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‘‘(1) 
MINIMIZE
CROSS-SUBSIDIZATION.—The
rates established shall result in a minimum of cross-
subsidization between the geographic risk territories.
‘‘(2) FINANCIAL SOUNDNESS.—The rates estab-
lished shall produce expected premiums which shall
be sufficient to pay for all claims, loss adjustment
expense, and all administrative costs due to the Cor-
poration for the two trust accounts established
under section 906.
‘‘(c) APPROVAL OF RATES.—The rates, and adjust-
ments thereto, developed by the Board under this section
shall be reviewed and approved by the Natural Disaster
Insurance Board of Actuaries according to the process de-
scribed in section 904.
‘‘SEC. 904. INSURANCE BOARD OF ACTUARIES.
‘‘(a) ESTABLISHMENT.—There is established an inde-
pendent Natural Disaster Insurance Board of Actuaries
(in this section referred to as the ‘‘Independent Board’’)
to review and approve the plan of operation developed
under section 902 and the rates developed under section
903.
‘‘(b) MEMBERSHIP.—
‘‘(1) APPOINTMENT.—
‘‘(A) INITIAL
APPOINTMENT.—The Inde-
pendent Board shall be composed of 5 members
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appointed by the Secretary of the United States
Treasury (hereinafter in this title referred to as
the ‘‘Secretary’’) within 180 days of the date of
enactment of the Natural Disaster Protection
Partnership Act of 1995.
‘‘(B) VACANCIES.—The Secretary shall im-
mediately appoint new members to fill any va-
cancies that arise on the Independent Board.
‘‘(2) QUALIFICATIONS.—The members of the
Independent Board described in paragraph (1)—
‘‘(A) shall be citizens of the United States;
‘‘(B) shall not be employees of members of
the Corporation; and
‘‘(C) shall be professional actuaries who—
‘‘(i) are members of the Casualty Ac-
tuarial Society or the American Academy
of Actuaries and meet the Academy’s qual-
ification standards for public statements of
actuarial opinion, and
‘‘(ii) have previous experience in set-
ting actuarially sound property and cas-
ualty rates.
‘‘(3) CHAIRPERSON.—The Secretary shall des-
ignate a chairperson of the Independent Board from
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among members appointed to the Independent
Board.
‘‘(4) TERMS
OF
SERVICE.—All members ap-
pointed under paragraph (2) shall serve staggered
terms for a maximum of 6 years as determined by
the Secretary at the time of appointment.
‘‘(c) APPROVAL OF THE PLAN OF OPERATION.—
‘‘(1) SUBMISSION OF DRAFT PLAN TO INDE-
PENDENT BOARD.—A draft plan of operation that
satisfies the requirements of section 902(a) shall be
submitted by the Board of the Corporation to the
Independent Board within 15 months of enactment
of the Natural Disaster Protection Partnership Act
of 1995.
‘‘(2) APPROVAL OF THE PLAN.—The draft plan
submitted to the Independent Board under para-
graph (1) shall be deemed approved and shall be-
come final, except if within 90 days of receiving the
plan from the Board, the Independent Board dis-
approves it pursuant to the standard described in
paragraph (3).
‘‘(3) STANDARD FOR DISAPPROVAL.—The Inde-
pendent Board may disapprove the entirety of the
draft plan described in paragraph (2) only if the
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plan, as a whole, is materially inconsistent with the
provisions of this title.
‘‘(4) OPPORTUNITY TO CURE.—If the Independ-
ent Board disapproves the draft plan under para-
graph (2), the chairperson of the Independent Board
shall immediately return such plan to the Board
with written instructions of the changes required for
the plan to be materially consistent with the provi-
sions of this title. The Board shall modify the plan
consistent with the Independent Board’s instructions
and submit it back to the Independent Board for ap-
proval according to the process described in its sub-
section.
‘‘(5) 
AMENDMENTS
TO
THE
PLAN.—Any
amendments to the plan shall be developed by the
Board of the Corporation under section 902 and ap-
proved by the Independent Board according to the
process described in this subsection.
‘‘(6) REPORT TO SECRETARY.—After reviewing
the draft plan of operation, and amendments there-
to, the Independent Board shall prepare and submit
a report to the Secretary of its finding regarding
such plan.
‘‘(d) APPROVAL OF THE RATES.—
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‘‘(1) SUBMISSION OF PROPOSED RATES TO THE
INDEPENDENT
BOARD.—Rates developed by the
Board that are proposed to be established for the in-
surance coverages issued or provided by the Cor-
poration under section 903(a), including any meth-
odologies used in developing such rates, shall be sub-
mitted by the Board of the Corporation to the Inde-
pendent Board within 12 months of the date of en-
actment of the Natural Disaster Protection Partner-
ship Act of 1995.
‘‘(2) 
APPROVAL
BY
THE
INDEPENDENT
BOARD.—
‘‘(A) PRIMARY
INSURANCE
COVERAGES
RATES.—The rates proposed for the primary in-
surance coverages submitted to the Independent
Board under paragraph (1) shall be deemed ap-
proved, except if within 90 days of receiving
such proposed rates, the Independent Board
disapproves such rates pursuant to the stand-
ard described in paragraph (3).
‘‘(B) REINSURANCE
COVERAGE
METH-
ODOLOGIES.—The methodologies used in devel-
oping the rates proposed for the reinsurance
coverage submitted to the Independent Board
under paragraph (1) shall be deemed approved,
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except if within 90 days of receiving such meth-
odologies, the Independent Board disapproves
such methodologies pursuant to the standard
described in paragraph (3).
‘‘(3) STANDARD FOR DISAPPROVAL.—The Inde-
pendent Board may disapprove the rates or meth-
odologies described in paragraph (2) only if compel-
ling and substantial actuarial evidence is presented
on the record that the rates or methodologies are
materially inconsistent with the actuarial soundness
requirement of section 903(b).
‘‘(4) OPPORTUNITY TO CURE.—If the Independ-
ent Board disapproves any proposed rates or meth-
odologies under this subsection, the chairperson of
the Independent Board shall immediately return
such rates and methodologies to the Board of the
Corporation with written instructions of the changes
required to the rates and methodologies to satisfy
the actuarial requirement of section 903(b). The
Board shall modify the rates or methodologies con-
sistent with the Independent Board’s instructions
and submit them back to the Independent Board for
approval according to the process described in the
subsection.
‘‘(5) APPROVAL OF RATES.—