Homeowners' Insurance Availability Act of 2005 - Instructs the Secretary of the Treasury to implement a reinsurance coverage program available only through contracts for reinsurance coverage purchased at regional auctions.
States that the purpose of the program is to improve: (1) the availability of homeowners' insurance for the purpose of facilitating the pooling, and spreading the risk, of catastrophic financial losses from disasters; and (2) the solvency of the homeowners' insurance markets.
Prescribes implementation guidelines that include establishment: (1) in the Treasury of the Disaster Reinsurance Fund; and (2) of a National Commission on Catastrophe Risks and Insurance Loss Costs.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 846 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 846
To establish a Federal program to provide reinsurance to improve the
availability of homeowners' insurance.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 16, 2005
Ms. Ginny Brown-Waite of Florida (for herself, Mr. Davis of Florida,
Mr. Sherman, Ms. Ros-Lehtinen, Mr. Larsen of Washington, Ms. Bordallo,
Mr. Lewis of Georgia, Mr. Weldon of Florida, Ms. Hooley, Mr. Wolf, Ms.
Wasserman Schultz, Mr. Bilirakis, Mr. Gene Green of Texas, and Mr.
Feeney) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To establish a Federal program to provide reinsurance to improve the
availability of homeowners' insurance.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Homeowners'
Insurance Availability Act of 2005''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title and table of contents.
Sec. 2. Program authority.
Sec. 3. Qualified lines of coverage.
Sec. 4. Covered perils.
Sec. 5. Auction of contracts for reinsurance coverage.
Sec. 6. Minimum level of retained losses and maximum Federal liability.
Sec. 7. Disaster Reinsurance Fund.
Sec. 8. National Commission on Catastrophe Risks and Insurance Loss
Costs.
Sec. 9. Definitions.
Sec. 10. Regulations.
Sec. 11. Termination.
Sec. 12. Annual study of cost and availability of disaster insurance
and program need.
SEC. 2. PROGRAM AUTHORITY.
(a) In General.--The Secretary of the Treasury shall carry out a
program under this Act to make reinsurance coverage available through
contracts for reinsurance coverage under section 5, which shall be made
available for purchase by purchasers under section 5(a)(1) only through
auctions under section 5(a).
(b) Purpose.--The program shall be designed to make reinsurance
coverage under this Act available to improve the availability of
homeowners' insurance for the purpose of facilitating the pooling, and
spreading the risk, of catastrophic financial losses from disasters and
to improve the solvency of homeowners' insurance markets.
(c) Contract Principles.--Under the program under this Act, the
Secretary shall offer reinsurance coverage through contracts with
covered purchasers, which contracts--
(1) shall not displace or compete with the private
insurance or reinsurance markets or capital markets;
(2) shall minimize the administrative costs of the Federal
Government; and
(3) shall provide coverage based solely on insured losses
within the region established pursuant to section 5(a) for
which the auction is held.
SEC. 3. QUALIFIED LINES OF COVERAGE.
Each contract for reinsurance coverage made available under this
Act shall provide insurance coverage against residential property
losses to homes (including dwellings owned under condominium and
cooperative ownership arrangements) and the contents of apartment
buildings.
SEC. 4. COVERED PERILS.
Each contract for reinsurance coverage made available under this
Act shall cover losses that are proximately caused by--
(1) earthquakes;
(2) perils ensuing from earthquakes, including fire and
tsunamis; and
(3) tropical cyclones having maximum sustained winds of at
least 74 miles per hour, including hurricanes and typhoons.
The Secretary shall, by regulation, define the disaster perils under
this section.
SEC. 5. AUCTION OF CONTRACTS FOR REINSURANCE COVERAGE.
(a) Auction Program Requirements.--The Secretary shall carry out a
program to auction contracts for reinsurance coverage under this Act
made available pursuant to section 2(a), which shall comply with the
following requirements:
(1) Purchasers.--The auction program shall provide for
auctioning all contracts made available under this section to
private insurers and reinsurers, State insurance and
reinsurance programs, and other interested entities.
(2) Regional auctions.--The auction program shall provide
for auctions on a regional basis. The Secretary shall divide
the States into not less than 6 regions for the purpose of
holding such regional auctions, which shall include separate
regions for all or part of the State of California and all or
part of the State of Florida. In determining the boundaries for
such regions, the Secretary shall consider which areas have
greater risks of losses from covered perils and which areas
have lesser risks of losses from covered perils, and shall
attempt not to combine those different types of areas. Auctions
for each region shall be conducted not less often than
annually.
(3) Reserve price.--In auctioning contracts under this
section for reinsurance coverage, the Secretary shall set, for
each contract, a reserve price that is the minimum price at
which the contract may be sold, based upon the recommendations
of the Commission. The reserve price shall be determined on the
basis of the following components:
(A) Risk-based price.--A risk-based price, which
shall reflect the anticipated annualized payout of the
contract according to the actuarial analysis and
recommendations of the Commission.
(B) Risk load.--A risk load in an amount that is
not less than the risk-based price under subparagraph
(A).
(C) Administrative costs.--A sum sufficient to
provide for the operation of the Commission and the
administrative expenses incurred by the Secretary in
carrying out this section.
(D) Mitigation.--An adjustment based on an
actuarial analysis that takes into account any efforts
that are being made to reduce losses to property in the
region in which the contract is being sold.
(4) Price gouging protections.--The auction program may
provide reinsurance coverage for losses incurred only for
property located in a State for which the State entity
authorized to make such determinations has certified to the
Secretary that there are in effect, in such State, laws or
regulations sufficient to prohibit price gouging, during the
term of such reinsurance coverage, in any disaster area located
within the State.
(5) Mitigation requirements.--
(A) In general.--The auction program shall require
each purchaser of a contract, as a condition of such
purchase, to contribute an amount, that the Secretary
(in consultation with the Director of the Federal
Emergency Management Agency) shall establish and which
shall not exceed 5 percent of the price paid for the
contract, to communities that--
(i) are located in the State in which the
reinsurance coverage under the contract is
provided (or in the case of multiple States,
among such States, as determined by the
Secretary);
(ii) are designated by the Director of the
Federal Emergency Management Agency and the
appropriate emergency management agency for the
State as Project Impact communities (for
purposes of the pre-disaster mitigation program
of such Agency); and
(iii) are participating in such programs or
initiatives as the Secretary may require that
provide incentives for construction of
structures and communities that are resistant
to damage from covered perils, which shall
include the Building Code Effectiveness Grading
Schedule of the Insurance Services Office.
(B) Use of contributions.--Amounts contributed to
communities pursuant to the requirement under
subparagraph (A) shall be used only--
(i) for activities to reduce losses from
covered perils to properties covered under the
reinsurance contract purchased under the
auction program that are located in such
communities; and
(ii) in accordance with such requirements
as the Secretary, in consultation with the
Director of the Federal Emergency Management
Agency and appropriate State agencies, shall
establish to ensure cost-effective use of such
amounts.
(C) Allocation.--The Secretary, in consultation
with the Director of the Federal Emergency Management
Agency, shall establish requirements for allocation of
contributions among communities eligible under
subparagraph (A) to receive such contributions.
(6) Other requirements.--The Secretary may establish such
other requirements for the auction program as the Secretary
considers necessary to carry out this Act.
(b) Contract Terms and Conditions.--Each contract for reinsurance
coverage under this Act shall include the following terms and
conditions:
(1) Maturity.--The term of each such contract shall not
exceed 1 year or such other term as the Secretary may
determine.
(2) Transferability.--The contract shall at all times be
fully transferable, assignable, and divisible.
(3) Threshold of coverage.--The contract shall provide that
the covered purchaser may receive a payment for losses covered
under the contract if, under a process specified in the
contract, the Secretary determines that the insurance industry
will, as a result of a single event of a covered peril, incur
losses within the coverage area for the region established
under subsection (a)(2) for which the contract was auctioned
that are covered by one or more lines of insurance under
section 4 in an aggregate amount, for such event, greater than
the level of retained losses specified in section 6.
(4) Multiple events.--The contract shall cover any eligible
losses from one or more covered events that may occur during
the term of the contract and shall provide that if multiple
events occur, the retained losses requirement under paragraph
(3) shall apply to each event.
(5) Additional contract option.--The contract shall provide
that the purchaser of the contract may, during the term of such
original contract, purchase additional contracts from among
those offered by the Secretary at the beginning of the term,
subject to the limitations under section 6, at the prices at
which such contracts were offered at the beginning of the term,
prorated based upon the remaining term as determined by the
Secretary. Such additional contracts shall provide coverage
beginning on a date 15 days after the date of purchase but
shall not provide coverage for losses for an event that has
already occurred.
(6) Submission of information.--The contract shall include
terms that--
(A) require the purchaser to notify the Secretary
of any sale, transfer, assignment, or division of the
contract or any interest in the contract, identify the
interest involved, and identify the price paid or
compensation provided; and
(B) authorize the disclosures required under
subsection (c)(2).
(7) Other terms.--The contract shall contain such other
terms as the Secretary considers necessary to carry out this
Act and to ensure the long-term financial integrity of the
program under this Act.
(c) GAO Audit.--
(1) In general.--For each fiscal year, the Comptroller
General of the United States shall conduct an audit of prices
for contracts made available under the auction program under
this section during such fiscal year that determines--
(A) the reserve prices established for such
contracts;
(B) the prices paid for such contracts that are
purchased;
(C) the prices paid, or compensation provided, in
any sales, transfers, assignments, or divisions of any
such contracts (or any interests in such contracts) in
the secondary market or to any third party; and
(D) pursuant to the information obtained under
subparagraphs (A) through (C), the appropriate reserve
prices for such contracts that are to be made available
in the succeeding fiscal year.
(2) Use of information.--The Secretary shall provide any
information referred to in subsection (b)(6) that is obtained
by the Secretary to the Comptroller General, the Director of
the Congressional Budget Office, and the Director of the Office
of Management and Budget, and shall make such information
publicly available. The Secretary, the Director of the
Congressional Budget Office, the Director of the Office of
Management and Budget shall each take such information into
consideration in preparing any budget, report, estimate, or
recommendation to the extent it relates to the auction program
under this section, and in any determinations relating to the
Budget of the United States or the concurrent resolution on the
budget (as such term is defined in section 3 of the
Congressional Budget Act of 1974). The Secretary shall take
such information into consideration in establishing reserve
prices for contracts made available under this section.
(d) Private Sector Right to Participate.--
(1) Establishment of competitive procedure.--The Secretary
shall establish, by regulation, a competitive procedure under
this subsection that provides qualified entities an
opportunity, on a basis consistent with the regional auction
procedure and contract cycle established under this section by
the Secretary, to offer to provide, in lieu of reinsurance
coverage under this Act made available by the Secretary,
reinsurance coverage that is substantially similar to such
coverage.
(2) Competitive procedure.--Under the procedure established
under this subsection--
(A) the Secretary shall establish criteria for
private insurers, reinsurers, and capital market
companies, and consortia of such entities to be treated
as qualified entities for purposes of this subsection,
which criteria shall require such an entity to have at
all times capital sufficient to satisfy the terms of
the reinsurance contracts and shall include such other
industry and credit rating standards as the Secretary
considers appropriate;
(B) not less than 30 days before the beginning of
each regional auction during which any reinsurance
coverage under this Act is to be made available, the
Secretary shall publish in the Federal Register the
reserve prices and terms for contracts for such
reinsurance coverage that are to be made available
during the auction;
(C) the Secretary shall provide qualified entities
a period of not less than 10 days (which shall
terminate not less than 20 days before the beginning of
the auction) to submit to the Secretary a written
expression of interest in providing reinsurance
coverage in lieu of the coverage otherwise to be made
available under this Act by the Secretary;
(D) the Secretary shall provide any qualified
entity submitting an expression of interest during the
period referred to in subparagraph (C) a period of not
less than 20 days (which shall terminate before the
commencement of the auction) to submit to the Secretary
an offer to provide, in lieu of the reinsurance
coverage under this Act otherwise to be made available
under an auction under this section, coverage that is
substantially similar to such coverage;
(E) if the Secretary determines that an offer
submitted during the period referred to in subparagraph
(D) is a bona fide offer to provide reinsurance
coverage to be made available during the auction for
the same contract cycle and at a reserve price and
terms that are substantially similar to the reserve
price and terms for reinsurance coverage otherwise to
be made available at the auction under this section by
the Secretary, the Secretary shall accept the offer (if
still outstanding) and, notwithstanding any other
provision of this Act, provide that the reinsurance
coverage provided by such entity in accordance with the
offer shall be made available at the auction; and
(F) if the Secretary accepts an offer pursuant to
subparagraph (E) to make reinsurance coverage available
at the auction, notwithstanding any other provision of
this Act, the Secretary shall reduce, to an equivalent
extent, the amount of reinsurance coverage otherwise to
be made available under this Act by the Secretary at
the auction, unless and until the Secretary determines
that the entity is not complying with the terms of the
accepted offer.
SEC. 6. MINIMUM LEVEL OF RETAINED LOSSES AND MAXIMUM FEDERAL LIABILITY.
(a) Available Levels of Retained Losses.--In making reinsurance
coverage available under this Act, the Secretary shall make available
for purchase contracts for such coverage that require the sustainment
of retained losses from a single event of a covered peril (as required
under section 5(b)(3) for payment of eligible losses) in various
amounts, as the Secretary, in consultation with the Commission,
determines appropriate and subject to the requirements under subsection
(b) of this section.
(b) Minimum Level of Retained Losses.--
(1) Cumulative amount.--Subject to paragraphs (2), (3), and
(4) and notwithstanding any other provision of this Act, a
contract for reinsurance coverage may not be made available or
sold under section 5 through a regional auction unless the
contract requires that the insurance industry in the region for
which the auction was conducted sustains a cumulative amount of
retained losses (in covered lines resulting from covered
perils) of not less than an amount, determined by the Secretary
in consultation with the Commission, that is in the range
between the amount equal to the eligible loss projected to be
incurred once every 100 years from a single event in the region
and the amount equal to the eligible loss projected to be
incurred once every 250 years from such an event.
(2) Initial adjustment based on private market.--The
Secretary may, before making contracts for reinsurance coverage
under this Act initially available under section 5, raise the
minimum level of retained losses from the amount required under
paragraph (1) for a region to ensure, as determined by the
Secretary, that such contracts comply with the principle under
section 2(c)(1).
(3) Annual adjustment.--The Secretary may annually raise
the minimum level of retained losses established under
paragraph (1) for a region to reflect, as determined by the
Secretary--
(A) changes in the capacity of public reinsurance
programs or the private insurance and reinsurance
market;
(B) increases in the market value of properties; or
(C) such other situations as the Secretary
considers appropriate.
The Secretary shall consider the minimum level of retained
losses requirement in paragraph (1) as a minimum requirement
only and shall have full authority, effective on the date of
the enactment of this Act, to establish levels of required
minimum retained losses in any amount greater than the amounts
specified in such paragraph. In making any determination under
this paragraph in the minimum level of retained losses, the
Secretary shall establish such level at an amount such that the
program under this Act for making reinsurance coverage
available does not displace or compete with the private
insurance or reinsurance markets or capital markets, as
determined by the Secretary after the Secretary has provided
interested parties an opportunity to submit to the Commission
market information relevant to such determination and has
provided the Commission with an opportunity to advise the
Secretary regarding such information and determination.
(4) Optional annual inflationary or exposure adjustment.--
The Secretary may, on an annual basis, raise the minimum level
of retained losses established under paragraph (1) for each
region to reflect the annual rate of inflation or growth in
exposures, whichever is greater. Any such raise shall be made
in accordance with an inflation index or exposure index, as
appropriate, that the Secretary determines to be appropriate.
The first such raise may be made one year after contracts for
reinsurance coverage under this Act are first made available
for purchase.
(c) Maximum Federal Liability.--
(1) In general.--Notwithstanding any other provision of
law, the Secretary may sell only contracts for reinsurance
coverage under this Act in various amounts which comply with
the following requirements:
(A) Estimate of aggregate liability.--The aggregate
liability for payment of claims under all such
contracts in any single year is unlikely to exceed
$25,000,000,000 (as such amount is adjusted under
paragraph (2)).
(B) Eligible loss coverage sold.--Eligible losses
covered by all contracts sold within a State or region
during a 12-month period do not exceed the difference
between the following amounts (each of which shall be
determined by the Secretary in consultation with the
Commission):
(i) The amount equal to the eligible loss
projected to be incurred once every 500 years
from a single event in the State or region.
(ii) The amount equal to the eligible loss
projected to be incurred once every 100 years
from a single event in the State or region.
(2) Annual adjustments.--The Secretary shall annually
adjust the amount under paragraph (1)(A) (as it may have been
previously adjusted) to provide for inflation in accordance
with an inflation index that the Secretary determines to be
appropriate.
(d) Limitation on Percentage of Risk in Excess of Retained
Losses.--
(1) In general.--The Secretary may not make available for
purchase contracts for reinsurance coverage under this Act that
would pay out more than 50 percent of eligible losses in excess
of retained losses for the region for which the contract was
made available.
(2) Payout.--For purposes of this subsection, the amount of
payout from a reinsurance contract shall be the amount of
eligible losses in excess of retained losses multiplied by the
percentage under paragraph (1).
SEC. 7. DISASTER REINSURANCE FUND.
(a) Establishment.--There is established within the Treasury of the
United States a fund to be known as the Disaster Reinsurance Fund (in
this section referred to as the ``Fund'').
(b) Credits.--The Fund shall be credited with--
(1) amounts received annually from the sale of contracts
for reinsurance coverage under this Act;
(2) any amounts borrowed under subsection (d);
(3) any amounts earned on investments of the Fund pursuant
to subsection (e); and
(4) such other amounts as may be credited to the Fund.
(c) Uses.--Amounts in the Fund shall be available to the Secretary
only for the following purposes:
(1) Contract payments.--For payments to covered purchasers
under contracts for reinsurance coverage under this Act for
eligible losses under such contracts.
(2) Commission costs.--To pay for the operating costs of
the Commission.
(3) Administrative expenses.--To pay for the administrative
expenses incurred by the Secretary in carrying out the
reinsurance program under this Act.
(4) Termination.--Upon termination under section 11, as
provided in such section.
(d) Borrowing.--
(1) Authority.--To the extent that the amounts in the Fund
are insufficient to pay claims and expenses under subsection
(c), the Secretary may issue such obligations of the Fund as
may be necessary to cover the insufficiency and shall purchase
any such obligations issued.
(2) Public debt transaction.--For the purpose of purchasing
any such obligations, the Secretary may use as a public debt
transaction the proceeds from the sale of any securities issued
under chapter 31 of title 31, United States Code, and the
purposes for which securities are issued under such chapter are
hereby extended to include any purchase by the Secretary of
such obligations under this subsection.
(3) Characteristics of obligations.--Obligations issued
under this subsection shall be in such forms and denominations,
bear such maturities, bear interest at such rate, and be
subject to such other terms and conditions, as the Secretary
shall determine.
(4) Treatment.--All redemptions, purchases, and sales by
the Secretary of obligations under this subsection shall be
treated as public debt transactions of the United States.
(5) Repayment.--Any obligations issued under this
subsection shall be repaid, including interest, from the Fund
and shall be recouped from premiums charged for reinsurance
coverage provided under this Act.
(e) Investment.--If the Secretary determines that the amounts in
the Fund are in excess of current needs, the Secretary may invest such
amounts as the Secretary considers advisable in obligations issued or
guaranteed by the United States.
(f) Prohibition of Federal Funds.--Except for amounts made
available pursuant to subsection (d) of this section and section 8(h),
no Federal funds shall be authorized or appropriated for the Fund or
for carrying out the reinsurance program under this Act.
SEC. 8. NATIONAL COMMISSION ON CATASTROPHE RISKS AND INSURANCE LOSS
COSTS.
(a) Establishment.--The Secretary shall establish a commission to
be known as the National Commission on Catastrophe Risks and Insurance
Loss Costs.
(b) Duties.--The Commission shall meet for the sole purpose of
advising the Secretary regarding the estimated loss costs associated
with the contracts for reinsurance coverage under this Act and carrying
out the functions specified in this Act.
(c) Members.--The Commission shall consist of not more than 5
members, who shall be appointed by the Secretary and shall be broadly
representative of the public interest. Members shall have no personal,
professional, or financial interest at stake in the deliberations of
the Commission. The membership of the Commission shall at all times
include at least 1 representative of a nationally recognized consumer
organization.
(d) Treatment of Non-Federal Members.--Each member of the
Commission who is not otherwise employed by the Federal Government
shall be considered a special Government employee for purposes of
sections 202 and 208 of title 18, United States Code.
(e) Experts and Consultants.--The Commission may procure temporary
and intermittent services under section 3109(b) of title 5, United
States Code, but at a rate not in excess of the daily equivalent of the
annual rate of basic pay payable for level V of the Executive Schedule,
for each day during which the individual procured is performing such
services for the Commission.
(f) Compensation.--Each member of the Commission who is not an
officer or employee of the Federal Government shall be compensated at a
rate of basic pay payable for level V of the Executive Schedule, for
each day (including travel time) during which such member is engaged in
the performance of the duties of the Commission. All members of the
Commission who are officers or employees of the United States shall
serve without compensation in addition to that received for their
services as officers or employees of the United States.
(g) Obtaining Data.--The Commission and the Secretary may solicit
loss exposure data and such other information either deems necessary to
carry out its responsibilities from governmental agencies and bodies
and organizations that act as statistical agents for the insurance
industry. The Commission and the Secretary shall take such actions as
are necessary to ensure that information that either deems is
confidential or proprietary is disclosed only to authorized individuals
working for the Commission or the Secretary. No company which refuses
to provide information requested by the Commission or the Secretary may
participate in the program for reinsurance coverage authorized under
this Act, nor may any State insurance or reinsurance program
participate if any governmental agency within that State has refused to
provide information requested by the Commission or the Secretary.
(h) Funding.--
(1) Authorization of appropriations.--There are authorized
to be appropriated--
(A) $1,000,000 for fiscal year 2006 for the initial
expenses in establishing the Commission and the initial
activities of the Commission that cannot timely be
covered by amounts obtained pursuant to section
5(a)(3)(C), as determined by the Secretary;
(B) such additional sums as may be necessary to
carry out subsequent activities of the Commission;
(C) $1,000,000 for fiscal year 2006 for the initial
expenses of the Secretary in carrying out the program
authorized under section 2; and
(D) such additional sums as may be necessary to
carry out subsequent activities of the Secretary under
this Act.
(2) Offset.--The Secretary shall provide, to the maximum
extent practicable, that an amount equal to any amount
appropriated under paragraph (1) is obtained from purchasers of
reinsurance coverage under this Act and deposited in the Fund
established under section 7. Such amounts shall be obtained by
inclusion of a provision for the Secretary's and the
Commission's expenses incorporated into the pricing of the
contracts for such reinsurance coverage, pursuant to section
5(a)(3)(C).
(i) Termination.--The Commission shall terminate upon the effective
date of the repeal under section 11(c).
SEC. 9. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Commission.--The term ``Commission'' means the National
Commission on Catastrophe Risks and Insurance Loss Costs
established under section 8.
(2) Covered perils.--The term ``covered perils'' means the
disaster perils under section 4.
(3) Covered purchaser.--The term ``covered purchaser''
means, with respect to reinsurance coverage made available
under a contract under section 5, the purchaser of the contract
auctioned under such section or any subsequent holder or
holders of the contract.
(4) Disaster area.--The term ``disaster area'' means a
geographical area, with respect to which--
(A) a covered peril has occurred; and
(B) a declaration that a major disaster exists, as
a result of the occurrence of such peril--
(i) has been made by the President of the
United States; and
(ii) is in effect.
(5) Eligible losses.--The term ``eligible losses'' means
losses in excess of the sustained and retained losses, as
defined by the Secretary after consultation with the
Commission.
(6) Price gouging.--The term ``price gouging'' means the
providing of any consumer good or service by a supplier 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 (notwithstanding any real cost
increase due to any attendant business risk and other
reasonable expenses that result from the major disaster
involved), than the price charged by the supplier for such
consumer good or service immediately before the disaster.
(7) Qualified lines.--The term ``qualified lines'' means
lines of insurance coverage for which losses are covered under
section 3 by reinsurance coverage under this Act.
(8) Reinsurance coverage.--The term ``reinsurance coverage
under this Act'' means coverage under contracts made available
under section 5 by the Secretary.
(9) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(10) State.--The term ``State'' means the States of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana Islands,
Guam, the Virgin Islands, American Samoa, and any other
territory or possession of the United States.
SEC. 10. REGULATIONS.
The Secretary shall issue any regulations necessary to carry out
the program for reinsurance coverage under this Act.
SEC. 11. TERMINATION.
(a) In General.--Except as provided in subsection (b), the
Secretary may not provide any reinsurance coverage under this Act
covering any period after the expiration of the 10-year period
beginning on the date of the enactment of this Act.
(b) Extension.--If upon the expiration of the period under
subsection (a) the Secretary, in consultation with the Commission,
determines that continuation of the program for reinsurance coverage
under this Act is necessary to carry out the purpose of this Act under
section 2(b) because of insufficient growth of capacity in the private
homeowners' insurance market, the Secretary shall continue to provide
reinsurance coverage under this Act until the expiration of the 5-year
period beginning upon the expiration of the period under subsection
(a).
(c) Repeal.--Effective upon the date that reinsurance coverage
under this Act is no longer available or in force pursuant to
subsection (a) or (b), this Act (except for this section) is repealed.
(d) Deficit Reduction.--The Secretary shall cover into the General
Fund of the Treasury any amounts remaining in the Fund under section 7
upon the repeal of this Act.
SEC. 12. ANNUAL STUDY OF COST AND AVAILABILITY OF DISASTER INSURANCE
AND PROGRAM NEED.
(a) In General.--The Secretary shall, on an annual basis, conduct a
study and submit to the Congress a report on the cost and availability
of homeowners' insurance for losses resulting from catastrophic
disasters covered by the reinsurance program under this Act.
(b) Contents.--Each annual study under this section shall determine
and identify, on an aggregate basis--
(1) for each State or region, the capacity of the private
homeowners' insurance market with respect to coverage for
losses from catastrophic disasters;
(2) for each State or region, the percentage of homeowners
who have such coverage, the disasters covered, and the average
cost of such coverage;
(3) for each State or region, the progress that private
reinsurers and capital markets have made in providing
reinsurance for such homeowners' insurance;
(4) for each State or region, the effects of the Federal
reinsurance program under this Act on the availability and
affordability of such insurance; and
(5) the appropriate time for termination of the Federal
reinsurance program under this Act.
(c) Timing.--Each annual report under this section shall be
submitted not later than March 30 of the year after the year for which
the study was conducted.
(d) Commencement of Reporting Requirement.--The Secretary shall
first submit an annual report under this section not later than 2 years
after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Referred to the Subcommittee on Housing and Community Opportunity.
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