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expenses incurred by such private insurer under the
terms of the primary insurance coverage policies.
‘‘(3) NO LIABILITY FOR PRIVATE INSURERS.—
Private insurers acting as service providers of the
primary insurance coverages shall not be liable, or in
any way responsible, for the payment of claims for
which reimbursement under the terms of paragraph
(2) is not provided, except that such private insurers
shall be responsible for payment of claims resulting
from the quota share amounts such insurers agree
to retain under subsection (c).
‘‘SEC. 915. FLOOD INSURANCE.
‘‘(a) FLOOD INSURANCE STUDY.—
‘‘(1) MEASURES
TO
INCREASE
COVERAGE.—
Within 18 months of the date of enactment of the
Natural Disaster Protection Partnership Act of
1995, the Director and the Corporation shall jointly
submit a report to Congress of any additional sanc-
tions or other measures deemed necessary and ap-
propriate to assure policyholders purchase Federal
flood insurance provided pursuant to the National
Flood Insurance Act of 1968 (42 U.S.C. 4001 et
seq.).
‘‘(2) ASSESSMENT OF PROPOSALS.—The report
described in paragraph (1) shall include an assess-
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ment of the advisability and feasibility of the follow-
ing two proposals:
‘‘(A) INCLUSION
IN
THE
PRIMARY
COV-
ERAGE.—Adding the Standard Flood Insurance
Policy issued pursuant to the National Flood
Insurance Act of 1968 (42 U.S.C. 4001 et
seq.), or the content thereof, to the primary in-
surance coverage contracts issued by the Cor-
poration pursuant to section 911.
‘‘(B) PRIVATIZATION.—Privatizing the en-
tire national flood insurance program managed
by the Director pursuant to the National Flood
Insurance Act of 1968 (42 U.S.C. 4001 et
seq.).
‘‘(b) IMPROVED PARTICIPATION IN THE FEDERAL
FLOOD INSURANCE PROGRAM.—
‘‘(1) WARNING
STATEMENT
REQUIRED
FROM
ALL PRIVATE INSURERS.—Not late than 18 months
after the date of enactment of the Natural Disaster
Protection Partnership Act of 1995, all residential
property insurance contracts issued by private insur-
ers which exclude coverage for physical damage
caused by flooding shall bear the following warning
statement: ‘FLOOD INSURANCE WARNING:
This policy does not cover losses caused by flooding.
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However, if you have purchased a separate flood in-
surance policy, including one issued under the Na-
tional Flood Insurance Program, you have coverage
against physical damage caused by flooding. If your
property is located in a flood-prone area and you
have a mortgage from a bank or other lending insti-
tution regulated or insured by a Federal entity (as
most are), you may be required by that lending in-
stitution to have flood insurance. If this requirement
applies to you and you fail to have flood insurance
coverage, your eligibility to obtain Federal disaster
aid for flood losses could be subject to conditions.’.
‘‘(2) ALTERNATIVE WARNING STATEMENT.—
‘‘(A) If the private insurer is engaged in
the national flood insurance program as a
write-your-own company pursuant to section
1345 of the National Flood Insurance Act of
1968 (42 U.S.C. 4081) and the accompanying
Federal regulations, the following sentence shall
appear at the end of the warning statement re-
quired by paragraph (1): ‘For more information
about obtaining insurance to cover physical
damage caused by flooding, consult your insur-
ance agent, broker, or insurance company rep-
resentative.’.
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‘‘(B) If the private insurer is not engaged
as a write-your-own company as described in
subparagraph (A), the following sentence shall
appear at the end of the warning statement re-
quired by paragraph (1): ‘For more information
about obtaining insurance to cover physical
damage caused by flooding, consult your insur-
ance agent, broker, or insurance company rep-
resentative or call the National Flood Insurance
Program.’.
‘‘(3) LOCATION
AND
FORMAT
OF
WARNING
STATEMENT.—The warning statement required by
paragraphs (1) and (2) shall be located in a con-
spicuous and prominent place on the residential
property insurance contract. The statement shall be
displayed in legible type which contrasts by typog-
raphy, layout, or color with other printed materials
on the policy.
‘‘(4) CONSEQUENCES
OF
NONCOMPLIANCE.—
Private insurers failing to comply with this section
shall be ineligible to participate as members of the
Corporation described in section 901.
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‘‘Subtitle C—Reinsurance Coverage
‘‘SEC. 921. SCOPE OF COVERAGE.
‘‘(a) GENERAL AUTHORITY.—As a condition of re-
ceiving Federal loans under section 906(d), the Corpora-
tion shall make available excess reinsurance coverage
which shall—
‘‘(1) provide coverage to eligible entities de-
scribed in subsection (b) for any direct and indirect
losses for the covered losses set forth in subsection
(c) that are caused by the natural disaster perils de-
scribed in subsection (d); and
‘‘(2) have the terms and conditions described in
sections 922 and 923.
‘‘(b) ELIGIBLE ENTITIES.—The following entities, as
members of the Corporation, are eligible to purchase the
excess reinsurance coverage described in subsection (a),
provided such entities meet the minimum criteria and fi-
nancial viability standards set by the Corporation in the
plan of operation under section 902:
‘‘(1) Private insurers.
‘‘(2) State insurance pools.
‘‘(c) COVERED LOSSES.—The excess reinsurance cov-
erage described in subsection (a) shall insure against the
following losses:
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‘‘(1) Residential losses, including quota-share
amounts retained by the private insurers under sec-
tion 914(c), not already insured by the Corporation
under the primary insurance coverage policies de-
scribed in section 911.
‘‘(2) Commercial losses.
‘‘(d) NATURAL DISASTER PERILS.—The excess rein-
surance coverage described in subsection (a) shall cover
losses that are proximately caused by the following natural
disaster perils:
‘‘(1) Earthquakes.
‘‘(2) Volcanic eruptions.
‘‘(3) Tsunamis.
‘‘(4) Hurricanes
‘‘SEC. 922. TERMS AND CONDITIONS.
‘‘(a) GENERAL AUTHORITY.—
‘‘(1) SETTING THE TERMS AND CONDITIONS.—
The Board of the Corporation shall set the terms
and conditions of the reinsurance coverage issued
under this subtitle. Such terms and conditions, as
may be modified from time to time, shall be included
in the plan of operation pursuant to section 902.
‘‘(2) GUIDING PRINCIPLE.—The terms and con-
ditions for the reinsurance coverage policy shall be—
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‘‘(A) similar to those generally used in pri-
vate catastrophic reinsurance contracts; and
‘‘(B) standardized and designed, to the
maximum extent practicable, to limit the finan-
cial exposure of the reinsurance account de-
scribed in section 906(b) to a manageable level
given the probable maximum losses for the nat-
ural disaster perils described in section 921(d).
‘‘(b) SPECIFIC TERMS AND CONDITIONS.—The terms
and conditions for the reinsurance coverage shall include
the following:
‘‘(1) Limits on the amount of coverage avail-
able.
‘‘(2) Rates as determined under section 903
which shall take into account the private insurer’s fi-
nancial standing and its exposure to the natural dis-
aster perils described in section 921(d).
‘‘(3) Any other terms and conditions that may
be necessary to carry out the purposes of this sub-
title.
‘‘(c) PAYMENT OF CLAIMS.—From amounts in the
reinsurance account described in section 906(b), including
any Federal loans provided under section 906(d), the Cor-
poration shall pay the qualifying losses as determined
under section 923 of those private insurers which pur-