I 
112TH CONGRESS 
2D SESSION 
H. R. 6477 
To strengthen America’s financial infrastructure, by requiring pre-funding 
for catastrophe losses using private insurance premium dollars to protect 
taxpayers from massive bailouts, and to provide dedicated funding from 
insurance premiums to improve catastrophe preparedness, loss prevention 
and mitigation, and to improve the availability and affordability of home-
owners insurance coverage for catastrophic events, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 20, 2012 
Mr. SIRES introduced the following bill; which was referred to the Committee 
on Financial Services, and in addition to the Committee on Transpor-
tation and Infrastructure, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To strengthen America’s financial infrastructure, by requir-
ing pre-funding for catastrophe losses using private in-
surance premium dollars to protect taxpayers from mas-
sive bailouts, and to provide dedicated funding from in-
surance premiums to improve catastrophe preparedness, 
loss prevention and mitigation, and to improve the avail-
ability and affordability of homeowners insurance cov-
erage for catastrophic events, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Taxpayer Protection Act of 2012’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
Sec. 2. Findings and purpose. 
Sec. 3. Definitions. 
TITLE I—TAXPAYER PROTECTION, PRE-FUNDED CATASTROPHE 
RECOVERY, AND MARKET STABILIZATION 
Sec. 101. National Commission on Natural Catastrophe Preparation and Pro-
tection. 
Sec. 102. Pre-funded and privately financed catastrophe recovery program. 
Sec. 103. Post-catastrophe market stabilization program for liquidity loans. 
Sec. 104. Termination. 
TITLE II—DISASTER READINESS, CITIZEN AND COMMUNITY 
PREPAREDNESS, AND MITIGATION 
Sec. 201. National Readiness, Preparedness, and Mitigation Committee. 
SEC. 2. FINDINGS AND PURPOSE. 
(a) FINDINGS.—The Congress finds the following: 
(1) The economy of the United States, the 
American taxpayers, and all homeowners need to be 
better prepared for, and more protected from, major 
natural catastrophes. 
(2) Taking into consideration the current eco-
nomic and fiscal challenges facing the United States, 
it is more important than ever to fortify our Na-
tion’s financial infrastructure to be fully prepared 
for major natural catastrophes and to mitigate the 
risk of catastrophe as much as possible. 
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(3) In the past, when a natural catastrophe 
eclipsed the ability of the private industry or a State 
to manage the loss, or individuals were uninsured or 
underinsured, the Federal Government has stepped 
in to provide the funding and services needed for re-
covery. 
(4) The costs of such Federal ‘‘bailouts’’ have 
been borne by all taxpayers, thereby creating a dis-
incentive to fully prepare for catastrophe and un-
fairly burdening citizens who live in lower risk com-
munities. 
(5) Historically, the budget for Federal Govern-
ment has assumed there will be no natural disasters, 
and this lack of pre-funding for catastrophe contrib-
uted substantially to annual budget deficits and 
growing national debt. 
(6) The Budget Control Act of 2011 ends an 
era of unbudgeted recovery assistance and author-
izes a fixed level of annual funding for disaster re-
lief. 
(7) The amount of future disaster relief funding 
is capped at the average amount spent on natural 
disasters during the previous 10 years with the high 
and low years removed. 
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(8) By removing the high and low years, the 
law now caps disaster spending at a level that is less 
than 60 percent of the amount spent on disaster re-
lief during the previous 10 years. 
(9) Natural catastrophes will continue to occur, 
and the exposure to catastrophe risk is growing. Sci-
entists warn that future catastrophes will inevitably 
cause losses far in excess of prior events, and these 
losses could exceed the limited capacity in the pri-
vate market to cover claims and remain viable to in-
sure properties after massive catastrophic events. 
(10) In 2011, the earthquake centered in Vir-
ginia that shook the East Coast and Hurricane 
Irene provided powerful reminders that natural ca-
tastrophes can strike unexpectedly and severely dam-
age areas not thought to be at high risk. 
(11) Losses caused by natural catastrophes in 
2011 reached record levels and affected areas 
throughout the country. 
(12) To successfully transition to a more lim-
ited Federal role in post-event disaster funding, 
communities must be better prepared for future ca-
tastrophe, the risk of damage from natural catas-
trophes must be mitigated and individuals must have 
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greater access to private market protection against 
catastrophe risk. 
(13) Currently, neither the government, nor 
communities, nor the private sector are accumu-
lating sufficient resources or procuring sufficient 
coverage to recover from inevitable future natural 
catastrophes. 
(14) The private insurance market does not 
have sufficient capacity to efficiently address the 
timing risk presented by major natural catastrophes, 
and there is no guarantee that the level of capacity 
that does exist will continue to be available from one 
year to the next or that consumers have the re-
sources to adjust to significant price swings in the 
cost of the capital for available capacity. 
(15) Disruptions in insurance availability and 
affordability will continue to harm economic activity 
in States exposed to major catastrophes and place 
significant burdens on residents of these States. 
(16) Consumers in many areas around the 
country cannot find homeowners insurance in the 
private market, and affordability and availability 
challenges will grow dramatically when the next 
major catastrophe strikes. 
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(17) Hurricane Katrina and other recent catas-
trophes confirm that the economic harm from nat-
ural catastrophes has a disproportionate impact 
upon the poor and middle class. 
(18) A new public-private partnership approach 
to deal more effectively with major natural catas-
trophes would more efficiently leverage the public 
sector and establish a limited, less expensive, more 
focused role for government while also maximizing 
the capabilities of the private sector. 
(19) A privately funded backstop can provide 
more protection at lower cost for consumers while 
also strengthening America’s financial infrastructure 
to deal with natural catastrophes by increasing ca-
pacity and providing more market stability after a 
catastrophe. 
(20) Cost savings can lower premiums for con-
sumers and be used to encourage better prevention 
and mitigation in lieu of post-event bailouts. 
(21) A financial backstop can be structured to 
be fully funded to protect taxpayers from bailouts 
and insurance policyholders from subsidies upon 
which the current system relies. 
(22) A public-private partnership model, with 
an appropriately structured backstop, can protect 
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against the timing risk presented by major natural 
catastrophes, spread risk more broadly, and enable 
private direct insurers to underwrite and price insur-
ance for large-scale catastrophes more efficiently and 
with less risk of insolvency or financial distress while 
making insurance more available and affordable for 
consumers. 
(23) Private market reinsurers could continue 
to provide coverage for direct insurers and could 
participate in providing capacity to the financial 
backstop. 
(24) For the majority of Americans their home 
is their single biggest asset and protecting that in-
vestment is important to the economic health of mil-
lions of Americans, to social stability; and to the 
health of the banking system and broader economy. 
(25) The financial crisis of 2008 confirms the 
value of taking action in advance to strengthen 
America’s financial infrastructure through a pri-
vately funded backstop rather than waiting for a fu-
ture crisis or collapse to take emergency action in 
the form of bailouts. 
(26) It is in the best interests of the Nation to 
take responsible action now to begin to build a fi-
nancial backstop that will help protect a recovering 
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American economy and mitigate the economic or fi-
nancial shock that could result from a major cata-
strophic event. 
(b) PURPOSES.—The purposes of this Act are— 
(1) to establish a fully funded program for ca-
tastrophe losses to strengthen the financial infra-
structure of the United States; 
(2) to protect taxpayers from bailouts and sub-
sidies related to the financing of post-catastrophe 
disaster relief; 
(3) to develop a public-private partnership that 
maximizes the private market capacity to directly 
provide insurance to consumers with a comprehen-
sive and integrated plan to help homeowners better 
prepare for and recover from the damages caused by 
natural catastrophes; 
(4) to encourage individuals and communities to 
adopt mitigation and prevention measures that re-
duce losses from such catastrophes; and 
(5) to expedite the payment of claims and bet-
ter assist in the financial recovery from such catas-
trophes. 
SEC. 3. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
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(1) ACTUARIALLY SOUND.—The term ‘‘actuari-
ally sound’’ means, with respect to premiums, that 
premiums are determined according to principles of 
actuarial science to be adequate, but not excessive, 
in the aggregate to pay current and future obliga-
tions, including the expected annualized cost of all 
claims, loss adjustment expenses, and all administra-
tive costs. 
(2) COVERED
EVENT.—The term ‘‘covered 
event’’ means the occurrence of one or more of the 
perils specified in section 102(c) that causes a loss 
or series of losses. 
(3) COVERED
STATE.—The term ‘‘covered 
States’’ means, with respect to a State plan, a State 
covered by the plan. 
(4) ELIGIBLE STATE PLAN.—The term ‘‘eligible 
State plan’’ means a State plan or multi-State plan 
that meets the requirements of section 102(d). 
(5) EMERGENCY RESPONSE PROVIDERS.—The 
term ‘‘emergency response providers’’ has the mean-
ing given such term in section 2 of the Homeland 
Security Act of 2002 (6 U.S.C. 101). 
(6) FUND.—The term ‘‘Fund’’ means the Ca-
tastrophe Preparedness Fund established under sec-
tion 102(g). 
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