Bill 112-S-1940 — Domestic Commerce / Disaster Relief
Subject: Finance and financial sector

Title I: Flood Insurance Reform and Modernization - Flood Insurance Reform and Modernization Act of 2011 - (Sec. 104) Amends the National Flood Insurance Act of 1968 (NFIA) to extend: (1) through FY2016 the authority of the Administrator of the Federal Emergency Management Agency (FEMA) to issue up to $ 20.725 billion in debt obligations, with the President's approval, for the National Flood Insurance Program (Program); and (2) through FY2013 the authorization for the Program itself. (Sec. 105) Requires the FEMA Administrator to make national flood insurance available for multifamily properties of more than four units. (Sec. 106) Prohibits the Administrator from estimating risk premium rates for flood insurance for: (1) any property which is not an individual's primary residence, (2) any severe repetitive loss property, (3) any property that has incurred flood-related damage in which the cumulative amounts of claims payments equaled or exceeded its fair market value, (4) any business property, or (5) any property which on or after the date of the enactment of this Act has experienced or sustained either substantial damage exceeding 50% of its fair market value or substantial improvement exceeding 30% of its fair market value. Prohibits the Administrator from providing flood insurance to prospective insureds at risk premium rates less than those otherwise estimated for: (1) new or lapsed policies, or (2) any prospective insured who refuses to accept any offer for FEMA mitigation assistance. Requires the estimate of risk premium rates to be based, in part, on all costs, as prescribed by principles and standards of practice in ratemaking adopted by the American Academy of Actuaries and the Casualty Actuarial Society. Increases from 10% to 15% the annual limitation on risk premium rate increases for any properties within any single risk classification. Directs the Administrator to provide policyholders that are not required to escrow their premiums (with respect to any chargeable premium rate) and fees for flood insurance with the option of paying their premiums either annually or in more frequent installments. (Sec. 107) Instructs FEMA to issue final regulations establishing revised definitions of special flood hazard areas, including residual risk areas. Subjects such areas to mandatory flood insurance purchase requirements. (Sec. 108) Requires adjustment of flood insurance risk premium rates to reflect the current risk of flood to property located in an area participating in the Program. (Sec. 109) Adds a new requirement for those states and areas where flood insurance must be made available. Requires such states or areas to give satisfactory assurance that, by six months after enactment of this Act, state-chartered lending institutions not insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) shall be subject to state regulations consistent with the Flood Disaster Protection Act of 1973. (Sec. 110) Amends the Flood Disaster Protection Act of 1973 to increase from $350 to $2000 the civil monetary penalty for a single violation of the Act. Repeals the limitation upon the maximum penalty amount that may be imposed against any single regulated lending institution or enterprise in any calendar year. (Sec. 111) Revises the requirement that federal entities responsible for lending regulation require by regulation the payment of flood insurance premiums to a mortgage lender for deposit in an escrow account. Changes the property reference from real estate or mobile home to any property for which a loan has been made for purposes of acquisition or construction. Extends the same requirement to state entities responsible for lending regulations with respect to lending institutions they supervise. Requires any regulated lending institution, upon final payment of a mortgage, to notify the policyholder: (1) that insurance coverage may cease with such final payment, and (2) how flood insurance coverage may be continued after the life of the loan. (Sec. 112) Prescribes minimum deductibles for claims under the Program for specified properties. Specifies the minimum annual deductible for pre-FIRM properties (containing a structure neither constructed nor substantially improved after the later of December 31, 1974, or the effective date of the initial rate map published by the FEMA Administrator under NFIA for the pertinent area) as: (1) $1,500, if the flood insurance covers structural damage of $100,000 or less; and (2) $2,000, if the flood insurance covers structural damage greater than $100,000. Sets the minimum annual deductible for post-FIRM properties at $1,000 in the first instance, and $1,250 in the second. (Sec. 113) Revises requirements for the FEMA Administrator's prescription of chargeable flood insurance premium rates. Repeals the requirement that the Administrator consult with certain entities before prescribing rates. Requires such rates, in addition to meeting other conditions, to be adequate, on the basis of accepted actuarial principles, to cover the average historical loss year obligations incurred by the National Flood Insurance Fund. (Sec. 114) Instructs the Administrator to establish in the Treasury a National Flood Insurance Reserve Fund, which shall maintain 1% of the sum of the total potential loss exposure of all outstanding flood insurance policies in force in the prior fiscal year, or any higher percentage the Administrator determines appropriate. (Sec. 115) Requires any funds borrowed by FEMA for the Program to include a repayment schedule, which shall be transmitted not only to the Secretary but to specified congressional committees. (Sec. 116) Prohibits FEMA from denying payment of certain flood insurance claims by condominium owners who purchased such flood insurance separate and apart from the flood insurance purchased by the condominium association, based on the flood insurance coverage of the association or others on the association's overall property. (Sec. 117) Establishes the Technical Mapping Advisory (TMA) Council to recommend mapping standards and guidelines for flood insurance rate maps. Directs the Council to develop recommendations on how to: (1) ensure that flood insurance rate maps incorporate the best available climate science to assess flood risks, and (2) ensure that FEMA uses the best available methodology to consider the impact of the rise in the sea level and future development on flood risk. Requires the FEMA Administrator to incorporate any such future risk assessment into updated National Flood Insurance Program rate maps. (Sec. 118) Requires the FEMA Administrator, in coordination with the TMA Council, to establish an ongoing program for review, update, and maintenance of Program rate maps. Directs the Administrator to: (1) work to enhance communication and outreach to states, local communities, and property owners about the effects of any potential changes to Program rate maps that may result from this mapping program, and which such changes may have on flood insurance purchase requirements; and (2) engage with local communities to enhance communication and outreach to their residents on such effects. Authorizes appropriations for FY2012-FY2016. (Sec. 119) Allows appeals to the local government of any designation of an identified special flood hazard area, but only on the ground that such designation is scientifically or technically incorrect. (Sec. 120) Requires the Administrator to make make an independent Scientific Resolution Panel available to any community that has: (1) filed a timely map appeal, completed 60 days of consultation with FEMA on the appeal, and not allowed more than 120 days (or longer under a waiver) to pass since the end of the appeal period; or (2) received an unsatisfactory ruling under the map revision process. Requires any property owner or lessee appealing a proposed flood elevation determination to submit related scientific and technical data to the appeals to the Scientific Resolution Panel for review. Requires the Panel, following deliberations, to issue a determination resolving a dispute, with binding recommendations, not subject to further judicial review, for the base flood elevation determination or the determination of a special flood hazard area that shall be reflected in the Flood Insurance Rate Maps. (Sec. 121) Removes the limitation placed upon state or local government contributions for the cost of updating flood maps. (Sec. 122) Directs the Secretary of Homeland Security (DHS), the FEMA Administrator, the Director of the Office of Management and Budget (OMB), and the heads of specified federal agencies to: (1) coordinate and share data on flood risk determination and geospatial data; and (2) report to Congress an interagency budget crosscut and coordination report that displays the budget proposed for agencies working on flood risk determination data and digital elevation models, including planned agency transfers, and describes how these efforts complement one another. (Sec. 123) Directs the National Academy of Public Administration to study and report to Congress on how FEMA can: (1) improve interagency coordination on flood mapping, including a funding strategy to leverage and coordinate budgets and expenditures; and (2) establish joint funding mechanisms with other governmental agencies. (Sec. 124) Exempts from certain floor insurance purchase requirements any area located within the 500-year flood plain. (Sec. 125) Amends the Real Estate Settlement Procedures Act of 1974 (RESPA) to require that certain public information booklets include the availability of federal flood insurance, regardless of whether the real estate is located in a special flood hazard area. (Sec. 126) Requires the FEMA Administrator, upon state insurance commissioner request, to cause Program representatives to participate in state disaster claims mediation programs. (Sec. 127) Directs the FEMA Administrator to collect additional adjuster estimates for both wind and flood damage with regard to claims payments by private sector companies authorized to participate in the Write Your Own (WYO) program. (The WYO program, part of the National Flood Insurance Program, is a cooperative undertaking of the insurance industry and FEMA which allows participating property and casualty insurance companies to write and service the Standard Flood Insurance Policy in their own names. The companies receive an expense allowance for policies written and claims processed while the federal government retains responsibility for underwriting losses.) (Sec. 128) Requires WYO companies to submit to FEMA biennial expense reports for the prior five years. Requires FEMA to pass them on to the Comptroller General. Requires the Administrator to: (1) develop a methodology for determining amounts to reimburse property and casualty insurance companies participating in the WYO program for selling, writing, and servicing flood insurance policies and adjusting claims; and (2) conduct a rulemaking proceeding to formulate revised reimbursements to WYO companies for their related expenses. Directs the Comptroller General to study the efficacy, adequacy, and sufficiency of such rules. (Sec. 129) Revises requirements for mitigation assistance grants. Specifies grants: (1) to states and communities to carry out mitigation activities that reduce flood damage to severe repetitive loss properties, and (2) to property owners for mitigation activities that reduce flood damage to individual structures for which two or more flood insurance claim payments for losses have been made if neither the state nor community in which such a structure is located has the capacity to manage such grants. Allows a flood risk mitigation plan to be part of a multi-hazard mitigation plan. Restricts the Administrator to approving only mitigation activities that are technically feasible, cost-effective, and in the interest of the National Flood Insurance Fund (NFIF). Eliminates beach nourishment from eligible mitigation activities. Declares to be eligible mitigation activities: (1) elevation, relocation, or floodproofing of utilities; (2) state or community development or update of mitigation plans (as under current law); and (3) technical assistance to certain communities to identify eligible activities, develop grant applications, and implement mitigation grants. Directs the Administrator to consider as an eligible mitigation activity the demolition and rebuilding of properties to at least base flood elevation or greater. Specifies state and community matching requirements for severe repetitive loss structures (0%), repetitive loss structures (10%), and other mitigation activities (25%). Specifies the annual allocation of NFIF amounts for such activities. (Sec. 130) Directs the Administrator and the Secretary of the Army, acting through the Chief of Engineers, jointly to establish a Flood Protection Structure Accreditation Task Force to develop a process to better align the information and data collected by or for the Corps of Engineers under the Inspection of Completed Works Program with flood protection structure accreditation requirements so that sufficient information and data collected for either purpose can be used interchangeably. (Sec. 131) Requires the Administrator to review and report to Congress on the processes and procedures: (1) for determining that a flood event has commenced or is in progress, (2) for notifying the public about such an event, and (3) about the timing of public notification of flood insurance requirements and availability. Requires the review and report to include the effects and implications that weather conditions have on the determination that a flood event has commenced or is in progress. (Sec. 132) Makes technical amendments to the requirements for additional flood insurance in excess of ordinary limits for residential and commercial properties. (Sec. 133) Prohibits designation as a special flood hazard area, unless certain criteria are met, of any area or community participating in the Program that is: (1) or includes Community Identification Number 360467 and is impacted by the Jamaica Bay flooding source, or (2) Community Identification Number 360495. Requires any such designation to be based on: (1) flood hazard analyses of hydrologic, hydraulic, or coastal flood hazards that have been properly calibrated and validated, and are specific and directly relevant to the geographic area being studied; and (2) ground elevation information of sufficient accuracy and precision to meet FEMA guidelines for accuracy at the 95% confidence level. Requires the Administrator to remap, using compliant information and procedures, any rate map for either area if it has been designated a special flood hazard area on the basis of information that does not comply with these requirements. (Sec. 134) Makes eligible for flood insurance any person residing in a community participating in the Program that has made adequate progress on the reconstruction or improvement of a flood protection system that will afford flood protection for a 100-year floodplain. Limits the risk premium rate for such a person to one that does not exceed the risk premium rate that would be chargeable if the flood protection system had been completed. Specifies criteria for adequate progress. (Sec. 135) Requires the Comptroller General to report to Congress on: (1) expansion of the Program, (2) pre-FIRM structures receiving discounted premiums, and (3) a review of the three largest FEMA contractors used in administering the Program. (Pre-Flood Insurance Rate Map [pre-FIRM] structures are those that were neither constructed nor substantially improved after the later of December 31, 1974, or the effective date of the initial rate map published under NFIA for the area in which such a structure is located.) (Sec. 136) Requires the Administrator to report to Congress a private market pricing assessment regarding the capacity of the private reinsurance, capital, and financial markets to assist communities, on a voluntary basis, in managing the full range of financial risks associated with flooding by requesting proposals to assume a portion of the insurance risk of the National Flood Insurance Program. Requires the report to describe and assess proposals responding to the request. Authorizes the Administrator to secure reinsurance of flood insurance coverage from the private market, at rates and on terms that are reasonable and appropriate, in an amount sufficient to maintain the Program's ability to pay claims. Requires the Administrator to conduct annual assessments of the Program's ability to pay claims. (Sec. 137) Directs the Comptroller General to study: (1) the availability of additional living expenses and business interruption coverage in the private marketplace for flood insurance, (2) the feasibility of allowing the Program to offer such coverage at the consumer's option, (3) the estimated cost to consumers if the Program priced such optional coverage at true actuarial rates, (4) the impact such optional coverage would have on consumer participation in the Program, and (5) the fiscal impact such optional coverage would have upon the NFIF if it were included in the Program at the price equal to the true actuarial rate. (Sec. 138) Requires each flood insurance policy under the Program, subject to administrative penalty, to state all conditions, exclusions, and other limitations pertaining to coverage, regardless of the underlying insurance product, in plain English, in boldface type, and in a font size that is twice the size of the text of the body of the policy. (Sec. 139) Directs the Administrator to study the impact, effectiveness, and feasibility of amending NFIA to include widely used and nationally recognized building codes as part of the floodplain management criteria developed for land management and use. (Sec. 140) Requires the Administrator also to study methods to: (1) encourage and maintain participation in the Program; (2) educate consumers about the Program and the flood risk associated with their property; (3) establish an affordability framework for the Program, including methods to aid individuals to afford risk-based premiums through targeted assistance rather than generally subsidized rates, including means-tested vouchers. Requires the National Academy of Sciences to submit to the Administrator, with respect to such study, an economic analysis of the costs and benefits to the federal government of a flood insurance program with full risk-based premiums, combined with means-tested federal assistance to aid individuals who cannot afford coverage, through an insurance voucher program. (Sec. 141) Directs the Comptroller General to examine: (1) the factors contributing to the current rates of participation in the Program by Indian tribes and their members, and (2) methods of encouraging such participation. Title II: Commission on Natural Catastrophe Risk Management and Insurance - Commission on Natural Catastrophe Risk Management and Insurance Act of 2011 - (Sec. 203) Establishes the Commission on Natural Catastrophe Risk Management and Insurance to report to Congress on its findings and assessments regarding the risks posed to the United States by natural catastrophes, and means for mitigating those risks and paying for losses caused by such catastrophes. (Sec. 205) Requires the Commission to assess: (1) the condition of the property and casualty insurance and reinsurance markets prior to and in the aftermath of Hurricanes Katrina, Rita, and Wilma in 2005, and the four major hurricanes that struck the United States in 2004; (2) the current condition of, as well as the outlook for, the availability and affordability of insurance in all regions of the country; (3) the current ability of states, communities, and individuals to mitigate their natural catastrophe risks, including the affordability and feasibility of such activities; and (4) specified related matters. (Sec. 206) Directs the Commission to report its findings and assessments to certain congressional committees. (Sec. 210) Authorizes appropriations.