[Congressional Record Volume 153, Number 172 (Wednesday, November 7, 2007)]
[House]
[Pages H13297-H13300]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               AMENDMENTS

  Under clause 8 of rule XVIII, proposed amendments were submitted as 
follows:

                               H.R. 3355

                 Offered By: Mr. Murphy of Connecticut

       Amendment No. 14: Page 21, strike lines 21 through 25 and 
     insert the following new subparagraph:
       (B) require that an appropriate public body within 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.
       Page 22, line 12, insert:
       (7) 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.
       Page 22, after line 21, insert the following new paragraph:
       (8) has been certified by the Secretary, for such year, in 
     accordance with an annual certification process established 
     by the Secretary for such purpose, as being in compliance 
     with the requirements under paragraphs (1) through (7).

                               H.R. 3355

                         Offered By: Mr. Putnam

       Amendment No. 15: Page 14, line 9, strike ``and''.
       Page 14, line 14, after the semicolon insert ``; and''.
       Page 14, after line 14, insert the following new 
     subparagraph:
       (C) the State or regional reinsurance program enters into 
     an agreement with the Secretary, as the Secretary shall 
     require, that the State 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 loan;
       Page 20, line 12, after the period insert the following: 
     ``The Secretary may not accept any repayment of any loan made 
     under this title that does not comply with the agreement for 
     such loan entered into in accordance with section 
     202(b)(1)(C).''.

                               H.R. 3355

                    Offered By: Mr. Klein of Florida

       Amendment No. 16: Page 2, after line 7, in the item in the 
     table of contents relating to section 202, strike ``State and 
     Regional'' and insert ``Qualified''.
       Page 4, line 6, strike ``(known as timing risk)''.
       Page 4, line 15, strike ``existing''.
       Page 6, strike lines 3 through 12, and insert the following 
     new paragraph:
       (16) State catastrophe reinsurance programs, if 
     appropriately structured and regulated, assume catastrophic 
     risk borne by private insurers without incurring many of the 
     additional costs imposed on private insurers, and thus enable 
     all insurers within the State to underwrite and price 
     coverage at rates designed to encourage property owners to 
     acquire levels of insurance appropriate to their individual 
     risks.
       Page 6, line 14, strike ``a Federal backstop'' and insert 
     ``Federal support''.
       Page 7, line 18, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 8, line 1, strike ``and'' and insert a comma.
       Page 8, line 2, before the semicolon insert ``, and State-
     sponsored providers of natural catastrophe insurance''.
       Page 13, line 19, strike ``STATE AND REGIONAL'' and insert 
     ``QUALIFIED''.
       Page 14, line 5, strike ``State or regional'' and insert 
     ``qualified''.
       Page 14, line 16, before the comma insert ``at a 
     commercially reasonable rate''.
       Page 14, line 21, before the semicolon insert ``at a 
     commercially reasonable rate''.
       Page 15, line 2, strike ``and'' the first place such term 
     appears.
       Page 15, lines 3 and 4, strike ``the loan is afforded the 
     full faith and credit of the State and''.
       Page 15, strike lines 21 through 23 and insert the 
     following new subparagraph:
       (B) cannot access capital in the private markets at a 
     commercially reasonable rate.
       Page 17, line 4, strike ``privately issued''.
       Page 18, lines 9 and 10, strike ``real property or 
     homeowners' '' and insert ``residential''.
       Page 19, strike ``section 301(c)'' each place such term 
     appears in lines 3 and 11 and insert ``section 401(d)''.
       Page 20, line 9, after ``not'' insert ``be''.
       Page 20, after line 12, insert the following new title:

   TITLE III--REINSURANCE COVERAGE FOR QUALIFIED REINSURANCE PROGRAMS

     SEC. 301. PROGRAM AUTHORITY.

       Subject to section 304(c), the Secretary of the Treasury, 
     shall make available for purchase, only by qualified 
     reinsurance programs (as such term is defined in section 
     401), contracts for reinsurance coverage under this title.

     SEC. 302. CONTRACT PRINCIPLES.

       Contracts for reinsurance coverage made available under 
     this title--
       (1) shall not displace or compete with the private 
     insurance or reinsurance markets or the capital market;
       (2) shall minimize the administrative costs of the Federal 
     Government; and
       (3) shall provide coverage based solely on insured losses 
     covered by the qualified reinsurance program purchasing the 
     contract.

     SEC. 303. TERMS OF REINSURANCE CONTRACTS.

       (a) Minimum Attachment Point.--Notwithstanding any other 
     provision of this title, a contract for reinsurance coverage 
     under this title for a qualified reinsurance program may not 
     be made available or sold unless the contract requires that 
     the qualified reinsurance program sustain an amount of 
     retained losses from events in an amount, as determined by 
     the Secretary, that is equal to the amount of losses 
     projected to be incurred from a single event of such 
     magnitude that it has a 0.5 percent chance of being equaled 
     or exceeded in any year.
       (b) 90 Percent Coverage of Insured Losses in Excess of 
     Retained Losses.--Each contract for reinsurance coverage 
     under this title shall provide that the amount paid out under 
     the contract shall, subject to section 304, be equal to 90 
     percent of the amount of insured losses of the qualified 
     reinsurance program in excess of the amount of retained 
     losses that the contract requires, pursuant to subsection 
     (a), to be incurred by such program.
       (c) Maturity.--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.
       (d) Payment Condition.--Each contract for reinsurance 
     coverage under this title shall authorize claims payments to 
     the qualified reinsurance program purchasing the coverage 
     only for insured losses provided under the contract.
       (e) Multiple Events.--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.

[[Page H13298]]

       (f) Timing of Claims.--Claims under a contract for 
     reinsurance coverage under this title shall include only 
     insurance claims that are reported to the qualified 
     reinsurance program within the 3-year period beginning upon 
     the event or events for which payment under the contract is 
     provided.
       (g) Actuarial Pricing.--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, 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 and the 
     limits specified in section 304.
       (h) Information.--Each contract for reinsurance coverage 
     under this title shall contain a condition providing that the 
     Secretary may require the qualified reinsurance program that 
     is covered under the contract to submit to the Secretary all 
     information on the qualified reinsurance program relevant to 
     the duties of the Secretary under this title.
       (i) Others.--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.

     SEC. 304. MAXIMUM FEDERAL LIABILITY.

       (a) In General.--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 by the Secretary shall not exceed $200,000,000,000 or 
     such lesser amount as is determined by the Secretary based on 
     review of the market for reinsurance coverage under this 
     title.
       (b) Limitation.--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.

     SEC. 305. FEDERAL NATURAL CATASTROPHE REINSURANCE FUND.

       (a) Establishment.--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 ``Fund'').
       (b) Credits.--The Fund shall be credited with--
       (1) amounts received annually from the sale of contracts 
     for reinsurance coverage under this title;
       (2) any amounts appropriated under section 304; and
       (3) any amounts earned on investments of the Fund pursuant 
     to subsection (d).
       (c) Uses.--Amounts in the Fund shall be available to the 
     Secretary only for the following purposes:
       (1) Contract payments.--For payments to purchasers covered 
     under contracts for reinsurance coverage for eligible losses 
     under such contracts.
       (2) Administrative expenses.--To pay for the administrative 
     expenses incurred by the Secretary in carrying out the 
     reinsurance program under this title.
       (3) Outwards reinsurance.--To obtain retrocessional or 
     other reinsurance coverage of any kind to cover risk 
     reinsured under contracts for reinsurance coverage made 
     available under this title.
       (d) Investment.--If the Secretary determines that the 
     amounts in the Fund are in excess of current needs, the 
     Secretary may invest such amounts as the Secretary considers 
     advisable in obligations issued or guaranteed by the United 
     States.
       (e) Prohibition of Federal Funds.--No Federal funds shall 
     be authorized or appropriated for the Fund or for carrying 
     out the reinsurance program under this title.

     SEC. 306. REGULATIONS.

       The Secretary shall issue any regulations necessary to 
     carry out the program for reinsurance coverage under this 
     title.
       Page 20, line 13, strike ``TITLE III'' and insert ``TITLE 
     IV''.
       Page 20, line 15, strike ``SEC. 301.'' and insert ``SEC. 
     401.''.
       Page 21, strike lines 21 through 25 and insert the 
     following new subparagraph:
       (B) require 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.
       Page 22, line 4, after the semicolon insert ``and''.
       Page 22, line 17, strike ``and''.
       Page 22, strike lines 9 through 11 and insert the 
     following: ``the reasonably anticipated cost of all claims, 
     loss adjustment expenses, and all administrative costs of the 
     insurance or reinsurance coverage offered by such entities, 
     and any such outwards reinsurance as the program 
     administrator deems prudent;''.
       Page 22, strike lines 12 through 17 and insert the 
     following new paragraphs:
       (7) to the extent possible, seeks to avoid cross-
     subsidization between any separate property and casualty 
     lines covered under the State authorized insurance or 
     reinsurance entity;
       (8) complies with the risk-based capital requirements under 
     subsection (b); and
       Page 22, line 18, strike ``(7)'' and insert ``(9)''.
       Page 22, after line 21, insert the following new 
     subsection:
       (b) Risk-Based Capital Requirements.--
       (1) In general.--Except for programs deemed to be qualified 
     reinsurance programs pursuant to section 401(c), each 
     qualified reinsurance program shall maintain risk-based 
     capital in accordance with requirements established by the 
     Secretary, in consultation with the National Association of 
     Insurance Commissioners and consistent with the Risk-Based 
     Capital Model Act of the National Association of Insurance 
     Commissioners, and take into consideration asset risk, credit 
     risk, underwriting risk, and such other relevant risk as 
     determined by the Secretary.
       (2) Treatment of access to liquidity loans.--
       (A) In general.--To the extent that a qualified reinsurance 
     program is deficient in complying with any aspect of the 
     risk-based capital requirements established pursuant to this 
     subsection, the Secretary shall recognize and give credit for 
     the ability of such qualified reinsurance program to access 
     capital through the liquidity loan program established under 
     section 202(d).
       (B) Annual diminution.--The extent of credit recognized and 
     given for a qualified reinsurance program pursuant to 
     subparagraph (A) shall diminish annually in a proportion 
     equal to the earned premium for the program for the prior 
     calendar year.
       (C) Reset upon occurrence of catastrophe.--To the extent 
     that a qualified reinsurance program is obligated to pay 
     losses as a result of the occurrence of a catastrophe, the 
     Secretary shall increase the credit recognized and given for 
     the program pursuant to subparagraph (A) by an amount equal 
     to the losses paid by the program as a result of the 
     catastrophe.
       (D) Resumption after catastrophe.--After a reset occurs 
     pursuant to subparagraph (C) for a qualified reinsurance 
     program, the diminution described in subparagraph (B) shall 
     resume and continue until the program has accumulated capital 
     sufficient to satisfy the risk-based capital requirement 
     determined by the Secretary to be appropriate given the 
     ceiling coverage level of that particular qualified 
     reinsurance program.
       (3) Report.--For each calendar year, each qualified 
     reinsurance program shall prepare and submit to the Secretary 
     a report identifying its risk based capital, at such time 
     after the conclusion of such year, and containing such 
     information and in such form, as the Secretary shall require.
       Page 22, line 22, strike ``(b)'' and insert ``(c)''.
       Page 23, line 1, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 23, line 3, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 23, line 5, strike ``(c)'' and insert ``(d)''.
       Page 23, line 11, strike ``(d)'' and insert ``(e)''.
       Page 23, after line 16, insert the following new section:

     SEC. 402. STUDY AND CONDITIONAL COVERAGE OF COMMERCIAL 
                   RESIDENTIAL LINES OF INSURANCE.

       (a) Study.--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 
     qualified reinsurance 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 has on housing 
     affordability for renters, and the likelihood that such an 
     expansion of the program would increase insurance capacity 
     for this market segment.
       (b) Conditional Coverage.--To the extent that the Secretary 
     determines that there is such a need to expand such programs 
     and such expansion will be effective in increasing insurance 
     capacity for the commercial residential insurance market, the 
     Secretary shall, in consultation with the National 
     Association of Insurance Commissioners--
       (1) apply the provisions of this Act, as appropriate, to 
     insured losses of a qualified reinsurance program for losses 
     arising from commercial insurance policies which provide 
     coverage for properties that are composed predominantly of 
     residential rental units, as described in paragraph (a); and
       (2) provide such restrictions, limitations, or conditions 
     with respect to the programs under this Act that the 
     Secretary deems appropriate, based on the study under 
     subsection (a).
       Page 23, line 17, strike ``SEC. 302.'' and insert ``SEC. 
     403.''.
       Page 23, lines 22 and 23, strike ``, under law,''.
       Page 24, line 7, strike ``section 301'' and insert 
     ``section 401''.
       Page 24, line 15, strike ``SEC. 303.'' and insert ``SEC. 
     404.''.

                               H.R. 3355

                    Offered By: Mr. Klein of Florida

       Amendment No. 17: Page 2, after line 7, in the item in the 
     table of contents relating to

[[Page H13299]]

     section 202, strike ``State and Regional'' and insert 
     ``Qualified''.
       Page 4, line 6, strike ``(known as timing risk)''.
       Page 4, line 15, strike ``existing''.
       Page 6, strike lines 3 through 12, and insert the following 
     new paragraph:
       (16) State catastrophe reinsurance programs, if 
     appropriately structured and regulated, assume catastrophic 
     risk borne by private insurers without incurring many of the 
     additional costs imposed on private insurers, and thus enable 
     all insurers within the State to underwrite and price 
     coverage at rates designed to encourage property owners to 
     acquire levels of insurance appropriate to their individual 
     risks.
       Page 6, line 14, strike ``a Federal backstop'' and insert 
     ``Federal support''.
       Page 7, line 18, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 8, line 1, strike ``and'' and insert a comma.
       Page 8, line 2, before the semicolon insert ``, and State-
     sponsored providers of natural catastrophe insurance''.
       Page 13, line 19, strike ``STATE AND REGIONAL'' and insert 
     ``QUALIFIED''.
       Page 14, line 5, strike ``State or regional'' and insert 
     ``qualified''.
       Page 14, line 16, before the comma insert ``at a 
     commercially reasonable rate''.
       Page 14, line 21, before the semicolon insert ``at a 
     commercially reasonable rate''.
       Page 15, line 2, strike ``and'' the first place such term 
     appears.
       Page 15, lines 3 and 4, strike ``the loan is afforded the 
     full faith and credit of the State and''.
       Page 15, strike lines 21 through 23 and insert the 
     following new subparagraph:
       (B) cannot access capital in the private markets at a 
     commercially reasonable rate.
       Page 17, line 4, strike ``privately issued''.
       Page 18, lines 9 and 10, strike ``real property or 
     homeowners' '' and insert ``residential''.
       Page 19, strike ``section 301(c)'' each place such term 
     appears in lines 3 and 11 and insert ``section 401(d)''.
       Page 20, line 9, after ``not'' insert ``be''.
       Page 20, after line 12, insert the following new title:

   TITLE III--REINSURANCE COVERAGE FOR QUALIFIED REINSURANCE PROGRAMS

     SEC. 301. PROGRAM AUTHORITY.

       Subject to section 304(c), the Secretary of the Treasury, 
     shall make available for purchase, only by qualified 
     reinsurance programs (as such term is defined in section 
     401), contracts for reinsurance coverage under this title.

     SEC. 302. CONTRACT PRINCIPLES.

       Contracts for reinsurance coverage made available under 
     this title--
       (1) shall not displace or compete with the private 
     insurance or reinsurance markets or the capital market;
       (2) shall minimize the administrative costs of the Federal 
     Government; and
       (3) shall provide coverage based solely on insured losses 
     covered by the qualified reinsurance program purchasing the 
     contract.

     SEC. 303. TERMS OF REINSURANCE CONTRACTS.

       (a) Minimum Attachment Point.--Notwithstanding any other 
     provision of this title, a contract for reinsurance coverage 
     under this title for a qualified reinsurance program may not 
     be made available or sold unless the contract requires that 
     the qualified reinsurance program sustain an amount of 
     retained losses from events in an amount, as determined by 
     the Secretary, that is equal to the amount of losses 
     projected to be incurred from a single event of such 
     magnitude that it has a 0.5 percent chance of being equaled 
     or exceeded in any year.
       (b) 90 Percent Coverage of Insured Losses in Excess of 
     Retained Losses.--Each contract for reinsurance coverage 
     under this title shall provide that the amount paid out under 
     the contract shall, subject to section 304, be equal to 90 
     percent of the amount of insured losses of the qualified 
     reinsurance program in excess of the amount of retained 
     losses that the contract requires, pursuant to subsection 
     (a), to be incurred by such program.
       (c) Maturity.--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.
       (d) Payment Condition.--Each contract for reinsurance 
     coverage under this title shall authorize claims payments to 
     the qualified reinsurance program purchasing the coverage 
     only for insured losses provided under the contract.
       (e) Multiple Events.--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.
       (f) Timing of Claims.--Claims under a contract for 
     reinsurance coverage under this title shall include only 
     insurance claims that are reported to the qualified 
     reinsurance program within the 3-year period beginning upon 
     the event or events for which payment under the contract is 
     provided.
       (g) Actuarial Pricing.--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, 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 and the 
     limits specified in section 304.
       (h) Information.--Each contract for reinsurance coverage 
     under this title shall contain a condition providing that the 
     Secretary may require the qualified reinsurance program that 
     is covered under the contract to submit to the Secretary all 
     information on the qualified reinsurance program relevant to 
     the duties of the Secretary under this title.
       (i) Others.--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.

     SEC. 304. MAXIMUM FEDERAL LIABILITY.

       (a) In General.--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 by the Secretary shall not exceed $200,000,000,000 or 
     such lesser amount as is determined by the Secretary based on 
     review of the market for reinsurance coverage under this 
     title.
       (b) Limitation.--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.

     SEC. 305. FEDERAL NATURAL CATASTROPHE REINSURANCE FUND.

       (a) Establishment.--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 ``Fund'').
       (b) Credits.--The Fund shall be credited with--
       (1) amounts received annually from the sale of contracts 
     for reinsurance coverage under this title;
       (2) any amounts appropriated under section 304; and
       (3) any amounts earned on investments of the Fund pursuant 
     to subsection (d).
       (c) Uses.--Amounts in the Fund shall be available to the 
     Secretary only for the following purposes:
       (1) Contract payments.--For payments to purchasers covered 
     under contracts for reinsurance coverage for eligible losses 
     under such contracts.
       (2) Administrative expenses.--To pay for the administrative 
     expenses incurred by the Secretary in carrying out the 
     reinsurance program under this title.
       (3) Outwards reinsurance.--To obtain retrocessional or 
     other reinsurance coverage of any kind to cover risk 
     reinsured under contracts for reinsurance coverage made 
     available under this title.
       (d) Investment.--If the Secretary determines that the 
     amounts in the Fund are in excess of current needs, the 
     Secretary may invest such amounts as the Secretary considers 
     advisable in obligations issued or guaranteed by the United 
     States.

     SEC. 306. REGULATIONS.

       The Secretary shall issue any regulations necessary to 
     carry out the program for reinsurance coverage under this 
     title.
       Page 20, line 13, strike ``TITLE III'' and insert ``TITLE 
     IV''.
       Page 20, line 15, strike ``SEC. 301.'' and insert ``SEC. 
     401.''.
       Page 22, line 4, after the semicolon insert ``and''.
       Page 22, line 17, strike ``and''.
       Page 22, strike lines 9 through 11 and insert the 
     following: ``the reasonably anticipated cost of all claims, 
     loss adjustment expenses, and all administrative costs of the 
     insurance or reinsurance coverage offered by such entities, 
     and any such outwards reinsurance as the program 
     administrator deems prudent;''.
       Page 22, strike lines 12 through 17 and insert the 
     following new paragraphs:
       (7) to the extent possible, seeks to avoid cross-
     subsidization between any separate property and casualty 
     lines covered under the State authorized insurance or 
     reinsurance entity;
       (8) complies with the risk-based capital requirements under 
     subsection (b); and
       Page 22, line 18, strike ``(7)'' and insert ``(9)''.
       Page 22, after line 21, insert the following new 
     subsection:
       (b) Risk-Based Capital Requirements.--
       (1) In general.--Except for programs deemed to be qualified 
     reinsurance programs pursuant to section 401(c), each 
     qualified reinsurance program shall maintain risk-based 
     capital in accordance with requirements established by the 
     Secretary, in consultation with the National Association of 
     Insurance Commissioners and consistent with the Risk-Based 
     Capital Model Act of the National Association of Insurance 
     Commissioners, and take into consideration asset risk, credit 
     risk, underwriting risk, and such other relevant risk as 
     determined by the Secretary.
       (2) Treatment of access to liquidity loans.--
       (A) In general.--To the extent that a qualified reinsurance 
     program is deficient in complying with any aspect of the 
     risk-based capital requirements established pursuant to this 
     subsection, the Secretary shall recognize and give credit for 
     the ability of such

[[Page H13300]]

     qualified reinsurance program to access capital through the 
     liquidity loan program established under section 202(d).
       (B) Annual diminution.--The extent of credit recognized and 
     given for a qualified reinsurance program pursuant to 
     subparagraph (A) shall diminish annually in a proportion 
     equal to the earned premium for the program for the prior 
     calendar year.
       (C) Reset upon occurrence of catastrophe.--To the extent 
     that a qualified reinsurance program is obligated to pay 
     losses as a result of the occurrence of a catastrophe, the 
     Secretary shall increase the credit recognized and given for 
     the program pursuant to subparagraph (A) by an amount equal 
     to the losses paid by the program as a result of the 
     catastrophe.
       (D) Resumption after catastrophe.--After a reset occurs 
     pursuant to subparagraph (C) for a qualified reinsurance 
     program, the diminution described in subparagraph (B) shall 
     resume and continue until the program has accumulated capital 
     sufficient to satisfy the risk-based capital requirement 
     determined by the Secretary to be appropriate given the 
     ceiling coverage level of that particular qualified 
     reinsurance program.
       (3) Report.--For each calendar year, each qualified 
     reinsurance program shall prepare and submit to the Secretary 
     a report identifying its risk based capital, at such time 
     after the conclusion of such year, and containing such 
     information and in such form, as the Secretary shall require.
       Page 22, line 22, strike ``(b)'' and insert ``(c)''.
       Page 23, line 1, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 23, line 3, after ``entity'' insert ``, or State-
     sponsored provider of natural catastrophe insurance,''.
       Page 23, line 5, strike ``(c)'' and insert ``(d)''.
       Page 23, line 11, strike ``(d)'' and insert ``(e)''.
       Page 23, after line 16, insert the following new section:

     SEC. 402. STUDY AND CONDITIONAL COVERAGE OF COMMERCIAL 
                   RESIDENTIAL LINES OF INSURANCE.

       (a) Study.--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 
     qualified reinsurance 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 has on housing 
     affordability for renters, and the likelihood that such an 
     expansion of the program would increase insurance capacity 
     for this market segment.
       (b) Conditional Coverage.--To the extent that the Secretary 
     determines that there is such a need to expand such programs 
     and such expansion will be effective in increasing insurance 
     capacity for the commercial residential insurance market, the 
     Secretary shall, in consultation with the National 
     Association of Insurance Commissioners--
       (1) apply the provisions of this Act, as appropriate, to 
     insured losses of a qualified reinsurance program for losses 
     arising from commercial insurance policies which provide 
     coverage for properties that are composed predominantly of 
     residential rental units, as described in paragraph (a); and
       (2) provide such restrictions, limitations, or conditions 
     with respect to the programs under this Act that the 
     Secretary deems appropriate, based on the study under 
     subsection (a).
       Page 23, line 17, strike ``SEC. 302.'' and insert ``SEC. 
     403.''.
       Page 23, lines 22 and 23, strike ``, under law,''.
       Page 24, line 7, strike ``section 301'' and insert 
     ``section 401''.
       Page 24, line 15, strike ``SEC. 303.'' and insert ``SEC. 
     404.''.

                               H.R. 3996

                   Offered By: Mr. Ryan of Wisconsin

       Amendment No. 1: Strike title VI.