I 
109TH CONGRESS 
1ST SESSION H. R. 4366 
To establish a program to provide reinsurance for State natural catastrophe 
insurance programs to help the United States better prepare for and 
protect its citizens against the ravages of natural catastrophes, to encour-
age and promote mitigation and prevention for, and recovery and rebuild-
ing from such catastrophes, and to better assist in the financial recovery 
from such catastrophes. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 17, 2005 
Ms. GINNY BROWN-WAITE of Florida (for herself and Mr. SHAW) introduced 
the following bill; which was referred to the Committee on Financial Services 
A BILL 
To establish a program to provide reinsurance for State 
natural catastrophe insurance programs to help the 
United States better prepare for and protect its citizens 
against the ravages of natural catastrophes, to encourage 
and promote mitigation and prevention for, and recovery 
and rebuilding from such catastrophes, and to better 
assist in the financial recovery from such catastrophes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Homeowners Insurance Protection Act of 2005’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Congressional findings. 
Sec. 3. National Commission on Catastrophe Preparation and Protection. 
Sec. 4. Program authority. 
Sec. 5. Qualified lines of coverage. 
Sec. 6. Covered perils. 
Sec. 7. Contracts for reinsurance coverage for eligible State programs. 
Sec. 8. Minimum level of retained losses and maximum Federal liability. 
Sec. 9. Consumer Hurricane, Earthquake, Loss Protection (HELP) Fund. 
Sec. 10. Definitions. 
Sec. 11. Regulations. 
Sec. 12. Termination. 
Sec. 13. Annual study concerning benefits of the Act. 
Sec. 14. GAO study of the National Flood Insurance Program and hurricane- 
related flooding. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that— 
(1) America needs to take steps to be better 
prepared for and better protected from catastrophes; 
(2) the hurricane seasons of 2004 and 2005 are 
startling reminders of both the human and economic 
devastation that hurricanes, flooding, and other nat-
ural disasters can cause; 
(3) if a repeat of the deadly 1900 Galveston 
hurricane occurred again it could cause over $36 bil-
lion in loss; 
(4) if the 1904 San Francisco earthquake oc-
curred again it could cause over $400 billion in loss;
(5) if a Category 5 hurricane were to hit Miami 
it could cause over $50 billion in loss and devastate 
the insurance industry in the United States; 
(6) if a repeat of the 1938 ‘‘Long Island Ex-
press’’ were to occur again it could cause over $30 
billion in damage and if a hurricane that strong 
were to directly hit Manhattan it could cause over 
$150 billion in damage and cause irreparable harm 
to our Nation’s economy; 
(7) a more comprehensive and integrated ap-
proach to dealing with catastrophes is needed; 
(8) using history as a guide, natural catas-
trophes will inevitably place a tremendous strain on 
homeowners’ insurance markets in many areas, will 
raise costs for consumers, and will jeopardize the 
ability of many consumers to adequately insure their 
homes and possessions; 
(9) the lack of sufficient insurance capacity and 
the inability of private insurers to build enough cap-
ital, in a short amount of time, threatens to increase 
the number of uninsured homeowners, which, in 
turn, increases the risk of mortgage defaults and the 
strain on the Nation’s banking system;
(10) some States have intervened to ensure the 
continued availability and affordability of home-
owners’ insurance for all residents; 
(11) it is appropriate that efforts to improve in-
surance availability be designed and implemented at 
the State level; 
(12) while State insurance programs may be 
adequate to cover losses from most natural disasters, 
a small percentage of events are likely to exceed the 
financial capacity of these programs and the local 
insurance markets; 
(13) limited Federal reinsurance will improve 
the effectiveness of State insurance programs and 
private insurance markets and will increase the like-
lihood that homeowners’ insurance claims will be 
fully paid in the event of a large natural catastrophe 
and that routine claims that occur after a mega-ca-
tastrophe will also continue to be paid; 
(14) it is necessary to provide a Federal rein-
surance program that will provide more protection at 
an overall lower cost and that will promote stability 
in the homeowners’ insurance market; 
(15) it is the proper role of the Federal Govern-
ment to prepare for and protect its citizens from ca-
tastrophes and to facilitate consumer protection, vic-
tim assistance, and recovery, including financial re-
covery; and 
(16) any Federal reinsurance program must be 
founded upon sound actuarial principles and priced 
in a manner that encourages the creation of State 
funds and maximizes the buying potential of these 
State funds and encourages and promotes prevention 
and mitigation, recovery and rebuilding, and con-
sumer education, and emphasizes continuous anal-
ysis and improvement. 
SEC. 3. NATIONAL COMMISSION ON CATASTROPHE PREPA-
RATION AND PROTECTION. 
(a) ESTABLISHMENT.—The Secretary of the Treas-
ury shall establish a commission to be known as the Na-
tional Commission on Catastrophe Preparation and Pro-
tection. 
(b) DUTIES.—The Commission shall meet for the 
purpose of advising the Secretary regarding the estimated 
loss costs associated with the contracts for reinsurance 
coverage available under this Act and carrying out the 
functions specified in this Act, including— 
(1) the development and implementation of 
public education concerning the risks posed by nat-
ural catastrophes;
(2) the development and implementation of pre-
vention, mitigation, recovery, and rebuilding stand-
ards that better prepare and protect the United 
States from catastrophes; and 
(3) conducting continuous analysis of the effec-
tiveness of this Act and recommending improve-
ments to the Congress so that the costs of providing 
catastrophe protection are decreased and so that the 
United States is better prepared. 
(c) MEMBERS.— 
(1) APPOINTMENT AND QUALIFICATION.—The 
Commission shall consist of 9 members, as follows: 
(A) HOMELAND SECURITY MEMBER.—The 
Secretary of Homeland Security or the Sec-
retary’s designee. 
(B) APPOINTED
MEMBERS.—8 members 
appointed by the Secretary, who shall consist 
of— 
(i) one individual who is an actuary; 
(ii) one individual who is employed in 
engineering; 
(iii) one individual representing the 
scientific community; 
(iv) one individual representing prop-
erty and casualty insurers;
(v) one individual representing rein-
surers; 
(vi) one individual who is a member or 
former member of the National Association 
of Insurance Commissioners; and 
(vii) two individuals who are con-
sumers. 
(2) PREVENTION
OF
CONFLICTS
OF
INTER-
EST.—Members shall have no personal or financial 
interest at stake in the deliberations of the Commis-
sion. 
(d) TREATMENT
OF NON-FEDERAL MEMBERS.— 
Each member of the Commission who is not otherwise em-
ployed 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 from in-
dividuals or groups recognized as experts in the fields of 
meteorology, seismology, vulcanlogy, geology, structural 
engineering, wind engineering, and hydrology, and other 
fields, 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 indi-
vidual procured is performing such services for the Com-
mission. The Commission may also procure, and the Con-
gress encourages the Commission to procure, experts from 
universities, research centers, foundations, and other ap-
propriate organizations who could study, research, and de-
velop methods and mechanisms that could be utilized to 
strengthen structures to better withstand the perils cov-
ered by this Act. 
(f) COMPENSATION.—Each member of the Commis-
sion who is not an officer or employee of the Federal Gov-
ernment shall be compensated at a rate of basic pay pay-
able for level V of the Executive Schedule, for each day 
(including travel time) during which such member is en-
gaged in the performance of the duties of the Commission. 
All members of the Commission who are officers or em-
ployees of the United States shall serve without compensa-
tion in addition to that received for their services as offi-
cers or employees of the United States. 
(g) OBTAINING DATA.—The Commission and the 
Secretary may solicit loss exposure data and such other 
information either deems necessary to carry out its re-
sponsibilities from governmental agencies and bodies and 
organizations that act as statistical agents for the insur-
ance industry. The Commission and the Secretary shall 
take such actions as are necessary to ensure that informa-
tion that either deems is confidential or proprietary is dis-
closed only to authorized individuals working for the Com-
mission or the Secretary. No company which refuses to 
provide information requested by the Commission or the 
Secretary may participate in the program for reinsurance 
coverage authorized under this Act, nor may any State 
insurance or reinsurance program participate if any gov-
ernmental agency within that State has refused to provide 
information requested by the Commission or the Sec-
retary. 
(h) FUNDING.— 
(1) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated— 
(A) $10,000,000 for fiscal year 2006 for 
the initial expenses in establishing the Commis-
sion and the initial activities of the Commission 
that cannot timely be covered by amounts ob-
tained pursuant to section 7(b)(6)(B)(iii), as 
determined by the Secretary; 
(B) such additional sums as may be nec-
essary to carry out subsequent activities of the 
Commission; 
(C) $10,000,000 for fiscal year 2006 for 
the initial expenses of the Secretary in carrying
out the program authorized under section 4; 
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 obtained from purchasers of reinsurance cov-
erage under this Act and deposited in the Fund es-
tablished under section 9. Such amounts shall be ob-
tained by inclusion of a provision for the Secretary’s 
and the Commission’s expenses incorporated into the 
pricing of the contracts for such reinsurance cov-
erage, pursuant to section 7(b)(6)(B)(iii). 
(i) TERMINATION.—The Commission shall terminate 
upon the effective date of the repeal under section 12(c). 
SEC. 4. PROGRAM AUTHORITY. 
(a) IN GENERAL.—The Secretary of the Treasury, in 
consultation with the Secretary of Homeland Security, 
shall carry out a program under this Act to make home-
owners protection coverage available through contracts for 
reinsurance coverage under section 7, which shall be made 
available for purchase only by eligible State programs.
(b) PURPOSE.—The program shall be designed to 
make reinsurance coverage under this Act available— 
(1) to improve the availability and affordability 
of homeowners’ insurance for the purpose of facili-
tating the pooling, and spreading the risk, of cata-
strophic financial losses from natural catastrophes; 
(2) to improve the solvency and capacity of 
homeowners’ insurance markets; 
(3) to encourage the development and imple-
mentation of mitigation, prevention, recovery, and 
rebuilding standards; and 
(4) to recommend methods to continuously im-
prove the way the United States reacts and responds 
to catastrophes, including improvements to the 
HELP Fund established under section 9. 
(c) CONTRACT PRINCIPLES.—Under the program 
under this Act, the Secretary shall offer reinsurance cov-
erage through contracts with covered purchasers, which 
contracts shall— 
(1) minimize the administrative costs of the 
Federal Government; 
(2) provide coverage based solely on insured 
losses within the State for the eligible State program 
purchasing the contract.
SEC. 5. QUALIFIED LINES OF COVERAGE. 
Each contract for reinsurance coverage made avail-
able under this Act shall provide insurance coverage 
against residential property losses to homes (including 
dwellings owned under condominium and cooperative own-
ership arrangements) and the contents of apartment 
buildings. 
SEC. 6. COVERED PERILS. 
Each contract for reinsurance coverage made avail-
able under this Act shall cover losses insured or reinsured 
by the eligible State program purchasing the contract that 
are proximately caused by— 
(1) earthquakes; 
(2) perils ensuing from earthquakes, including 
fire and tsunamis; 
(3) tropical cyclones having maximum sustained 
winds of at least 74 miles per hour, including hurri-
canes and typhoons; 
(4) tornadoes; 
(5) volcanic eruptions; 
(6) catastrophic winter storms; and 
(7) any other natural catastrophe (not including 
any flood) insured or reinsured under the eligible 
State program for which reinsurance coverage under 
section 7 is provided.
The Secretary shall, by regulation, define the natural ca-
tastrophe perils under this section. 
SEC. 7. CONTRACTS FOR REINSURANCE COVERAGE FOR 
ELIGIBLE STATE PROGRAMS. 
(a) ELIGIBLE STATE PROGRAMS.—A program shall 
be eligible to purchase a contract under this section for 
reinsurance coverage under this Act only if the State enti-
ty authorized to make such determinations certifies to the 
Secretary that the program complies with the following re-
quirements: 
(1) PROGRAM DESIGN.—The program shall be a 
State-operated— 
(A) insurance program that— 
(i) offers coverage for homes (which 
may include dwellings owned under condo-
minium and cooperative ownership ar-
rangements) and the contents of apart-
ments to State residents; and 
(ii) is authorized by State law; or 
(B) reinsurance program that is designed 
to improve private insurance markets that offer 
coverage for homes (which may include dwell-
ings owned under condominium and cooperative 
ownership arrangements) and the contents of 
apartments.
(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 inter-
est in the program, which shall not include a 
program authorized by State law or regulation 
that requires insurers to pool resources to pro-
vide property insurance coverage for covered 
perils. 
(C) The State shall not be eligible for con-
sumer HELP Fund assistance if a State has 
appropriated money from the State fund and 
not paid it back to the State fund, with inter-
est. 
(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 all 
perils enumerated in section 6. 
(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) PREVENTION AND MITIGATION.—The pro-
gram shall include prevention and mitigation provi-
sions that require that not less $10,000,000 and not 
more than 35 percent of the net investment income 
of the State insurance or reinsurance program be 
used for programs to mitigate losses from natural 
catastrophes for which the State insurance or rein-
surance program was established. For purposes of 
this paragraph, prevention and mitigation shall in-
clude methods to reduce losses of life and property, 
including appropriate measures to adequately re-
flect— 
(A) encouragement of awareness about the 
risk factors and what can be done to eliminate 
or reduce them; 
(B) location of the risk, by giving careful 
consideration of the natural risks for the loca-
tion of the property before allowing building 
and considerations if structures are allowed; 
and 
(C) construction relative to the risk and 
hazards, which act upon— 
(i) State mandated building codes ap-
propriate for the risk;
(ii) adequate enforcement of the risk- 
appropriate building codes; 
(iii) building materials that prevent or 
significantly lessen potential damage from 
the natural catastrophes; 
(iv) building methods that prevent or 
significantly lessen potential damage from 
the natural catastrophes; and 
(v) a focus on prevention and mitiga-
tion for any substantially damaged struc-
ture, with an emphasis on how structures 
can be retrofitted so as to make them 
building code compliant. 
(7) REQUIREMENTS REGARDING COVERAGE.— 
(A) IN GENERAL.—The program— 
(i) may not, except for charges or as-
sessments related to post-event financing 
or bonding, involve cross-subsidization be-
tween 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 con-
tract for reinsurance coverage under this 
Act pursuant 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 pro-
gram if the insurance commissioner or 
other such entity determines that the pro-
gram is no longer necessary to ensure the 
availability of homeowners’ insurance for 
all residents of the State; and 
(iii) shall provide that, for any insur-
ance coverage for homes (which may in-
clude dwellings owned under condominium 
and cooperative ownership arrangements) 
and the contents of apartments that is 
made available under the State insurance 
program 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, 2006, commence 
offering insurance or reinsurance coverage 
described in subparagraph (A) or (B), re-
spectively, 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 consultation with the National Commission 
on Catastrophe Preparation and Prevention es-
tablished under section 3. The regulations shall 
establish 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 shall have pub-
lic members on its board of directors or 
have an advisory board with public mem-
bers; 
(ii) the State program provide ade-
quate insurance or reinsurance protection, 
as applicable, for the peril covered, which 
shall include a range of deductibles and 
premium costs that reflect the applicable 
risk to eligible properties; 
(iii) insurance or reinsurance cov-
erage, as applicable, provided by the State 
program is made available on a non-
discriminatory basis to all qualifying resi-
dents; 
(iv) any new construction, substantial 
rehabilitation, and renovation insured or 
reinsured by the program complies with 
applicable State or local government build-
ing, fire, and safety codes; 
(v) the State, or appropriate local gov-
ernments within the State, have in effect
and enforce nationally recognized model 
building, fire, and safety codes and con-
sensus-based standards that offer risk re-
sponsive resistance that is substantially 
equivalent or greater than the resistance to 
earthquakes or high winds; 
(vi) the State has taken actions to es-
tablish an insurance rate structure that 
takes into account measures to mitigate in-
surance losses; 
(vii) 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 
(viii) 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 subject to the following terms and conditions:
(1) MATURITY.—The term of the contract shall 
not exceed 1 year or such other term as the Sec-
retary 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 insurance claims for losses, which are 
covered by qualified lines, occur to properties located 
within the State covered by the contract, and that 
result from events, exceeds the amount of retained 
losses provided under the contract (pursuant to sec-
tion 8(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 con-
tract and shall provide that if multiple events occur, 
the retained losses requirement under paragraph (3) 
shall apply on a calendar year basis, in the aggre-
gate and not separately to each individual event. 
(5) TIMING
OF
ELIGIBLE
LOSSES.—Eligible 
losses under the contract shall include only insur-
ance claims for property covered by qualified lines
that are reported to the eligible State program with-
in the 3-year period beginning upon the event or 
events for which payment under the contract is pro-
vided. 
(6) PRICING.— 
(A) DETERMINATION.—The price of rein-
surance 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 reflect the risks and costs 
being borne under each reinsurance con-
tract issued under this Act and that takes 
into consideration empirical models of nat-
ural disasters and the capacity of private 
markets to absorb insured losses from nat-
ural disasters. 
(iii) SELF-SUFFICIENCY.—The rates 
for reinsurance coverage shall be estab-
lished at a level that annually produces ex-
pected premiums that shall be sufficient to 
pay the expected annualized cost of all 
claims, loss adjustment expenses, and all 
administrative costs of reinsurance cov-
erage 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 accord-
ing to the actuarial analysis and rec-
ommendations of the Commission. 
(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 re-
quire the State program that is covered under the 
contract to submit to the Commission all informa-
tion on the State program relevant to the duties of 
the Commission, 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, sub-
ject to the limitations under section 8, at the prices 
at which such contracts were offered at the begin-
ning of the term, prorated based upon the remaining 
term as determined by the Secretary. Such addi-
tional contracts 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 occurred. 
(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 fi-
nancial integrity of the program under this Act. 
(c) PARTICIPATION BY MULTI-STATE CATASTROPHE 
FUND PROGRAMS.—Nothing in this Act shall prohibit the 
creation of multi-State catastrophe insurance or reinsur-
ance programs, or the participation by such programs in 
the program established pursuant to section 4. The Sec-
retary shall, by regulation, apply the provisions of this Act 
to multi-State catastrophe insurance and reinsurance pro-
grams.
SEC. 8. 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 covered perils (as required under section 
7(b)(3) for payment of eligible losses) in various amounts, 
as the Secretary, in consultation with the Commission, de-
termines appropriate and subject to the requirements 
under subsection (b). 
(b) MINIMUM LEVEL OF RETAINED LOSSES.— 
(1) CONTRACTS FOR STATE PROGRAMS.—Sub-
ject to paragraphs (3) and (4) and notwithstanding 
any other provision of this Act, a contract for rein-
surance coverage under section 7 for an eligible 
State program that offers insurance or reinsurance 
coverage described in subparagraph (A) or (B), re-
spectively, of section 7(a)(1) may not be made avail-
able or sold unless the contract requires retained 
losses from covered perils in the following amount: 
(A) IN
GENERAL.—The State program 
shall sustain an amount of retained losses of 
not less than—
(i) the claims-paying capacity of the 
eligible State program, as determined by 
the Secretary; and 
(ii) an amount, determined by the 
Secretary in consultation with the Commis-
sion, that is the amount equal to the eligi-
ble losses projected to be incurred once 
every 50 years on an annual basis from 
covered perils. 
(B) TRANSITION RULE FOR EXISTING PRO-
GRAMS.— 
(i) CLAIMS-PAYING
CAPACITY.—Sub-
ject to clause (ii), in the case of any eligi-
ble State program that was offering insur-
ance 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 sub-
paragraph (A)(i) but less than an amount 
determined for the program under sub-
paragraph (A)(ii), the minimum level of re-
tained losses applicable under this para-
graph shall be the claims-paying capacity 
of such State program.
(ii) AGREEMENT.—Clause (i) shall 
apply to a State program only if the pro-
gram enters into a written agreement with 
the Secretary providing a schedule for in-
creasing the claims-paying capacity of the 
program to the amount determined for the 
program under subparagraph (A)(ii) over a 
period not to exceed 5 years. The Sec-
retary may extend the 5-year period for 
not more than 5 additional one-year peri-
ods if the Secretary determines that losses 
incurred by the State program as a result 
of covered perils create excessive hardship 
on the State program. The Secretary shall 
consult with the appropriate officials of the 
State program regarding the required 
schedule and any potential one-year exten-
sions. 
(C) TRANSITION
RULE
FOR
NEW
PRO-
GRAMS.— 
(i) 50-YEAR
EVENT.—The Secretary 
may provide that, in the case of an eligible 
State program that, after January 1, 
2006, commences offering insurance or re-
insurance coverage, during the 7-year pe-
riod beginning on the date that reinsur-
ance coverage under section 7 is first made 
available, the minimum level of retained 
losses applicable under this paragraph 
shall be the amount determined for the 
State under subparagraph (A)(i), except 
that such minimum level shall be adjusted 
annually as provided in clause (ii) of this 
subparagraph. 
(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 7- 
year period, the applicable minimum 
level of retained losses approaches the 
minimum level that, under subpara-
graph (A) (ii), will apply to the eligi-
ble 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 
subparagraphs (A), (B), and (C) or the 
terms contained in a contract for reinsur-
ance pursuant to such subparagraphs, if 
the Secretary determines that the claims- 
paying capacity of an eligible State pro-
gram has been reduced because of payment 
for losses due to an event, the Secretary 
may reduce the minimum level of retained 
losses. 
(ii) TERM OF REDUCTION.—The Sec-
retary may extend the 5-year period for 
not more than 5 additional one-year peri-
ods if the Secretary determines that losses 
incurred by the State program as a result 
of covered perils create excessive hardship 
on the State program. The Secretary shall 
consult with the appropriate officials of the 
State program regarding the required 
schedule and any potential one-year exten-
sions. 
(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 7(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. 
(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 
various amounts that comply with the following re-
quirements: 
(A) ESTIMATE
OF
AGGREGATE
LIABIL-
ITY.—The aggregate liability for payment of 
claims under all such contracts in any single 
year is unlikely to exceed $200,000,000,000 (as 
such amount is adjusted under paragraph (2)). 
(B) ELIGIBLE LOSS COVERAGE SOLD.—El-
igible losses covered by all contracts sold within 
a State during a 12-month period do not exceed
the difference between the following amounts 
(each of which shall be determined by the Sec-
retary in consultation with the Commission): 
(i) The amount equal to the eligible 
loss projected to be incurred once every 
500 years from a single event in the State. 
(ii) The amount equal to the eligible 
loss projected to be incurred once every 50 
years from a single event in the State. 
(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 appro-
priate. 
(d) LIMITATION ON PERCENTAGE OF RISK IN EX-
CESS OF RETAINED LOSSES.— 
(1) IN
GENERAL.—The Secretary may not 
make available for purchase contracts for reinsur-
ance coverage under this Act that would pay out 
more than 100 percent of eligible losses in excess of 
retained losses in the case of a contract under sec-
tion 7 for an eligible State program, for such State. 
(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 
paragraph (1). 
SEC. 9. CONSUMER HURRICANE, EARTHQUAKE, LOSS PRO-
TECTION (HELP) FUND. 
(a) ESTABLISHMENT.—There is established within 
the Treasury of the United States a fund to be known 
as the Consumer HELP 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 Sec-
retary in carrying out the reinsurance program 
under this Act. 
(4) TERMINATION.—Upon termination under 
section 13, as provided in such section. 
(d) BORROWING.— 
(1) AUTHORITY.—To the extent that the 
amounts in the Fund are insufficient to pay claims 
and expenses under subsection (c), the Secretary 
may issue such obligations of the Fund as may be 
necessary to cover the insufficiency and shall pur-
chase any such obligations issued. 
(2) PUBLIC DEBT TRANSACTION.—For the pur-
pose of purchasing any such obligations, the Sec-
retary may use as a public debt transaction the pro-
ceeds 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 Secretary of such obligations under this sub-
section. 
(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 trans-
actions 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 pre-
miums 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 
considers 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 
section 3(h), no further Federal funds shall be authorized 
or appropriated for the Fund or for carrying out the rein-
surance program under this Act. 
SEC. 10. 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 3. 
(2) COVERED PERILS.—The term ‘‘covered per-
ils’’ means the natural disaster perils under section 
6. 
(3) COVERED PURCHASER.—The term ‘‘covered 
purchaser’’ means an eligible State-operated insur-
ance or reinsurance program that purchases reinsur-
ance coverage made available under a contract under 
section 7. 
(4) DISASTER AREA.—The term ‘‘disaster area’’ 
means a geographical area, with respect to which— 
(A) a covered peril specified in section 
6has 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
retained losses, as defined by the Secretary after 
consultation with the Commission. 
(6) ELIGIBLE STATE PROGRAM.—The term ‘‘eli-
gible State program’’ means a State program that, 
pursuant to section 7(a), is eligible to purchase rein-
surance coverage made available through contracts 
under section 7, or a multi-State program that is eli-
gible to purchase such coverage pursuant to section 
7(c). 
(7) 
PRICE
GOUGING.—The 
term 
‘‘price 
gouging’’ means the providing of any consumer good 
or service by a supplier related to repair or restora-
tion of property damaged from a catastrophe for a 
price that the supplier knows or has reason to know 
is greater, by at least the percentage set forth in a 
State law or regulation prohibiting such act (not-
withstanding any real cost increase due to any at-
tendant business risk and other reasonable expenses 
that result from the major catastrophe involved), 
than the price charged by the supplier for such con-
sumer good or service immediately before the dis-
aster. 
(8) QUALIFIED
LINES.—The term ‘‘qualified 
lines’’ means lines of insurance coverage for which
losses are covered under section 5 by reinsurance 
coverage under this Act. 
(9) REINSURANCE COVERAGE.—The term ‘‘re-
insurance coverage under this Act’’ means coverage 
under contracts made available under section 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 Colum-
bia, the Commonwealth of Puerto Rico, the Com-
monwealth of the Northern Mariana Islands, Guam, 
the Virgin Islands, American Samoa, and any other 
territory or possession of the United States. 
SEC. 11. REGULATIONS. 
The Secretary, in consultation with the Secretary of 
the Department of Homeland Security, shall issue any 
regulations necessary to carry out the program for rein-
surance coverage under this Act. 
SEC. 12. 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 20-year period beginning on the date of the 
enactment 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 pro-
gram for reinsurance coverage under this Act is necessary 
or appropriate to carry out the purpose of this Act under 
section 4(b) because of insufficient growth of capacity in 
the private homeowners’ insurance market, the Secretary 
shall continue to provide reinsurance coverage under this 
Act until the expiration of the 5-year period beginning 
upon the expiration of the period under subsection (a). 
(c) REPEAL.—Effective upon the date that reinsur-
ance 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 9 upon the repeal of 
this Act. 
SEC. 13. ANNUAL STUDY CONCERNING BENEFITS OF THE 
ACT. 
(a) IN GENERAL.—The Secretary shall, on an annual 
basis, conduct a study and submit to the Congress a report 
that— 
(1) analyzes the cost and availability of home-
owners’ insurance for losses resulting from cata-
strophic natural disasters covered by the reinsurance 
program under this Act; 
(2) describes the efforts of the participating 
States in— 
(A) enacting preparedness, prevention, 
mitigation, recovery, and rebuilding standards; 
and 
(B) educating the public on the risks asso-
ciated with natural catastrophe; and 
(3) makes recommendations regarding ways to 
improve the program under this Act and its adminis-
tration. 
(b) CONTENTS.—Each annual study under this sec-
tion shall also 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 dis-
asters; 
(2) for each State or region, the percentage of 
homeowners who have such coverage, the catas-
trophes covered, and the average cost of such cov-
erage; and
(3) for each State or region, the effects this Act 
is having on the availability and affordability of such 
insurance. 
(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
REQUIRE-
MENT.—The Secretary shall first submit an annual report 
under this section not later than two years after the date 
of the enactment of this Act. 
SEC. 14. GAO STUDY OF THE NATIONAL FLOOD INSURANCE 
PROGRAM 
AND 
HURRICANE-RELATED 
FLOODING. 
(a) IN GENERAL.—In light of the flooding associated 
with Hurricane Katrina, the Comptroller General of the 
United States shall conduct a study of the availability and 
adequacy of flood insurance coverage for losses to resi-
dences and other properties caused by hurricane-related 
flooding. 
(b) CONTENTS.—The study under this section shall 
determine 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 mak-
ing 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 
providing 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 pro-
gram, 
including 
the 
standard 
and 
variable 
deductibles for pre-FIRM and post-FIRM prop-
erties, 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; 
(9) how the national flood program is marketed, 
if changes can be made so that more people are 
aware of flood coverage, and how take-up rates may 
be improved; 
(10) the number of homes that are not primary 
residences that are insured under the national flood 
insurance program and are pre-FIRM subsidized 
properties; and 
(11) suggestions and means on how the pro-
gram under this Act can better meet its stated goals 
as well as the feasibility of expanding the NFIP to 
cover the perils covered by this Act. 
(c) CONSULTATION WITH FEMA.—In conducting 
the study under this section, the Comptroller General shall 
consult with the Director of the Federal Emergency Man-
agement Agency. 
(d) REPORT.—The Comptroller General shall com-
plete the study under this section and submit a report to
the Congress regarding the findings of the study not later 
than 5 months after the date of the enactment of this Act. 
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