[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5891 Introduced in House (IH)]








109th CONGRESS
  2d Session
                                H. R. 5891

       To establish a bipartisan commission on insurance reform.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 26, 2006

   Ms. Wasserman Schultz (for herself, Mr. Castle, Mr. Melancon, Mr. 
   McHenry, Mrs. McCarthy, Ms. Hooley, Mr. Ackerman, Mr. Israel, Mr. 
  Bishop of New York, and Mr. Crowley) introduced the following bill; 
       which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
       To establish a bipartisan commission on insurance reform.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Catastrophic Disaster Risk and 
Insurance Commission Act of 2006''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Hurricanes Katrina, Rita, and Wilma, which struck the 
        United States in 2005, caused more than $200 billion in total 
        economic losses, including insured and uninsured losses.
            (2) In the United States, expanded development in exposed 
        geographic areas and rising property values have combined to 
        result in dramatic increases in both insured and economic 
        losses resulting from national catastrophes. Nationally 
        recognized experts in risk management expect these trends to 
        continue. According to a 2004 study based on United States 
        Census data and published by the National Oceanic and 
        Atmospheric Administration, 53 percent of the population of the 
        United States (153 million people) lived in coastal counties 
        (including those that abut the Great Lakes) in 2003. This 
        compares to the 1960 average of 187 people living on each 
        square mile of the United States coast, excluding Alaska. In 
        1994, that figure was 274 persons per square mile, and it is 
        expected to reach 327 people by 2015.
            (3) Although private sector insurance is currently 
        available to spread some catastrophe-related losses throughout 
        the United States and abroad, most experts believe there will 
        be significant insurance and reinsurance shortages, resulting 
        in dramatic rate increases for consumers and businesses, and 
        the unavailability of catastrophe insurance.
            (4) The Federal Government has provided and will continue 
        to provide billions of dollars and resources to pay for losses 
        from catastrophes, including hurricanes, volcanic eruptions, 
        tsunamis, tornados, and other disasters, at huge costs to 
        American taxpayers.
            (5) The Federal Government has a critical interest in 
        ensuring that the management of catastrophes is appropriate and 
        fiscally responsible, and to mitigate, reduce and prevent, 
        where possible, cost to taxpayers. Mortgages require reliable 
        property insurance, and the unavailability of reliable property 
        insurance would make most real estate transactions impossible. 
        In addition, the public health, safety, and welfare demand that 
        structures damaged or destroyed in a catastrophe be 
        reconstructed as soon as possible. Therefore, the potential of 
        unmitigated cost to the American taxpayer and the inability of 
        the private sector insurance and reinsurance markets to 
        maintain sufficient capacity to enable Americans to obtain 
        property insurance coverage in the private sector endanger the 
        national economy and the public health, safety, and welfare.
            (6) Multiple proposals have been introduced in the United 
        States Congress over the past decade to address catastrophic 
        risk insurance, including the creation of a national 
        catastrophic reinsurance fund and the revision of the Federal 
        tax code to allow insurers to use tax-deferred catastrophe 
        funds, yet Congress has failed to act on any of these 
        proposals.
            (7) To the extent the United States faces increased risks 
        from catastrophe exposure, essential technical information 
        about market capacity, financial structures, risk management 
        structures, and innovations in the catastrophe insurance market 
        is needed.
            (8) The most efficient and effective approach to assessing 
        the catastrophe insurance problem in the public policy context 
        is to establish a bipartisan commission of experts to study the 
        management of catastrophic disaster risk, and to require such 
        commission to timely report its recommendations to Congress so 
        that Congress can quickly craft a solution to protect the 
        American people.

SEC. 3. ESTABLISHMENT.

    There is established a bipartisan Catastrophic Disaster Risk and 
Insurance Commission (in this Act referred to as the ``Commission'').

SEC. 4. MEMBERSHIP.

    (a) Members.--The Commission shall be composed of the following:
            (1) 2 members who shall be former members of Congress that 
        were members of a committee of appropriate jurisdiction, of 
        whom--
                    (A) one shall be a Republican; and
                    (B) one shall be a Democrat.
            (2) The Secretary of the Treasury or a designee of the 
        Secretary.
            (3) The Director of the Federal Emergency Management Agency 
        or a designee of the Director.
            (4) The Administrator of the National Oceanic and 
        Atmospheric Administration or a designee of the Administrator.
            (5) 12 additional members or their designees of whom one 
        shall be--
                    (A) a representative of a consumer group;
                    (B) a representative of a primary property and 
                casualty insurance company;
                    (C) a representative of a reinsurance company;
                    (D) an independent insurance agent with experience 
                in writing property and casualty insurance policies;
                    (E) a representative of a national realty company;
                    (F) a State insurance regulator;
                    (G) a State emergency operations official;
                    (H) a physical scientist with expertise in natural 
                disasters;
                    (I) a faculty member of an accredited university 
                with experience in risk management;
                    (J) a member of nationally recognized think tank 
                with experience in risk management;
                    (K) a homebuilder with experience in structural 
                engineering;
                    (L) a lender with expertise in both commercial and 
                residential mortgage lending; and
                    (M) a licensed attorney who is a nationally 
                recognized expert in antitrust law.
    (b) Manner of Appointment.--
            (1) In general.--Any member of the Commission described 
        under paragraph (1) or (5) of subsection (a) shall be appointed 
        only upon unanimous agreement of--
                    (A) the majority leader of the Senate;
                    (B) the minority leader of the Senate;
                    (C) the Speaker of the House of Representatives; 
                and
                    (D) the minority leader of the House of 
                Representatives.
            (2) Consultation.--In making any appointment under 
        paragraph (1), each individual described in paragraph (1) shall 
        consult with the President.
            (3) Time of appointment.--Members of the commission 
        appointed under this subsection shall be appointed not later 
        than 30 days after the date of the enactment of this Act.
    (c) Eligibility Limitation.--Except as provided in subsection (a), 
no member or officer of the Congress, or other member or officer of the 
Executive Branch of the United States Government or any State 
government may be appointed to be a member of the Commission.
    (d) Period of Appointment.--
            (1) In general.--Each member of the Commission shall be 
        appointed for the life of the Commission.
            (2) Vacancies.--A vacancy on the Commission shall not 
        affect its powers, but shall be filled in the same manner as 
        the original appointment was made.
    (e) Quorum.--
            (1) Majority.--A majority of the members of the Commission 
        shall constitute a quorum, but a lesser number may hold 
        hearings.
            (2) Approval actions.--All recommendations and reports of 
        the Commission required by this Act shall be approved only by a 
        majority vote of a quorum of the Commission.
    (f) Chair and Vice Chair.--The majority leader of the Senate, the 
minority leader of the Senate, the Speaker of the House of 
Representatives, and the minority leader of the House of 
Representatives shall jointly select 1 member appointed pursuant to 
subsection (a)(1) to serve as the Chair of the Commission and the other 
member appointed pursuant to subsection (a)(1) to serve as the Vice 
Chair.
    (g) Meetings.--The Council shall meet at the call of its 
Chairperson or a majority of its members at any time.

SEC. 5. DUTIES OF COMMISSION.

    The Commission shall--
            (1) assess--
                    (A) the condition of the property and casualty 
                insurance and reinsurance markets in the aftermath of 
                Hurricanes Katrina, Rita, and Wilma in 2005, and the 4 
                major hurricanes that struck the United States in 2004; 
                and
                    (B) the ongoing exposure of the United States to 
                hurricanes, typhoons, earthquakes, volcanic eruptions, 
                tsunamis, floods, wild fires, and other extreme weather 
                events or natural disasters as determined by the 
                Commission; and
            (2) recommend and report, as required under section 6, any 
        necessary legislative and regulatory changes that will--
                    (A) improve the participation of domestic and 
                international market participants and increase 
                competitiveness of such markets;
                    (B) assure consumers of the--
                            (i) availability of adequate private 
                        insurance coverage when an insured event 
                        occurs; and
                            (ii) best possible range of insurance 
                        products at fair and competitive prices; and
                    (C) minimize liability to the Federal Government 
                and taxpayers by--
                            (i) reducing the likelihood of fraud and 
                        abuse of a federal repayment program; and
                            (ii) hedging the risk exposure assumed by 
                        the Federal Government by the adoption of a 
                        national catastrophe program.

SEC. 6. REPORT.

    (a) In General.--Not later than 180 days after the appointment of 
Commission members under section 4, the Commission shall submit to the 
President and the Congress a final report containing a detailed 
statement of its findings, together with any recommendations for 
legislation or administrative action that the Commission considers 
appropriate, in accordance with the requirements of section 5.
    (b) Considerations.--In developing any recommendations under 
subsection (a), the Commission shall consider--
            (1) the catastrophic insurance and reinsurance market 
        structures and the relevant commercial practices in such 
        insurance industries in providing insurance protection to 
        different sectors of the American population;
            (2) the constraints and opportunities in implementing a 
        catastrophic insurance system that can resolve key obstacles 
        currently impeding broader implementation of catastrophe risk 
        management and financing with insurance;
            (3) methods to improve risk underwriting practices, 
        including--
                    (A) analysis of modalities of risk transfer for 
                potential financial losses;
                    (B) assessment of private securitization of 
                insurances risks;
                    (C) private-public partnerships to increase 
                insurance capacity in constrained markets; and
                    (D) the financial feasibility and sustainability of 
                a national catastrophe pool or regional catastrophe 
                pools designed to provide adequate insurance coverage 
                and increased underwriting capacity to insurers and 
                reinsurers;
            (4) approaches for implementing a public insurance scheme 
        for low-income communities, in order to promote risk reduction 
        and explicit insurance coverage in such communities;
            (5) methods to strengthen insurance regulatory requirements 
        and supervision of such requirements, including solvency for 
        catastrophic risk reserves;
            (6) methods to promote public insurance policies linked to 
        programs for loss reduction in the uninsured sectors of the 
        American population;
            (7) methods to strengthen the risk assessment and 
        enforcement of structural mitigation and vulnerability 
        reduction measures, such as zoning and building code 
        compliance;
            (8) methods that incentivize the public to purchase and 
        retain risk insurance coverage throughout the ownership of 
        insured property;
            (9) the appropriate role for States in stabilizing the 
        property and casualty insurance and reinsurance markets, with 
        an analysis of--
                    (A) the best way to allow, or whether it is in the 
                best interest to allow, a State government to set up a 
                method to address the risks facing such State; and
                    (B) any lessons learned from the success or failure 
                of a State in setting up such method;
            (10) the appropriate role for the Federal Government in 
        stabilizing the property and casualty insurance and reinsurance 
        markets, with an analysis of--
                    (A) options such as--
                            (i) a reinsurance mechanism;
                            (ii) the modernization of Federal taxation 
                        policies; and
                            (iii) an ``insurance of last resort'' 
                        mechanism;
                    (B) how to fund such options;
                    (C) how best to hedge any risk exposure assumed by 
                the Federal Government; and
                    (D) how the establishment of a Federal disaster 
                plan would affect existing State disaster plans;
            (11) the merits of the legislative proposals currently 
        pending in the 109th Congress, including proposals for--
                    (A) the creation of a Federal catastrophe fund to 
                act as a backup to State catastrophe funds;
                    (B) tax-deferred catastrophe accounts for insurers; 
                and
                    (C) tax-free catastrophe accounts for 
                policyholders; and
            (12) the merits of pursuing a policy for the Federal 
        Government to hedge its risk exposure.

SEC. 7. POWERS OF THE COMMISSION.

    (a) Hearings.--The Commission or, at the direction of the 
Commission, any subcommittee or member of the Commission, may, for the 
purpose of carrying out this Act--
            (1) hold such public hearings in such cities and countries, 
        sit and act at such times and places, take such testimony, 
        receive such evidence, and administer such oaths or 
        affirmations as the Commission or such subcommittee or member 
        considers advisable; and
            (2) require, by subpoena or otherwise, the attendance and 
        testimony of such witnesses and the production of such books, 
        records, correspondence, memoranda, papers, documents, tapes, 
        and materials as the Commission or such subcommittee or member 
        considers advisable.
    (b) Issuance and Enforcement of Subpoenas.--
            (1) Issuance.--Subpoenas issued under subsection (a) shall 
        bear the signature of the Chairperson of the Commission and 
        shall be served by any person or class of persons designated by 
        the Chairperson for that purpose.
            (2) Enforcement.--In the case of contumacy or failure to 
        obey a subpoena issued under subsection (a), the United States 
        district court for the judicial district in which the 
        subpoenaed person resides, is served, or may be found may issue 
        an order requiring such person to appear at any designated 
        place to testify or to produce documentary or other evidence. 
        Any failure to obey the order of the court may be punished by 
        the court as a contempt of that court.
            (3) Confidentiality.--
                    (A) In general.--Information obtained under a 
                subpoena issued under subsection (a) which is deemed 
                confidential, or with reference to which a request for 
                confidential treatment is made by the person furnishing 
                such information--
                            (i) shall be exempt from disclosure under 
                        section 552 of title 5, United States Code; and
                            (ii) shall not be published or disclosed 
                        unless the Commission determines that the 
                        withholding of such information is contrary to 
                        the interest of the United States.
                    (B) Exception.--The requirements of subparagraph 
                (A) shall not apply to the publication or disclosure of 
                any data aggregated in a manner that ensures protection 
                of the identity of the person furnishing such data.
    (c) Authority of Members or Agents of the Commission.--Any member 
or agent of the Commission may, if authorized by the Commission, take 
any action which the Commission is authorized to take by this Act.
    (d) Obtaining Official Data.--
            (1) Authority.--Notwithstanding any provision of section 
        552a of title 5, United States Code, the Commission may secure 
        directly from any department or agency of the United States any 
        information necessary to enable the Commission to carry out the 
        purposes of this Act.
            (2) Procedure.--Upon request of the Chairperson of the 
        Commission, the head of that department or agency shall furnish 
        the information requested to the Commission.
    (e) Postal Services.--The Commission may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    (f) Administrative Support Services.--Upon the request of the 
Commission, the Administrator of General Services shall provide to the 
Commission, on a reimbursable basis, any administrative support 
services necessary for the Commission to carry out its responsibilities 
under this Act.
    (g) Gifts.--
            (1) In general.--The Commission may accept, use, and 
        dispose of gifts or donations of services or property.
            (2) Regulations.--The Commission shall adopt internal 
        regulations governing the receipt of gifts or donations of 
        services or property similar to those described in part 2601 of 
        title 5, Code of Federal Regulations.

SEC. 8. COMMISSION PERSONNEL MATTERS.

    (a) Compensation of Members.--Each member of the Commission who is 
not an officer or employee of the Federal Government shall be 
compensated at a rate equal to the daily equivalent of the annual rate 
of basic pay prescribed for GS-18 of the General Schedule under section 
5332 of title 5, United States Code, 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.
    (b) Travel Expenses.--The members of the Commission shall be 
allowed travel expenses, including per diem in lieu of subsistence, at 
rates authorized for employees of agencies under subchapter I of 
chapter 57 of title 5, United States Code, while away from their homes 
or regular places of business in the performance of services for the 
Commission.
    (c) Subcommittees.--The Commission may establish subcommittees and 
appoint persons to such subcommittees as the Commission considers 
appropriate.
    (d) Staff.--Subject to such policies as the Commission may 
prescribe, the Chairperson of the Commission may appoint and fix the 
pay of such additional personnel as the Chairperson considers 
appropriate to carry out the duties of the Commission.
    (e) Applicability of Certain Civil Service Laws.--Subcommittee 
members and staff of the Commission may be--
            (1) appointed without regard to the provisions of title 5, 
        United States Code, governing appointments in the competitive 
        service; and
            (2) paid without regard to the provisions of chapter 51 and 
        subchapter III of chapter 53 of that title relating to 
        classification and General Schedule pay rates, except that an 
        individual so appointed may not receive pay in excess of the 
        annual rate of basic pay prescribed for GS-18 of the General 
        Schedule under section 5332 of that title.
    (f) Experts and Consultants.--In carrying out its objectives, the 
Commission may procure temporary and intermittent services of 
consultants and experts under section 3109(b) of title 5, United States 
Code, at rates for individuals which do not exceed the daily equivalent 
of the annual rate of basic pay prescribed for GS-18 of the General 
Schedule under section 5332 of that title.
    (g) Detail of Government Employees.--Upon request of the 
Chairperson of the Commission, any Federal Government employee may be 
detailed to the Commission to assist in carrying out the duties of the 
Commission--
            (1) on a reimbursable basis; and
            (2) such detail shall be without interruption or loss of 
        civil service status or privilege.

SEC. 9. TERMINATION.

    The Commission shall terminate 60 days after the date on which the 
Commission submits its report under section 6.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated $5,000,000 to carry out the 
purposes of this Act.
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