FAITH Act of 2022
Bill: H.R.7643 | Sponsor: Rep. Crist, Charlie (D-FL)
Policy area: Finance and Financial Sector

Summary:
Fueling Affordable Insurance for Today's Homeowners Act of 2022 or the FAITH Act of 2022
This bill establishes the Natural Disaster Risk Reinsurance Program within the Department of the Treasury. States may voluntarily participate in the program.
The program provides payments to states for damages from a natural disaster not covered by the National Flood Insurance Program for amounts in excess of trigger amounts. These trigger amounts are calculated by the National Academy of Sciences.
States must present a plan that ensures the coverage of losses by insurers not exceeding the trigger amount. States must also pledge to repay the full amount provided by the program within 10 years.

To establish a Natural Disaster Risk Reinsurance Program, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fueling Affordable Insurance for 
Today's Homeowners Act of 2022'' or the ``FAITH Act of 2022''.

SEC. 2. NATURAL DISASTER RISK REINSURANCE PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--There is established in the Department of 
        the Treasury the Natural Disaster Risk Reinsurance Program, 
        which shall apply only to covered events occurring on or after 
        January 1, 2023.
            (2) Goal.--The goal of the Program shall be to protect 
        insurers from insolvency resulting from covered events of a 
        significant magnitude in a manner that provides for 
        affordability of coverage in the marketplace for losses from 
        such covered events.
            (3) Authority of secretary.--Notwithstanding any other 
        provision of State or Federal law, the Secretary shall 
        administer the Program, in consultation with the Director of 
        the Federal Insurance Office, and shall make payments to States 
        in accordance with subsection (b) to cover insured losses.
            (4) Voluntary participation.--
                    (A) In general.--Participation in the Program shall 
                be voluntary on the part of a State, subject to the 
                requirements under paragraph (4).
                    (B) Election.--The Secretary shall provide a 
                procedure by which States may elect to participate in 
                the Program.
                    (C) Termination of participation.--The Secretary 
                shall provide a procedure by which States may elect to 
                terminate participation in the Program, which shall 
                require advance notice to the Secretary of not less 
                than 180 days before such termination is effective.
            (5) Required state plan.--To be eligible to participate in 
        the Program a State shall have in effect a plan, approved by 
        the Secretary, that provides such assurances to the Secretary 
        as the Secretary considers necessary--
                    (A) to ensure that insurers will cover claims for 
                insured losses occurring in the State during the 
                participation of the State in the Program not exceeding 
                the trigger amount for the State under subsection 
                (b)(2);
                    (B) to ensure that insurers submit to the State 
                insurance regulator and the State insurance regulator 
                submits to the Secretary, in accordance with such 
                reasonable procedures as the Secretary may establish, 
                information sufficient for administration of the 
                Program, including information regarding claims for 
                insured losses occurring in the State, insured losses 
                incurred, and direct written premium for covered 
                insurance in the State;
                    (C) to distribute Federal payments under the 
                Program appropriately among insurers based on insured 
                losses suffered by insurers and insurers' market 
                shares;
                    (D) to pledge the State's full faith and credit 
                toward full repayment to the Secretary, within 10 years 
                of receipt, of any Federal payment amounts provided 
                under subsection (b) and to provide a regular payment 
                schedule over such 10-year period; and
                    (E) to provide appropriate treatment under the 
                program for any insurer that is a State residual market 
                insurance entity.
            (6) Treatment of existing policies.--This Act may not be 
        construed to affect any policy for covered insurance in force 
        on the date of the commencement of participation in the Program 
        by the State in which the dwelling covered by such insurance is 
        located, but the Program shall apply to policies renewed after 
        such date.
    (b) Federal Payments for Excessive Insured Losses.--
            (1) Federal payment.--Pursuant to the occurrence of a 
        covered event, the Secretary shall pay to each participating 
        State an amount equal to the amount by which the aggregate 
        industry-wide insured losses within such participating State 
        resulting from such covered event exceed the trigger amount in 
        effect at such time under paragraph (2) for such participating 
        State for the type of covered event that occurred. The 
        Secretary shall provide for payments under this subsection for 
        a participating State for a covered event to be made in 
        installments of approximately 25 percent of the estimated total 
        amount to be provided for such State in connection with such 
        disaster, as best determined by the Secretary after 
        consideration of the information regarding insured losses 
        provided to the Secretary pursuant to paragraph (2)(D).
            (2) State trigger amounts.--
                    (A) NAS authority.--The Secretary shall enter into 
                an agreement with the National Academy of Sciences (in 
                this paragraph referred to as the ``Academy'') under 
                which the Academy shall propose to the Secretary, for 
                each participating State and for each different type of 
                covered event, a trigger amount under this paragraph. A 
                trigger amount proposed for a State shall be effective 
                for purposes of the Program only upon review, 
                adjustment if necessary, and approval by the Secretary.
                    (B) Considerations.--The trigger amount proposed by 
                the Academy for a participating State for a type of 
                covered event shall be the lesser of--
                            (i) the total direct written premiums for 
                        covered insurance in the participating State; 
                        and
                            (ii) the amount, as determined by the 
                        Academy, that when applied under the Program, 
                        protects insurers from insolvency in the case 
                        of covered event of such type of a severity 
                        equal to or exceeding that of a covered event 
                        of such type having a two percent chance of 
                        occurring in any given year.
                    (C) Revision.--The agreement pursuant to 
                subparagraph (A) shall provide for the Academy to 
                review and revise the proposed trigger amounts for each 
                participating State not less frequently than once every 
                24 months, and more frequently at the request of the 
                Secretary. Any revised trigger amount may not take 
                effect under the Program before the expiration of the 
                180-day period beginning upon the provision by the 
                Secretary to such participating State of written 
                notification of such revised trigger amount.
                    (D) Assessment of insured losses.--The agreement 
                pursuant to subparagraph (A) shall provide that 
                following the occurrence of a covered event, the 
                Academy shall, for each participating State affected, 
                make assessments of the insured losses for each such 
                State and provide such information to the Secretary. 
                Such assessments shall be made on an ongoing basis as 
                necessary to make an accurate determination of such 
                insured losses.
                    (E) Experts.--
                            (i) Authority.--The agreement pursuant to 
                        subparagraph (A) shall provide that, in 
                        establishing proposed trigger amounts under 
                        this paragraph and assessing insured losses 
                        pursuant to subparagraph (D), the Academy may 
                        contract with such experts and consultants, 
                        including experts in disaster modeling, as it 
                        considers appropriate.
                            (ii) Authorization of appropriations.--
                        There is authorized to be appropriated to the 
                        National Academy of Sciences such sums as may 
                        be necessary for costs of hiring experts and 
                        consultants pursuant to clause (i).
            (3) Authority to issue bonds to fund federal payments.--
                    (A) Issuance.--In connection with a covered event 
                for which the Secretary is required to make a payment 
                under paragraph (1) to a participating State, the 
                Secretary shall issue bonds under this paragraph, the 
                proceeds of which shall be used for making such 
                payment.
                    (B) Terms.--Bonds issued under this paragraph shall 
                be in such form and denominations, and shall be subject 
                to such terms and conditions of issue, conversion, 
                redemption, maturation, and payment as the Secretary 
                may prescribe and shall be fully and unconditionally 
                guaranteed both as to interest and principal by the 
                United States, and such guaranty shall be expressed on 
                the face of each bond.
                    (C) Interest.--Bonds issued under this paragraph 
                shall bear interest at a rate not less than the current 
                average yield on outstanding market obligations of the 
                United States of comparable maturity during the month 
                preceding the issuance of the obligation as determined 
                by the Secretary.
                    (D) Amount.--The aggregate amount of bonds issued 
                under this paragraph in connection with a covered event 
                shall be equal to the aggregate amount of payments made 
                by the Secretary pursuant to paragraph (1) in 
                connection with such covered event and such additional 
                amount as the Secretary considers appropriate to cover 
                any administrative costs incurred by the State in 
                connection with borrowing under this paragraph in 
                connection with such covered event.
                    (E) Treatment.--All bonds issued under this 
                paragraph, and the interest on or credits with respect 
                to such obligations, shall not be subject to taxation 
                by any State, county, municipality, or local taxing 
                authority.
            (4) Recoupment of federal amounts.--Each participating 
        State that receives a payment pursuant to paragraph (1) shall 
        repay the Secretary, pursuant to its pledge made in accordance 
        with subsection (a)(4)(D) and within 10 years of such receipt, 
        an amount equal to such payment, together with interest on such 
        amount sufficient to cover the costs to the Secretary of 
        borrowing such amounts pursuant to this paragraph. The 
        Secretary shall cover any amounts repaid pursuant to this 
        paragraph into the general fund of the Treasury.

SEC. 3. REPORTING.

    (a) By States.--
            (1) Annual reports.--The Secretary shall require the State 
        insurance regulator for each participating State to submit a 
        report annually to the Secretary regarding each covered event 
        resulting in payment under section 2(b)(1), during the period 
        that any payment amounts for such event have not been fully 
        repaid in accordance with section 2(b)(4), regarding insured 
        losses in the State resulting from such covered event, 
        additional such insured losses expected to be incurred, 
        including the timing of such losses, and any progress in 
        repayment to the Secretary for the Federal payments made.
            (2) Final report.--The Secretary shall require the State 
        insurance regulator for each participating State receiving a 
        payment under section 2(b)(1) in connection with a covered 
        event to submit to the Secretary, upon full repayment of all 
        such payments made in connection with such covered event, a 
        final report containing such information as the Secretary shall 
        require.

SEC. 4. GENERAL AUTHORITY.

    (a) General Authority.--The Secretary shall have the powers and 
authorities necessary to carry out the Program, including authority--
            (1) to investigate and audit all claims for a covered event 
        in a State for which payments have been made by the Secretary 
        under the Program; and
            (2) to prescribe regulations and procedures to effectively 
        administer and implement the Program.
    (b) Consultation.--The Secretary shall consult with the National 
Association of Insurance Commissioners, as the Secretary determines 
appropriate, concerning the Program.
    (c) Contracts for Services.--The Secretary may employ persons or 
contract for services as may be necessary to implement the Program.
    (d) Submission of Premium Information.--
            (1) In general.--The Secretary shall annually compile 
        information on the premium rates of insurers for covered 
        insurance for the preceding year.
            (2) Access to information.--To the extent that such 
        information is not otherwise available to the Secretary, the 
        Secretary may require each insurer to submit to the National 
        Association of Insurance Commissioners premium rates for 
        covered insurance, as necessary to carry out paragraph (1), and 
        the National Association of Insurance Commissioners shall make 
        such information available to the Secretary.
            (3) Availability to congress.--The Secretary shall make 
        information compiled under this subsection available to the 
        Congress, upon request.
    (e) Administrative Expenses.--There are hereby appropriated, out of 
funds in the Treasury not otherwise appropriated, such sums as may be 
necessary to pay reasonable costs of administering the Program.

SEC. 5. DEFINITIONS.

    In this Act, the following definitions shall apply:
            (1) Affiliate.--The term ``affiliate'' means, with respect 
        to a participating insurer, any entity that controls, is 
        controlled by, or is under common control with the insurer.
            (2) Control.--
                    (A) In general.--An entity has ``control'' over 
                another entity, if--
                            (i) the entity directly or indirectly or 
                        acting through 1 or more other persons owns, 
                        controls, or has power to vote 25 percent or 
                        more of any class of voting securities of the 
                        other entity;
                            (ii) the entity controls in any manner the 
                        election of a majority of the directors or 
                        trustees of the other entity; or
                            (iii) the Secretary determines, after 
                        notice and opportunity for hearing, that the 
                        entity directly or indirectly exercises a 
                        controlling influence over the management or 
                        policies of the other entity.
                    (B) Rule of construction.--An entity, including any 
                affiliate thereof, does not have ``control'' over 
                another entity, if, as of January 1, 2023, the entity 
                is acting as an attorney-in-fact, as defined by the 
                Secretary, for the other entity and such other entity 
                is a reciprocal insurer, provided that the entity is 
                not, for reasons other than the attorney-in-fact 
                relationship, defined as having ``control'' under 
                subparagraph (A).
            (3) Covered event.--
                    (A) In general.--The term ``covered event'' means 
                volcanic eruption, severe storm, tropical storm, 
                hurricane, earthquake, tsunami, fire, tornado, hail, or 
                any other natural disaster not eligible for coverage 
                under the National Flood Insurance Program under the 
                National Flood Insurance Act of 1968 (42 U.S.C. 4001 et 
                seq.), that is certified by the Secretary as a covered 
                event for purposes of this Act.
                    (B) Nondelegation.--The Secretary may not delegate 
                or designate to any other officer, employee, or person, 
                any certification under subparagraph (A) of whether, 
                during the effective period of the Program, a covered 
                event occurs.
            (4) Covered insurance.--The term ``covered insurance'' 
        means property and casualty insurance coverage for a single-
        family or multifamily residence, including homeowners 
        insurance, condominium insurance, cooperative insurance, and 
        residential rental insurance. Such term does not include 
        private mortgage insurance (as such term is defined in section 
        2 of the Homeowners Protection Act of 1998 (12 U.S.C. 4901)) or 
        title insurance.
            (5) Insured loss.--
                    (A) In general.--The term ``insured loss'' means 
                any loss that--
                            (i) results from a covered event;
                            (ii) is covered by covered insurance issued 
                        by an insurer, regardless of whether the 
                        insurer is solvent; and
                            (iii) occurs within a State.
                    (B) Included amounts.--Such term includes the costs 
                of claims investigation, adjustment, litigation, and 
                all other usual costs paid by the insurer in connection 
                with coverage for covered event.
            (6) Insurer.--The term insurer means any entity, including 
        any affiliate thereof--
                    (A) that is--
                            (i) licensed or admitted to engage in the 
                        business of providing primary or excess 
                        insurance in any State;
                            (ii) not licensed or admitted as described 
                        in clause (i), if it is an eligible surplus 
                        line carrier listed on the Quarterly Listing of 
                        Alien Insurers of the National Association of 
                        Insurance Commissioners, or any successor 
                        thereto;
                            (iii) approved for the purpose of offering 
                        property and casualty insurance by a Federal 
                        agency in connection with maritime, energy, or 
                        aviation activity; or
                            (iv) a State residual market insurance 
                        entity;
                    (B) that receives direct earned premiums for 
                covered insurance coverage; and
                    (C) that meets any other criteria that the 
                Secretary may reasonably prescribe.
            (7) Participating state.--The term ``participating State'' 
        means a State that has elected pursuant to section 2(a)(3) to 
        participate in the Program and has not terminated such 
        participation.
            (8) Person.--The term ``person'' means any individual, 
        business or nonprofit entity (including those organized in the 
        form of a partnership, limited liability company, corporation, 
        or association), trust or estate, or a State or political 
        subdivision of a State or other governmental unit.
            (9) Program.--The term ``Program'' means the Natural 
        Disaster Risk Reinsurance Program established by this Act.
            (10) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
            (11) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Commonwealth of the Northern Mariana Islands, 
        American Samoa, Guam, the United States Virgin Islands, and any 
        other territory or possession of the United States.
            (12) State insurance regulator.--The term ``State insurance 
        regulator'' means, with respect to a State, the regulatory 
        authority responsible for the supervision of insurers.
            (13) Rule of construction for dates.--With respect to any 
        reference to a date in this Act, such day shall be construed--
                    (A) to begin at 12:01 a.m. on that date; and
                    (B) to end at midnight on that date.
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