IIB 
110TH CONGRESS 
1ST SESSION H. R. 3355 
IN THE SENATE OF THE UNITED STATES 
NOVEMBER 13, 2007 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To ensure the availability and affordability of homeowners’ 
insurance coverage for catastrophic events. 
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; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Homeowners’ Defense Act of 2007’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purposes. 
TITLE I—NATIONAL CATASTROPHE RISK CONSORTIUM 
Sec. 101. Establishment; status; principal office; membership. 
Sec. 102. Functions. 
Sec. 103. Powers. 
Sec. 104. Nonprofit entity; conflicts of interest; audits. 
Sec. 105. Management. 
Sec. 106. Staff; experts and consultants. 
Sec. 107. Federal liability. 
Sec. 108. Authorization of appropriations. 
TITLE II—NATIONAL HOMEOWNERS’ INSURANCE STABILIZATION 
PROGRAM 
Sec. 201. Establishment. 
Sec. 202. Liquidity loans and catastrophic loans for qualified reinsurance pro-
grams. 
Sec. 203. Reports and audits. 
Sec. 204. Funding. 
TITLE III—REINSURANCE COVERAGE FOR QUALIFIED 
REINSURANCE PROGRAMS 
Sec. 301. Program authority. 
Sec. 302. Contract principles. 
Sec. 303. Terms of reinsurance contracts. 
Sec. 304. Maximum Federal liability. 
Sec. 305. Federal Natural Catastrophe Reinsurance Fund. 
Sec. 306. Regulations. 
TITLE IV—GENERAL PROVISIONS 
Sec. 401. Qualified reinsurance programs. 
Sec. 402. Study and conditional coverage of commercial residential lines of in-
surance. 
Sec. 403. Definitions. 
Sec. 404. Regulations. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds that— 
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(7) as the risk of catastrophic losses grows, so 
do the risks that any premiums collected by private 
insurers for extending coverage will be insufficient to 
cover future catastrophes, and private insurers, in 
an effort to protect their shareholders and policy-
holders (in the case of mutually-owned companies), 
have thus significantly raised premiums and cur-
tailed insurance coverage in States exposed to major 
catastrophes; 
(8) such effects on the insurance industry have 
been harmful to economic activity in States exposed 
to major catastrophes and have placed significant 
burdens on residents of such States; 
(9) Hurricanes Katrina, Rita, and Wilma 
struck the United States in 2005, causing over 
$200,000,000,000 in total economic losses, and in-
sured 
losses 
to 
homeowners 
in 
excess 
of 
$50,000,000,000; 
(10) since 2004, the Congress has appropriated 
more than $58,000,000,000 in disaster relief to the 
States affected by natural catastrophes; 
(11) the Federal Government has provided and 
will continue to provide resources to pay for losses 
from future catastrophes; 
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(12) when Federal assistance is provided to the 
States, accountability for Federal funds disbursed is 
paramount; 
(13) the Government Accountability Office or 
other appropriate agencies must have the means in 
place to confirm that Federal funds for catastrophe 
relief have reached the appropriate victims and have 
contributed to the recovery effort as efficiently as 
possible so that taxpayer funds are not wasted and 
citizens are enabled to rebuild and resume produc-
tive activities as quickly as possible; 
(14) States that are recipients of Federal funds 
must be responsible to account for and provide an 
efficient means for distribution of funds to home-
owners to enable the rapid rebuilding of local econo-
mies after a catastrophic event without unduly bur-
dening taxpayers who live in areas seldom affected 
by natural disasters; 
(15) State insurance and reinsurance programs 
can provide a mechanism for States to exercise that 
responsibility if they appropriately underwrite and 
price risk, and if they pay claims quickly and within 
established contractual terms; and 
(16) State catastrophe reinsurance programs, if 
appropriately structured and regulated, assume cata-
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strophic risk borne by private insurers without in-
curring many of the additional costs imposed on pri-
vate insurers, and thus enable all insurers within the 
State to underwrite and price coverage at rates de-
signed to encourage property owners to acquire lev-
els of insurance appropriate to their individual risks. 
(b) PURPOSES.—The purposes of this Act are to es-
tablish a program to provide Federal support for State- 
sponsored insurance programs to help homeowners pre-
pare for and recover from the damages caused by natural 
catastrophes, to encourage mitigation and prevention for 
such catastrophes, to promote the use of private market 
capital as a means to insure against such catastrophes, 
to expedite the payment of claims and better assist in the 
financial recovery from such catastrophes. 
TITLE 
I—NATIONAL 
CATAS-
TROPHE RISK CONSORTIUM 
SEC. 101. ESTABLISHMENT; STATUS; PRINCIPAL OFFICE; 
MEMBERSHIP. 
(a) ESTABLISHMENT.—There is established an entity 
to be known as the ‘‘National Catastrophe Risk Consor-
tium’’ (in this title referred to as the ‘‘Consortium’’). 
(b) STATUS.—The Consortium is not a department, 
agency, or instrumentality of the United States Govern-
ment. 
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(c) PRINCIPAL OFFICE.—The principal office and 
place of business of the Consortium shall be such location 
within the United States determined by the Board of Di-
rectors to be the most advantageous for carrying out the 
purpose and functions of the Consortium. 
(d) MEMBERSHIP.—Any State that has established a 
reinsurance fund or has authorized the operation of a 
State residual insurance market entity, or State-sponsored 
provider of natural catastrophe insurance, shall be eligible 
to participate in the Consortium. 
SEC. 102. FUNCTIONS. 
The Consortium shall— 
(1) work with all States, particularly those par-
ticipating in the Consortium, to gather and maintain 
an inventory of catastrophe risk obligations held by 
State reinsurance funds, State residual insurance 
market entities, and State-sponsored providers of 
natural catastrophe insurance; 
(2) at the discretion of the affected members 
and on a conduit basis, issue securities and other fi-
nancial instruments linked to the catastrophe risks 
insured or reinsured through members of the Con-
sortium in the capital markets; 
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(3) coordinate reinsurance contracts between 
participating, qualified reinsurance funds and pri-
vate parties; 
(4) act as a centralized repository of State risk 
information that can be accessed by private-market 
participants seeking to participate in the trans-
actions described in paragraphs (2) and (3) of this 
section; 
(5) use a catastrophe risk database to perform 
research and analysis that encourages standardiza-
tion of the risk-linked securities market; 
(6) perform any other functions, other than as-
suming risk or incurring debt, that are deemed nec-
essary to aid in the transfer of catastrophe risk from 
participating States to private parties; and 
(7) submit annual reports to Congress describ-
ing the activities of the Consortium for the pre-
ceding year, and the first such annual report shall 
include an assessment of the costs to States and re-
gions associated with catastrophe risk and an anal-
ysis of the costs and benefits, for States not partici-
pating in the Consortium, of such nonparticipation. 
SEC. 103. POWERS. 
The Consortium— 
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(1) may make and perform such contracts and 
other agreements with any individual or other pri-
vate or public entity however designated and wher-
ever situated, as may be necessary for carrying out 
the functions of the Consortium; and 
(2) shall have such other powers, other than the 
power to assume risk or incur debt, as may be nec-
essary and incident to carrying out this Act. 
SEC. 104. NONPROFIT ENTITY; CONFLICTS OF INTEREST; 
AUDITS. 
(a) NONPROFIT ENTITY.—The Consortium shall be 
a nonprofit entity and no part of the net earnings of the 
Consortium shall inure to the benefit of any member, 
founder, contributor, or individual. 
(b) CONFLICTS OF INTEREST.—No director, officer, 
or employee of the Consortium shall in any manner, di-
rectly or indirectly, participate in the deliberation upon or 
the determination of any question affecting his or her per-
sonal interests or the interests of any Consortium, part-
nership, or organization in which he or she is directly or 
indirectly interested. 
(c) AUDITS.— 
(1) ANNUAL AUDIT.—The financial statements 
of the Consortium shall be audited annually in ac-
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cordance with generally accepted auditing standards 
by independent certified public accountants. 
(2) REPORTS.—The report of each annual audit 
pursuant to paragraph (1) shall be included in the 
annual report submitted in accordance with section 
102(7). 
SEC. 105. MANAGEMENT. 
(a) BOARD OF DIRECTORS; MEMBERSHIP; DESIGNA-
TION OF CHAIRPERSON.— 
(1) BOARD OF DIRECTORS.—The management 
of the Consortium shall be vested in a board of di-
rectors (referred to in this title as the ‘‘Board’’) 
composed of not less than 3 members. 
(2) CHAIRPERSON.—The Secretary of Treasury, 
or the designee of the Secretary, shall serve as the 
chairperson of the Board. 
(3) MEMBERSHIP.—The members of the Board 
shall include— 
(A) the Secretary of Homeland Security 
and the Secretary of Commerce, or the des-
ignees of such Secretaries, respectively, but only 
during such times as there are fewer than two 
States participating in the Consortium; and 
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(B) a member from each State partici-
pating in the Consortium, who shall be ap-
pointed by such State. 
(b) BYLAWS.—The Board may prescribe, amend, and 
repeal such bylaws as may be necessary for carrying out 
the functions of the Consortium. 
(c) COMPENSATION, ACTUAL, NECESSARY, 
AND 
TRANSPORTATION EXPENSES.— 
(1) NON-FEDERAL EMPLOYEES.—A member of 
the Board who is not otherwise employed by the 
Federal Government shall be entitled to receive the 
daily equivalent of the annual rate of basic pay pay-
able for level IV of the Executive Schedule under 
section 5315 of title 5, United States Code, as in ef-
fect from time to time, for each day (including travel 
time) during which such member is engaged in the 
actual performance of duties of the Consortium. 
(2) FEDERAL EMPLOYEES.—A member of the 
Board who is an officer or employee of the Federal 
Government shall serve without additional pay (or 
benefits in the nature of compensation) for service 
as a member of the Consortium. 
(3) TRAVEL EXPENSES.—Members of the Con-
sortium shall be entitled to receive travel expenses, 
including per diem in lieu of subsistence, equivalent 
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to those set forth in subchapter I of chapter 57 of 
title 5, United States Code. 
(d) QUORUM.—A majority of the Board shall con-
stitute a quorum. 
(e) EXECUTIVE DIRECTOR.—The Board shall ap-
point an executive director of the Consortium on such 
terms as the Board may determine. 
SEC. 106. STAFF; EXPERTS AND CONSULTANTS. 
(a) STAFF.— 
(1) APPOINTMENT.—The Board of the Consor-
tium may appoint and terminate such other staff as 
are necessary to enable the Consortium to perform 
its duties. 
(2) COMPENSATION.—The Board of the Con-
sortium may fix the compensation of the executive 
director and other staff. 
(b) EXPERTS AND CONSULTANTS.—The Board shall 
procure the services of experts and consultants as the 
Board considers appropriate. 
SEC. 107. FEDERAL LIABILITY. 
The Federal Government and the Consortium shall 
not bear any liabilities arising from the actions of the Con-
sortium. Participating States shall retain all catastrophe 
risk until the completion of a transaction described in 
paragraphs (2) and (3) of section 102. 
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SEC. 108. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated to carry out 
this title $20,000,000 for each of fiscal years 2008 
through 2013. 
TITLE 
II—NATIONAL 
HOME-
OWNERS’ 
INSURANCE 
STA-
BILIZATION PROGRAM 
SEC. 201. ESTABLISHMENT. 
The Secretary of the Treasury shall carry out a pro-
gram under this title to make liquidity loans and cata-
strophic loans under section 202 to qualified reinsurance 
programs to ensure the solvency of such programs, to im-
prove the availability and affordability of homeowners’ in-
surance, to incent risk transfer to the private capital and 
reinsurance markets, and to spread the risk of cata-
strophic financial loss resulting from natural disasters and 
catastrophic events. 
SEC. 202. LIQUIDITY LOANS AND CATASTROPHIC LOANS 
FOR QUALIFIED REINSURANCE PROGRAMS. 
(a) CONTRACTS.—The Secretary may enter into a 
contract with a qualified reinsurance program to carry out 
the purposes of this Act as the Secretary may deem appro-
priate. The contract shall include, at a minimum, the con-
ditions for loan eligibility set forth in this section. 
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