I 
109TH CONGRESS 
1ST SESSION H. R. 4507 
To establish a Federal program to provide reinsurance for State natural 
disaster insurance programs. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 13, 2005 
Mrs. MALONEY introduced the following bill; which was referred to the 
Committee on Financial Services 
A BILL 
To establish a Federal program to provide reinsurance for 
State natural disaster insurance programs. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Natural Catastrophe Insurance Act of 2005’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
Sec. 2. Congressional findings. 
Sec. 3. Program authority. 
Sec. 4. Qualified lines of coverage. 
Sec. 5. Covered perils. 
Sec. 6. Contracts for reinsurance coverage for eligible State programs. 
Sec. 7. Minimum level of retained losses and maximum Federal liability.
Sec. 8. Disaster Reinsurance Fund. 
Sec. 9. Definitions. 
Sec. 10. Regulations. 
Sec. 11. Termination. 
Sec. 12. Annual study of cost and availability of disaster insurance and pro-
gram need. 
Sec. 13. GAO study of Federal program for reinsurance for all solvency-threat-
ening events. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that — 
(1) in the last quarter-century, multiple signifi-
cant natural disasters have severely impacted the 
nation and caused major insured losses; 
(2) in 2004, four major hurricanes hit the 
United States, and each was among the 10 most 
costly hurricanes in the Nation’s history; 
(3) in 2005, the United States sustained the 
most costly storm in its history, Hurricane Katrina, 
which caused insured losses estimated at between 
$40 billion and $60 billion, and suffered two other 
storms, Wilma and Rita; 
(4) the rising costs resulting from natural dis-
asters have placed a strain on the market for home-
owners and commercial insurance in many areas, 
jeopardizing the ability of consumers adequately to 
insure their homes and businesses; 
(5) the threat of insufficient insurance capacity 
threatens to increase the number of uninsured 
homes and businesses, which in turn increases the
risk of mortgage or business defaults and the ad-
verse impact such default can have on the Nation’s 
financial system; 
(6) in order to ensure capacity at a reasonable 
price, a national plan needs to be implemented that 
allows the private market to operate at full capacity 
while at the same time supporting that market 
through State and Federal resources; 
(7) the risk of catastrophes may best be ad-
dressed by a public-private partnership involving pri-
vate industry, State and local governments, and the 
Federal Government, each playing their appropriate 
role; 
(8) it is appropriate that efforts to improve in-
surance availability be designed and implemented at 
the State level; 
(9) some States have created State catastrophe 
funds to ensure the continued availability of home-
owners or business insurance against a particular 
peril or to spread the costs of such insurance; 
(10) while existing State programs have to date 
been adequate to cover losses from natural disasters, 
it is foreseeable that a small percentage of such 
events may exceed the financial capacity of these 
programs;
(11) providing Federal reinsurance for such 
State funds, at the highest levels of insured losses, 
will improve the effectiveness of State programs and 
will increase the likelihood that claims will be paid 
in the event of a natural mega-catastrophe—that is, 
a natural event which threatens the solvency of the 
insurance industry as a whole; 
(12) it is necessary to provide a Federal rein-
surance program that will promote stability in the 
homeowners and business insurance markets and en-
courage the continued growth of capacity by the pri-
vate and capital markets; 
(13) such a Federal program should not dis-
place the ability of the private entities or the capital 
markets to provide adequate reinsurance capacity to 
address insurance market dislocations caused by 
natural disasters, nor should it discourage risk- 
spreading by individual insurers in accordance with 
sound business practices; and 
(14) any Federal program must be founded 
upon sound actuarial principles and structured in a 
manner that minimizes bureaucracy and the poten-
tial impact on the Treasury.
SEC. 3. PROGRAM AUTHORITY. 
(a) IN GENERAL.—The Secretary of the Treasury 
shall carry out a program under this Act to make reinsur-
ance coverage available through contracts for reinsurance 
coverage under section 6, 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 to im-
prove the availability of homeowners’ insurance and insur-
ance for businesses for the purpose of facilitating the pool-
ing, and spreading the risk, of catastrophic financial losses 
from natural disasters and to improve the solvency of the 
markets for homeowners’ insurance and business insur-
ance. 
(c) CONTRACT PRINCIPLES.—Under the program 
under this Act, the Secretary shall offer reinsurance cov-
erage through contracts with covered purchasers, which 
contracts— 
(1) shall not displace or compete with the pri-
vate insurance or reinsurance markets or capital 
markets; 
(2) shall minimize the administrative costs of 
the Federal Government; and 
(3) shall provide coverage based solely on in-
sured losses within the State of the eligible State 
program purchasing the contract.
SEC. 4. QUALIFIED LINES OF COVERAGE. 
A contract for reinsurance coverage made available 
under this Act shall provide insurance coverage against— 
(1) residential property losses to homes (includ-
ing dwellings owned under condominium and cooper-
ative ownership arrangements) and the contents of 
apartment buildings; and 
(2) real property losses to businesses and the 
contents of business properties. 
SEC. 5. COVERED PERILS. 
A contract for reinsurance coverage made available 
under this Act shall cover losses that are insured or rein-
sured by the eligible State program purchasing the con-
tract, that are proximately caused by— 
(1) windstorm (hurricane, cyclone, or tornado); 
(2) earthquake (including any fire following); 
(3) winter catastrophe (snow, ice, or freezing); 
(4) fire; 
(5) tsunami; 
(6) flood; 
(7) volcanic eruption; or 
(8) hail 
and the Secretary shall, by regulation, define the natural 
disaster perils under this section.