1.Short title; table of
contents
(a)This Act may be cited as the Homeowners’ Defense Act of
2011
.
(b)The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Title I—National Catastrophe Risk Consortium
Sec. 101. Establishment; status; principal office;
membership.
Sec. 102. Functions.
Sec. 103. Powers.
Sec. 104. Nonprofit entity; conflicts of interest;
audits.
Sec. 105. Management.
Sec. 106. Staff; experts and consultants.
Sec. 107. Federal liability.
Sec. 108. 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. 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 insurance.
Sec. 503. Study of risk-based pricing and State program
rates.
Sec. 504. Definitions.
Sec. 505. Regulations.
2.
(a)The
Congress finds that—
(1)the United States has a history of
catastrophic natural disasters, including hurricanes, tornadoes, flood, fire,
earthquakes, and volcanic eruptions;
(2)although
catastrophic natural disasters occur infrequently, they will continue to occur
and are predictable;
(3)such disasters
generate large economic losses and a major component of those losses comes from
damage and destruction to homes;
(4)for the majority
of Americans, their investment in their home represents their single biggest
asset and the protection of that investment is paramount to economic and social
stability;
(5)the United States
needs to take and support State actions to be better prepared for and better
protected from catastrophes;
(6)as the risk of
catastrophic losses grows, so do the risks that any premiums collected by
private insurers for extending coverage will be insufficient to cover future
catastrophes, and private insurers, in an effort to protect their shareholders
and policyholders (in the case of mutually owned companies), have thus
significantly raised premiums and curtailed insurance coverage in States
exposed to major catastrophes;
(7)such effects on
the insurance industry have been harmful to economic activity in States exposed
to major catastrophes and have placed significant burdens on residents of such
States;
(8)Hurricanes
Katrina, Rita, and Wilma struck the United States in 2005, causing over
$200,000,000,000 in total economic losses, and insured losses to homeowners in
excess of $50,000,000,000;
(9)the Federal
Government has provided and will continue to provide resources to pay for
losses from future catastrophes;
(10)when Federal
assistance is provided to the States, accountability for Federal funds
disbursed is paramount;
(11)the Government
Accountability Office or other appropriate agencies must have the means in
place to confirm that Federal funds for catastrophe relief have reached the
appropriate victims and have contributed to the recovery effort as efficiently
as possible so that taxpayer funds are not misspent and citizens are enabled to
rebuild and resume productive activities as quickly as possible;
(12)States that are
recipients of Federal funds must be responsible to account for and provide an
efficient means for distribution of funds to homeowners to enable the rapid
rebuilding of local economies after a catastrophic event without unduly
burdening taxpayers who live in areas seldom affected by natural
disasters;
(13)State insurance
and reinsurance programs can provide a mechanism for States to exercise that
responsibility if they appropriately underwrite and price risk, and if they pay
claims quickly and within established contractual terms;
(14)making available
Federal guarantees to enhance the capability of eligible State programs to
issue debt will minimize the exposure of State and Federal taxpayers who
otherwise may bear the consequences of underfunded programs or under-insured
communities following catastrophic events, especially during today’s historic
market turmoil; and
(15)it is the proper
role of the Federal Government to prepare for and protect its citizens from
catastrophes and to facilitate consumer protection, victim assistance, and
recovery, including financial recovery.
(b)The purposes of this Act are to establish a
program to provide Federal support for State-sponsored insurance programs to
help homeowners prepare for and recover from the damages caused by natural
catastrophes, to encourage mitigation and prevention for such catastrophes, to
promote the use of private market capital as a means to insure against such
catastrophes, to expedite the payment of claims and better assist in the
financial recovery from such catastrophes.
<enum>I</enum><header>National
Catastrophe Risk Consortium</header>
<section id="HBD5C5CAEED7648B9A6B942D9FE488259"><enum>101.</enum><header>Establishment;
status; principal office; membership</header>
<subsection id="H5615306806B045D9AE160EC0AA50AAD7"><enum>(a)</enum><header>Establishment</header><text>There
is established an entity to be known as the <term>National Catastrophe Risk
Consortium</term> (in this title referred to as the
<term>Consortium</term>).</text>
</subsection><subsection id="H3477F7A925804A22B54A9E2E872DB3B0"><enum>(b)</enum><header>Status</header><text>The
Consortium is not a department, agency, or instrumentality of the United States
Government.</text>
</subsection><subsection id="H1349A2BB6FD44EED9141DBC2D1869598"><enum>(c)</enum><header>Principal
office</header><text>The principal office and place of business of the
Consortium shall be such location within the United States determined by the
Board of Directors to be the most advantageous for carrying out the purpose and
functions of the Consortium.</text>
</subsection><subsection id="H508E640F86C1479A96D1BF1EBD7A76E6"><enum>(d)</enum><header>Membership</header><text display-inline="yes-display-inline">Any State that has established a
reinsurance fund or has authorized the operation of a State residual insurance
market entity, or State-sponsored provider of natural catastrophe insurance,
shall be eligible to participate in the Consortium.</text>
</subsection></section><section id="H1CC8BFFFA1FB47ED94ED517AEEC17B82"><enum>102.</enum><header>Functions</header><text display-inline="no-display-inline">The Consortium shall—</text>
<paragraph id="H24BA1F071E194E6CBC950DE0642B96E2"><enum>(1)</enum><text display-inline="yes-display-inline">work with all States, particularly those
participating in the Consortium, to gather and maintain an inventory of
catastrophe risk obligations held by State reinsurance funds, State residual
insurance market entities, and State-sponsored providers of natural catastrophe
insurance;</text>
</paragraph><paragraph id="HEE2E3F8612B4413B8697F2B60B594AB1"><enum>(2)</enum><text>at the discretion
of the affected members and on a conduit basis, issue securities and other
financial instruments linked to the catastrophe risks insured or reinsured
through members of the Consortium in the capital markets;</text>
</paragraph><paragraph id="HCC748FD31DB3465FA03CEB1E14A2B077"><enum>(3)</enum><text>coordinate
reinsurance contracts between participating, qualified reinsurance funds and
private parties;</text>
</paragraph><paragraph id="HD0CDCDC510804262A95CC6235AA0132D"><enum>(4)</enum><text>act as a
centralized repository of State risk information that can be accessed by
private-market participants seeking to participate in the transactions
described in paragraphs (2) and (3) of this section;</text>
</paragraph><paragraph id="H5027C05C6C814F3F8422CE97EC0A846C"><enum>(5)</enum><text>establish a
catastrophe risk database to perform research and analysis that encourages
standardization of the risk-linked securities market;</text>
</paragraph><paragraph id="HE609CA6C800F48ADB011744C00D88C6D"><enum>(6)</enum><text>perform any other
functions, other than assuming risk or incurring debt, that are deemed
necessary to aid in the transfer of catastrophe risk from participating States
to private parties; and</text>
</paragraph><paragraph id="H478EF3870FE140C985452AE3337FD575"><enum>(7)</enum><text display-inline="yes-display-inline">submit annual reports to Congress
describing the activities of the Consortium for the preceding year, and the
first such annual report shall include an assessment of the costs to States and
regions associated with catastrophe risk and an analysis of the costs and
benefits, for States not participating in the Consortium, of such
nonparticipation.</text>
</paragraph></section><section id="HCA2A741B11E8488499BE58BAA1DE01EC"><enum>103.</enum><header>Powers</header><text display-inline="no-display-inline">The Consortium—</text>
<paragraph id="H172FE744781545858217D16AE90B6EBA"><enum>(1)</enum><text>may make and
perform such contracts and other agreements with any individual or other
private or public entity however designated and wherever situated, as may be
necessary for carrying out the functions of the Consortium; and</text>
</paragraph><paragraph id="HF7DE954AFF1B41FB9B2785E762D769ED"><enum>(2)</enum><text>shall have such
other powers, other than the power to assume risk or incur debt, as may be
necessary and incident to carrying out this Act.</text>
</paragraph></section><section id="H79894BDAF0364D48869987C1E5F3A027"><enum>104.</enum><header>Nonprofit
entity; conflicts of interest; audits</header>
<subsection id="H5F0DD99FAF984D6C9AD480E6A070C445"><enum>(a)</enum><header>Nonprofit
entity</header><text>The Consortium shall be a nonprofit entity and no part of
the net earnings of the Consortium shall inure to the benefit of any member,
founder, contributor, or individual.</text>
</subsection><subsection id="HACC014ED21A04ACBA3BEC9684E826A23"><enum>(b)</enum><header>Conflicts of
interest</header><text>No director, officer, or employee of the Consortium
shall in any manner, directly or indirectly, participate in the deliberation
upon or the determination of any question affecting his or her personal
interests or the interests of any Consortium, partnership, or organization in
which he or she is directly or indirectly interested.</text>
</subsection><subsection id="HA77910DF9298408288024D973D58BA36"><enum>(c)</enum><header>Audits</header>
<paragraph id="H6F771C26D3004BF79F975D9BA3BFF47A"><enum>(1)</enum><header>Annual
audit</header><text>The financial statements of the Consortium shall be audited
annually in accordance with generally accepted auditing standards by
independent certified public accountants.</text>
</paragraph><paragraph id="H6661D3EA722D4ACEA0835E8CA98FDE6A"><enum>(2)</enum><header>Reports</header><text>The
report of each annual audit pursuant to paragraph (1) shall be included in the
annual report submitted in accordance with section 102(7).</text>
</paragraph></subsection><subsection id="HF2B353E9A8FB46ECB3F4F6FF8A7F3562"><enum>(d)</enum><header>Prohibition on
election and lobbying activities</header>
<paragraph id="H7F8D69C660E04214AAE25FF48657900A"><enum>(1)</enum><header>Federal</header><text display-inline="yes-display-inline">The Consortium may not—</text>
<subparagraph id="HAF62A45825C14A9A985E7D202045077C"><enum>(A)</enum><text>make any
contribution to a candidate for election for Federal office or to a political
committee;</text>
</subparagraph><subparagraph id="H0AC71BBCBC25443283AC130B29E07599"><enum>(B)</enum><text>employ or
retain—</text>
<clause id="H511ABC0A5FF34794A0498591130C96C1"><enum>(i)</enum><text>a
registered lobbyist under the Lobbying Disclosure Act of 1995 (2 U.S.C. 1601 et
seq.); or</text>
</clause><clause id="H64AD4571800B42B88BF0CFC802E795D6"><enum>(ii)</enum><text display-inline="yes-display-inline">an organization that employs one or more
lobbyists and is registered under section 4(a)(2) of such Act (2 U.S.C.
1603(a)(2)); or</text>
</clause></subparagraph><subparagraph id="H16F2522B6BC34C2387795ECAE5C58F11"><enum>(C)</enum><text display-inline="yes-display-inline">provide any thing of value, other than
educational materials or information, to any elected official of the Federal
Government.</text>
</subparagraph><continuation-text continuation-text-level="paragraph">For purposes
of this paragraph, the terms <term>contribution</term>, <term>candidate</term>,
<term>Federal office</term>, and <term>political committee</term> have the
meanings given such terms in section 301 of the Federal Election Campaign Act
of 1971 (2 U.S.C. 431).</continuation-text></paragraph><paragraph id="HD0CFFDEC39184017887ACCAC11AC1EB6"><enum>(2)</enum><header>Consortium</header><text display-inline="yes-display-inline">The Consortium may not—</text>
<subparagraph id="HF6479CB58E484D03B0078B27A2827E86"><enum>(A)</enum><text>make any
contribution to a candidate for election for any State or local office or to
any committee, club, association, or other group that receives contributions or
makes expenditures for the purpose of influencing any such election;</text>
</subparagraph><subparagraph id="H6D89985582A348218B28EEBCD14D0259"><enum>(B)</enum><text display-inline="yes-display-inline">employ or retain any person who engages in
influencing legislating (as such term is defined in section 4911(d) of the
Internal Revenue Code of 1986 (26 U.S.C. 4911(d))) of any State or local
legislative body; or</text>
</subparagraph><subparagraph id="HF291D773E3C84E1A82830F4C1F1C2D10"><enum>(C)</enum><text display-inline="yes-display-inline">provide any thing of value, other than
educational materials or information, to any elected official of any State or
local government.</text>
</subparagraph></paragraph></subsection></section><section id="HCDCA2AA357CB44DC967ACFD8B03EA48D"><enum>105.</enum><header>Management</header>
<subsection id="HAFBDC6DA94154F5DBE556DE466E81486"><enum>(a)</enum><header>Board of
directors; membership; designation of chairperson</header>
<paragraph id="HEAE210A2A8034DF7A36DDC13D672B3EB"><enum>(1)</enum><header>Board of
directors</header><text>The management of the Consortium shall be vested in a
board of directors (referred to in this title as the <term>Board</term>)
composed of not less than 3 members.</text>
</paragraph><paragraph id="H4974C042D2BC4D7794B4311AF3BED5EB"><enum>(2)</enum><header>Chairperson</header><text>The
Secretary of the Treasury, or the designee of the Secretary, shall serve as the
chairperson of the Board.</text>
</paragraph><paragraph id="H741AA33E525D4F15A054367811306F0B"><enum>(3)</enum><header>Membership</header><text>The
members of the Board shall include—</text>
<subparagraph id="HC2EDBF70C8C147209A4A87C3418FA6F6"><enum>(A)</enum><text>the Secretary of
Homeland Security and the Secretary of Commerce, or the designees of such
Secretaries, respectively, but only during such times as there are fewer than
two States participating in the Consortium; and</text>
</subparagraph><subparagraph id="H3595A7ADB1A54B4E884B60B3429173D9"><enum>(B)</enum><text>a member from each
State participating in the Consortium, who shall be appointed by such
State.</text>
</subparagraph></paragraph></subsection><subsection id="H92C423D1A2204EC581B303C117365D98"><enum>(b)</enum><header>Bylaws</header><text>The
Board may prescribe, amend, and repeal such bylaws as may be necessary for
carrying out the functions of the Consortium.</text>
</subsection><subsection id="H192EDB2FA1434EDA86170C8981DB7C3E"><enum>(c)</enum><header>Compensation,
actual, necessary, and transportation expenses</header>
<paragraph id="HC6A5EA5B64B64F75BFEA5DB21C2F8422"><enum>(1)</enum><header>Non-Federal
employees</header><text>A member of the Board who is not otherwise employed by
the Federal Government shall be entitled to receive the daily equivalent of the
annual rate of basic pay payable for level IV of the Executive Schedule under
section 5315 of title 5, United States Code, as in effect from time to time,
for each day (including travel time) during which such member is engaged in the
actual performance of duties of the Consortium.</text>
</paragraph><paragraph id="HCCE810435E854D7989B61ECEE5E9BC66"><enum>(2)</enum><header>Federal
employees</header><text>A member of the Board who is an officer or employee of
the Federal Government shall serve without additional pay (or benefits in the
nature of compensation) for service as a member of the Consortium.</text>
</paragraph><paragraph id="H321E9853010E4C96BF5871D6B3C7F835"><enum>(3)</enum><header>Travel
expenses</header><text>Members of the Consortium shall be entitled to receive
travel expenses, including per diem in lieu of subsistence, equivalent to those
set forth in subchapter I of chapter 57 of title 5, United States Code.</text>
</paragraph></subsection><subsection id="H04AC05CBE4D24FEEB3CC633BFF4CB70E"><enum>(d)</enum><header>Quorum</header><text>A
majority of the Board shall constitute a quorum.</text>
</subsection><subsection id="H932166F334EE454B96DE962454BE2436"><enum>(e)</enum><header>Executive
director</header><text>The Board shall appoint an executive director of the
Consortium on such terms as the Board may determine.</text>
</subsection></section><section id="H28A5B8F6DCB4419498ECB73C45F40C7E"><enum>106.</enum><header>Staff; experts
and consultants</header>
<subsection id="H7180DE28E69F42A894E9A8C678BF1464"><enum>(a)</enum><header>Staff</header>
<paragraph id="H5CC584C7DA5E4459950627DD3BF618C0"><enum>(1)</enum><header>Appointment</header><text>The
Board of the Consortium may appoint and terminate such other staff as are
necessary to enable the Consortium to perform its duties.</text>
</paragraph><paragraph id="H43D8476FE5C7404FB2B238CB30FAD70E"><enum>(2)</enum><header>Compensation</header><text>The
Board of the Consortium may fix the compensation of the executive director and
other staff.</text>
</paragraph></subsection><subsection id="H3CF664053C9240B0B3B9E156BAA96D4E"><enum>(b)</enum><header>Experts and
consultants</header><text>The Board shall procure the services of experts and
consultants as the Board considers appropriate.</text>
</subsection></section><section id="H58350D8C8FAB4BDB9D2739A572D19388"><enum>107.</enum><header>Federal
liability</header><text display-inline="no-display-inline">The Federal
Government and the Consortium shall not bear any liabilities arising from the
actions of the Consortium. Participating States shall retain all catastrophe
risk until the completion of a transaction described in paragraphs (2) and (3)
of section 102.</text>
</section><section id="H73B38DF61F964A34A4D6B4A7453AF92E"><enum>108.</enum><header>Authorization
of appropriations</header><text display-inline="no-display-inline">There are
authorized to be appropriated to carry out this title $20,000,000 for each of
fiscal years 2012 through 2016.</text>
</section><enum>II</enum><header>Catastrophe
Obligation Guarantees</header>
<section id="HFECF970012C648C599200768F848840B"><enum>201.</enum><header>Purposes</header><text display-inline="no-display-inline">The purposes of this title are to establish
a program—</text>
<paragraph id="H218C90A629FC453185B3E650348D5DB7"><enum>(1)</enum><text>to promote the
availability of private capital to provide liquidity and capacity to State
catastrophe insurance programs; and</text>
</paragraph><paragraph id="HB20F97CB8EA74939B632D33F2CF8169D"><enum>(2)</enum><text>to expedite the
payment of claims under State catastrophe insurance programs and better assist
the financial recovery from significant natural catastrophes by authorizing the
Secretary of the Treasury to guarantee debt for such purposes.</text>
</paragraph></section><section id="H2E4AF3E9D8EB438FB2D2F5226267DE50"><enum>202.</enum><header>Establishment
of debt guarantee program</header>
<subsection id="H055E65A0CC564719880E1EE57B491985"><enum>(a)</enum><header>Authority of
Secretary</header><text>The Secretary of the Treasury is authorized and shall
have the powers and authorities necessary to guarantee, and to enter into
commitments to guarantee, holders of debt against loss of principal or
interest, or both, on any such debt issued by eligible State programs for
purposes of this title, provided that the total principal amount of debt
obligations guaranteed by the Secretary—</text>
<paragraph id="H4515369862744433BFACE37DF0F000A3"><enum>(1)</enum><text>for eligible State
programs that cover earthquake peril shall not exceed $3,500,000,000;
and</text>
</paragraph><paragraph id="HD4D646D416A143859FB7F2ADB9DC3F8A"><enum>(2)</enum><text>for eligible State
programs that cover all other perils shall not exceed $17,000,000,000.</text>
</paragraph></subsection><subsection id="H41D37BB6A3C343639F60BE95A9AF9755"><enum>(b)</enum><header>Conditions for
guarantee eligibility</header><text>A debt guarantee under this section may be
made only if the Secretary has issued a commitment to guarantee to an eligible
State program. The commitment to guarantee shall be for a period of 3 years and
may be extended by the Secretary for a period of 1 year on each annual
anniversary of the issuance of the commitment to guarantee. The commitment to
guarantee and each extension of such commitment may be issued by the Secretary
only if the following requirements are satisfied:</text>
<paragraph id="H3FAA191FB05F40F3945145C27C38B9D9"><enum>(1)</enum><text>The eligible State
program submits to the Secretary a report setting forth, in such form and
including such information as the Secretary shall require, how the eligible
State program plans to repay the debt.</text>
</paragraph><paragraph id="H60277FFC9C6946E3B3BD4206C513A950"><enum>(2)</enum><text>Based upon the
eligible State program's report submitted pursuant to paragraph (1), the
Secretary determines there is reasonable assurance that the eligible State
program can meet its repayment obligation under the debt.</text>
</paragraph><paragraph id="H5DFD9FA0EEE64D23A9169268CDF0F43D"><enum>(3)</enum><text>The eligible State
program enters into an agreement with the Secretary, as the Secretary shall
require, that the eligible State program will not use Federal funds of any kind
or from any Federal source (including any disaster or other financial
assistance, loan proceeds, and any other assistance or subsidy) to repay the
debt.</text>
</paragraph><paragraph id="HC676A3CBDA1644CC96B1730B09D31F7A"><enum>(4)</enum><text>The commitment to
guarantee shall specify the fees for debt guarantee coverage.</text>
</paragraph><paragraph id="HD4B9A6994F6B46EE8D18987267145886"><enum>(5)</enum><text>The maximum term
of the debt that shall be specified in a commitment issued under this section
may not exceed 30 years.</text>
</paragraph><paragraph id="H63334169F6FE4A76A0E50C210CE73522"><enum>(6)</enum><text display-inline="yes-display-inline">The Secretary determines that the eligible
State program does not cover losses arising from floods to properties located
in areas having special flood hazards (as such term is defined for purposes of
the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act
of 1973).</text>
</paragraph></subsection><subsection id="H29B87C4AB4824317A8F2622014CEA118"><enum>(c)</enum><header>Mandatory
assistance for eligible State programs</header><text>The Secretary shall upon
the request of an eligible State program and pursuant to a commitment to
guarantee issued under subsection (b), provide a guarantee under subsection (d)
for such eligible State program in the amount requested by such eligible State
program, subject to the limitation under subsection (d)(2).</text>
</subsection><subsection id="H39C5B1277EBB4C02843D5072D78222E6"><enum>(d)</enum><header>Catastrophic
debt guarantee</header><text>A debt guarantee under this subsection for an
eligible State program shall be subject to the following requirements:</text>
<paragraph id="H1CE9084F2787417D9748D38B6AEE2785"><enum>(1)</enum><header>Preconditions</header><text>The
eligible State program shows to the satisfaction of the Secretary that insured
losses in the State to the eligible State program arising from the event or
events covered by the commitment to guarantee are likely to exceed the eligible
State program’s available cash resources, as calculated on the date of the
event.</text>
</paragraph><paragraph id="H875D2C8C048C46D98506935CC582EE4A"><enum>(2)</enum><header>Amount</header><text>The
aggregate principal amount of the debt guaranteed following an event or events
referred to in paragraph (1) may not exceed the amount by which the insured
losses expected to be sustained by the State program as a result of such event
or events exceed 80 percent of the qualifying assets of the eligible State
program as stated in the most recent quarterly financial statement filed with
the domiciliary regulator of the program prior to the event or events, except
that, for eligible State programs that are not required to file such quarterly
financial statements, the aggregate principal amount of the debt guaranteed may
not exceed the amount by which insured losses sustained by the State program as
a result of such event or events exceed 80 percent of the unrestricted net
assets as stated in the annual financial statement for the program’s fiscal
year ending immediately prior to the event or events.</text>
</paragraph><paragraph id="H9DDA8DAEE4614000A4CE233742134D26"><enum>(3)</enum><header>Use of
funds</header><text>Amounts of debt guaranteed under this section shall be used
only to pay the costs of issuing debt and to pay the insured losses and loss
adjustment expenses incurred by an eligible State program. Such amounts shall
not be used for any other purpose.</text>
</paragraph></subsection><subsection id="H46A5B18517844C0FAE4F052432D0AA68"><enum>(e)</enum><header>Funding</header><text display-inline="yes-display-inline">There are authorized to be appropriated
such sums as may be necessary to carry out this section.</text>
</subsection></section><section id="H6C54F11C0E7F42ADA975C8615F4D5378"><enum>203.</enum><header>Effect of
guarantee</header><text display-inline="no-display-inline">The issuance of any
guarantee by the Secretary under this title shall be conclusive evidence
that—</text>
<paragraph id="HD8529EDFDC764BF797483587542DEF5B"><enum>(1)</enum><text>the guarantee has
been properly obtained;</text>
</paragraph><paragraph id="H4A0B6554B6EF431E9BF11CBD26940C0E"><enum>(2)</enum><text>the underlying
debt qualified for such guarantee; and</text>
</paragraph><paragraph id="HF20BDACD256A49E5B50958FD5B4ECB1E"><enum>(3)</enum><text>the guarantee is
valid, legal, and enforceable.</text>
</paragraph></section><section id="H95BD1F5D5E6A47D8862A897A6FFB8D42"><enum>204.</enum><header>Full faith and
credit</header><text display-inline="no-display-inline">The full faith and
credit of the United States is pledged to the payment of all guarantees issued
under this title with respect to principal and interest.</text>
</section><section id="HF91DBBB7662944A9BEBA9A559A1A5DF8"><enum>205.</enum><header>Fees for
guarantees; amount; collection</header><text display-inline="no-display-inline">The Secretary shall charge and collect fees
for each guarantee in amounts specified in the commitment to guarantee, which
shall be in amounts sufficient in the judgment of the Secretary at the time of
issuance of the commitment to guarantee to cover applicable administrative
costs and probable losses on the guaranteed obligations covered by the
commitment to guarantee, but in any event not to exceed one-half of 1 per
centum per annum of the outstanding indebtedness covered by each
guarantee.</text>
</section><section id="H0F2608D475DC495D93915CE6E9C6EC45"><enum>206.</enum><header>Payment of
losses</header>
<subsection id="H085488DAC34C4811B00E33EFA6EF0991"><enum>(a)</enum><header>In
general</header><text>The Secretary agrees to pay to the duly appointed paying
agent or trustee (in this section referred to as the <term>Fiscal Agent</term>)
for the eligible State program that portion of the principal and interest on
any debt guaranteed under this title that shall become due for payment but
shall be unpaid by the eligible State program as a result of such program
having provided insufficient funds to the Fiscal Agent to make such payments.
The Secretary shall make such payments on the date such principal or interest
becomes due for payment or on the business day next following the day on which
the Secretary shall receive notice of failure on the part of the eligible State
program to provide sufficient funds to the Fiscal Agent to make such payments,
whichever is later. Upon making such payment, the Secretary shall be subrogated
to all the rights of the ultimate recipient of the payment. The Secretary shall
be entitled to recover from the eligible State program the amount of any
payments made pursuant to any guarantee entered into under this title.</text>
</subsection><subsection id="HAA0EB9DD65424878B3B4302E2AEDC535"><enum>(b)</enum><header>Role of the
Attorney General</header><text>The Attorney General shall take such action as
may be appropriate to enforce any right accruing to the United States as a
result of the issuance of any guarantee under this title.</text>
</subsection><subsection id="HBF45CA29C86148BA868B450D33CC833F"><enum>(c)</enum><header>Right of the
Secretary</header><text>Notwithstanding any other provision of law relating to
the acquisition, handling, or disposal of property by the United States, the
Secretary shall have the right in the discretion of the Secretary to complete,
recondition, reconstruct, renovate, repair, maintain, operate, or sell any
property acquired by the Secretary pursuant to the provisions of this
title.</text>
</subsection></section><section id="HF973B99C4C954841809058D81D5B3E28"><enum>207.</enum><header>Regulations</header><text display-inline="no-display-inline">The Secretary shall issue any regulations
necessary to carry out the debt-guarantee program established under this
title.</text>
</section><enum>III</enum><header>Reinsurance
coverage for eligible State programs</header>
<section id="H00D9FFEE06CF42BC96B6CD905D369FDE"><enum>301.</enum><header>Program
authority</header><text display-inline="no-display-inline">The Secretary of the
Treasury, shall make available for purchase, only by eligible State programs,
contracts for reinsurance coverage under this title.</text>
</section><section id="H3C0D2754273B435D899F865F937D17DF"><enum>302.</enum><header>Contract
principles</header><text display-inline="no-display-inline">Contracts for
reinsurance coverage made available under this title—</text>
<paragraph id="HA2DCB1DB96A1481BA798E10BE7F64B30"><enum>(1)</enum><text display-inline="yes-display-inline">shall be priced on an actuarially sound
basis;</text>
</paragraph><paragraph id="HE62F70116FD343D69CA92F89762B50FD"><enum>(2)</enum><text>shall minimize the
administrative costs of the Federal Government; and</text>
</paragraph><paragraph id="H51D69E43CA7E4385B56915E0FBF74A06"><enum>(3)</enum><text>shall provide
coverage based solely on insured losses covered by the eligible State program
purchasing the contract.</text>
</paragraph></section><section display-inline="no-display-inline" id="H887DCFF05FDB46D3A56B4197FBB7AFE8" section-type="subsequent-section"><enum>303.</enum><header>Terms of reinsurance
contracts</header>
<subsection id="HB9050ACF9D01472DBB7CEBA330AE789C"><enum>(a)</enum><header>Minimum
attachment point and levels of coverage</header><text display-inline="yes-display-inline">The Secretary shall establish attachment
points at which reinsurance coverage under this title is provided to eligible
State programs. In setting attachment points and in determining the levels of
reinsurance coverage provided, the Secretary shall take into
consideration—</text>
<paragraph id="HB22E3F2CF92F4C03B088CF4C171EE6C6"><enum>(1)</enum><text>the coverage
available through eligible State programs;</text>
</paragraph><paragraph id="H02D90330EAEA4125843A3D916DFFCC75"><enum>(2)</enum><text>the availability
and accessibility of reinsurance in the private market; and</text>
</paragraph><paragraph id="HC99FB9A334DB4A8EB5DA873C810A8B46"><enum>(3)</enum><text>other factors as
deemed appropriate by the Secretary.</text>
</paragraph></subsection><subsection commented="no" id="H01B4ABCA06BB4255A3B40EFE038A9142"><enum>(b)</enum><header>Ninety percent
coverage of insured losses in excess of retained losses</header><text>Each
contract for reinsurance coverage under this title shall provide that the
amount paid out under the contract shall be equal to 90 percent of the amount
of insured losses of the eligible State program in excess of the amount of
retained losses that the contract requires, pursuant to subsection (a), to be
incurred by such program.</text>
</subsection><subsection id="H20296DD50FCF4525BE078529AF43C518"><enum>(c)</enum><header>Maturity</header><text display-inline="yes-display-inline">The term of each contract for reinsurance
coverage under this title shall not exceed 1 year or such other term as the
Secretary may determine.</text>
</subsection><subsection id="H6CF8A89122E546C5AEFB5EBA079D9295"><enum>(d)</enum><header>Payment
condition</header><text display-inline="yes-display-inline">Each contract for
reinsurance coverage under this title shall authorize claims payments to the
eligible State program purchasing the coverage only for insured losses provided
under the contract.</text>
</subsection><subsection id="HA28234F1469449ACA9EA8B410AE9C00F"><enum>(e)</enum><header>Multiple
events</header><text>The contract shall cover any insured losses from one or
more events that may occur during the term of the contract and shall provide
that if multiple events occur, the retained losses requirement under subsection
(a) shall apply on a calendar year basis, in the aggregate and not separately
to each individual event.</text>
</subsection><subsection commented="no" id="H7DFF6B6D3D5C4890A5B931A1DFD0058A"><enum>(f)</enum><header>Timing of
claims</header><text display-inline="yes-display-inline">Claims under a
contract for reinsurance coverage under this title shall include only insurance
claims that are reported to the eligible State program within the 3-year period
beginning upon the event or events for which payment under the contract is
provided.</text>
</subsection><subsection id="H08E5E8131E064816A8AAD58DD7E7F428"><enum>(g)</enum><header>Actuarial
pricing</header><text display-inline="yes-display-inline">The price of coverage
under a reinsurance contract under this title shall be an amount, established
by the Secretary at a level that annually produces expected premiums that shall
be sufficient to pay the reasonably anticipated cost of all claims (which may
not be equal only to average annual costs), loss adjustment expenses, all
administrative costs of reinsurance coverage offered under this title, and any
such outwards reinsurance, as described in section 305(c)(3), as the Secretary
considers prudent taking into consideration the demand for reinsurance coverage
under this title. The anticipated cost of all claims shall be comparable to
amounts being included in the price for similar layers of coverage in the
private sector, taking into account the savings associated with non-profit and
tax-exempt status of the Fund established under section 305.</text>
</subsection><subsection id="H1FD3697326F143119761CBC628CC5F92"><enum>(h)</enum><header>Information</header><text display-inline="yes-display-inline">Each contract for reinsurance coverage
under this title shall contain a condition providing that the Secretary may
require the eligible State program that is covered under the contract to submit
to the Secretary all information on the eligible State program relevant to the
duties of the Secretary under this title.</text>
</subsection><subsection id="HBE5257BF6F5D4F26900CCC67B6556BEE"><enum>(i)</enum><header>Others</header><text>Contracts
for reinsurance coverage under this title shall contain such other terms as the
Secretary considers necessary to carry out this title and to ensure the
long-term financial integrity of the program under this title.</text>
</subsection></section><section display-inline="no-display-inline" id="HCD77F2FF91F2490BAE846FB70EAB2F0D" section-type="subsequent-section"><enum>304.</enum><header>Maximum Federal
liability</header>
<subsection id="H24A4387D95724A2CAECA987E412C39BE"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subject to subsection
(b) and notwithstanding any other provision of law, the aggregate potential
liability for payment of claims under all contracts for reinsurance coverage
under this title sold in any single year shall be determined by the Secretary
based on review of the market for reinsurance coverage under this title.</text>
</subsection><subsection id="H6DA7243D584A460DB994BDA48271AB74"><enum>(b)</enum><header>Limitation</header><text display-inline="yes-display-inline">The authority of the Secretary to enter
into contracts for reinsurance coverage under this title shall be effective for
any fiscal year only to such extent or in such amounts as are or have been
provided in appropriation Acts for such fiscal year for the aggregate potential
liability for payment of claims under all contracts for reinsurance coverage
under this title.</text>
</subsection></section><section id="HDAA72D7969244EFCA6DB197586B1AABC"><enum>305.</enum><header>Federal Natural
Catastrophe Reinsurance Fund</header>
<subsection id="H4BC1F871857241958656BA8B78C1D692"><enum>(a)</enum><header>Establishment</header><text>There
is established within the Treasury of the United States a fund to be known as
the Federal Natural Catastrophe Reinsurance Fund (in this section referred to
as the <term>Fund</term>).</text>
</subsection><subsection id="H4822DBD14511440086AACAFE57B15EB2"><enum>(b)</enum><header>Credits</header><text>The
Fund shall be credited with—</text>
<paragraph id="H660A5C97E5E14AA78987386A9ABF2CB3"><enum>(1)</enum><text>amounts received
annually from the sale of contracts for reinsurance coverage under this
title;</text>
</paragraph><paragraph id="H6666927EF66F4E3C9431D32FA760A7B2"><enum>(2)</enum><text display-inline="yes-display-inline">any amounts appropriated for the aggregate
potential liability for payment of claims under all contracts for reinsurance
coverage under this title; and</text>
</paragraph><paragraph id="H86ECD1A94E414DB3BA93361D24E97017"><enum>(3)</enum><text>any amounts earned
on investments of the Fund pursuant to subsection (d).</text>
</paragraph></subsection><subsection id="H251EBA5A49D74C66ADD619261767B6D6"><enum>(c)</enum><header>Uses</header><text>Amounts
in the Fund shall be available to the Secretary only for the following
purposes:</text>
<paragraph id="H719FEF16F4D6491AA8B9A44C255A4C9D"><enum>(1)</enum><header>Contract
payments</header><text>For payments to purchasers covered under contracts for
reinsurance coverage for eligible losses under such contracts.</text>
</paragraph><paragraph id="H15F4C12CFBFB4F6BB9FC412126204E48"><enum>(2)</enum><header>Administrative
expenses</header><text>To pay for the administrative expenses incurred by the
Secretary in carrying out the reinsurance program under this title.</text>
</paragraph><paragraph id="HFC4322E2D2EC4BDAA6DE6C2E636CE53C"><enum>(3)</enum><header>Outwards
reinsurance</header><text display-inline="yes-display-inline">To obtain
retrocessional or other reinsurance coverage of any kind to cover risk
reinsured under contracts for reinsurance coverage made available under this
title.</text>
</paragraph></subsection><subsection id="H74B9D681D679481F9A6BE9EF52F4A6D3"><enum>(d)</enum><header>Investment</header><text display-inline="yes-display-inline">The Secretary shall invest such amounts in
the Fund as the Secretary considers advisable in obligations issued or
guaranteed by the United States. For purposes of the grant mandate in section
401(e) for a fiscal year, the Secretary shall disclose the annual net
investment income available not later than 60 days after the conclusion of such
fiscal year and disperse appropriate funds not later than 90 days after the
conclusion of such fiscal year.</text>
</subsection></section><section display-inline="no-display-inline" id="H89B474037BA84DE4B4592F2957BD402E" section-type="subsequent-section"><enum>306.</enum><header>Regulations</header><text display-inline="no-display-inline">The Secretary shall issue any regulations
necessary to carry out the program for reinsurance coverage under this
title.</text>
</section><enum>IV</enum><header>Mitigation grant
program</header>
<section id="HD76971BB1F954770ADB299F241B238B3"><enum>401.</enum><header>Mitigation
grant program</header>
<subsection id="HEEA1EA06C80E418BAFE73585150F6869"><enum>(a)</enum><header>Establishment</header><text display-inline="yes-display-inline">The Secretary of Housing and Urban
Development shall establish and carry out a program to provide grants to
eligible entities to develop, enhance, or maintain programs to prevent and
mitigate losses from natural catastrophes.</text>
</subsection><subsection id="H58EE28D131394C18ACD0D9A6E3EA79D8"><enum>(b)</enum><header>Grants</header><text display-inline="yes-display-inline">A grant provided under subsection (a) shall
be used to reduce loss of life and property by—</text>
<paragraph id="H3CE270DF71D04FFC97F2895C9D6ABCAA"><enum>(1)</enum><text display-inline="yes-display-inline">encouraging awareness of risk factors and
what steps can be taken to eliminate or reduce them, including public education
campaigns to promote citizen and community preparedness;</text>
</paragraph><paragraph id="HDC7F287A089C44798D46A192F769BE07"><enum>(2)</enum><text>assisting in the
determination of the location of risk by giving careful consideration to the
natural risks for the location of a property;</text>
</paragraph><paragraph id="H5C73F3838F0F4D97B68197CC72D56C23"><enum>(3)</enum><text display-inline="yes-display-inline">providing inspections of homes to identify
areas to strengthen such homes and reduce exposure to natural
catastrophes;</text>
</paragraph><paragraph id="HE486F349E1BF4838920BB9B94C80E605"><enum>(4)</enum><text display-inline="yes-display-inline">providing financial assistance to
homeowners to retrofit homes to reduce exposure to natural catastrophes;
or</text>
</paragraph><paragraph id="H8E87B3F1F0BB4AE199FDAF820E8C5CA1"><enum>(5)</enum><text display-inline="yes-display-inline">supporting disaster response readiness
programs, including initiatives that develop, enhance ,or maintain the capacity
of a public safety organization to be better prepared, equipped, and trained to
respond to natural catastrophes.</text>
</paragraph></subsection><subsection id="HD415693B791940528D6EDACE85753C78"><enum>(c)</enum><header>Consultation
with experts</header><text>In carrying out the program established under
subsection (a), the Secretary of Housing and Urban Development shall consult
with—</text>
<paragraph id="H03E251E7F4FD4551800BEB3A207EB8B2"><enum>(1)</enum><text>disaster
preparedness and response organizations;</text>
</paragraph><paragraph id="HBE3A5778E4F14032A6D4189B23D75759"><enum>(2)</enum><text>homebuilders;</text>
</paragraph><paragraph id="H283AE2501DA04193A5F528565D2B8DB8"><enum>(3)</enum><text>real estate
professionals;</text>
</paragraph><paragraph id="H57F37EB301CC421EAF8BE2B31B841224"><enum>(4)</enum><text>building code
enforcement agencies; and</text>
</paragraph><paragraph id="HBC9ACB482D8249728037683BEEBB010B"><enum>(5)</enum><text>any other person
that the Secretary considers appropriate.</text>
</paragraph></subsection><subsection id="HAED65C8BDC794F699FE1DC65CED68122"><enum>(d)</enum><header>Eligible entity
defined</header><text display-inline="yes-display-inline">In this section, the
term <term>eligible entity</term> means a State or local government, a part or
program of a State or local government, or a nationally recognized,
congressionally chartered disaster response non-profit organization.</text>
</subsection><subsection id="H3065E3D59DED4C698D95A59E55674FEA"><enum>(e)</enum><header>Grant
mandate</header><text display-inline="yes-display-inline">The Secretary shall,
to the extent provided in advance in appropriation Acts, use not less than 35
percent of the net investment income from the Federal Natural Catastrophe
Reinsurance Fund earned in each fiscal year pursuant to section 305(d) for
grants under this section.</text>
</subsection></section><enum>V</enum><header>General
provisions</header>
<section id="H3826E66C6C2048258FE360E576156DB0"><enum>501.</enum><header>Eligible State
programs</header>
<subsection id="H159D60AF4B3542668BF6EA59827E3DF1"><enum>(a)</enum><header>Eligible State
programs</header><text>A State program shall be considered an <term>eligible
State program</term> for purposes of this Act if the Secretary certifies, in
accordance with the procedures established under subsection (c), that the State
program complies with the following requirements:</text>
<paragraph id="H9E5B82F71CC84A2DAFC0FC9B31D53EFA"><enum>(1)</enum><header>State program
design</header><text>The State program is established and authorized by State
law as an insurance program or a reinsurance program that is designed to
improve private insurance markets and that offers residential property
insurance coverage for losses arising from any personal residential line of
insurance, as defined in the Uniform Property and Casualty Product Coding
Matrix of the National Association of Insurance Commissioners.</text>
</paragraph><paragraph id="H62D3F1E73F854C90814F3D2EDE5B7335"><enum>(2)</enum><header>Operation</header><text>The
State program shall meet the following requirements:</text>
<subparagraph id="H2E5344AC40C84CADA6F4EDF64F698224"><enum>(A)</enum><text>A majority of the
members of the governing body of the State program shall be public officials or
appointed by public officials.</text>
</subparagraph><subparagraph id="HB43801C2383C448C9017F7ADF8316AFC"><enum>(B)</enum><text>The State shall
have a financial interest in the State program.</text>
</subparagraph><subparagraph id="H2236DB8D74A94EF2B4299A32673B6496"><enum>(C)</enum><text>If the State has
at any time appropriated amounts from the State program's funds for any purpose
other than payments for losses insured under the State program, or payments
made in connection with any of the State program's authorized activities, the
State shall have returned such amounts to the State fund, together with
interest on such amounts.</text>
</subparagraph></paragraph><paragraph id="HA7047443325D44C082CCCC96434FAD8A"><enum>(3)</enum><header>Tax
status</header><text>The State program shall have received from the Secretary
(or the Secretary’s designee) a written determination, within the meaning of
section 6110(b) of the Internal Revenue Code of 1986, that the program
either—</text>
<subparagraph id="H468D6804CD5B4AA48DC5D5F88CDD7FF1"><enum>(A)</enum><text>constitutes an
<term>integral part</term> of the State that has created it; or</text>
</subparagraph><subparagraph id="H8853CB1551F74E629836A82F04AD998F"><enum>(B)</enum><text>is otherwise
exempt from Federal income taxation.</text>
</subparagraph></paragraph><paragraph id="HED7C5601D86C4CA0B8685B78D2F8612D"><enum>(4)</enum><header>Earnings</header><text>The
State program may not provide for any distribution of any part of any net
profits of the State program to any insurer that participates in the State
program.</text>
</paragraph><paragraph id="H06F1044CE2E5466FAFE9B0A1A96BF38A"><enum>(5)</enum><header>Prevention and
mitigation</header>
<subparagraph id="H7080D9EEC21E420686319106857223C3"><enum>(A)</enum><header>Mitigation of
losses</header><text>The State program shall include provisions designed to
encourage and support programs to mitigate losses from natural catastrophes for
which the State insurance or reinsurance program was established to provide
insurance coverage.</text>
</subparagraph><subparagraph id="H90D9385B4AF6474BBD023B534B3D7F8A"><enum>(B)</enum><header>Operational
requirements</header><text>The State program shall operate in a State
that—</text>
<clause display-inline="no-display-inline" id="H2B980306BDED40038893B203F8F9F7BB"><enum>(i)</enum><text>requires that an
appropriate public body within the State shall have adopted adequate mitigation
measures with effective enforcement provisions which the Secretary finds are
consistent with the criteria for construction described in the International
Code Council building codes;</text>
</clause><clause id="HF73CAB9F02D747ACA9BA4349263EDB66"><enum>(ii)</enum><text>has
taken actions to establish an insurance rate structure that takes into account
measures to mitigate insured losses; and</text>
</clause><clause display-inline="no-display-inline" id="H4688D7A603564ADC8AE36B2508E379F6"><enum>(iii)</enum><text>ensures, to the
extent that reinsurance coverage made available under the eligible State
program results in any cost savings in providing insurance coverage for risks
in such State, such cost savings are reflected in premium rates charged to
consumers for such coverage.</text>
</clause></subparagraph></paragraph><paragraph id="H93434F6E93AD436596ED04E822A3289D"><enum>(6)</enum><header>Requirements
regarding coverage</header><text>The State program—</text>
<subparagraph id="HE99BB8360953414B88108C2C9F2BF1C6"><enum>(A)</enum><text>may not, except
for charges or assessments related to post-event financing or bonding, involve
cross-subsidization between any separate property and casualty insurance lines
covered under the State program pursuant to paragraph (1);</text>
</subparagraph><subparagraph id="HDD1C953304324F2786E715D66E467B5D"><enum>(B)</enum><text display-inline="yes-display-inline">shall be subject to a requirement under
State law that for any insurance coverage made available under the State
insurance program or for any reinsurance coverage for such insurance coverage
made available under the State reinsurance program, the premium rates charged
shall cover the expected value of all future costs associated with insurance
policies or reinsurance contracts written by such program, in accordance with
the principles under section 303(g);</text>
</subparagraph><subparagraph id="H7FB0FE9CA6DD44D8876CFF70B9796A7F"><enum>(C)</enum><text>shall make
available to all qualifying policyholders insurance or reinsurance coverage, as
applicable, and mitigation services on a basis that is not unfairly
discriminatory; and</text>
</subparagraph><subparagraph id="id547969AAA58E4A58AA41453EBBA151E1"><enum>(D)</enum><text display-inline="yes-display-inline">publishes, and displays in a prominent
location on a Web site for the State insurance program, information for the
State insurance program of estimated assessments and surcharges on
policyholders, in accordance with State laws, regulations, or other
requirements, for a range of natural disaster or catastrophic events having a
varying magnitude of losses, including an event projected to result in losses
of such magnitude that they have a 1 percent chance of being equaled or
exceeded in any single year, based on the current year estimated aggregate
funding capacity of the State insurance program and State reinsurance
program.</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="H8ACA987B75434E8CB0EE2F555592A470"><enum>(7)</enum><header>Land use and
zoning</header><text>The State program, to the extent possible, seeks to
encourage appropriate State and local government units to develop comprehensive
land use and zoning plans that include natural hazard mitigation.</text>
</paragraph><paragraph id="HCF00AAFF964E4B9791C89A9E883562C0"><enum>(8)</enum><header>Risk-based
capital requirements</header><text display-inline="yes-display-inline">The
State program—</text>
<subparagraph id="H2789666356E642788D86A7F95373DB8C"><enum>(A)</enum><text>complies with such
risk-based capital requirements as applicable State law may impose and shall
take into consideration asset risk, credit risk, underwriting risk, and such
other relevant risk as determined by the Secretary; and</text>
</subparagraph><subparagraph id="H18C10DF99E6649AEBABB0D6D81AD09BB"><enum>(B)</enum><text>for each calendar
year, prepares and submits to the Secretary a report identifying its
claim-paying capacity at such time after the conclusion of such year, and
containing such information and in such form, as the Secretary shall
require.</text>
</subparagraph></paragraph><paragraph id="HB9336018F16B44BF9A3ECF7261A164C4"><enum>(9)</enum><header>Other
requirements</header><text display-inline="yes-display-inline">The State
program complies with such additional organizational, underwriting, and
financial requirements as the Secretary shall, by regulation, provide to carry
out the purposes of this Act.</text>
</paragraph></subsection><subsection id="H1A3633256AD94E6B8C67559FE973E458"><enum>(b)</enum><header>Certification</header><text>The
Secretary shall establish procedures for initial certification and
recertification as an eligible State program.</text>
</subsection><subsection id="H63759AC6083E43708841F8E9CACB9D82"><enum>(c)</enum><header>Transitional
Mechanisms</header><text display-inline="yes-display-inline">For the 5-year
period beginning on the date of the enactment of this Act, in the case of a
State that does not have an eligible State program for the State, a State
residual insurance market entity, or State-sponsored provider of natural
catastrophe insurance, for such State shall be considered to be an eligible
State program, but only if such State residual insurance market entity, or
State-sponsored provider of natural catastrophe insurance, was in existence
before such date of enactment.</text>
</subsection><subsection id="HA0D570FECF9F416E909E407AE9D31471"><enum>(d)</enum><header>Reinsurance To
cover exposure</header><text>This section may not be construed to limit or
prevent any eligible State program from obtaining reinsurance coverage for
insured losses retained by insurers pursuant to this section.</text>
</subsection></section><section id="HBCFA9A9F78A648CA836EB93237A00516"><enum>502.</enum><header>Study and
conditional coverage of commercial residential lines of insurance</header><text display-inline="no-display-inline">The Secretary shall study, on an expedited
basis, the need for and impact of expanding the programs established by this
Act to apply to insured losses of eligible State programs for losses arising
from all commercial insurance policies which provide coverage for properties
that are composed predominantly of residential rental units. The Secretary
shall consider the catastrophic insurance and reinsurance market for commercial
residential properties, and specifically the availability of adequate private
insurance coverage when an insured event occurs, the impact any such capacity
restrictions have on housing affordability for renters, and the likelihood that
such an expansion of the program would increase insurance capacity for this
market segment.</text>
</section><section id="H32420DD6E0EA404FA95B9AAD6A5CB7C6"><enum>503.</enum><header>Study of
risk-based pricing and State program rates</header><text display-inline="no-display-inline">The Comptroller General of the United States
shall conduct a study to analyze—</text>
<paragraph id="HED5BF4D567574BADB720A176126CC480"><enum>(1)</enum><text>risk-based rate
pricing, to determine the use of actuarially sound pricing for State insurance,
reinsurance, or residual market programs, including what measures States are
taking to implement actuarially sound rates; and</text>
</paragraph><paragraph id="H67DA567344FC443C87BB9B1FB22F6815"><enum>(2)</enum><text>rates for State
insurance, reinsurance, or residual market programs that fail to cover the
expected value of all future costs, including the cost of capital, associated
with insurance policies or reinsurance contracts written by such programs or
fail to have sufficient assets above their indebtedness to meet their
obligations.</text>
</paragraph><continuation-text continuation-text-level="section">Not later than 6 months after the date of the enactment
of this Act, the Comptroller General shall submit a report to the Congress on
the results of the study under this section.</continuation-text></section><section commented="no" id="H898708816E814B63974B2B5B73B8DB81"><enum>504.</enum><header>Definitions</header><text display-inline="no-display-inline">In this Act:</text>
<paragraph commented="no" id="HA4BAFAE2F4DA4CD69CED6F359D3A6972"><enum>(1)</enum><header>Commitment to
guarantee</header><text>The term <term>commitment to guarantee</term> means a
commitment to make debt guarantees to an eligible State program pursuant to
section 202(d).</text>
</paragraph><paragraph commented="no" id="H2751E70F071A4210B752D9C3044129BD"><enum>(2)</enum><header>Eligible State
program</header><text>The term <term>eligible State program</term> means a
State program that the Secretary certifies as an eligible State program under
section 501.</text>
</paragraph><paragraph commented="no" id="H3FF7A6C360674316A36B8D4D84CF6F13"><enum>(3)</enum><header>Insured
loss</header><text>The term <term>insured loss</term> means any loss that is
determined by an eligible State program as being covered by insurance or
reinsurance made available under that eligible State program.</text>
</paragraph><paragraph commented="no" id="H762190ADEA9E461780C4F5E8468F65C5"><enum>(4)</enum><header>Qualifying
assets</header><text>The term <term>qualifying assets</term> means the
policyholder surplus of the eligible State program as stated in the most recent
quarterly financial statement filed by the program with the domiciliary
regulator of the program in the last quarter ending prior to the event or
events.</text>
</paragraph><paragraph commented="no" id="H852D2616630A4EB6B36F716389955356"><enum>(5)</enum><header>Secretary</header><text>The
term <term>Secretary</term> means the Secretary of the Treasury.</text>
</paragraph><paragraph commented="no" id="H011876D96ECC40D9912B601AB03BE248"><enum>(6)</enum><header>State</header><text>The
term <term>State</term> includes the several States, the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the Commonwealth of the Northern Mariana
Islands, the United States Virgin Islands, and American Samoa, and any other
territory or possession of the United States.</text>
</paragraph></section><section id="H65B6188AD41748FB84163BA2BF55CEAD"><enum>505.</enum><header>Regulations</header><text display-inline="no-display-inline">The Secretary shall issue such regulations
as may be necessary to carry out this Act.</text>
</section>