charged shall be actuarially sound or actuarially 
indicated; and 
(C) shall make available to all qualifying 
policyholders insurance or reinsurance coverage, 
as applicable, and mitigation services on a basis 
that is not unfairly discriminatory. 
(7) LAND USE AND ZONING.—The State pro-
gram, to the extent possible, seeks to encourage ap-
propriate State and local government units to de-
velop comprehensive land use and zoning plans that 
include natural hazard mitigation. 
(8) RISK-BASED
CAPITAL
REQUIREMENTS.— 
The State program complies with the risk-based cap-
ital requirements under subsection (b); 
(9) OTHER
REQUIREMENTS.—The State pro-
gram complies with such additional organizational, 
underwriting, and financial requirements as the Sec-
retary shall, by regulation, provide to carry out the 
purposes of this Act. 
(b) RISK-BASED CAPITAL REQUIREMENTS.— 
(1) IN GENERAL.—Except for programs deemed 
to be eligible State programs pursuant to subsection 
(d), each eligible State program shall maintain risk- 
based capital in accordance with requirements estab-
lished by the Secretary, in consultation with the Na-
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tional Association of Insurance Commissioners and 
consistent with the Risk-Based Capital Model Act of 
the National Association of Insurance Commis-
sioners, and take into consideration asset risk, credit 
risk, underwriting risk, and such other relevant risk 
as determined by the Secretary. 
(2) REPORT.—For each calendar year, each eli-
gible State program shall prepare and submit to the 
Secretary a report identifying its risk based capital, 
at such time after the conclusion of such year, and 
containing such information and in such form, as 
the Secretary shall require. 
(c) CERTIFICATION.—The Secretary shall establish 
procedures for initial certification and recertification as an 
eligible State program. 
(d) TRANSITIONAL MECHANISMS.—For the 5-year 
period beginning on the date of the enactment of this Act, 
in the case of a State that does not have an eligible State 
program for the State, a State residual insurance market 
entity, or State-sponsored provider of natural catastrophe 
insurance, for such State shall be considered to be an eligi-
ble State program, but only if such State residual insur-
ance market entity, or State-sponsored provider of natural 
catastrophe insurance, was in existence before such date 
of enactment. 
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(e) REINSURANCE TO COVER EXPOSURE.—This sec-
tion may not be construed to limit or prevent any eligible 
State program from obtaining reinsurance coverage for in-
sured losses retained by insurers pursuant to this section. 
SEC. 502. STUDY AND CONDITIONAL COVERAGE OF COM-
MERCIAL RESIDENTIAL LINES OF INSUR-
ANCE. 
The Secretary shall study, on an expedited basis, the 
need for and impact of expanding the programs estab-
lished by this Act to apply to insured losses of eligible 
State programs for losses arising from all commercial in-
surance policies which provide coverage for properties that 
are composed predominantly of residential rental units. 
The Secretary shall consider the catastrophic insurance 
and reinsurance market for commercial residential prop-
erties, and specifically the availability of adequate private 
insurance coverage when an insured event occurs, the im-
pact any such capacity restrictions have on housing afford-
ability for renters, and the likelihood that such an expan-
sion of the program would increase insurance capacity for 
this market segment. 
SEC. 503. DEFINITIONS. 
In this Act: 
(1) COMMITMENT TO GUARANTEE.—The term 
‘‘commitment to guarantee’’ means a commitment to 
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make debt guarantees to an eligible State program 
pursuant to section 202(c). 
(2) ELIGIBLE STATE PROGRAM.—The term ‘‘eli-
gible State program’’ means a State program that 
the Secretary certifies as an eligible State program 
under section 501. 
(3) INSURED LOSS.—The term ‘‘insured loss’’ 
means any loss that is determined by an eligible 
State program as being covered by insurance or re-
insurance made available under that eligible State 
program. 
(4) QUALIFYING
ASSETS.—The term ‘‘quali-
fying assets’’ means the policyholder surplus of the 
eligible State program as stated in the most recent 
quarterly financial statement filed by the program 
with the domiciliary regulator of the program in the 
last quarter ending prior to the event or events. 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(6) STATE.—The term ‘‘State’’ includes the 
several States, the District of Columbia, the Com-
monwealth of Puerto Rico, Guam, the Common-
wealth of the Northern Mariana Islands, the United 
States Virgin Islands, and American Samoa, and 
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any other territory or possession of the United 
States. 
SEC. 504. REGULATIONS. 
The Secretary shall issue such regulations as may be 
necessary to carry out this Act. 
Æ 
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