I
119THCONGRESS
1
STSESSION H. R. 827
To ensure the availability and affordability of homeowners’ insurance coverage
for catastrophic events.
IN THE HOUSE OF REPRESENTATIVES
JANUARY28, 2025
Ms. W
ILSONof Florida introduced the following bill; which was referred to
the Committee on Financial Services
A BILL
To ensure the availability and affordability of homeowners’
insurance coverage for catastrophic events.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3
(a) S
HORTTITLE.—This Act may be cited as the 4
‘‘Homeowners’ Defense Act of 2025’’. 5
(b) T
ABLE OFCONTENTS.—The table of contents for 6
this Act is as follows: 7
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
TITLE I—NATIONAL CATASTROPHE RISK CONSORTIUM
Sec. 101. Establishment; chairperson; membership; bylaws.
Sec. 102. Functions.
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Sec. 103. Authorization of appropriations.
TITLE II—CATASTROPHE OBLIGATION GUARANTEES
Sec. 201. Purposes.
Sec. 202. Establishment of debt guarantee program.
Sec. 203. Effect of guarantee.
Sec. 204. Full faith and credit.
Sec. 205. Fees for guarantees; amount; collection.
Sec. 206. Payment of losses.
Sec. 207. Regulations.
TITLE III—REINSURANCE COVERAGE FOR ELIGIBLE STATE
PROGRAMS
Sec. 301. Program authority.
Sec. 302. Contract principles.
Sec. 303. Terms of reinsurance contracts.
Sec. 304. Maximum Federal liability.
Sec. 305. Federal Natural Catastrophe Reinsurance Fund.
Sec. 306. Consideration of rebuilding.
Sec. 307. Regulations.
TITLE IV—MITIGATION GRANT PROGRAM
Sec. 401. Mitigation grant program.
TITLE V—GENERAL PROVISIONS
Sec. 501. Eligible State programs.
Sec. 502. Study and conditional coverage of commercial residential lines of in-
surance.
Sec. 503. Study of risk-based pricing and State program rates.
Sec. 504. Definitions.
Sec. 505. Regulations.
SEC. 2. FINDINGS AND PURPOSES.
1
(a) F
INDINGS.—The Congress finds that— 2
(1) the United States has a history of cata-3
strophic natural disasters, including hurricanes, tor-4
nadoes, flood, fire, earthquakes, and volcanic erup-5
tions; 6
(2) although catastrophic natural disasters 7
occur infrequently, their costs are likely to escalate 8
in the coming years, in part because of the inten-9
sifying impacts of climate change, coastal develop-10
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ment patterns, and increasing property values along 1
the hurricane-prone or earthquake-vulnerable coast-2
lines of the United States; 3
(3) such disasters present physical risk to as-4
sets, publicly traded securities, private investments, 5
and companies; 6
(4) as the risk of catastrophe losses grows, so 7
do the risks that any premiums collected by private 8
insurers for extending coverage will be insufficient to 9
cover future catastrophes, and private insurers, to 10
protect their shareholders and policyholders (in the 11
case of mutually owned companies), have thus sig-12
nificantly raised premiums and curtailed insurance 13
coverage in States exposed to major catastrophes; 14
(5) such effects on the insurance industry have 15
been harmful to economic activity in States exposed 16
to major catastrophes and have placed significant 17
burdens on residents of such States and the Federal 18
Government; and 19
(6) under the current disaster risk management 20
system, the Federal Government and, hence, tax-21
payers pay for rebuilding through government 22
grants and low-interest loans. 23
(b) P
URPOSES.—The purposes of this Act are to es-24
tablish a program to provide Federal support for State- 25
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sponsored insurance programs to help homeowners pre-1
pare for and recover from the damages caused by natural 2
catastrophes, to encourage mitigation and prevention for 3
such catastrophes, to promote the use of private market 4
capital as a means to insure against such catastrophes, 5
to expedite the payment of claims and better assist in the 6
financial recovery from such catastrophes. 7
TITLE I—NATIONAL CATAS-8
TROPHE RISK CONSORTIUM 9
SEC. 101. ESTABLISHMENT; CHAIRPERSON; MEMBERSHIP; 10
BYLAWS. 11
(a) E
STABLISHMENT.—There is established an entity 12
to be known as the ‘‘National Catastrophe Risk Consor-13
tium’’ (in this title referred to as the ‘‘Consortium’’). 14
(b) C
HAIRPERSON.—The Secretary of the Treasury, 15
or the designee of the Secretary, shall serve as the chair-16
person of the Consortium. 17
(c) M
EMBERSHIP.—Any State shall be eligible to par-18
ticipate in the Consortium. 19
(d) C
ONSIDERATIONS.—In selecting members of the 20
Consortium, the States shall— 21
(1) select members who have a background and 22
expertise relevant to the functions of the Consor-23
tium; and 24
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(2) ensure the participation of one individual or 1
representative of an organization that represents 2
consumers, minorities, and low- and moderate-in-3
come housing persons by reflecting the communities 4
that are being affected by catastrophic natural disas-5
ters. 6
(e) B
YLAWS.—The Consortium may prescribe, 7
amend, and repeal such bylaws as necessary to carry out 8
the functions of the Consortium. 9
SEC. 102. FUNCTIONS. 10
The Consortium shall— 11
(1) work with States to gather and maintain an 12
inventory of catastrophe risk obligations held by pro-13
viders of natural catastrophe insurance; 14
(2) assess issues or gaps in the insurance sector 15
of the United States financial system and any re-16
lated effects on insurance affordability for policy-17
holders; 18
(3) advance consistent, clear, intelligible, com-19
parable, and accurate disclosure of catastrophic risk; 20
(4) submit annual reports to the Congress de-21
scribing the activities of the Consortium for the pre-22
ceding year, and the first such annual report shall 23
include an assessment of the costs to States and the 24
regions associated with catastrophe risk; 25
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(5) assess the potential for major disruptions of 1
private insurance coverage in United States markets 2
particularly vulnerable to catastrophes; 3
(6) make such other recommendations on how 4
identified financial risk can be mitigated, including 5
through new or revised regulatory standards, as ap-6
propriate; and 7
(7) account for and identify disparate impacts 8
of catastrophic risks on disadvantaged communities 9
and communities of color. 10
SEC. 103. AUTHORIZATION OF APPROPRIATIONS. 11
There are authorized to be appropriated to carry out 12
this title such sums as may be necessary for each of fiscal 13
years 2026 through 2029. 14
TITLE II—CATASTROPHE 15
OBLIGATION GUARANTEES 16
SEC. 201. PURPOSES. 17
The purposes of this title are to establish a pro-18
gram— 19
(1) to promote the availability of private capital 20
to provide liquidity and capacity to State catas-21
trophe insurance programs; and 22
(2) to expedite the payment of claims under 23
State catastrophe insurance programs and better as-24
sist the financial recovery from significant natural 25
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catastrophes by authorizing the Secretary of the 1
Treasury to guarantee debt for such purposes. 2
SEC. 202. ESTABLISHMENT OF DEBT GUARANTEE PRO-3
GRAM. 4
(a) A
UTHORITY OFSECRETARY.—The Secretary of 5
the Treasury is authorized and shall have the powers and 6
authorities necessary to guarantee, and to enter into com-7
mitments to guarantee, holders of debt against loss of 8
principal or interest, or both, on any such debt issued by 9
eligible State programs for purposes of this title, provided 10
that the total principal amount of debt obligations guaran-11
teed by the Secretary— 12
(1) for eligible State programs that cover earth-13
quake peril shall not exceed $3,500,000,000; and 14
(2) for eligible State programs that cover all 15
other perils shall not exceed $17,000,000,000. 16
(b) C
ONDITIONS FORGUARANTEEELIGIBILITY.—A 17
debt guarantee under this section may be made only if 18
the Secretary has issued a commitment to guarantee to 19
an eligible State program. The commitment to guarantee 20
shall be for a period of 3 years and may be extended by 21
the Secretary for a period of 1 year on each annual anni-22
versary of the issuance of the commitment to guarantee. 23
The commitment to guarantee and each extension of such 24
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commitment may be issued by the Secretary only if the 1
following requirements are satisfied: 2
(1) The eligible State program submits to the 3
Secretary a report setting forth, in such form and 4
including such information as the Secretary shall re-5
quire, how the eligible State program plans to repay 6
the debt. 7
(2) Based upon the eligible State program’s re-8
port submitted pursuant to paragraph (1), the Sec-9
retary determines there is reasonable assurance that 10
the eligible State program can meet its repayment 11
obligation under the debt. 12
(3) The eligible State program enters into an 13
agreement with the Secretary, as the Secretary shall 14
require, that the eligible State program will not use 15
Federal funds of any kind or from any Federal 16
source (including any disaster or other financial as-17
sistance, loan proceeds, and any other assistance or 18
subsidy) to repay the debt. 19
(4) The commitment to guarantee shall specify 20
the fees for debt guarantee coverage. 21
(5) The maximum term of the debt that shall 22
be specified in a commitment issued under this sec-23
tion may not exceed 30 years. 24
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(6) The Secretary determines that the eligible 1
State program does not cover losses arising from 2
floods to properties that are required to be covered 3
by flood insurance, covered by flood insurance, or lo-4
cated in areas having special flood hazards (as such 5
term is defined for purposes of the National Flood 6
Insurance Act of 1968 and the Flood Disaster Pro-7
tection Act of 1973). 8
(c) M
ANDATORYASSISTANCE FORELIGIBLESTATE 9
P
ROGRAMS.—The Secretary shall upon the request of an 10
eligible State program and pursuant to a commitment to 11
guarantee issued under subsection (b), provide a guar-12
antee under subsection (d) for such eligible State program 13
in the amount requested by such eligible State program, 14
subject to the limitation under subsection (d)(2). 15
(d) C
ATASTROPHIC DEBTGUARANTEE.—A debt 16
guarantee under this subsection for an eligible State pro-17
gram shall be subject to the following requirements: 18
(1) P
RECONDITIONS.—The eligible State pro-19
gram shows to the satisfaction of the Secretary that 20
insured losses in the State to the eligible State pro-21
gram arising from the event or events covered by the 22
commitment to guarantee are likely to exceed the eli-23
gible State program’s available cash resources, as of 24
immediately before the date of the event. 25
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(2) AMOUNT.—The aggregate principal amount 1
of the debt guaranteed following an event or events 2
referred to in paragraph (1) may not exceed the 3
amount by which the insured losses expected to be 4
sustained by the State program as a result of such 5
event or events exceed 80 percent of the qualifying 6
assets of the eligible State program as stated in the 7
most recent quarterly financial statement filed with 8
the domiciliary regulator of the program prior to the 9
event or events, except that, for eligible State pro-10
grams that are not required to file such quarterly fi-11
nancial statements, the aggregate principal amount 12
of the debt guaranteed may not exceed the amount 13
by which insured losses sustained by the State pro-14
gram as a result of such event or events exceed 80 15
percent of the unrestricted net assets as stated in 16
the annual financial statement for the program’s fis-17
cal year ending immediately prior to the event or 18
events. 19
(3) U
SE OF FUNDS.—Amounts of debt guaran-20
teed under this section shall be used only to pay the 21
costs of issuing debt and to pay the insured losses 22
and loss adjustment expenses incurred by an eligible 23
State program. Such amounts shall not be used for 24
any other purpose. 25
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(e) FUNDING.—There are authorized to be appro-1
priated such sums as may be necessary to carry out this 2
section. 3
SEC. 203. EFFECT OF GUARANTEE. 4
The issuance of any guarantee by the Secretary 5
under this title shall be conclusive evidence that— 6
(1) the guarantee has been properly obtained; 7
(2) the underlying debt qualified for such guar-8
antee; and 9
(3) the guarantee is valid, legal, and enforce-10
able. 11
SEC. 204. FULL FAITH AND CREDIT. 12
The full faith and credit of the United States is 13
pledged to the payment of all guarantees issued under this 14
title with respect to principal and interest. 15
SEC. 205. FEES FOR GUARANTEES; AMOUNT; COLLECTION. 16
The Secretary shall charge and collect fees for each 17
guarantee in amounts specified in the commitment to 18
guarantee, which shall be in amounts sufficient in the 19
judgment of the Secretary at the time of issuance of the 20
commitment to guarantee to cover applicable administra-21
tive costs and probable losses on the guaranteed obliga-22
tions covered by the commitment to guarantee, but in any 23
event not to exceed one-half of 1 percent per annum of 24
the outstanding indebtedness covered by each guarantee. 25
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SEC. 206. PAYMENT OF LOSSES. 1
(a) I
NGENERAL.—The Secretary agrees to pay to 2
the duly appointed paying agent or trustee (in this section 3
referred to as the ‘‘Fiscal Agent’’) for the eligible State 4
program that portion of the principal and interest on any 5
debt guaranteed under this title that shall become due for 6
payment but shall be unpaid by the eligible State program 7
as a result of such program having provided insufficient 8
funds to the Fiscal Agent to make such payments. The 9
Secretary shall make such payments on the date such 10
principal or interest becomes due for payment or on the 11
business day next following the day on which the Secretary 12
shall receive notice of failure on the part of the eligible 13
State program to provide sufficient funds to the Fiscal 14
Agent to make such payments, whichever is later. Upon 15
making such payment, the Secretary shall be subrogated 16
to all the rights of the ultimate recipient of the payment. 17
The Secretary shall be entitled to recover from the eligible 18
State program the amount of any payments made pursu-19
ant to any guarantee entered into under this title. 20
(b) R
OLE OF THEATTORNEYGENERAL.—The Attor-21
ney General shall take such action as may be appropriate 22
to enforce any right accruing to the United States as a 23
result of the issuance of any guarantee under this title. 24
(c) R
IGHT OF THE SECRETARY.—Notwithstanding 25
any other provision of law relating to the acquisition, han-26
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dling, or disposal of property by the United States, the 1
Secretary shall have the right in the discretion of the Sec-2
retary to complete, recondition, reconstruct, renovate, re-3
pair, maintain, operate, or sell any property acquired by 4
the Secretary pursuant to the provisions of this title. 5
SEC. 207. REGULATIONS. 6
The Secretary shall issue any regulations necessary 7
to carry out the debt-guarantee program established under 8
this title. 9
TITLE III—REINSURANCE COV-10
ERAGE FOR ELIGIBLE STATE 11
PROGRAMS 12
SEC. 301. PROGRAM AUTHORITY. 13
The Secretary of the Treasury, shall make available 14
for purchase, only by eligible State programs, contracts 15
for reinsurance coverage under this title. 16
SEC. 302. CONTRACT PRINCIPLES. 17
Contracts for reinsurance coverage made available 18
under this title— 19
(1) shall be priced on an actuarially sound 20
basis; 21
(2) shall minimize the administrative costs of 22
the Federal Government; and 23
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(3) shall provide coverage based solely on in-1
sured losses covered by the eligible State program 2
purchasing the contract. 3
SEC. 303. TERMS OF REINSURANCE CONTRACTS. 4
(a) M
INIMUMATTACHMENTPOINT ANDLEVELS OF 5
C
OVERAGE.—The Secretary shall establish attachment 6
points at which reinsurance coverage under this title is 7
provided to eligible State programs. In setting attachment 8
points and in determining the levels of reinsurance cov-9
erage provided, the Secretary shall take into consider-10
ation— 11
(1) the coverage available through eligible State 12
programs; 13
(2) the availability and accessibility of reinsur-14
ance in the private market; and 15
(3) other factors as deemed appropriate by the 16
Secretary. 17
(b) E
IGHTY TONINETYPERCENTCOVERAGE OFIN-18
SUREDLOSSES INEXCESS OFRETAINEDLOSSES.—Each 19
contract for reinsurance coverage under this title shall 20
provide that the amount paid out under the contract shall 21
be equal to at least 80 percent, but not more than 90 per-22
cent, of the amount of insured losses of the eligible State 23
program in excess of the amount of retained losses that 24
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the contract requires, pursuant to subsection (a), to be 1
incurred by such program. 2
(c) M
ATURITY.—The term of each contract for rein-3
surance coverage under this title shall not exceed 1 year 4
or such other term as the Secretary may determine. 5
(d) P
AYMENTCONDITION.—Each contract for rein-6
surance coverage under this title shall authorize claims 7
payments to the eligible State program purchasing the 8
coverage only for insured losses provided under the con-9
tract. 10
(e) M
ULTIPLEEVENTS.—The contract shall cover 11
any insured losses from one or more events that may occur 12
during the term of the contract and shall provide that if 13
multiple events occur, the retained losses requirement 14
under subsection (a) shall apply on a calendar year basis, 15
in the aggregate and not separately to each individual 16
event. 17
(f) T
IMING OFCLAIMS.—Claims under a contract for 18
reinsurance coverage under this title shall include only in-19
surance claims that are reported to the eligible State pro-20
gram within the 3-year period beginning upon the event 21
or events for which payment under the contract is pro-22
vided. 23
(g) A
CTUARIALPRICING.—The price of coverage 24
under a reinsurance contract under this title shall be an 25
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amount, established by the Secretary at a level that annu-1
ally produces expected premiums that shall be sufficient 2
to pay the reasonably anticipated cost of all claims (which 3
may not be equal only to average annual costs), loss ad-4
justment expenses, all administrative costs of reinsurance 5
coverage offered under this title, and any such outwards 6
reinsurance, as described in section 305(c)(3), as the Sec-7
retary considers prudent taking into consideration the de-8
mand for reinsurance coverage under this title. The antici-9
pated cost of all claims shall be comparable to amounts 10
being included in the price for similar layers of coverage 11
in the private sector, taking into account the savings asso-12
ciated with non-profit and tax-exempt status of the Fund 13
established under section 305. 14
(h) I
NFORMATION.—Each contract for reinsurance 15
coverage under this title shall contain a condition pro-16
viding that the Secretary may require the eligible State 17
program that is covered under the contract to submit to 18
the Secretary all information on the eligible State program 19
relevant to the duties of the Secretary under this title. 20
(i) O
THERS.—Contracts for reinsurance coverage 21
under this title shall contain such other terms as the Sec-22
retary considers necessary to carry out this title and to 23
ensure the long-term financial integrity of the program 24
under this title. 25
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SEC. 304. MAXIMUM FEDERAL LIABILITY. 1
(a) I
NGENERAL.—Subject to subsection (b) and not-2
withstanding any other provision of law, the aggregate po-3
tential liability for payment of claims under all contracts 4
for reinsurance coverage under this title sold in any single 5
year shall be determined by the Secretary based on review 6
of the market for reinsurance coverage under this title. 7
(b) L
IMITATION.—The authority of the Secretary to 8
enter into contracts for reinsurance coverage under this 9
title shall be effective for any fiscal year only to such ex-10
tent or in such amounts as are or have been provided in 11
appropriation Acts for such fiscal year for the aggregate 12
potential liability for payment of claims under all contracts 13
for reinsurance coverage under this title. 14
SEC. 305. FEDERAL NATURAL CATASTROPHE REINSUR-15
ANCE FUND. 16
(a) E
STABLISHMENT.—There is established within 17
the Treasury of the United States a fund to be known 18
as the Federal Natural Catastrophe Reinsurance Fund (in 19
this section referred to as the ‘‘Fund’’). 20
(b) C
REDITS.—The Fund shall be credited with— 21
(1) amounts received annually from the sale of 22
contracts for reinsurance coverage under this title; 23
(2) any amounts appropriated for the aggregate 24
potential liability for payment of claims under all 25
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contracts for reinsurance coverage under this title; 1
and 2
(3) any amounts earned on investments of the 3
Fund pursuant to subsection (d). 4
(c) U
SES.—Amounts in the Fund shall be available 5
to the Secretary only for the following purposes: 6
(1) C
ONTRACT PAYMENTS .—For payments to 7
purchasers covered under contracts for reinsurance 8
coverage for eligible losses under such contracts. 9
(2) A
DMINISTRATIVE EXPENSES .—To pay for 10
the administrative expenses incurred by the Sec-11
retary in carrying out the reinsurance program 12
under this title. 13
(3) O
UTWARDS REINSURANCE .—To obtain 14
retrocessional or other reinsurance coverage of any 15
kind to cover risk reinsured under contracts for rein-16
surance coverage made available under this title. 17
(d) I
NVESTMENT.—The Secretary shall invest such 18
amounts in the Fund as the Secretary considers advisable 19
in obligations issued or guaranteed by the United States. 20
For purposes of the grant mandate in section 401(f) for 21
a fiscal year, the Secretary shall disclose the annual net 22
investment income available not later than 60 days after 23
the conclusion of such fiscal year and disperse appropriate 24
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funds not later than 90 days after the conclusion of such 1
fiscal year. 2
SEC. 306. CONSIDERATION OF REBUILDING. 3
Nothing in this title may be construed to prevent 4
counties, municipalities, and other localities from under-5
taking land and environmental assessments to determine 6
the efficacy of rebuilding. 7
SEC. 307. REGULATIONS. 8
The Secretary shall issue any regulations necessary 9
to carry out the program for reinsurance coverage under 10
this title. 11
TITLE IV—MITIGATION GRANT 12
PROGRAM 13
SEC. 401. MITIGATION GRANT PROGRAM. 14
(a) E
STABLISHMENT.—The Secretary of Housing 15
and Urban Development shall establish and carry out a 16
program to provide grants to eligible entities to develop, 17
enhance, or maintain programs to prevent and mitigate 18
losses from natural catastrophes. 19
(b) G
RANTS.—A grant provided under subsection (a) 20
shall be used to reduce loss of life and property by— 21
(1) encouraging awareness of risk factors and 22
what steps can be taken to eliminate or reduce them, 23
including public education campaigns to promote cit-24
izen and community preparedness; 25
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(2) assisting in the determination of the loca-1
tion of risk by giving careful consideration to the 2
natural risks for the location of a property; 3
(3) providing inspections of homes to identify 4
areas to strengthen such homes and reduce exposure 5
to natural catastrophes; 6
(4) providing financial assistance to home-7
owners to retrofit homes to reduce exposure to nat-8
ural catastrophes; or 9
(5) supporting disaster response readiness pro-10
grams, including initiatives that develop, enhance ,or 11
maintain the capacity of a public safety organization 12
to be better prepared, equipped, and trained to re-13
spond to natural catastrophes. 14
(c) P
RIORITY.—In making grants under the program 15
under subsection (a), the Secretary shall give priority to 16
applicants demonstrating greater financial need, including 17
applicants serving lower income individuals and areas. 18
(d) C
ONSULTATION WITHEXPERTS.—In carrying 19
out the program established under subsection (a), the Sec-20
retary of Housing and Urban Development shall consult 21
with— 22
(1) disaster preparedness and response organi-23
zations; 24
(2) homebuilders; 25
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(3) real estate professionals; 1
(4) building code enforcement agencies; and 2
(5) any other person that the Secretary con-3
siders appropriate. 4
(e) E
LIGIBLEENTITYDEFINED.—In this section, the 5
term ‘‘eligible entity’’ means a State or local government, 6
a part or program of a State or local government, or a 7
nationally recognized, congressionally chartered disaster 8
response non-profit organization. 9
(f) G
RANTMANDATE.—The Secretary shall, to the 10
extent provided in advance in appropriation Acts, use not 11
less than 35 percent of the net investment income from 12
the Federal Natural Catastrophe Reinsurance Fund 13
earned in each fiscal year pursuant to section 305(d) for 14
grants under this section. 15
TITLE V—GENERAL PROVISIONS 16
SEC. 501. ELIGIBLE STATE PROGRAMS. 17
(a) E
LIGIBLESTATEPROGRAMS.—A State program 18
shall be considered an ‘‘eligible State program’’ for pur-19
poses of this Act if the Secretary certifies, in accordance 20
with the procedures established under subsection (c), that 21
the State program complies with the following require-22
ments: 23
(1) S
TATE PROGRAM DESIGN .—The State pro-24
gram is established and authorized by State law as 25
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an insurance program or a reinsurance program that 1
is designed to improve private insurance markets 2
and that offers residential property insurance cov-3
erage for losses arising from any personal residential 4
line of insurance, as defined in the Uniform Prop-5
erty and Casualty Product Coding Matrix of the Na-6
tional Association of Insurance Commissioners. 7
(2) O
PERATION.—The State program shall 8
meet the following requirements: 9
(A) A majority of the members of the gov-10
erning body of the State program shall be pub-11
lic officials or appointed by public officials. 12
(B) The State shall have a financial inter-13
est in the State program. 14
(C) If the State has at any time appro-15
priated amounts from the State program’s 16
funds for any purpose other than payments for 17
losses insured under the State program, or pay-18
ments made in connection with any of the State 19
program’s authorized activities, the State shall 20
have returned such amounts to the State fund, 21
together with interest as determined by the in-22
dividual State on such amounts. 23
(3) T
AX STATUS.—The State program shall 24
have received from the Secretary (or the Secretary’s 25
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designee) a written determination, within the mean-1
ing of section 6110(b) of the Internal Revenue Code 2
of 1986, that the program either— 3
(A) constitutes an ‘‘integral part’’ of the 4
State that has created it; or 5
(B) is otherwise exempt from Federal in-6
come taxation. 7
(4) E
ARNINGS.—The State program may not 8
provide for any distribution of any part of any net 9
profits of the State program to any insurer that par-10
ticipates in the State program. 11
(5) P
REVENTION AND MITIGATION .— 12
(A) M
ITIGATION OF LOSSES.—The State 13
program shall include provisions designed to en-14
courage and support programs to mitigate 15
losses from natural catastrophes for which the 16
State insurance or reinsurance program was es-17
tablished to provide insurance coverage. 18
(B) O
PERATIONAL REQUIREMENTS .—The 19
State program shall operate in a State that— 20
(i) requires that an appropriate public 21
body within the State shall have adopted 22
adequate mitigation measures with effec-23
tive enforcement provisions which the Sec-24
retary finds are consistent with the criteria 25
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for construction described in the Inter-1
national Code Council building codes; 2
(ii) has taken actions to establish an 3
insurance rate structure that takes into ac-4
count measures to mitigate insured losses; 5
and 6
(iii) ensures, to the extent that rein-7
surance coverage made available under the 8
eligible State program results in any cost 9
savings in providing insurance coverage for 10
risks in such State, such cost savings are 11
reflected in premium rates charged to con-12
sumers for such coverage. 13
(6) R
EQUIREMENTS REGARDING COVERAGE .— 14
The State program— 15
(A) may not, except for charges or assess-16
ments related to post-event financing or bond-17
ing, involve cross-subsidization between any 18
separate property and casualty insurance lines 19
covered under the State program pursuant to 20
paragraph (1); 21
(B) shall be subject to a requirement 22
under State law that for any insurance coverage 23
made available under the State insurance pro-24
gram or for any reinsurance coverage for such 25
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insurance coverage made available under the 1
State reinsurance program, the premium rates 2
charged shall cover the expected value of all fu-3
ture costs associated with insurance policies or 4
reinsurance contracts written by such program, 5
in accordance with the principles under section 6
303(g); 7
(C) shall make available to all qualifying 8
policyholders insurance or reinsurance coverage, 9
as applicable, and mitigation services on a basis 10
that is not unfairly discriminatory; and 11
(D) publishes, and displays in a prominent 12
location on a website for the State insurance 13
program, information for the State insurance 14
program of estimated assessments and sur-15
charges on policyholders, in accordance with 16
State laws, regulations, or other requirements, 17
for a range of natural disaster or catastrophic 18
events having a varying magnitude of losses, in-19
cluding an event projected to result in losses of 20
such magnitude that they have a 1 percent 21
chance of being equaled or exceeded in any sin-22
gle year, based on the current year estimated 23
aggregate funding capacity of the State insur-24
ance program and State reinsurance program. 25
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(7) LAND USE AND ZONING .—The State pro-1
gram, to the extent possible, seeks to encourage ap-2
propriate State and local government units to de-3
velop comprehensive land use and zoning plans that 4
include natural hazard mitigation. 5
(8) R
ISK-BASED CAPITAL REQUIREMENTS .— 6
The State program— 7
(A) complies with such risk-based capital 8
requirements as applicable State law may im-9
pose and shall take into consideration asset 10
risk, credit risk, underwriting risk, and such 11
other relevant risk as determined by the Sec-12
retary; and 13
(B) for each calendar year, prepares and 14
submits to the Secretary a report identifying its 15
claim-paying capacity at such time after the 16
conclusion of such year, and containing such in-17
formation and in such form, as the Secretary 18
shall require. 19
(9) O
THER REQUIREMENTS .—The State pro-20
gram complies with such additional organizational, 21
underwriting, and financial requirements as the Sec-22
retary shall, by regulation, provide to carry out the 23
purposes of this Act. 24
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(b) CERTIFICATION.—The Secretary shall establish 1
procedures for initial certification and recertification as an 2
eligible State program. 3
(c) T
RANSITIONALMECHANISMS.—For the 5-year 4
period beginning on the date of the enactment of this Act, 5
in the case of a State that does not have an eligible State 6
program for the State, a State residual insurance market 7
entity, or State-sponsored provider of natural catastrophe 8
insurance, for such State shall be considered to be an eligi-9
ble State program, but only if such State residual insur-10
ance market entity, or State-sponsored provider of natural 11
catastrophe insurance, was in existence before such date 12
of enactment. 13
(d) R
EINSURANCETOCOVEREXPOSURE.—This sec-14
tion may not be construed to limit or prevent any eligible 15
State program from obtaining reinsurance coverage for in-16
sured losses retained by insurers pursuant to this section. 17
SEC. 502. STUDY AND CONDITIONAL COVERAGE OF COM-18
MERCIAL RESIDENTIAL LINES OF INSUR-19
ANCE. 20
The Secretary shall study, on an expedited basis, the 21
need for and impact of expanding the programs estab-22
lished by this Act to apply to insured losses of eligible 23
State programs for losses arising from all commercial in-24
surance policies which provide coverage for properties that 25
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are composed predominantly of residential rental units. 1
The Secretary shall consider the catastrophic insurance 2
and reinsurance market for commercial residential prop-3
erties, and specifically the availability of adequate private 4
insurance coverage when an insured event occurs, the im-5
pact any such capacity restrictions have on housing afford-6
ability for renters, and the likelihood that such an expan-7
sion of the program would increase insurance capacity for 8
this market segment. 9
SEC. 503. STUDY OF RISK-BASED PRICING AND STATE PRO-10
GRAM RATES. 11
The Comptroller General of the United States shall 12
conduct a study to analyze— 13
(1) risk-based rate pricing, to determine the use 14
of actuarially sound pricing for State insurance, re-15
insurance, or residual market programs, including 16
what measures States are taking to implement actu-17
arially sound rates; 18
(2) rates for State insurance, reinsurance, or 19
residual market programs that fail to cover the ex-20
pected value of all future costs, including the cost of 21
capital, associated with insurance policies or reinsur-22
ance contracts written by such programs or fail to 23
have sufficient assets above their indebtedness to 24
meet their obligations; and 25
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(3) any financial complications arising for pol-1
icyholders resulting from increased policy costs. 2
Not later than 6 months after the date of the enactment 3
of this Act, the Comptroller General shall submit a report 4
to the Congress on the results of the study under this sec-5
tion. 6
SEC. 504. DEFINITIONS. 7
In this Act: 8
(1) C
OMMITMENT TO GUARANTEE .—The term 9
‘‘commitment to guarantee’’ means a commitment to 10
make debt guarantees to an eligible State program 11
pursuant to section 202(c). 12
(2) E
LIGIBLE STATE PROGRAM .—The term ‘‘eli-13
gible State program’’ means a State program that 14
the Secretary certifies as an eligible State program 15
under section 501. 16
(3) I
NSURED LOSS.—The term ‘‘insured loss’’ 17
means any loss that is determined by an eligible 18
State program as being covered by insurance or re-19
insurance made available under that eligible State 20
program. 21
(4) Q
UALIFYING ASSETS.—The term ‘‘quali-22
fying assets’’ means the policyholder surplus of the 23
eligible State program as stated in the most recent 24
quarterly financial statement filed by the program 25
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with the domiciliary regulator of the program in the 1
last quarter ending prior to the event or events. 2
(5) S
ECRETARY.—The term ‘‘Secretary’’ means 3
the Secretary of the Treasury. 4
(6) S
TATE.—The term ‘‘State’’ includes the 5
several States, the District of Columbia, the Com-6
monwealth of Puerto Rico, Guam, the Common-7
wealth of the Northern Mariana Islands, the United 8
States Virgin Islands, and American Samoa, and 9
any other territory or possession of the United 10
States. 11
SEC. 505. REGULATIONS. 12
The Secretary shall issue such regulations as may be 13
necessary to carry out this Act. 14
Æ
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