H.R.2555 - Homeowners' Defense Act of 2009
To ensure the availability and affordability of homeowners' insurance coverage for catastrophic events.
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Mr. KLEIN of Florida (for himself, Mr. FRANK of Massachusetts, Mr. GRAYSON, Ms. KOSMAS, Mr. LARSON of Connecticut, Mr. CLYBURN, Mr. CROWLEY, Mrs. TAUSCHER, Mr. HARE, Mr. MEEK of Florida, Mr. WELCH, Ms. CASTOR of Florida, Mr. WEXLER, Mr. DELAHUNT, Mr. KENNEDY, Ms. GINNY BROWN-WAITE of Florida, Mr. ABERCROMBIE, Mr. POSEY, Ms. ROS-LEHTINEN, Mr. BUCHANAN, Mr. GRIFFITH, Mr. MELANCON, Mr. SCHIFF, Mr. WALZ, Ms. BERKLEY, Ms. JACKSON-LEE of Texas, Mr. HASTINGS of Florida, Mr. BRALEY of Iowa, Mr. BOYD, Mr. RYAN of Ohio, Ms. WASSERMAN SCHULTZ, Mr. BERMAN, Mr. CRENSHAW, Mr. INSLEE, Mr. KAGEN, Mr. MCNERNEY, Mr. PERLMUTTER, Ms. CORRINE BROWN of Florida, Ms. HARMAN, Mr. LINCOLN DIAZ-BALART of Florida, Mr. ACKERMAN, Mr. YARMUTH, Mr. ROONEY, and Mr. DONNELLY of Indiana) introduced the following bill; which was referred to the Committee on Financial ServicesCommentsClose CommentsPermalink
Additional sponsors: Mr. JOHNSON of Georgia, Mr. CAPUANO, Mr. ELLISON, Ms. HIRONO, Mr. MORAN of Virginia, Mr. PIERLUISI, Mr. MARIO DIAZ-BALART of Florida, Ms. GIFFORDS, Mr. HILL, Mr. SIRES, Mr. CONYERS, Mr. COHEN, Ms. DEGETTE, Mr. CAMPBELL, Mr. MOORE of Kansas, Ms. WOOLSEY, Mr. CHILDERS, Ms. LORETTA SANCHEZ of California, Mr. PAYNE, Mr. ANDREWS, Mr. WEINER, Mr. JACKSON of Illinois, Mr. CUMMINGS, Mr. CLAY, Mr. MEEKS of New York, Mr. COSTA, Mr. BACA, Mr. MILLER of Florida, Mr. YOUNG of Florida, Mr. DAVIS of Illinois, Mr. FILNER, Mr. MICA, Mr. DEUTCH, Mr. BISHOP of Georgia, Ms. RICHARDSON, and Ms. ESHOOCommentsClose CommentsPermalink
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
TITLE I--NATIONAL CATASTROPHE RISK CONSORTIUM
TITLE II--CATASTROPHE OBLIGATION GUARANTEES
TITLE III--REINSURANCE COVERAGE FOR ELIGIBLE STATE PROGRAMS
TITLE IV--MITIGATION GRANT PROGRAM
TITLE V--GENERAL PROVISIONS
SEC. 2. FINDINGS AND PURPOSES.
(4) for the majority of Americans, their investment in their home represents their single biggest asset and the protection of that investment is paramount to economic and social stability; CommentsClose CommentsPermalink
(6) 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 policyholders (in the case of mutually owned companies), have thus significantly raised premiums and curtailed insurance coverage in States exposed to major catastrophes; CommentsClose CommentsPermalink
(7) 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; CommentsClose CommentsPermalink
(8) Hurricanes Katrina, Rita, and Wilma struck the United States in 2005, causing over $200,000,000,000 in total economic losses, and insured losses to homeowners in excess of $50,000,000,000; CommentsClose CommentsPermalink
(11) 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 misspent and citizens are enabled to rebuild and resume productive activities as quickly as possible; CommentsClose CommentsPermalink
(12) States that are recipients of Federal funds must be responsible to account for and provide an efficient means for distribution of funds to homeowners to enable the rapid rebuilding of local economies after a catastrophic event without unduly burdening taxpayers who live in areas seldom affected by natural disasters; CommentsClose CommentsPermalink
(13) 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; CommentsClose CommentsPermalink
(14) making available Federal guarantees to enhance the capability of eligible State programs to issue debt will minimize the exposure of State and Federal taxpayers who otherwise may bear the consequences of underfunded programs or under-insured communities following catastrophic events, especially during today’s historic market turmoil; and CommentsClose CommentsPermalink
(15) it is the proper role of the Federal Government to prepare for and protect its citizens from catastrophes and to facilitate consumer protection, victim assistance, and recovery, including financial recovery. CommentsClose CommentsPermalink
(b) Purposes- The purposes of this Act are to establish a program to provide Federal support for State-sponsored insurance programs to help homeowners prepare 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. CommentsClose CommentsPermalink
SEC. 101. ESTABLISHMENT; STATUS; PRINCIPAL OFFICE; MEMBERSHIP.
(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 Directors to be the most advantageous for carrying out the purpose and functions of the Consortium. CommentsClose CommentsPermalink
(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. CommentsClose CommentsPermalink
SEC. 102. FUNCTIONS.
(1) work with all States, particularly those participating 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; CommentsClose CommentsPermalink
(2) at the discretion of the affected members and on a conduit basis, issue securities and other financial instruments linked to the catastrophe risks insured or reinsured through members of the Consortium in the capital markets; CommentsClose CommentsPermalink
(4) act as a centralized repository of State risk information that can be accessed by private-market participants seeking to participate in the transactions described in paragraphs (2) and (3) of this section; CommentsClose CommentsPermalink
(6) perform any other functions, other than assuming risk or incurring debt, that are deemed necessary to aid in the transfer of catastrophe risk from participating States to private parties; and CommentsClose CommentsPermalink
(7) submit annual reports to Congress describing the activities of the Consortium for the preceding year, and the first such annual report shall include an assessment of the costs to States and regions associated with catastrophe risk and an analysis of the costs and benefits, for States not participating in the Consortium, of such nonparticipation. CommentsClose CommentsPermalink
SEC. 103. POWERS.
(1) may make and perform such contracts and other agreements with any individual or other private or public entity however designated and wherever situated, as may be necessary for carrying out the functions of the Consortium; and CommentsClose CommentsPermalink
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. CommentsClose CommentsPermalink
(b) Conflicts of Interest- No director, officer, or employee of the Consortium shall in any manner, directly or indirectly, participate in the deliberation upon or the determination of any question affecting his or her personal interests or the interests of any Consortium, partnership, or organization in which he or she is directly or indirectly interested. CommentsClose CommentsPermalink
(1) ANNUAL AUDIT- The financial statements of the Consortium shall be audited annually in accordance with generally accepted auditing standards by independent certified public accountants. CommentsClose CommentsPermalink
For purposes of this paragraph, the terms ‘contribution’, ‘candidate’, ‘Federal office’, and ‘political committee’ have the meanings given such terms in section 301 of the Federal Election Campaign Act of 1971 (
(A) make any contribution to a candidate for election for any State or local office or to any committee, club, association, or other group that receives contributions or makes expenditures for the purpose of influencing any such election; CommentsClose CommentsPermalink
(B) employ or retain any person who engages in influencing legislating (as such term is defined in section 4911(d) of the Internal Revenue Code of 1986 (
SEC. 105. MANAGEMENT.
(1) BOARD OF DIRECTORS- The management of the Consortium shall be vested in a board of directors (referred to in this title as the ‘Board’) composed of not less than 3 members. CommentsClose CommentsPermalink
(A) the Secretary of Homeland Security and the Secretary of Commerce, or the designees of such Secretaries, respectively, but only during such times as there are fewer than two States participating in the Consortium; and CommentsClose CommentsPermalink
(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 payable for level IV of the Executive Schedule under
(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. CommentsClose CommentsPermalink
(3) TRAVEL EXPENSES- Members of the Consortium shall be entitled to receive travel expenses, including per diem in lieu of subsistence, equivalent to those set forth in subchapter I of chapter 57 of title 5, United States Code. CommentsClose CommentsPermalink
SEC. 106. STAFF; EXPERTS AND CONSULTANTS.
SEC. 107. FEDERAL LIABILITY.
The Federal Government and the Consortium shall not bear any liabilities arising from the actions of the Consortium. Participating States shall retain all catastrophe risk until the completion of a transaction described in paragraphs (2) and (3) of section 102. CommentsClose CommentsPermalink
SEC. 108. AUTHORIZATION OF APPROPRIATIONS.
SEC. 201. PURPOSES.
(2) to expedite the payment of claims under State catastrophe insurance programs and better assist the financial recovery from significant natural catastrophes by authorizing the Secretary of the Treasury to guarantee debt for such purposes. CommentsClose CommentsPermalink
SEC. 202. ESTABLISHMENT OF DEBT GUARANTEE PROGRAM.
(a) Authority of Secretary- The Secretary of the Treasury is authorized and shall have the powers and authorities necessary to guarantee, and to enter into commitments to guarantee, holders of debt against loss of principal or interest, or both, on any such debt issued by eligible State programs for purposes of this title, provided that the total principal amount of debt obligations guaranteed by the Secretary-- CommentsClose CommentsPermalink
(b) Conditions for Guarantee Eligibility- A debt guarantee under this section may be made only if the Secretary has issued a commitment to guarantee to an eligible State program. The commitment to guarantee shall be for a period of 3 years and may be extended by the Secretary for a period of 1 year on each annual anniversary of the issuance of the commitment to guarantee. The commitment to guarantee and each extension of such commitment may be issued by the Secretary only if the following requirements are satisfied: CommentsClose CommentsPermalink
(1) The eligible State program submits to the Secretary a report setting forth, in such form and including such information as the Secretary shall require, how the eligible State program plans to repay the debt. CommentsClose CommentsPermalink
(2) Based upon the eligible State program’s report submitted pursuant to paragraph (1), the Secretary determines there is reasonable assurance that the eligible State program can meet its repayment obligation under the debt. CommentsClose CommentsPermalink
(3) The eligible State program enters into an agreement with the Secretary, as the Secretary shall require, that the eligible State program will not use Federal funds of any kind or from any Federal source (including any disaster or other financial assistance, loan proceeds, and any other assistance or subsidy) to repay the debt. CommentsClose CommentsPermalink
(6) The Secretary determines that the eligible State program does not cover losses arising from floods to properties located in areas having special flood hazards (as such term is defined for purposes of the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973). CommentsClose CommentsPermalink
(c) Mandatory Assistance for Eligible State Programs- The Secretary shall upon the request of an eligible State program and pursuant to a commitment to guarantee issued under subsection (b), provide a guarantee under subsection (d) for such eligible State program in the amount requested by such eligible State program, subject to the limitation under subsection (d)(2). CommentsClose CommentsPermalink
(1) PRECONDITIONS- The eligible State program shows to the satisfaction of the Secretary that insured losses in the State to the eligible State program arising from the event or events covered by the commitment to guarantee are likely to exceed the eligible State program’s available cash resources, as calculated on the date of the event. CommentsClose CommentsPermalink
(2) AMOUNT- The aggregate principal amount of the debt guaranteed following an event or events referred to in paragraph (1) may not exceed the amount by which the insured losses expected to be sustained by the State program as a result of such event or events exceed 80 percent of the qualifying assets of the eligible State program as stated in the most recent quarterly financial statement filed with the domiciliary regulator of the program prior to the event or events, except that, for eligible State programs that are not required to file such quarterly financial statements, the aggregate principal amount of the debt guaranteed may not exceed the amount by which insured losses sustained by the State program as a result of such event or events exceed 80 percent of the unrestricted net assets as stated in the annual financial statement for the program’s fiscal year ending immediately prior to the event or events. CommentsClose CommentsPermalink
(3) USE OF FUNDS- Amounts of debt guaranteed under this section shall be used only to pay the costs of issuing debt and to pay the insured losses and loss adjustment expenses incurred by an eligible State program. Such amounts shall not be used for any other purpose. CommentsClose CommentsPermalink
SEC. 203. EFFECT OF GUARANTEE.
SEC. 204. FULL FAITH AND CREDIT.
SEC. 205. FEES FOR GUARANTEES; AMOUNT; COLLECTION.
The Secretary shall charge and collect fees for each guarantee in amounts specified in the commitment to guarantee, which shall be in amounts sufficient in the judgment of the Secretary at the time of issuance of the commitment to guarantee to cover applicable administrative costs and probable losses on the guaranteed obligations covered by the commitment to guarantee, but in any event not to exceed one-half of 1 per centum per annum of the outstanding indebtedness covered by each guarantee. CommentsClose CommentsPermalink
SEC. 206. PAYMENT OF LOSSES.
(a) In General- The Secretary agrees to pay to the duly appointed paying agent or trustee (in this section referred to as the ‘Fiscal Agent’) for the eligible State program that portion of the principal and interest on any debt guaranteed under this title that shall become due for payment but shall be unpaid by the eligible State program as a result of such program having provided insufficient funds to the Fiscal Agent to make such payments. The Secretary shall make such payments on the date such principal or interest becomes due for payment or on the business day next following the day on which the Secretary shall receive notice of failure on the part of the eligible State program to provide sufficient funds to the Fiscal Agent to make such payments, whichever is later. Upon making such payment, the Secretary shall be subrogated to all the rights of the ultimate recipient of the payment. The Secretary shall be entitled to recover from the eligible State program the amount of any payments made pursuant to any guarantee entered into under this title. CommentsClose CommentsPermalink
(b) Role of the Attorney General- The Attorney General shall take such action as may be appropriate to enforce any right accruing to the United States as a result of the issuance of any guarantee under this title. CommentsClose CommentsPermalink
(c) Right of the Secretary- Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of property by the United States, the Secretary shall have the right in the discretion of the Secretary to complete, recondition, reconstruct, renovate, repair, maintain, operate, or sell any property acquired by the Secretary pursuant to the provisions of this title. CommentsClose CommentsPermalink
SEC. 207. REGULATIONS.
SEC. 301. PROGRAM AUTHORITY.
SEC. 302. CONTRACT PRINCIPLES.
SEC. 303. TERMS OF REINSURANCE CONTRACTS.
(a) Minimum Attachment Point- Notwithstanding any other provision of this title, a contract for reinsurance coverage under this title for an eligible State program may not be made available or sold unless the contract requires that the eligible State program 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) and Levels of Coverage- The Secretary shall establish attachment points at which reinsurance coverage under this title is provided to eligible State programs. In setting attachment points and in determining the levels of reinsurance coverage provided, the Secretary shall take into consideration-- CommentsClose CommentsPermalink
(b) Ninety Percent Coverage of Insured Losses in Excess of Retained Losses- Each contract for reinsurance coverage under this title shall provide that the amount paid out under the contract shall be equal to 90 percent of the amount of insured losses of the eligible State program in excess of the amount of retained losses that the contract requires, pursuant to subsection (a), to be incurred by such program. CommentsClose CommentsPermalink
(d) Payment Condition- Each contract for reinsurance coverage under this title shall authorize claims payments to the eligible State program purchasing the coverage only for insured losses provided under the contract. CommentsClose CommentsPermalink
(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 multiple events occur, the retained losses requirement under subsection (a) shall apply on a calendar year basis, in the aggregate and not separately to each individual event. CommentsClose CommentsPermalink
(f) Timing of Claims- Claims under a contract for reinsurance coverage under this title shall include only insurance claims that are reported to the eligible State program within the 3-year period beginning upon the event or events for which payment under the contract is provided. CommentsClose CommentsPermalink
(g) Actuarial Pricing- The price of coverage under a reinsurance contract under this title shall be an amount, established by the Secretary at a level that annually produces expected premiums that shall be sufficient to pay the reasonably anticipated cost of all claims (which may not be equal only to average annual costs), loss adjustment expenses, all administrative costs of reinsurance coverage offered under this title, and any such outwards reinsurance, as described in section 305(c)(3), as the Secretary considers prudent taking into consideration the demand for reinsurance coverage under this title. The anticipated cost of all claims shall be comparable to amounts being included in the price for similar layers of coverage in the private sector, taking into account the savings associated with non-profit and tax-exempt status of the Fund established under section 305. CommentsClose CommentsPermalink
(h) Information- Each contract for reinsurance coverage under this title shall contain a condition providing that the Secretary may require the eligible State program that is covered under the contract to submit to the Secretary all information on the eligible State program relevant to the duties of the Secretary under this title. CommentsClose CommentsPermalink
(i) Others- Contracts for reinsurance coverage under this title shall contain such other terms as the Secretary considers necessary to carry out this title and to ensure the long-term financial integrity of the program under this title. CommentsClose CommentsPermalink
SEC. 304. MAXIMUM FEDERAL LIABILITY.
(a) In General- Subject to subsection (b) and notwithstanding any other provision of law, the aggregate potential liability for payment of claims under all contracts for reinsurance coverage under this title sold in any single year by the Secretary shall not exceed $200,000,000,000 or such lesser amount as isshall be determined by the Secretary based on review of the market for reinsurance coverage under this title. CommentsClose CommentsPermalink
(b) Limitation- The authority of the Secretary to enter into contracts for reinsurance coverage under this title shall be effective for any fiscal year only to such extent or in such amounts as are or have been provided in appropriation Acts for such fiscal year for the aggregate potential liability for payment of claims under all contracts for reinsurance coverage under this title. CommentsClose CommentsPermalink
SEC. 305. FEDERAL NATURAL CATASTROPHE REINSURANCE FUND.
(a) Establishment- There is established within the Treasury of the United States a fund to be known as the Federal Natural Catastrophe Reinsurance Fund (in this section referred to as the ‘Fund’). CommentsClose CommentsPermalink
(3) OUTWARDS REINSURANCE- To obtain retrocessional or other reinsurance coverage of any kind to cover risk reinsured under contracts for reinsurance coverage made available under this title. CommentsClose CommentsPermalink
(d) Investment- If the Secretary determines that the amounts in the Fund are in excess of current needs, the Secretary may invest such amountsThe Secretary shall invest such amounts in the Fund as the Secretary considers advisable in obligations issued or guaranteed by the United States. For purposes of the grant mandate in section 401(e) for a fiscal year, the Secretary shall disclose the annual net investment income available not later than 60 days after the conclusion of such fiscal year and disperse appropriate funds not later than 90 days after the conclusion of such fiscal year. CommentsClose CommentsPermalink
SEC. 306. REGULATIONS.
SEC. 401. MITIGATION GRANT PROGRAM.
(a) Establishment- The Secretary of Housing and Urban Development shall establish and carry out a program to provide grants to eligible entities to develop, enhance, or maintain programs to prevent and mitigate losses from natural catastrophes. CommentsClose CommentsPermalink
(1) encouraging awareness of risk factors and what steps can be taken to eliminate or reduce them, including public education campaigns to promote citizen and community preparedness; CommentsClose CommentsPermalink
(5) supporting disaster response readiness programs, including initiatives that develop, enhance ,or maintain the capacity of a public safety organization to be better prepared, equipped, and trained to respond to natural catastrophes. CommentsClose CommentsPermalink
(d) Eligible Entity Defined- In this section, the term ‘eligible entity’ means a State or local government, or a part or program of a State or local government, or a nationally recognized, congressionally chartered disaster response non-profit organization. CommentsClose CommentsPermalink
(e) Authorization of Appropriations- There are authorized to be appropriated to carry out this section $15,000,000 for each of fiscal years 2010 through 2014Grant Mandate- The Secretary shall, to the extent provided in advance in appropriation Acts, use not less than 35 percent of the net investment income from the Federal Natural Catastrophe Reinsurance Fund earned in each fiscal year pursuant to section 305(d) for grants under this section. CommentsClose CommentsPermalink
SEC. 501. ELIGIBLE STATE PROGRAMS.
(a) Eligible State Programs- A State program shall be considered an ‘eligible State program’ for purposes of this Act if the Secretary certifies, in accordance with the procedures established under subsection (c), that the State program complies with the following requirements: CommentsClose CommentsPermalink
(1) STATE PROGRAM DESIGN- The State program is established and authorized by State law as an insurance program or a reinsurance program that is designed to improve private insurance markets and that offers residential property insurance coverage for losses arising from any personal residential line of insurance, as defined in the Uniform Property and Casualty Product Coding Matrix of the National Association of Insurance Commissioners. CommentsClose CommentsPermalink
(C) If the State has at any time appropriated amounts from the State program’s funds for any purpose other than payments for losses insured under the State program, or payments made in connection with any of the State program’s authorized activities, the State shall have returned such amounts to the State fund, together with interest on such amounts. CommentsClose CommentsPermalink
(3) TAX STATUS- The State program shall have received from the Secretary (or the Secretary’s designee) a written determination, within the meaning of section 6110(b) of the Internal Revenue Code of 1986, that the program either-- CommentsClose CommentsPermalink
(4) EARNINGS- The State program may not provide for any distribution of any part of any net profits of the State program to any insurer that participates in the State program. CommentsClose CommentsPermalink
(A) MITIGATION OF LOSSES- The State program shall include provisions designed to encourage and support programs to mitigate losses from natural catastrophes for which the State insurance or reinsurance program was established to provide insurance coverage. CommentsClose CommentsPermalink
(i) requires that an appropriate public body within the State shall have adopted adequate mitigation measures (with effective enforcement provisions) which the Secretary which the Secretary finds are consistent with the criteria for construction described in the International Code Council building codes; CommentsClose CommentsPermalink
(iii) ensures, to the extent that reinsurance coverage made available under the eligible State program results in any cost savings in providing insurance coverage for risks in such State, such cost savings are reflected in premium rates charged to consumers for such coverage;(6) . CommentsClose CommentsPermalink
(A) may not, except for charges or assessments related to post-event financing or bonding, involve cross-subsidization between any separate property and casualty insurance lines covered under the State program pursuant to paragraph (1); CommentsClose CommentsPermalink
(B) shall be subject to a requirement under State law that for any insurance coverage made available under the State insurance program or for any reinsurance coverage for such insurance coverage made available under the State reinsurance program, the premium rates charged shall be actuarially sound or actuarially indicated; andcover the expected value of all future costs associated with insurance policies or reinsurance contracts written by such program, in accordance with the principles under section 303(g); CommentsClose CommentsPermalink
(C) shall make available to all qualifying policyholders insurance or reinsurance coverage, as applicable, and mitigation services on a basis that is not unfairly discriminatory; and CommentsClose CommentsPermalink
(D) publishes, and displays in a prominent location on a Website for the State insurance program, information for the State insurance program of estimated assessments and surcharges on policyholders, in accordance with State laws, regulations, or other requirements, for a range of natural disaster or catastrophic events having a varying magnitude of losses, including an event projected to result in losses of such magnitude that they have a 1 percent chance of being equaled or exceeded in any single year, based on the current year estimated aggregate funding capacity of the State insurance program and State reinsurance program. CommentsClose CommentsPermalink
(7) LAND USE AND ZONING- The State program, to the extent possible, seeks to encourage appropriate State and local government units to develop comprehensive land use and zoning plans that include natural hazard mitigation. CommentsClose CommentsPermalink
(A) complies with such risk-based capital requirements under subsection (b); (9) OTHER REQUIREMENTS- The State program complies with such additional organizational, underwriting, and financial requirements as the Secretary shall, by regulation, provide to carry out the purposes of this Act. (b) Risk-Based Capital Requirements-
(9) OTHER REQUIREMENTS- The State program complies with such additional organizational, underwriting, and financial requirements as the Secretary shall, by regulation, provide to carry out the purposes of this Act.
(b) Risk-Based Capital Requirements-(1) IN GENERAL- Except for programs deemed to be eligible State programs pursuant to subsection (d), each eligible State program shall maintain risk-based capital in accordance with requirements established by the Secretary, in consultation with the National Association of Insurance Commissioners and consistent with the Risk-Based Capital Model Act of the National Association of Insurance Commissioners, andas applicable State law may impose and shall take into consideration asset risk, credit risk, underwriting risk, and such other relevant risk as determined by the Secretary.(2) REPORT- F; and CommentsClose CommentsPermalink
(B) for each calendar year, each eligible State program shall prepare and submit to the Secretary aprepares and submits to the Secretary a report identifying its risk based capital,claim-paying capacity at such time after the conclusion of such year, and containing such information and in such form, as the Secretary shall require. CommentsClose CommentsPermalink
(c9) OTHER REQUIREMENTS- The State program complies with such additional organizational, underwriting, and financial requirements as the Secretary shall, by regulation, provide to carry out the purposes of this Act. CommentsClose CommentsPermalink
(dc) Transitional Mechanisms- For the 5-year period beginning on the date of the enactment of this Act, in the case of a State that does not have an eligible State program for the State, a State residual insurance market entity, or State-sponsored provider of natural catastrophe insurance, for such State shall be considered to be an eligible State program, but only if such State residual insurance market entity, or State-sponsored provider of natural catastrophe insurance, was in existence before such date of enactment. CommentsClose CommentsPermalink
(ed) Reinsurance to Cover Exposure- This section may not be construed to limit or prevent any eligible State program from obtaining reinsurance coverage for insured losses retained by insurers pursuant to this section. CommentsClose CommentsPermalink
SEC. 502. STUDY AND CONDITIONAL COVERAGE OF COMMERCIAL RESIDENTIAL LINES OF INSURANCE.
The Secretary shall study, on an expedited basis, the need for and impact of expanding the programs established by this Act to apply to insured losses of eligible State programs for losses arising from all commercial insurance policies which provide coverage for properties that are composed predominantly of residential rental units. The Secretary shall consider the catastrophic 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 have on housing affordability for renters, and the likelihood that such an expansion of the program would increase insurance capacity for this market segment. CommentsClose CommentsPermalink
SEC. 503. STUDY OF RISK-BASED PRICING AND STATE PROGRAM RATES.
(1) risk-based rate pricing, to determine the use of actuarially sound pricing for State insurance, reinsurance, or residual market programs, including what measures States are taking to implement actuarially sound rates; and CommentsClose CommentsPermalink
(2) rates for State insurance, reinsurance, or residual market programs that fail to cover the expected value of all future costs, including the cost of capital, associated with insurance policies or reinsurance contracts written by such programs or fail to have sufficient assets above their indebtedness to meet their obligations. CommentsClose CommentsPermalink
Not later than 6 months after the date of the enactment of this Act, the Comptroller General shall submit a report to the Congress on the results of the study under this section. CommentsClose CommentsPermalink
SEC. 504. DEFINITIONS.
(3) INSURED LOSS- The term ‘insured loss’ means any loss that is determined by an eligible State program as being covered by insurance or reinsurance made available under that eligible State program. CommentsClose CommentsPermalink
(4) QUALIFYING ASSETS- The term ‘qualifying assets’ means the policyholder surplus of the eligible State program as stated in the most recent quarterly financial statement filed by the program with the domiciliary regulator of the program in the last quarter ending prior to the event or events. CommentsClose CommentsPermalink
(6) STATE- The term ‘State’ includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the United States Virgin Islands, and American Samoa, and any other territory or possession of the United States. CommentsClose CommentsPermalink