. SPENCE, Mr. SESSIONS,
Mr. TANNER, Mr. KING, Mr. BERMAN, Mrs. MYRICK, Mr. SCAR-
BOROUGH, Mr. MOLLOHAN, Mr. MCINTYRE, Mr. ETHERIDGE, Mr.
DOYLE, Mr. MCINTOSH, Mr. JOHN, Ms. BROWN of Florida, Mr. JONES
of North Carolina, Mr. HULSHOF, Mr. SANDLIN, Mr. GORDON, Mr.
VITTER, Mrs. BIGGERT, Mr. MANZULLO, Mr. FRANKS of New Jersey,
Mr. FORBES, Mr. MASCARA, and Mr. MEEKS of New York
MARCH 15, 2000
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 January 6, 1999]
A BILL
To establish a Federal program to provide reinsurance for
State disaster insurance programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Homeowners’ Insurance Availability Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title.
Sec. 2. Congressional findings.
Sec. 3. Program authority.
Sec. 4. Qualified lines of coverage.
Sec. 5. Covered perils.
Sec. 6. Contracts for reinsurance coverage for eligible State programs.
Sec. 7. Auction of contracts for reinsurance coverage.
Sec. 8. Anti-redlining requirement.
Sec. 9. Minimum level of retained losses and maximum Federal liability.
Sec. 10. Disaster Reinsurance Fund.
Sec. 11. National Commission on Catastrophe Risks and Insurance Loss Costs.
Sec. 12. Definitions.
Sec. 13. Regulations.
Sec. 14. Termination.
Sec. 15. Annual study of cost and availability of disaster insurance and program
need.
Sec. 16. GAO study of hurricane related flooding.
SEC. 2. CONGRESSIONAL FINDINGS.
The Congress finds that—
(1) the rising costs resulting from natural disas-
ters have placed a strain on homeowners’ insurance
markets in many areas, jeopardizing the ability of
many consumers to adequately insure their homes
and possessions;
(2) the lack of sufficient insurance capacity
threatens to increase the number of uninsured home-
owners, which, in turn, increases the risk of mortgage
defaults and the strain on the Nation’s banking sys-
tem;
(3) some States have intervened to ensure the
continued availability of homeowners’ insurance for
all residents;
(4) it is appropriate that efforts to improve in-
surance availability be designed and implemented at
the State level;
(5) while State insurance programs may be ade-
quate to cover losses from most natural disasters, a
small percentage of events are likely to exceed the fi-
nancial capacity of these programs and the local in-
surance markets;
(6) limited Federal reinsurance will improve the
effectiveness of State insurance programs and private
insurance markets and will increase the likelihood
that homeowners’ insurance claims will be fully paid
in the event of a large natural catastrophe;
(7) it is necessary to provide, on a temporary
basis, a Federal reinsurance program that will pro-
mote stability in the homeowners’ insurance market
in the short term and encourage the growth of rein-
surance capacity by the private and capital markets
as soon as practicable;
(8) 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
current homeowners’ insurance market dislocations
caused by various disasters; and
(9) any Federal reinsurance program must be
founded upon sound actuarial principles and priced
in a manner that minimizes the potential impact on
the Treasury.
SEC. 3. PROGRAM AUTHORITY.
(a) IN GENERAL.—The Secretary of the Treasury shall
carry out a program under this Act to make reinsurance
coverage available through—
(1) contracts for reinsurance coverage under sec-
tion 6, which shall be made available for purchase
only by eligible State programs; and
(2) contracts for reinsurance coverage under sec-
tion 7, which shall be made available for purchase by
purchasers under section 7(a)(1) only through auc-
tions under section 7(a).
(b) PURPOSE.—The program shall be designed to make
reinsurance coverage under this Act available to improve
the availability of homeowners’ insurance for the purpose
of facilitating the pooling, and spreading the risk, of cata-
strophic financial losses from natural disasters and to im-
prove the solvency of homeowners’ insurance markets.
(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 private
insurance or reinsurance markets or capital markets;
(2) shall minimize the administrative costs of the
Federal Government;
(3) shall, in the case of any contract under sec-
tion 6 for an eligible State program, provide coverage
based solely on insured losses within the State of the
eligible State program purchasing the contract; and
(4) shall, in the case of any contract under sec-
tion 7 for purchase at auction, provide coverage based
solely on insured losses within the region established
pursuant to section 7(a) for which the auction is held.
SEC. 4. QUALIFIED LINES OF COVERAGE.
Each contract for reinsurance coverage made available
under this Act shall provide insurance coverage against res-
idential property losses to homes (including dwellings
owned under condominium and cooperative ownership ar-
rangements) and the contents of apartment buildings.
SEC. 5. COVERED PERILS.
Each contract for reinsurance coverage made available
under this Act shall cover losses that are—
(1) proximately caused by—
(A) earthquakes;
(B) perils ensuing from earthquakes, includ-
ing fire and tsunamis;
(C) tropical cyclones having maximum sus-
tained winds of at least 74 miles per hour, in-
cluding hurricanes and typhoons;
(D) tornadoes; or
(E) volcanic eruptions; and
(2) in the case only of a contract under section
6, insured or reinsured by the eligible State program
purchasing the contract.
The Secretary shall, by regulation, define the natural dis-
aster perils under paragraph (1).
owned under condominium and cooperative own-
ership arrangements) and the contents of apart-
ments because of a finding by the State insur-
ance commissioner or other State entity author-
ized to make such determination that such a pro-
gram is necessary in order to provide for the
continued availability of such residential cov-
erage 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 interest
in the program, which shall not include a pro-
gram authorized by State law or regulation that
requires insurers to pool resources to provide
property insurance coverage for covered perils.
(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 only a
single peril.
(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) MITIGATION.—
(A) IN GENERAL.—The program shall in-
clude mitigation provisions that require that not
less than 10 percent of the net investment income
of the State insurance or reinsurance program be
used for programs to mitigate losses from nat-
ural disasters for which the State insurance or
reinsurance program was established. For pur-
poses of this paragraph, mitigation shall include
methods to reduce losses of life and property.
(B) 
EXCEPTION.—Notwithstanding 
sub-
paragraph (A), in the case of any State for
which the Secretary has determined, pursuant to
a request by the State insurance commissioner,
that the 10 percent requirement under subpara-
graph (A) will jeopardize the actuarial sound-
ness of the State program, subparagraph (A)
shall be applied by substituting ‘‘5 percent’’ for
‘‘10 percent’’.
(7) REQUIREMENTS REGARDING COVERAGE.—
(A) IN GENERAL.—The program—
(i) may not involve cross-subsidization
between any separate property and casualty
lines covered under the program unless the
elimination of such activity in an existing
program would negatively impact the eligi-
bility of the program to purchase a contract
for reinsurance coverage under this Act pur-
suant 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 program if
the insurance commissioner or other such
entity determines that the program is no
longer necessary to ensure the availability
of homeowners’ insurance for all State resi-
dents; and
(iii) shall provide that, for any insur-
ance coverage for homes (which may include
dwellings owned under condominium and
cooperative ownership arrangements) and
the contents of apartments that is made
available under the State insurance pro-
gram 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,
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—
(i) before the expiration of the 2-year
period beginning on the date of the enact-
ment of this Act, only to State programs
which, after January 1, 1999, commence of-
fering insurance or reinsurance coverage de-
scribed in subparagraph (A) or (B), respec-
tively, of paragraph (1); and
(ii) after the expiration of such period,
to all State programs.
(8) 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 con-
sultation with the National Commission on Ca-
tastrophe Risks and Insurance Loss Costs estab-
lished under section 11. The regulations shall es-
tablish criteria for State programs to qualify to
purchase reinsurance under this section, which
are in addition to the requirements under the
other paragraphs of this subsection.
(B) CONTENTS.—The regulations issued
under this paragraph shall include requirements
that—
(i) the State program have public
members on its board of directors or have
an advisory board with public members;
(ii) insurance or reinsurance coverage,
as applicable, made available through the
State program not supplant coverage that is
otherwise reasonably available and afford-
able in the private market;
(iii) the State program provide ade-
quate insurance or reinsurance protection,
as applicable, for the peril covered, which
shall include a range of deductibles and pre-
mium costs that reflect the applicable risk
to eligible properties;
(iv) insurance or reinsurance coverage,
as applicable, provided by the State pro-
gram is made available on a nondiscrim-
inatory basis to all qualifying residents;
(v) any new construction, substantial
rehabilitation, and renovation insured or
reinsured by the program complies with ap-
plicable State or local government building,
fire, and safety codes;
(vi) the State, or appropriate local
governments within the State, have in effect
and enforce nationally recognized model
building, fire, and safety codes and con-
sensus-based standards that offer disaster
resistance that is substantially equivalent or
greater than the resistance under any re-
quirements for floods, earthquakes, or wind
resistance issued by the Federal Emergency
Management Agency;
(vii) the State has taken actions to es-
tablish an insurance rate structure that
takes into account measures to mitigate in-
surance losses;
(viii) 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
(ix) 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 sub-
ject to the following terms and conditions:
(1) MATURITY.—The term of the contract shall
not exceed 1 year or such other term as the Secretary
may determine.
(2) PAYMENT
CONDITION.—The contract shall
authorize claims payments for eligible losses only 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 in-
surance claims for losses, which are covered by quali-
fied lines, occur to properties located within the State
covered by the contract, and result from the event, ex-
ceeds the amount of retained losses provided under the
contract (pursuant to section 9(a)) purchased by the
eligible State program.
(4) MULTIPLE EVENTS.—The contract shall cover
any eligible losses from one or more covered events
that may occur during the term of the contract and
shall provide that if multiple events occur, the re-
tained losses requirement under paragraph (3) shall
apply to each event.
(5) TIMING
OF
ELIGIBLE
LOSSES.—Eligible
losses under the contract shall include only insurance
claims for property covered by qualified lines that are
reported to the eligible State program within the 3-
year period beginning upon the event or events for
which payment under the contract is provided.
(6) PRICING.—
(A) DETERMINATION.—The price of reinsur-
ance 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 return to the Federal Govern-
ment fair compensation for the risks and
costs being borne by the people of the United
States and that takes into consideration the
developmental stage of empirical models of
natural disasters and the capacity of pri-
vate markets to absorb insured losses from
natural disasters.
(iii) SELF-SUFFICIENCY.—The rates
for reinsurance coverage shall be established
at a level that annually produces expected
premiums which shall be sufficient to pay
the expected annualized cost of all claims,
loss adjustment expenses, and all adminis-
trative costs of reinsurance coverage 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 according
to the actuarial analysis and recommenda-
tions 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 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 require
the State program that is covered under the contract
to submit to the Commission all information on the
State program relevant to the duties of the Commis-
sion, 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, subject
to the limitations under section 9, at the prices at
which such contracts were offered at the beginning of
the term, prorated based upon the remaining term as
determined by the Secretary. Such additional con-
tracts 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 oc-
curred.
(9) OTHERS.—The contract shall contain such
other terms as the Secretary considers necessary to
carry out this Act and to ensure the long-term finan-
cial 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 coverage
otherwise made available under this section.
(2) COMPETITIVE PROCEDURE.—Under the pro-
cedure established under this subsection—
(A) the Secretary shall establish criteria for
private insurers, reinsurers, and capital market
companies, and consortia of such entities to be
treated as qualified entities for purposes of this
subsection, which criteria shall require 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 rat-
ing standards as the Secretary considers appro-
priate;
(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 reinsurance
coverage under this section that are to be made
available during such contract cycle;
(C) the Secretary shall provide qualified en-
tities 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 pro-
viding reinsurance coverage in lieu of the cov-
erage 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-
tion, coverage that is substantially similar to
such coverage;
(E) if the Secretary determines that an offer
submitted during the period referred to in sub-
paragraph (D) is a bona fide offer to provide re-
insurance coverage during the contract cycle at
rates and terms that are substantially similar to
the rates and terms for reinsurance coverage oth-
erwise to be provided under this section by the
Secretary, the Secretary shall accept the offer (if
still outstanding) and, notwithstanding any
other provision of this Act, provide for such enti-
ty to make reinsurance coverage available in ac-
cordance with the offer; and
(F) if the Secretary accepts an offer pursu-
ant 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 during
the contract cycle to which the offer relates, un-
less and until the Secretary determines that the
entity is not complying with the terms of the ac-
cepted offer.
SEC. 7. AUCTION OF CONTRACTS FOR REINSURANCE COV-
ERAGE.
(a) AUCTION PROGRAM REQUIREMENTS.—The Sec-
retary shall carry out a program to auction contracts for
reinsurance coverage under this Act made available pursu-
ant to section 3(a)(2), which shall comply with the fol-
lowing requirements:
(1) PURCHASERS.—The auction program shall
provide for auctioning all contracts made available
under this section to private insurers and reinsurers,
State insurance and reinsurance programs, and other
interested entities.
(2) REGIONAL AUCTIONS.—The auction program
shall provide for auctions on a regional basis. The
Secretary shall divide the States into not less than 6
regions for the purpose of holding such regional auc-
tions, which shall include separate regions for all or
part of the State of California and all or part of the
State of Florida. In determining the boundaries for
such regions, the Secretary shall consider which areas
have greater risks of losses from covered perils and
which areas have lesser risks of losses from covered
perils, and shall attempt not to combine those dif-
ferent types of areas. Auctions for each region shall be
conducted not less often than annually.
(3) RESERVE
PRICE.—In auctioning contracts
under this section for reinsurance coverage, the Sec-
retary shall set, for each contract, a reserve price that
is the minimum price at which the contract may be
sold, based upon the recommendations of the Commis-
sion. The reserve price shall be determined on the
basis of the following components:
(A) 
RISK-BASED
PRICE.—A 
risk-based
price, 
which 
shall 
reflect 
the 
anticipated
annualized payout of the contract according to
the actuarial analysis and recommendations of
the Commission.
(B) RISK LOAD.—A risk load in an amount
that is not less than the risk-based price under
subparagraph (A).
(C) ADMINISTRATIVE COSTS.—A sum suffi-
cient to provide for the operation of the Commis-
sion and the administrative expenses incurred by
the Secretary in carrying out this section.
(D) MITIGATION.—An adjustment based on
an actuarial analysis that takes into account
any efforts that are being made to reduce losses
to property in the region in which the contract
is being sold.
(4) PRICE GOUGING PROTECTIONS.—The auction
program may provide reinsurance coverage for losses
incurred only for property located in a State for
which the State entity authorized to make such deter-
minations has certified to the Secretary that there are
in effect, in such State, laws or regulations sufficient
to prohibit price gouging, during the term of such re-
insurance coverage, in any disaster area located with-
in the State.
(5) MITIGATION REQUIREMENTS.—
(A) IN
GENERAL.—The auction program
shall require each purchaser of a contract that is
not an eligible State program, as a condition of
such purchase, to contribute an amount, that the
Secretary (in consultation with the Director of
the Federal Emergency Management Agency)
shall establish and which shall not exceed 5 per-
cent of the price paid for the contract, to commu-
nities that—
(i) are located in the State in which
the reinsurance coverage under the contract
is provided (or in the case of multiple
States, among such States, as determined by
the Secretary);
(ii) are designated by the Director of
the Federal Emergency Management Agency
and the appropriate emergency manage-
ment agency for the State as Project Impact
communities (for purposes of the pre-dis-
aster mitigation program of such Agency);
and
(iii) are participating in such pro-
grams or initiatives as the Secretary may
require that provide incentives for construc-
tion of structures and communities that are
resistant to damage from covered perils,
which shall include the Building Code Ef-
fectiveness Grading Schedule of the Insur-
ance Services Office.
(B) USE
OF
CONTRIBUTIONS.—Amounts
contributed to communities pursuant to the re-
quirement under subparagraph (A) shall be used
only—
(i) for activities to reduce losses from
covered perils to properties covered under
the reinsurance contract purchased under
the auction program that are located in
such communities; and
(ii) in accordance with such require-
ments as the Secretary, in consultation with
the Director of the Federal Emergency Man-
agement Agency and appropriate State
agencies, shall establish to ensure cost-effec-
tive use of such amounts.
(C) ALLOCATION.—The Secretary, in con-
sultation with the Director of the Federal Emer-
gency Management Agency, shall establish re-
quirements for allocation of contributions among
communities eligible under subparagraph (A) to
receive such contributions.
(6) OTHER REQUIREMENTS.—The Secretary may
establish such other requirements for the auction pro-
gram as the Secretary considers necessary to carry
out this Act.
(b) CONTRACT TERMS AND CONDITIONS.—Each con-
tract for reinsurance coverage auctioned under the program
under this section shall include the following terms and con-
ditions:
(1) MATURITY.—The term of each such contract
shall not exceed 1 year or such other term as the Sec-
retary may determine.
(2) TRANSFERABILITY.—The contract shall at all
times be fully transferable, assignable, and divisible.
(3) THRESHOLD
OF
COVERAGE.—The contract
shall provide that the covered purchaser may receive
a payment for losses covered under the contract if,
under a process specified in the contract, the Sec-
retary determines that the insurance industry will, as
a result of a single event of a covered peril, incur
losses within the coverage area for the region estab-
lished under subsection (a)(2) for which the contract
was auctioned that are covered by one or more lines
of insurance under section 5 in an aggregate amount,
for such event, greater than the level of retained losses
specified in section 9.
(4) MULTIPLE EVENTS.—The contract shall con-
tain the provisions described in section 6(b)(4).
(5) ADDITIONAL CONTRACT OPTION.—The con-
tract shall contain the provisions described in section
6(b)(8).
(6) SUBMISSION OF INFORMATION.—The contract
shall include terms that—
(A) require the purchaser to notify the Sec-
retary of any sale, transfer, assignment, or divi-
sion of the contract or any interest in the con-
tract, identify the interest involved, and identify
the price paid or compensation provided; and
(B) authorize the disclosures required under
subsection (c)(2).
(7) OTHERS.—The contract shall contain such
other terms as the Secretary considers necessary to
carry out this Act and to ensure the long-term finan-
cial integrity of the program under this Act.
(c) GAO AUDIT.—
(1) IN
GENERAL.—For each fiscal year, the
Comptroller General of the United States shall con-
duct an audit of prices for contracts made available
under the auction program under this section during
such fiscal year that determines—
(A) the reserve prices established for such
contracts;
(B) the prices paid for such contracts that
are purchased;
(C) the prices paid, or compensation pro-
vided, in any sales, transfers, assignments, or di-
visions of any such contracts (or any interests in
such contracts) in the secondary market or to
any third party; and
(D) pursuant to the information obtained
under subparagraphs (A) through (C), the appro-
priate reserve prices for such contracts that are
to be made available in the succeeding fiscal
year.
(2) USE OF INFORMATION.—The Secretary shall
provide any information referred to in subsection
(b)(6) that is obtained by the Secretary to the Comp-
troller General, the Director of the Congressional
Budget Office, and the Director of the Office of Man-
agement and Budget, and shall make such informa-
tion publicly available. The Secretary, the Director of
the Congressional Budget Office, the Director of the
Office of Management and Budget shall each take
such information into consideration in preparing any
budget, report, estimate, or recommendation to the ex-
tent it relates to the auction program under this sec-
tion, and in any determinations relating to the Budg-
et of the United States or the concurrent resolution on
the budget (as such term is defined in section 3 of the
Congressional Budget Act of 1974). The Secretary
shall take such information into consideration in es-
tablishing reserve prices for contracts made available
under this section.
SEC. 8. ANTI-REDLINING REQUIREMENT.
Notwithstanding sections 6(a) and 7(a), the Secretary
may not make a contract for reinsurance coverage under
this Act available for purchase unless the purchaser certifies
to the Secretary—
(1) in the case of a contract under section 6,
that—
(A) no insurer (or affiliate of such insurer)
participating in the State-operated program of
such purchaser has been adjudicated in any Fed-
eral court, or has entered, after the date of the
enactment of this Act, into a consent decree filed
in a Federal court or into a settlement agree-
ment, premised upon a violation of the Fair
Housing Act for the activities involved in mak-
ing insurance coverage available; and
(B) if such insurer (or affiliate) has entered
into any such consent decree or settlement agree-
ment, the insurer (or affiliate) is not in violation
of the decree or settlement agreement as deter-
mined by a court of competent jurisdiction or the
agency with which the decree or agreement was
entered into; and
(2) in the case of a contract under section 7,
that—
(A)(i) in the case of a contract purchased
by an insurer or reinsurer, the insurer or rein-
surer (or affiliate of such insurer or reinsurer)
has not been adjudicated in any Federal court,
and has not entered, after the date of the enact-
ment of this Act, into a consent decree filed in
a Federal court or into a settlement agreement,
premised upon a violation of the Fair Housing
Act for the activities involved in making insur-
ance coverage available; or
(ii) in the case of a contract purchased by
a State program, no insurer (or affiliate of such
insurer) participating in the State program has
been adjudicated in any Federal court, or has
entered, after the date of the enactment of this
Act, into a consent decree filed in a Federal
court or into a settlement agreement, premised
upon a violation of the Fair Housing Act for the
activities involved in making insurance coverage
available; and
(B) if such an insurer or reinsurer (or affil-
iate of such an insurer or reinsurer) has entered
into any such consent decree or settlement agree-
ment, the insurer or reinsurer (or affiliate) is
not in violation of the decree or settlement agree-
ment as determined by a court of competent ju-
risdiction or the agency with which the decree or
agreement was entered into.
SEC. 9. MINIMUM LEVEL OF RETAINED LOSSES AND MAX-
IMUM 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 a single event of a covered peril (as required under
sections 6(b)(3) and 7(b)(3) for payment of eligible losses)
in various amounts, as the Secretary, in consultation with
the Commission, determines appropriate and subject to the
requirements under subsection (b).
(b) MINIMUM LEVEL OF RETAINED LOSSES.—
(1) CONTRACTS FOR STATE PROGRAMS.—Subject
to paragraphs (3) and (4) and notwithstanding any
other provision of this Act, a contract for reinsurance
coverage under section 6 for an eligible State program
that offers insurance or reinsurance coverage de-
scribed in subparagraph (A) or (B), respectively, of
section 6(a)(1) may not be made available or sold un-
less the contract requires retained losses from a single
event of a covered peril in the following amount:
(A) IN GENERAL.—The State program shall
sustain an amount of retained losses of not less
than the greater of—
(i) an amount between $2,000,000,000
and $5,000,000,000, that is determined by
the Secretary in accordance with the re-
quirement under section 3(c)(1);
(ii) the claims-paying capacity of the
eligible State program, as determined by the
Secretary; and
(iii) an amount, determined by the
Secretary in consultation with the Commis-
sion, that is in the range between the
amount equal to the eligible loss projected to
be incurred once every 100 years from a
single event in the State and the amount
equal to the eligible loss projected to be in-
curred once every 250 years from such an
event.
(B) TRANSITION RULE FOR EXISTING PRO-
GRAMS.—
(i) CLAIMS-PAYING CAPACITY.—Subject
to clause (ii), in the case of any eligible
State program that was offering insurance
or reinsurance coverage on the date of the
enactment of this Act and the claims-paying
capacity of which is greater than the
amount determined under subparagraph
(A)(i) but less than an amount determined
for the State under subparagraph (A)(iii),
the minimum level of retained losses appli-
cable under this paragraph shall be the
claims-paying capacity of such State pro-
gram.
(ii) AGREEMENT.—Clause (i) shall
apply to a State program only if the State
program enters into a written agreement
with the Secretary providing a schedule for
increasing the claims-paying capacity of the
State program to the amount determined
for the State under subparagraph (A)(iii)
over a period not to exceed 5 years. The
Secretary may extend the 5-year period for
not more than 2 additional one-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 con-
sult with the appropriate officials of the
State program regarding the required sched-
ule and any potential one-year extensions.
(C) TRANSITION
RULE
FOR
NEW
PRO-
GRAMS.—
(i) 100-YEAR
EVENT.—The Secretary
may provide that, in the case of an eligible
State program that, after January 1, 1999,
commences offering insurance or reinsur-
ance coverage, during the 5-year period be-
ginning on the date that reinsurance cov-
erage under section 6 is first made avail-
able, the minimum level of retained losses
applicable under this paragraph shall be the
amount determined for the State under sub-
paragraph (A)(iii), except that such min-
imum level shall be adjusted annually as
provided in clause (ii) of this subpara-
graph.
(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 5-
year period, the applicable minimum
level of retained losses approaches the
minimum level that, under subpara-
graph (A), 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.
(D) REDUCTION
BECAUSE
OF
REDUCED
CLAIMS-PAYING CAPACITY.—
(i) AUTHORITY.—Notwithstanding sub-
paragraphs (A), (B), and (C) or the terms
contained in a contract for reinsurance
pursuant to such subparagraphs, if the Sec-
retary determines that the claims-paying
capacity of an eligible State program has
been reduced because of payment for losses
due to an event, the Secretary may reduce
the minimum level of retained losses for the
State commensurate with the current capac-
ity of the State program, as determined by
the Secretary, but in no case may such min-
imum level be less than the amount deter-
mined under subparagraph (A)(i).
(ii) TERM OF REDUCTION.—If the min-
imum level of retained losses for an eligible
State program is reduced pursuant to
clause (i), upon the expiration of the 5-year
period beginning upon such reduction the
minimum level of retained losses applicable
to such State program under a contract for
reinsurance coverage under section 6 shall
be increased to an amount not less than the
amount applicable to such State program
immediately before such reduction.
(E) 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 6(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-
ance, and other financing mechanisms of the
program established by law.
(2) AUCTION
CONTRACTS.—Subject to para-
graphs (3) and (4) and notwithstanding any other
provision of this Act, a contract for reinsurance cov-
erage may not be made available or sold under section
7 through a regional auction unless the contract re-
quires that the insurance industry in the region for
which the auction was conducted sustains a cumu-
lative amount of retained losses (in covered lines re-
sulting from covered perils) of not less than the great-
er of—
(A) an amount between $2,000,000,000 and
$5,000,000,000, that is determined by the Sec-
retary in accordance with the requirement under
section 3(c)(1); and
(B) an amount, determined by the Sec-
retary in consultation with the Commission, that
is in the range between the amount equal to the
eligible loss projected to be incurred once every
100 years from a single event in the region and
the amount equal to the eligible loss projected to
be incurred once every 250 years from such an
event.
(3) INITIAL
ADJUSTMENT
BASED
ON
PRIVATE
MARKET.—The Secretary may, before making con-
tracts for reinsurance coverage under this Act ini-
tially available under section 6 or 7, raise the min-
imum level of retained losses from the amount re-
quired under paragraph (1) for an eligible State pro-
gram or under paragraph (2) for a region to ensure,
as determined by the Secretary, that such contracts
comply with the principle under section 3(c)(1).
(4) ANNUAL ADJUSTMENT.—The Secretary may
annually raise the minimum level of retained losses
established under paragraph (1) for an eligible State
program or under paragraph (2) for a region to re-
flect, as determined by the Secretary—
(A) in the case of an eligible State program,
changes to the claims-paying capacity of the pro-
gram;
(B) changes in the capacity of the private
insurance and reinsurance market;
(C) increases in the market value of prop-
erties; or
(D) such other situations as the Secretary
considers appropriate.
The Secretary shall consider the minimum level of re-
tained losses requirements in paragraphs (1) and (2)
as minimum requirements only and shall have full
authority, effective on the date of the enactment of
this Act, to establish levels of required minimum re-
tained losses in any amount greater than the amounts
specified in such paragraphs. In making any deter-
mination under this paragraph in the minimum level
of retained losses, the Secretary shall establish such
level at an amount such that the program under this
Act for making reinsurance coverage available does
not displace or compete with the private insurance
or reinsurance markets or capital markets, as deter-
mined by the Secretary after the Secretary has pro-
vided interested parties an opportunity to submit to
the Commission market information relevant to such
determination and has provided the Commission with
an opportunity to advise the Secretary regarding such
information and determination.
(5) OPTIONAL ANNUAL INFLATIONARY OR EXPO-
SURE ADJUSTMENT.—The Secretary may, on an an-
nual basis, raise the minimum level of retained losses
established under paragraph (1) for each eligible
State program and under paragraph (2) for each re-
gion to reflect the annual rate of inflation or growth
in exposures, whichever is greater. Any such raise
shall be made in accordance with an inflation index
or exposure index, as appropriate, that the Secretary
determines to be appropriate. The first such raise
may be made one year after contracts for reinsurance
coverage under this Act are first made available for
purchase.
(c) 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 var-
ious amounts which comply with the following re-
quirements:
(A) ESTIMATE OF AGGREGATE LIABILITY.—
The aggregate liability for payment of claims
under all such contracts in any single year is
unlikely to exceed $25,000,000,000 (as such
amount is adjusted under paragraph (2)).
(B) ELIGIBLE LOSS COVERAGE SOLD.—Eli-
gible losses covered by all contracts sold within
a State or region during a 12-month period do
not exceed the difference between the following
amounts (each of which shall be determined by
the Secretary in consultation with the Commis-
sion):
(i) The amount equal to the eligible
loss projected to be incurred once every 500
years from a single event in the State or re-
gion.
(ii) The amount equal to the eligible
loss projected to be incurred once every 100
years from a single event in the State or re-
gion.
(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 appropriate.
(d) LIMITATION ON PERCENTAGE OF RISK IN EXCESS
OF RETAINED LOSSES.—
(1) IN GENERAL.—The Secretary may not make
available for purchase contracts for reinsurance cov-
erage under this Act that would pay out more than
50 percent of eligible losses in excess of retained
losses—
(A) in the case of a contract under section
6 for an eligible State program, for such State;
and
(B) in the case of a contract made available
through a regional auction under section 7, for
such region.
(2) PAYOUT.—For purposes of this subsection,
the amount of payout from a reinsurance contract
shall be the amount of eligible losses in excess of re-
tained losses multiplied by the percentage under para-
graph (1).
SEC. 10. DISASTER REINSURANCE FUND.
(a) ESTABLISHMENT.—There is established within the
Treasury of the United States a fund to be known as the
Disaster Reinsurance 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;
(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 Secretary 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 ex-
penses under subsection (c), the Secretary may issue
such obligations of the Fund as may be necessary to
cover the insufficiency and shall purchase any such
obligations issued.
(2) PUBLIC DEBT TRANSACTION.—For the pur-
pose of purchasing any such obligations, the Secretary
may use as a public debt transaction the proceeds
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 Sec-
retary of such obligations under this subsection.
(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 transactions
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 premiums
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 con-
siders 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 sec-
tion 11(h), no Federal funds shall be authorized or appro-
priated for the Fund or for carrying out the reinsurance
program under this Act.
SEC. 11. NATIONAL COMMISSION ON CATASTROPHE RISKS
AND INSURANCE LOSS COSTS.
(a) ESTABLISHMENT.—The Secretary shall establish a
commission to be known as the National Commission on
Catastrophe Risks and Insurance Loss Costs.
(b) DUTIES.—The Commission shall meet for the sole
purpose of advising the Secretary regarding the estimated
loss costs associated with the contracts for reinsurance cov-
erage available under this Act and carrying out the func-
tions specified in this Act.
(c) MEMBERS.—The Commission shall consist of not
more than 5 members, who shall be appointed by the Sec-
retary and shall be broadly representative of the public in-
terest. Members shall have no personal, professional, or fi-
nancial interest at stake in the deliberations of the Commis-
sion. The membership of the Commission shall at all times
include at least 1 representative of a nationally recognized
consumer organization.
(d) TREATMENT OF NON-FEDERAL MEMBERS.—Each
member of the Commission who is not otherwise employed
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 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 individual procured is per-
forming such services for the Commission.
(f) COMPENSATION.—Each member of the Commission
who is not an officer or employee of the Federal Government
shall be compensated at a rate of basic pay payable for level
V of the Executive Schedule, for each day (including travel
time) during which such member is engaged in the perform-
ance of the duties of the Commission. All members of the
Commission who are officers or employees of the United
States shall serve without compensation in addition to that
received for their services as officers or employees of the
United States.
(g) OBTAINING DATA.—The Commission and the Sec-
retary may solicit loss exposure data and such other infor-
mation either deems necessary to carry out its responsibil-
ities from governmental agencies and bodies and organiza-
tions that act as statistical agents for the insurance indus-
try. The Commission and the Secretary shall take such ac-
tions as are necessary to ensure that information that either
deems is confidential or proprietary is disclosed only to au-
thorized individuals working for the Commission or the Sec-
retary. No company which refuses to provide information
requested by the Commission or the Secretary may partici-
pate in the program for reinsurance coverage authorized
under this Act, nor may any State insurance or reinsurance
program participate if any governmental agency within
that State has refused to provide information requested by
the Commission or the Secretary.
(h) FUNDING.—
(1) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated—
(A) $1,000,000 for fiscal year 2000 for the
initial expenses in establishing the Commission
and the initial activities of the Commission that
cannot timely be covered by amounts obtained
pursuant 
to 
sections 
6(b)(6)(B)(iii) 
and
7(a)(3)(C), as determined by the Secretary;
(B) such additional sums as may be nec-
essary to carry out subsequent activities of the
Commission;
(C) $1,000,000 for fiscal year 2000 for the
initial expenses of the Secretary in carrying out
the program authorized under section 3; 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 ob-
tained from purchasers of reinsurance coverage under
this Act and deposited in the Fund established under
section 10. Such amounts shall be obtained by inclu-
sion of a provision for the Secretary’s and the Com-
mission’s expenses incorporated into the pricing of the
contracts for such reinsurance coverage, pursuant to
sections 6(b)(6)(B)(iii) and 7(a)(3)(C).
(i) TERMINATION.—The Commission shall terminate
upon the effective date of the repeal under section 14(c).
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
11.
(2) COVERED PERILS.—The term ‘‘covered per-
ils’’ means the natural disaster perils under section 5.
(3) COVERED PURCHASER.—The term ‘‘covered
purchaser’’ means—
(A) with respect to reinsurance coverage
made available under a contract under section 6,
the eligible State-operated insurance or reinsur-
ance program that purchases such coverage; and
(B) with respect to reinsurance coverage
made available under a contract under section 7,
the purchaser of the contract auctioned under
such section or any subsequent holder or holders
of the contract.
(4) DISASTER AREA.—The term ‘‘disaster area’’
means a geographical area, with respect to which—
(A) a covered peril specified in section 5 has
occurred; and
(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 losses in excess of the sustained and re-
tained losses, as defined by the Secretary after con-
sultation with the Commission.
(6) ELIGIBLE STATE PROGRAM.—The term ‘‘eli-
gible State program’’ means a State program that,
pursuant to section 6(a), is eligible to purchase rein-
surance coverage made available through contracts
under section 6.
(7) PRICE GOUGING.—The term ‘‘price gouging’’
means the providing of any consumer good or service
by a supplier for a price that the supplier knows or
has reason to know is greater, by at least the percent-
age set forth in a State law or regulation prohibiting
such act (notwithstanding any real cost increase due
to any attendant business risk and other reasonable
expenses that result from the major disaster involved),
than the price charged by the supplier for such con-
sumer good or service immediately before the disaster.
(8) QUALIFIED
LINES.—The term ‘‘qualified
lines’’ means lines of insurance coverage for which
losses are covered under section 4 by reinsurance cov-
erage under this Act.
(9) REINSURANCE COVERAGE.—The term ‘‘rein-
surance coverage under this Act’’ includes coverage
under contracts made available under sections 6 and
7.
(10) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury.
(11) STATE.—The term ‘‘State’’ means the States
of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of
the Northern Mariana Islands, Guam, the Virgin Is-
lands, American Samoa, and any other territory or
possession of the United States.
SEC. 13. REGULATIONS.
The Secretary shall issue any regulations necessary to
carry out the program for reinsurance 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 10-year period beginning on the date of the en-
actment 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 program
for reinsurance coverage under this Act is necessary to
carry out the purpose of this Act under section 3(b) because
of insufficient growth of capacity in the private home-
owners’ insurance market, the Secretary shall continue to
provide reinsurance coverage under this Act until the expi-
ration of the 5-year period beginning upon the expiration
of the period under subsection (a).
(c) REPEAL.—Effective upon the date that reinsurance
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 10 upon the repeal of
this Act.
SEC. 15. ANNUAL STUDY OF COST AND AVAILABILITY OF
DISASTER INSURANCE AND PROGRAM NEED.
(a) IN GENERAL.—The Secretary shall, on an annual
basis, conduct a study and submit to the Congress a report
on the cost and availability of homeowners’ insurance for
losses resulting from catastrophic natural disasters covered
by the reinsurance program under this Act.
(b) CONTENTS.—Each annual study under this section
shall 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 disasters;
(2) for each State or region, the percentage of
homeowners who have such coverage, the disasters cov-
ered, and the average cost of such coverage;
(3) for each State or region, the progress that
private reinsurers and capital markets have made in
providing reinsurance for such homeowners’ insur-
ance;
(4) for each State or region, the effects of the
Federal reinsurance program under this Act on the
availability and affordability of such insurance; and
(5) the appropriate time for termination of the
Federal reinsurance program under this Act.
(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.
(d) COMMENCEMENT OF REPORTING REQUIREMENT.—
The Secretary shall first submit an annual report under
this section 2 years after the date of the enactment of this
Act.
SEC. 16. GAO STUDY OF HURRICANE RELATED FLOODING.
(a) IN GENERAL.—The Comptroller General of the
United States shall conduct a study of the availability and
adequacy of flood insurance coverage for losses to residences
and other properties caused by hurricane-related flooding.
(b) CONTENTS.—The study under this section shall de-
termine and analyze—
(1) the frequency and severity of hurricane-re-
lated flooding during the last 20 years in comparison
with flooding that is not hurricane-related;
(2) the differences between the risks of flood-re-
lated losses to properties located within the 100-year
floodplain and those located outside of such flood-
plain;
(3) the extent to which insurance coverage re-
ferred to in subsection (a) is available for properties
not located within the 100-year floodplain;
(4) the advantages and disadvantages of making
such coverage for such properties available under the
national flood insurance program;
(5) appropriate methods for establishing pre-
miums for insurance coverage under such program for
such properties that, based on accepted actuarial and
rate making principles, cover the full costs of pro-
viding such coverage;
(6) appropriate eligibility criteria for making
flood insurance coverage under such program avail-
able for properties that are not located within the
100-year floodplain or within a community partici-
pating in the national flood insurance program;
(7) 
the 
appropriateness 
of 
the 
existing
deductibles for all properties eligible for insurance
coverage under the national flood insurance program,
including the standard and variable deductibles for
pre-FIRM and post-FIRM properties, and whether a
broader range of deductibles should be established;
(8) income levels of policyholders of insurance
made available under the national flood insurance
program whose properties are pre-FIRM subsidized
properties; and
(9) the number of homes that are not primary
residences that are insured under the national flood
insurance program and are pre-FIRM subsidized
properties.
(c) CONSULTATION WITH FEMA.—In conducting the
study under this section, the Comptroller General shall con-
sult with the Director of the Federal Emergency Manage-
ment Agency.
(d) REPORT.—The Comptroller General shall complete
the study under this section and submit a report to the Con-
gress regarding the findings of the study, not later than 5
months after the date of the enactment of this Act.