(e) CATASTROPHIC LOANS.—A loan under this sub-
section for a qualified reinsurance program shall be sub-
ject to the following requirements: 
(1) PRECONDITIONS.—The Secretary shall have 
determined that an event has resulted in insured 
losses in a State with a qualified reinsurance pro-
gram and that such insured losses in such State are 
in excess of 150 percent of the aggregate amount of 
direct written premium for property and casualty in-
surance, for risks located in that State, over the cal-
endar year preceding such event, in accordance with 
regulations that the Secretary shall establish. 
(2) AMOUNT.—The principal amount of the 
loan made pursuant to an event referred to in para-
graph (1) may not exceed the amount by which the 
insured losses sustained as a result of such event ex-
ceed the ceiling coverage level for the qualified rein-
surance program. 
(3) RATE OF INTEREST.—The loan shall bear 
interest at an annual rate 0.20 percentage points 
higher than marketable obligations of the Treasury 
having a term to maturity of not less than 10 years 
and issued during the most recently completed 
month, as determined by the Secretary, or such 
higher rate as may be necessary to ensure that the
amounts of interest paid under such loans exceed 
the sum of the costs (as such term is defined in sec-
tion 502 of the Federal Credit Reform Act of 1990 
(2 U.S.C. 661a)) of such loans, the administrative 
costs involved in carrying out a program under this 
title for such loans, and any incidental effects on 
governmental receipts and outlays. 
(4) TERM.—The loan shall have a term to ma-
turity of not less than 10 years. 
(f) USE OF FUNDS.—Amounts from a loan under this 
section shall only be used to provide reinsurance or 
retrocessional coverage to underlying primary insurers or 
reinsurers for losses arising from all personal residential 
lines of insurance, as defined in the Uniform Property & 
Casualty Product Coding Matrix published and main-
tained by the National Association of Insurance Commis-
sioners. Such amounts shall not be used for any other pur-
pose. 
SEC. 203. REPORTS AND AUDITS. 
The Secretary shall submit a report to the President 
and the Congress annually that identifies and describes 
any loans made under this title during such year and any 
repayments during such year of loans made under this 
title, and describes actions taken to ensure accountability 
of loan funds. The Secretary shall provide for regular au-
dits to be conducted for each loan made under this title 
and shall make the results of such audits publicly avail-
able. 
SEC. 204. FUNDING. 
(a) PROGRAM FEE.— 
(1) IN GENERAL.—The Secretary may establish 
and collect, from qualified reinsurance programs 
that are precertified pursuant to section 401(d), a 
reasonable fee, as may be necessary to offset the ex-
penses of the Secretary in connection with carrying 
out the responsibilities of the Secretary under this 
title, including— 
(A) costs of developing, implementing, and 
carrying out the program under this title; and 
(B) costs of providing for precertification 
pursuant to section 401(d) of State and re-
gional reinsurance programs as qualified rein-
surance programs. 
(2) ADJUSTMENT.—The Secretary may, from 
time to time, adjust the fee under paragraph (1) as 
appropriate based on expenses of the Secretary re-
ferred to in such paragraph. 
(3) USE.—Any fees collected pursuant to this 
subsection shall be credited as offsetting collections 
of the Department of the Treasury and shall be
available to the Secretary only for expenses referred 
to in paragraph (1). 
(b) COSTS OF LOANS; ADMINISTRATIVE COSTS.—To 
the extent that amounts of negative credit subsidy are re-
ceived by the Secretary in any fiscal year pursuant to 
loans made under this title, such amounts shall be avail-
able for costs (as such term is defined in section 502 of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) 
of such loans and for costs of carrying out the program 
under this title for such loans. 
(c) FULL TAXPAYER REPAYMENT.—The Secretary 
shall require the full repayment of all loans made under 
this title. If the Secretary determines at any time that 
such full repayment will not be made, or is likely not to 
be made, the Secretary shall promptly submit a report to 
the Congress explaining why such full repayment will not 
be made or is likely not to be made. The Secretary may 
not accept any repayment of any loan made under this 
title that does not comply with the agreement for such 
loan entered into in accordance with section 202(b)(1)(C).
TITLE III—REINSURANCE COV-
ERAGE FOR QUALIFIED REIN-
SURANCE PROGRAMS 
SEC. 301. PROGRAM AUTHORITY. 
Subject to section 304(c), the Secretary of the Treas-
ury, shall make available for purchase, only by qualified 
reinsurance programs (as such term is defined in section 
401), contracts for reinsurance coverage under this title. 
SEC. 302. CONTRACT PRINCIPLES. 
Contracts for reinsurance coverage made available 
under this title— 
(1) shall not displace or compete with the pri-
vate insurance or reinsurance markets or the capital 
market; 
(2) shall minimize the administrative costs of 
the Federal Government; and 
(3) shall provide coverage based solely on in-
sured losses covered by the qualified reinsurance 
program purchasing the contract. 
SEC. 303. TERMS OF REINSURANCE CONTRACTS. 
(a) 
MINIMUM
ATTACHMENT
POINT.—Notwith-
standing any other provision of this title, a contract for 
reinsurance coverage under this title for a qualified rein-
surance program may not be made available or sold unless 
the contract requires that the qualified reinsurance pro-
gram sustain an amount of retained losses from events 
in an amount, as determined by the Secretary, that is 
equal to the amount of losses projected to be incurred 
from a single event of such magnitude that it has a 0.5 
percent chance of being equaled or exceeded in any year. 
(b) NINETY
PERCENT
COVERAGE
OF
INSURED 
LOSSES IN EXCESS OF RETAINED LOSSES.—Each con-
tract for reinsurance coverage under this title shall provide 
that the amount paid out under the contract shall, subject 
to section 304, be equal to 90 percent of the amount of 
insured losses of the qualified reinsurance program in ex-
cess of the amount of retained losses that the contract 
requires, pursuant to subsection (a), to be incurred by 
such program. 
(c) MATURITY.—The term of each contract for rein-
surance coverage under this title shall not exceed 1 year 
or such other term as the Secretary may determine. 
(d) PAYMENT CONDITION.—Each contract for rein-
surance coverage under this title shall authorize claims 
payments to the qualified reinsurance program purchasing 
the coverage only for insured losses provided under the 
contract. 
(e) MULTIPLE EVENTS.—The contract shall cover 
any insured losses from one or more events that may occur 
during the term of the contract and shall provide that if
residual insurance market entity, or State-sponsored pro-
vider of natural catastrophe insurance, was in existence 
before such date of enactment. 
(d) PRECERTIFICATION.—The Secretary shall estab-
lish procedures and standards for State and regional rein-
surance programs and the State residual insurance market 
entities described in section (b) to apply to the Secretary 
at any time for certification (and recertification) as quali-
fied reinsurance programs. 
(e) REINSURANCE TO COVER EXPOSURE.—This sec-
tion may not be construed to limit or prevent any insurer 
from obtaining reinsurance coverage for insured losses re-
tained by insurers pursuant to this section, nor shall the 
obtaining of such coverage affect the calculation of the 
amount of any loan under this title. 
SEC. 402. STUDY AND CONDITIONAL COVERAGE OF COM-
MERCIAL RESIDENTIAL LINES OF INSUR-
ANCE. 
(a) STUDY.—The Secretary shall study, on an expe-
dited basis, the need for and impact of expanding the pro-
grams established by this Act to apply to insured losses 
of qualified reinsurance programs for losses arising from 
all commercial insurance policies which provide coverage 
for properties that are composed predominantly of residen-
tial rental units. The Secretary shall consider the cata-
strophic insurance and reinsurance market for commercial 
residential properties, and specifically the availability of 
adequate private insurance coverage when an insured 
event occurs, the impact any such capacity restrictions has 
on housing affordability for renters, and the likelihood 
that such an expansion of the program would increase in-
surance capacity for this market segment. 
(b) CONDITIONAL COVERAGE.—To the extent that 
the Secretary determines that there is such a need to ex-
pand such programs and such expansion will be effective 
in increasing insurance capacity for the commercial resi-
dential insurance market, the Secretary shall, in consulta-
tion with the National Association of Insurance Commis-
sioners— 
(1) apply the provisions of this Act, as appro-
priate, to insured losses of a qualified reinsurance 
program for losses arising from commercial insur-
ance policies which provide coverage for properties 
that are composed predominantly of residential rent-
al units, as described in paragraph (a); and 
(2) provide such restrictions, limitations, or 
conditions with respect to the programs under this 
Act that the Secretary deems appropriate, based on 
the study under subsection (a).
SEC. 403. DEFINITIONS. 
For purposes of this Act, the following definitions 
shall apply: 
(1) CEILING
COVERAGE
LEVEL.—The term 
‘‘ceiling coverage level’’ means, with respect to a 
qualified reinsurance program, the maximum liabil-
ity that could be incurred at any time by the quali-
fied reinsurance program. 
(2) INSURED LOSS.—The term ‘‘insured loss’’ 
means any loss insured by a qualified reinsurance 
program. 
(3) 
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. 
(4) QUALIFIED REINSURANCE PROGRAM.—The 
term ‘‘qualified reinsurance program’’ means a State
or regional program that meets the requirements 
under section 401. 
(5) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(6) STATE.—The term ‘‘State’’ includes the 
several States, the District of Columbia, the Com-
monwealth of Puerto Rico, Guam, the Common-
wealth of the Northern Mariana Islands, the United 
States Virgin Islands, and American Samoa. 
SEC. 404. REGULATIONS. 
The Secretary shall issue such regulations as may be 
necessary to carry out this Act. 
Passed the House of Representatives November 8, 
2007. 
Attest: 
Clerk.
110TH CONGRESS 
1ST SESSION 
H. R. 3355 
AN ACT 
To ensure the availability and affordability of 
homeowners’ insurance coverage for catastrophic 
events.