Short title; table of contents

(a)

Short title

This Act may be cited as the

Commission on Natural Catastrophe Risk Management and Insurance Act of 2007

. (b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Establishment.

Sec. 4. Membership.

Sec. 5. Duties of the Commission.

Sec. 6. Timing.

Sec. 7. Powers of the Commission.

Sec. 8. Commission personnel matters.

Sec. 9. Termination.

Sec. 10. Authorization of appropriations.

Findings

The Congress finds that— (1)catastrophic hazards, including tornadoes, earthquakes, volcanoes, landslides, tsunamis, flooding, and hurricanes, directly affect hundreds of millions of people each year; (2)during the 1990s, 2,800 natural disasters killed more than 500,000 people and directly affected 1,300,000,000 people worldwide; (3)property damage from natural catastrophes has dramatically increased in recent decades, roughly doubling every seven years—a 14-fold increase over the past 40 years; (4)risk costs have particularly soared in coastal areas, where hurricane frequency and severity has significantly increased, along with home values and building costs; (5)increased risk costs are being reflected in increased catastrophe insurance and reinsurance costs; (6)an inefficient legal and regulatory environment in some States has further exacerbated insurance cost increases, including through ineffective price controls, restrictions on capital movement, sub-optimal solvency regulation, and duplicative or unnecessary regulation; (7)consumers further suffer from temporary rate and availability volatility after major catastrophes while the marketplace adjusts to the losses; (8)government catastrophe mitigation requirements have been sub-optimal, sometimes ineffective, and uncoordinated; (9)some State efforts to reduce insurance prices in catastrophe-prone areas have sometimes reduced long-term availability and competitive affordability of coverage, as well as subsidized excessive development in environmentally sensitive areas at the expense of taxpayers; (9)several proposals have been introduced in the Congress to address the affordability of natural catastrophe insurance, but there is little consensus on the appropriate role of the Federal Government in facilitating the private insurance marketplace while avoiding cross-subsidies; and (10)therefore, an efficient and effective approach to assessing natural catastrophe risk management and insurance is to establish a nonpartisan commission to study the management of natural catastrophe risk, and to require such commission to report to the Congress on its findings before the next hurricane season begins.

Establishment

There is established a nonpartisan Commission on Natural Catastrophe Risk Management and Insurance (in this Act referred to as the Commission).

Membership

(a)

Appointment

The Commission shall be composed of 16 members, of whom— (1)2 members shall be appointed by the Majority Leader of the Senate; (2)2 members shall be appointed by the Minority Leader of the Senate; (3)2 members shall be appointed by the Speaker of the House of Representatives; (4)2 members shall be appointed by the Minority Leader of the House of Representatives; (5)2 members shall be appointed by the Chairman of the Committee on Banking, Housing, and Urban Affairs of the Senate; (6)2 members shall be appointed by the Ranking Member of the Committee on Banking, Housing, and Urban Affairs of the Senate; (7)2 members shall be appointed by the Chairman of the Committee on Financial Services of the House of Representatives; and (8)2 members shall be appointed by the Ranking Member of the Committee on Financial Services of the House of Representatives. (b)

Qualification of members

(1)

In general

Members of the Commission shall be appointed under subsection (a) from among persons who— (A)have expertise in insurance, reinsurance, insurance regulation, policyholder concerns, emergency management, risk management, public finance, financial markets, actuarial analysis, flood mapping and planning, structural engineering, building standards, land use planning, natural catastrophes, meteorology, seismology, environmental issues, or other pertinent qualifications or experience; and (B)are not officers or employees of the United States Government or of any State government. (2)

Diversity

In making appointments to the Commission— (A)every effort shall be made to ensure that the members are representative of a broad cross section of perspectives within the United States; and (B)each member of Congress described in subsection (a) shall appoint not more than 1 person from any single primary area of expertise described in paragraph (1)(A) of this subsection. (c)

Period of appointment

(1)

In general

Each member of the Commission shall be appointed for the duration 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. (d)

Quorum

(1)

Majority

A majority of the members of the Commission shall constitute a quorum, but a lesser number, as determined by the Commission, may hold hearings. (2)

Approval actions

All recommendations and reports of the Commission required by this Act shall be approved only by a two-thirds vote of all of the members of the Commission. (e)

Chairperson

The Commission shall, by majority vote of all of the members, select 1 member to serve as the Chairperson of the Commission (in this Act referred to as the Chairperson). (f)

Meetings

The Commission shall meet at the call of its Chairperson or a majority of the members.

Duties of the Commission

The Commission shall examine and report to the Congress on the natural catastrophe insurance marketplace, including the extent to which insurance costs and availability are affected by the factors described in section 2, which factors the Federal Government can and should address to increase catastrophe insurance availability and competitiveness, and which actions the Federal Government can undertake to achieve this goal without requiring a long-term cross-subsidy from the taxpayers. In developing its report, the Commission shall consider— (1)the current condition of, as well as the outlook for, the availability and affordability of insurance and reinsurance for natural catastrophes in all regions of the United States; (2)the current ability of States, communities, and individuals to mitigate their natural catastrophe risks, including the affordability and feasibility of such activities; (3)the impact of Federal and State laws, regulations, and policies (including rate regulation, market access requirements, reinsurance regulations, accounting and tax policies, State residual markets, and State catastrophe funds) on— (A)the affordability and availability of catastrophe insurance; (B)the ability of the private insurance market to cover losses inflicted by natural catastrophes; (C)the commercial and residential development of high-risk areas; and (D)the costs of natural catastrophes to Federal and State taxpayers; (4)the benefits and costs of— (A)a national, regional, or other pooling mechanism designed to provide adequate insurance coverage and increased underwriting capacity to insurers and reinsurers, including private-public partnerships to increase insurance capacity in constrained markets, including proposed Federal natural catastrophe insurance programs (specifically addressing the costs to taxpayers, tax equity considerations, and the record of other government insurance programs, particularly with regard to charging actuarially sound prices); (B)improving Federal and State tax policy to allow insurers or individuals to set aside catastrophe reserves; (C)directing existing Federal agencies to begin selling catastrophe insurance to individuals; (D)creating a consortium of Federal and State officials to facilitate state catastrophe bonds and reinsurance purchasing as well as providing temporary Federal disaster loans to the States for insurance purposes; (E)expanding the Liability Risk Retention Act of 1986 to allow businesses to pool together to buy insurance and set up their own insurance funds; (F)providing temporary Federal assistance to low-income individual homeowners whose catastrophe insurance rates have increased beyond a certain level after a major disaster, with the possibility that the assistance would be repaid upon sale of the underlying home; (H)providing for limited Federal development and oversight of the sale of catastrophe insurance in high-risk areas during periods of relative unavailability; and (I)facilitating further growth of the catastrophe bond marketplace and other competitive alternatives to the traditional insurance and reinsurance marketplace; (5)the present and long-term financial condition of State residual markets and catastrophe funds in high-risk regions, including the likelihood of insolvency following a natural catastrophe, the concentration of risks within such funds, the reliance on post-event assessments and State funding, the adequacy of rates, and the degree to which such entities have been actuarially solvent in comparison to comparably sized private insurers; (6)the need for strengthened land use regulations and building codes in States at high risk for natural catastrophes, and methods to strengthen the risk assessment and enforcement of structural mitigation and vulnerability reduction measures, such as zoning and building code compliance; (7)the ability of the private insurance market in the United States— (A)to cover insured losses caused by natural catastrophes, including an estimate of the maximum amount of insured losses that could be sustained during a single year and the probability of natural catastrophes occurring in a single year that would inflict more insured losses than the United States insurance and reinsurance markets could sustain; and (B)to recover after covering substantial insured losses caused by natural catastrophes; (8)the impact that demographic trends could have on the amount of insured losses inflicted by future natural catastrophes; (9)the appropriate role, if any, for the Federal Government in stabilizing the property and casualty insurance and reinsurance markets; and (10)the role of the Federal, State, and local governments in providing incentives for feasible risk mitigation efforts.

Timing

Before the beginning of the 2008 hurricane season, which for purposes of this section shall be considered to be June 1, 2008, the Commission shall submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a final report containing— (1)a detailed statement of the findings and assessments conducted by the Commission pursuant to section 5; and (2)specific and detailed recommendations for legislative, regulatory, administrative, or other actions at the Federal, State, or local levels that the Commission considers appropriate, in accordance with the requirements of section 5.

Powers of the Commission

(a)

Meetings; hearings

The Commission may hold such hearings, sit and act at such times and places, take such testimony, and receive such evidence as the Commission considers necessary to carry out the purposes of this Act. Members may attend meetings of the Commission and vote in person, via telephone conference, or via video conference. (b)

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. (c)

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 this Act. (2)

Procedure

Upon request of the Chairperson, the head of such department or agency shall furnish to the Commission the information requested. (d)

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. (e)

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. (f)

Acceptance of gifts

The Commission may accept, hold, administer, and utilize gifts, donations, and bequests of property, both real and personal, for the purposes of aiding or facilitating the work of the Commission. The Commission shall issue internal guidelines governing the receipt of donations of services or property. (g)

Volunteer services

Notwithstanding the provisions of section 1342 of title 31, United States Code, the Commission may accept and utilize the services of volunteers serving without compensation. The Commission may reimburse such volunteers for local travel and office supplies, and for other travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code. (h)

Federal Property and Administrative Services Act of 1949

Subject to the Federal Property and Administrative Services Act of 1949, the Commission may enter into contracts with Federal and State agencies, private firms, institutions, and individuals for the conduct of activities necessary to the discharge of its duties and responsibilities. (i)

Limitation on contracts

A contract or other legal agreement entered into by the Commission may not extend beyond the date of the termination of the Commission.

Commission personnel matters

(a)

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. (b)

Subcommittees

The Commission may establish subcommittees and appoint members of the Commission to such subcommittees as the Commission considers appropriate. (c)

Staff

Subject to such policies as the Commission may prescribe, the Chairperson may appoint and fix the pay of such additional personnel as the Chairperson considers appropriate to carry out the duties of the Commission. The Commission shall confirm the appointment of the executive director by majority vote of all of the members of the Commission. (d)

Applicability of certain civil service laws

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–15 of the General Schedule under section 5332 of that title. (e)

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–15 of the General Schedule under section 5332 of that title. (f)

Detail of government employees

Upon request of the Chairperson, 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.

Termination

The Commission shall terminate 90 days after the date on which the Commission submits its report under section 6.

10.

Authorization of appropriations

There are authorized to be appropriated to the Commission, such sums as may be necessary to carry out this Act, to remain available until expended.