Title: Taxpayer Exposure Mitigation Act
Policy area: Finance and Financial Sector

Summary:
Taxpayer Exposure Mitigation Act
This bill requires the Federal Emergency Management Agency (FEMA) to annually transfer a portion of the risk from the National Flood Insurance Program (NFIP) to private reinsurance or capital markets. The amount of transferred risk must be based on a probable maximum loss target for NFIP established by FEMA each fiscal year.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3417 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 3417

   To provide for greater transfer of risk under the National Flood 
 Insurance Program to private capital and reinsurance markets, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 20, 2021

 Mr. Luetkemeyer introduced the following bill; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
   To provide for greater transfer of risk under the National Flood 
 Insurance Program to private capital and reinsurance markets, 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 ``Taxpayer Exposure Mitigation Act''.

SEC. 2. RISK TRANSFER REQUIREMENT.

    Subsection (e) of section 1345 of the National Flood Insurance Act 
of 1968 (42 U.S.C. 4081(e)) is amended--
            (1) by striking ``(e) Risk Transfer.--The Administrator'' 
        and inserting the following:
    ``(e) Risk Transfer.--
            ``(1) Authority.--The Administrator''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Required risk transfer coverage.--
                    ``(A) Requirement.--Not later than the expiration 
                of the 18-month period beginning upon the date of the 
                enactment of this paragraph and at all times 
                thereafter, the Administrator shall annually cede a 
                portion of the risk of the flood insurance program 
                under this title to the private reinsurance or capital 
                markets, or any combination thereof, and at rates and 
                terms that the Administrator determines to be 
                reasonable and appropriate, in an amount that--
                            ``(i) is sufficient to maintain the ability 
                        of the program to pay claims; and
                            ``(ii) manages and limits the annual 
                        exposure of the flood insurance program to 
                        flood losses in accordance with the probable 
                        maximum loss target established for such year 
                        under subparagraph (B).
                    ``(B) Probable maximum loss target.--The 
                Administrator shall for each fiscal year, establish a 
                probable maximum loss target for the national flood 
                insurance program that shall be the maximum probable 
                loss under the national flood insurance program that is 
                expected to occur in such fiscal year.
                    ``(C) Considerations.--In establishing the probable 
                maximum loss target under subparagraph (B) for each 
                fiscal year and carrying out subparagraph (A), the 
                Administrator shall consider--
                            ``(i) the probable maximum loss targets for 
                        other United States public natural catastrophe 
                        insurance programs, including as State wind 
                        pools and earthquake programs;
                            ``(ii) the probable maximum loss targets of 
                        other risk management organizations, including 
                        the Federal National Mortgage Association and 
                        the Federal Home Loan Mortgage Corporation;
                            ``(iii) catastrophic, actuarial, and other 
                        appropriate data modeling results of the 
                        national flood insurance program portfolio;
                            ``(iv) the availability of funds in the 
                        National Flood Insurance Fund established under 
                        section 1310 (42 U.S.C. 4017);
                            ``(v) the availability of funds in the 
                        National Flood Insurance Reserve Fund 
                        established under section 1310A (42 U.S.C. 
                        4017a);
                            ``(vi) the availability of borrowing 
                        authority under section 1309 (42 U.S.C. 4016);
                            ``(vii) the ability of the Administrator to 
                        repay outstanding debt;
                            ``(viii) amounts appropriated to the 
                        Administrator to carry out the national flood 
                        insurance program;
                            ``(ix) reinsurance, capital markets, 
                        catastrophe bonds, collateralized reinsurance, 
                        resilience bonds, and other insurance-linked 
                        securities, and other risk transfer 
                        opportunities; and
                            ``(x) any other factor the Administrator 
                        determines appropriate.
                    ``(D) Multi-year contracts.--Nothing in this 
                paragraph may be construed to prevent or prohibit the 
                Administrator from complying with the requirement under 
                subparagraph (A) regarding ceding risk through 
                contracts having a duration longer than one year.''.
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