,i #aacth ,,congress #ast ,session ,h4 ,r4 #aaja ,,in ,,the ,,house ,,of ,,representatives ,march #ab1 #bjac ,mr4 ,sires introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committee on ,transportation and ,infrastructure1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to strengthen ,america's financial infrastructure1 by requiring pre-funding for catastrophe losses using private insurance premium dollars to better prepare and protect homeowners from natural catastrophes and to protect taxpayers from massive bailouts1 and to provide dedicated funding from insurance premiums to improve catastrophe preparedness1 loss prevention and mitigation1 and to improve the availability and affordability of private market homeowners insurance coverage for catastrophic events1 and for other purposes4 #a4 ,short title and table of contents 7a7 ,short title ,this ,act may be cited as the ,homeowners and ,taxpayers ,protection ,act of #bjac4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title and table of contents4 ,sec4 #b4 ,findings and purpose4 ,sec4 #c4 ,definitions4 ,title ,i--,,taxpayer ,,protection1 ,,pre-,,funded ,,catastrophe ,,recovery1 ,,and ,,market ,,stabilization ,sec4 #aja4 ,national ,commission on ,natural ,catastrophe ,preparation and ,protection4 ,sec4 #ajb4 ,pre-funded and privately financed catastrophe recovery program4 ,sec4 #ajc4 ,post-catastrophe market stabilization program for liquidity loans4 ,sec4 #ajd4 ,termination4 ,title ,,ii--,,catastrophe ,,readiness1 ,,citizen ,,and ,,community ,,preparedness1 ,,and ,,mitigation ,sec4 #bja4 ,national ,readiness1 ,preparedness1 and ,mitigation ,committee4 #b4 ,findings and purpose 7a7 ,findings ,the ,congress finds the following3 7#a7 ,the economy of the ,united ,states1 the ,american taxpayers1 and all homeowners need to be better prepared for1 and more protected from1 major natural catastrophes4 7#b7 ,taking into consideration the current economic and fiscal challenges facing the ,united ,states1 it is more important than ever to fortify our ,nation's financial infrastructure to be fully prepared for major natural catastrophes and to mitigate the risk of catastrophe as much as possible4 7#c7 ,when major catastrophes hit1 the ,federal ,government is called upon to provide significant funding and services to support recovery4 7#d7 ,the costs of post-catastrophe ,federal bailouts are borne by all taxpayers and can create a disincentive to fully prepare for catastrophes4 7#e7 ,historically1 the budget for ,federal ,government has assumed there will be no natural catastrophes1 and this lack of pre-funding for catastrophes contributed substantially to annual budget deficits and growing national debt4 7#f7 ,the ,budget ,control ,act of #bjaa ends an era of unbudgeted recovery assistance and authorizes a fixed level of annual funding for catastrophes relief4 7#g7 ,the amount of future catastrophe relief funding is capped at the average amount spent on natural catastrophes during the previous #aj years with the high and low years removed4 7#h7 ,by removing the high and low years1 the law now caps catastrophes spending at a level that is less than #fj percent of the amount spent on catastrophe relief during the previous #aj years4 7#i7 ,responsibly managing ,government spending is a top congressional priority1 especially in light of the unprecedented fiscal challenges facing the ,nation4 7#aj7 ,natural catastrophes will continue to occur1 and the exposure to catastrophe risk is growing4 ,scientists warn that future catastrophes will inevitably cause losses far in excess of prior events1 and these losses could exceed the limited capacity in the private market to cover claims and remain viable to insure properties after massive catastrophic events4 7#aa7 ,in #bjaa1 the earthquake centered in ,virginia that shook the ,east ,coast and the extreme weather and deadly super tornadoes that ripped across the country provided powerful reminders that natural catastrophes can strike unexpectedly1 severely damaging areas not thought to be at high risk1 and no region is immune from the threat of natural catastrophe4 7#ab7 ,in #bjab1 the devastation caused by ,superstorm ,sandy demonstrated yet again the need for a mechanism to ensure that privately funded monies will be available if needed following mega-catastrophes4 7#ac7 ,to successfully transition to a more limited and targeted ,federal role in post-event catastrophe funding1 communities must be better prepared for future catastrophes1 the risk of damage must be mitigated1 and individuals must have greater access to private market protection against catastrophe risk4 7#ad7 ,the private insurance market alone does not have sufficient capacity to efficiently address the timing risk presented by major natural catastrophes1 and there is no guarantee that the level of capacity that does exist will continue to be available from one year to the next or that consumers have the resources to adjust to significant price swings in the cost of the capital for available capacity4 7#ae7 ,disruptions in insurance availability and affordability will continue to harm economic activity in ,states exposed to major catastrophes and place significant burdens on residents of these ,states4 7#af7 ,consumers in many areas around the country cannot find homeowners insurance in the private market1 and affordability and availability challenges will grow dramatically when future major catastrophes strike4 7#ag7 ,hurricane ,katrina1 ,superstorm ,sandy1 and other recent catastrophes confirm that the economic harm from natural catastrophes has a disproportionate impact upon the poor and middle class because areas most frequently and adversely impacted by catastrophic hurricanes have disproportionately high rates of poverty and housing stock valued well below ,state averages4 7#ah7 ,a new public-private partnership approach to deal more effectively with major natural catastrophes would more efficiently leverage the public sector and establish a limited1 less expensive1 more focused role for government while also maximizing the capabilities of the private sector4 7#ai7 ,a privately funded backstop can provide more protection at lower cost for consumers while also strengthening ,america's financial infrastructure to deal with natural catastrophes by increasing capacity and providing more market stability after a catastrophe4 7#bj7 ,cost savings can lower premiums for consumers and be used to encourage better prevention and mitigation in lieu of post-event bailouts4 7#ba7 ,a financial backstop can be structured to be fully funded to protect taxpayers from bailouts and insurance policyholders from subsidies upon which the current system relies4 7#bb7 ,a public-private partnership model1 with an appropriately structured backstop1 can protect against the timing risk presented by major natural catastrophes1 spread risk more broadly1 and enable private direct insurers to underwrite and price insurance for large-scale catastrophes more efficiently and with less risk of insolvency or financial distress while making insurance more available and affordable for consumers4 7#bc7 ,a public-private partnership model can be structured to include and encourage participation by private market reinsurers4 7#bd7 ,incentives and requirements can be created to improve prevention and mitigation measures at the ,state and local levels1 including strong building codes1 effective retrofits for existing homes1 and sensible land use policies to prohibit further development in environmentally sensitive areas that are highly exposed to catastrophe4 7#be7 ,for the majority of ,americans1 their home is their single biggest asset and protecting that investment is important to the economic health of millions of ,americans1 to social stability2 and to the health of the banking system and broader economy4 7#bf7 ,the financial crisis of #bjjh and recent fiscal challenges confirm the value of taking action in advance to strengthen ,america's financial infrastructure through a privately funded backstop rather than waiting for a future crisis or collapse to take emergency action in the form of bailouts4 7#bg7 ,it is in the best interests of the ,nation to take responsible action now to begin to build a financial backstop that will help protect a recovering ,american economy and mitigate the economic or financial shock that could result from a major catastrophic event4 7b7 ,purposes ,the purposes of this ,act are-- 7#a7 to better prepare and protect homeowners and taxpayers from major natural catastrophe2 7#b7 to establish a fully funded program for catastrophe losses to strengthen the financial infrastructure of the ,united ,states2 7#c7 to protect taxpayers from bailouts and subsidies related to the financing of post-catastrophe catastrophe relief2 7#d7 to develop a public-private partnership that maximizes and supplements private market capacity1 increases the spread of risk1 and increases market stability2 7#e7 to reduce the size of ,state government insurance exposure2 7#f7 to make private market homeowners insurance more available and affordable2 7#g7 to improve emergency preparedness2 7#h7 to encourage individuals and communities to adopt mitigation and prevention measures that reduce losses from such catastrophes2 and 7#i7 to fortify the ,nation's capacity to assist in the financial recovery from major catastrophes4 #c4 ,definitions ,for purposes of this ,act1 the following definitions shall apply3 7#a7 ,actuarially sound ,the term actuarially sound means1 with respect to premiums1 that premiums are determined according to principles of actuarial science to be adequate1 but not excessive1 in the aggregate to pay current and future obligations1 including the expected annualized cost of all claims1 loss adjustment expenses1 and all administrative costs4 7#b7 ,covered event ,the term covered event means the occurrence of one or more of the events specified in section #ajb7;c7 that causes a loss or series of losses4 7#c7 ,covered state ,the term covered ,states means1 with respect to a ,state plan1 a ,state covered by the plan4 7#d7 ,eligible state plan ,the term eligible ,state plan means a ,state plan or multi-,state plan that meets the requirements of section #ajb7;d74 7#e7 ,emergency response providers ,the term emergency response providers has the meaning given such term in section #b of the ,homeland ,security ,act of #bjjb 7#f ,u4,s4,c4 #aja74 7#f7 ,fund ,the term ,fund means the ,catastrophe ,preparedness ,fund established under section #ajb7;g74 7#g7 ,insured loss ,the term insured loss means any loss and associated loss adjustment expense insured or reinsured by an eligible ,state plan4 7#h7 ,liquidity loan ,the term liquidity loan means a loan to an eligible ,state plan made under section #ajc4 7#i7 ,multi-state plan ,the term multi-,state plan means a ,state plan described in paragraph 7#ac77;,a77ii7 of this section4 7#aj7 ,qualified entity ,the term qualified entity means a private market reinsurer or other private sector entity that has satisfied the criteria established by the ,secretary to be treated as a qualified entity for the purposes of section #ajb7;e74 7#aa7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury except as specifically provided otherwise4 7#ab7 ,state ,the term ,state includes the several ,states of the ,united ,states1 the ,district of ,columbia1 the ,commonwealth of ,puerto ,rico1 ,guam1 the ,commonwealth of the ,northern ,mariana ,islands1 the ,united ,states ,virgin ,islands1 and ,american ,samoa1 and any other territory or possession of the ,united ,states4 7#ac7 ,state plan ,the term ,state plan means a plan that-- 7,a7 is created or administered by-- 7i7 a single ,state2 or 7ii7 two or more ,states2 and 7,b7 provides insurance or reinsurance protection to address natural catastrophe preparedness and protection1 and in the case of a plan described in subparagraph 7,a77ii71 provides such protection as part of a program covering multiple ,states4 ,i ,,taxpayer ,,protection1 ,,pre-,,funded ,,catastrophe ,,recovery1 ,,and ,,market ,,stabilization #aja4 ,national ,commission on ,natural ,catastrophe ,preparation and ,protection 7a7 ,establishment ,to effectuate a stronger public-private partnership at the local1 ,state1 and national levels regarding natural catastrophe preparation and protection1 the ,secretary of the ,treasury1 in consultation with the ,secretary of ,homeland ,security1 shall establish a commission to be known as the ,national ,commission on ,natural ,catastrophe ,preparation and ,protection 7in this title referred to as the ,commission74 7b7 ,duties ,the ,commission shall meet for the purpose of advising the ,secretary regarding the estimated loss costs associated with the contracts for reinsurance protection made available under this title and carrying out the functions specified in this ,act1 including-- 7#a7 the development and implementation of public education concerning the risks posed by natural catastrophes2 7#b7 the establishment of a research priority for the development and implementation of prevention1 mitigation1 recovery1 and rebuilding strategies1 that better prepare and protect the ,united ,states from natural catastrophes2 7#c7 the establishment of a process for members of the ,commission to deploy following every major catastrophe to inspect and evaluate the handling of such catastrophes2 7#d7 conducting continuous analysis of the effectiveness of this ,act and recommending improvements to the ,congress so that the costs of providing natural catastrophe protection are decreased and so that the ,united ,states is better prepared2 and 7#e7 ensuring that the programs under this title are operated in a financially prudent manner and on an actuarially sound basis consistent with the provisions of this title and is not dependent on subsidy from taxpayers or consumers in areas that do not reside in areas that have a high-risk to natural catastrophe loss1 including by monitoring the expenditure of funds for administrative purposes to promote efficiency and economy in the operation and administration of the program and to minimize the cost for participating ,states4 7c7 ,members ,the ,commission shall consist of #ad members1 as follows3 7#a7 ,homeland security member ,the ,secretary of ,homeland ,security or the ,secretary's designee4 7#b7 ,appointed members #ac members appointed by the ,secretary of the ,treasury1 who shall consist of-- 7,a7 the ,director of the ,federal ,insurance ,office of the ,department of the ,treasury1 or the ,director's designee2 7,b7 a member of a ,state legislature who can provide the perspective of ,state government2 7,c7 one individual who is an actuary2 7,d7 one individual who is employed in engineering2 7,e7 one individual representing the scientific community2 7,f7 one individual representing property and casualty insurers2 7,g7 one individual representing reinsurers2 7,h7 one individual who is a member or former member of the ,national ,association of ,insurance ,commissioners2 7,i7 two individuals who are consumers1 including one consumer who is a homeowner who resides in an area with relatively high exposure to natural catastrophe risk and one consumer who resides in an area with relatively low exposure to natural catastrophe risk2 7,j7 one individual who is an emergency response expert2 7,k7 one individual with expertise regarding capital markets2 and 7,l7 one individual representing the residential construction community4 7d7 ,treatment of non-,federal members ,each member of the ,commission who is not otherwise employed by the ,federal ,government shall be considered a special ,government employee for purposes of sections #bjb and #bjh of title #ah1 ,united ,states ,code4 7e7 ,experts and consultants ,the ,commission may procure temporary and intermittent services from individuals or groups recognized as experts in the fields of actuarial science1 meteorology1 seismology1 vulcanology1 geology1 structural engineering1 wind engineering1 seismic engineering and hydrology1 emergency response1 and other fields1 under section #caji7;b7 of title #e1 ,united ,states ,code1 but at rates not in excess of the daily equivalent of the annual rate of basic pay payable for level ,v of the ,executive ,schedule1 for each day during which the individual procured is performing such services for the ,commission4 ,the ,commission may also procure1 and the ,congress encourages the ,commission to procure1 experts from universities1 research centers1 foundations1 and other appropriate organizations that could study1 research1 and develop methods and mechanisms that could be utilized to strengthen structures to better withstand the events covered by this ,act4 7f7 ,compensation ,each member of the ,commission who is not an officer or employee of the ,federal ,government shall be compensated at a rate of basic pay payable for level ,v of the ,executive ,schedule1 for each day 7including travel time7 during which such member is engaged in the performance of the duties of the ,commission4 ,all members of the ,commission who are officers or employees of the ,united ,states shall serve without compensation in addition to that received for their services as officers or employees of the ,united ,states4 7g7 ,obtaining data 7#a7 ,authority ,the ,commission and the ,secretary may solicit loss and exposure data and such other information that they deem necessary to carry out their responsibilities under this ,act from eligible ,state plans1 other governmental agencies1 and bodies and organizations that act as statistical agents for the insurance industry4 ,the ,commission and the ,secretary shall take such actions as are necessary to ensure that confidential or proprietary information is disclosed only to authorized individuals working for the ,commission or the ,secretary4 7#b7 ,confidentiality 7,a7 ,in general ,information obtained by the ,commission and the ,secretary pursuant to this ,act with reference to which a request for confidential treatment is made by the person furnishing such information-- 7i7 shall be exempt from disclosure under section #eeb of title #e1 ,united ,states ,code2 and 7ii7 shall not be published or disclosed4 7,b7 ,exception ,subparagraph 7,a7 shall not apply with respect to the publication or disclosure of any data aggregated in a manner that ensures protection of the identity of the person furnishing such data4 7h7 ,authorization of appropriations ,there is authorized to be appropriated-- 7#a7 #aj1jjj1jjj for fiscal year #bjac for the initial expenses in establishing the ,commission and the initial activities of the ,commission during such fiscal year that cannot timely be covered by amounts that are deposited in the ,fund pursuant to section #ajb7;e77#e77;,d72 and 7#b7 for fiscal year #bjad and each fiscal year thereafter1 such sums as may be necessary to carry out the activities of the ,commission during each such fiscal year that cannot timely be covered by amounts that are deposited in the ,fund pursuant to section #ajb7;e77#e77;,d74 7i7 ,termination ,the ,commission shall terminate upon the date specified in section #ajd7;c74 #ajb4 ,pre-funded and privately financed catastrophe recovery program 7a7 ,program authority 7#a7 ,in general ,the ,secretary of the ,treasury1 in consultation with the ,secretary of ,homeland ,security1 shall carry out a program under this section that utilizes premiums from eligible ,state plans to provide additional capacity and stability in the homeowners insurance market and improve the availability and affordability of homeowners protection coverage to pre-fund future natural catastrophe recovery by making available for purchase1 only by eligible ,state plans1 contracts for reinsurance coverage under this section4 7#b7 ,purpose ,the program shall make available privately funded reinsurance coverage under this section-- 7,a7 to diversify and spread risk more efficiently and leverage the economies of pooling reinsurance arrangements from different geographical areas of the country covering the events specified in subsection 7c72 7,b7 to generate additional capacity and provide stability to the homeowners insurance market by encouraging ,states to develop or expand plans that address current market challenges and assist homeowners in securing needed protection2 7,c7 to improve the availability and affordability of homeowners insurance for the purpose of privately financing post-catastrophe recovery by facilitating the pooling and spreading the risk of catastrophic financial losses from natural catastrophes2 7,d7 to improve the solvency1 capacity1 and stability of homeowners insurance markets1 supplement private market reinsurance1 and increase the spread of risk2 7,e7 to encourage the development and implementation of mitigation1 prevention1 recovery1 and rebuilding strategies to reduce future catastrophe losses2 and 7,f7 to recommend methods to continuously improve the way the ,united ,states prepares for1 reacts to1 and responds to catastrophes1 including improvements to the ,catastrophe ,preparedness ,fund established under section #ajb7;g74 7#c7 ,contract principles ,under the program under this section1 the ,secretary shall offer reinsurance coverage through contracts with eligible ,state plans1 which contracts shall-- 7,a7 be priced on an actuarially sound basis as specified in this section2 and 7,b7 provide coverage based solely on insured losses within the ,state or ,states participating in the eligible ,state plan purchasing the contract4 7b7 ,qualified lines of coverage ,each contract for reinsurance coverage made available under this section shall provide coverage for insured property losses covered under primary insurance contracts to homeowners1 mobile home owners1 renters1 and condominium owners for covered events4 ,nothing in this ,act shall be interpreted to expand the terms1 conditions1 or scope of coverage or events covered under insurance policies issued by insurers or eligible ,state plans4 7c7 ,covered events 7#a7 ,in general ,each contract for reinsurance coverage made available under this section shall cover losses insured or reinsured by the eligible ,state plan purchasing the contract that are proximately caused by-- 7,a7 earthquakes2 7,b7 events ensuing from earthquakes1 including fire and tsunami-related flood2 7,c7 catastrophic wildfires unrelated to earthquakes2 7,d7 tropical cyclones having maximum sustained winds of at least #gd miles per hour1 including hurricanes and typhoons2 7,e7 tornadoes2 7,f7 volcanic eruptions2 7,g7 catastrophic winter storms2 and 7,h7 any other natural catastrophe insured or reinsured under the eligible ,state plan purchasing the contract4 7#b7 ,definitions ,the ,secretary shall1 by regulation1 define the natural catastrophe events identified under this subsection4 7d7 ,eligible state plans ,a ,state plan shall be an eligible ,state plan for purposes of this section only if the ,state plan meets all of the following requirements3 7#a7 ,program design ,the entity for the covered ,state or ,states that is authorized to make such determinations certifies to the ,secretary that the ,state plan is a program1 established by the covered ,state or ,states1 that provides-- 7,a7 insurance coverage for insured property losses covered under primary insurance contracts for residential property located in any covered ,state2 or 7,b7 reinsurance coverage that is designed to improve availability or affordability1 or both1 in the private insurance markets that offers coverage for insured property losses covered under primary insurance contracts for residential property located in any covered ,state4 7#b7 ,operation ,the entity for the covered ,state or ,states that is authorized to make such determinations certifies to the ,secretary that the ,state plan complies with the following requirements3 7,a7 ,establishment2 governing body ,the ,state plan shall be established by the covered ,state or ,states and a majority of the members of the governing body of the ,state plan shall be public officials or appointed by public officials4 7,b7 ,repayment ,if any covered ,state has at any time appropriated amounts from the fund of the ,state plan for any purpose other than payments made in connection with the activities authorized under the ,state plan1 the ,state shall have repaid such amounts to the ,state fund1 together with interest on such amounts4 7,c7 ,nondiscrimination in coverage ,insurance or reinsurance coverage1 as applicable1 provided under the eligible ,state plan shall be made available on a nondiscriminatory basis to all qualifying residents of any covered ,state4 7,d7 ,prohibition of cross-subsidization ,the ,state plan may not1 except for charges or assessments related to post-event financing or bonding1 involve cross-subsidization between any separate property and casualty lines covered under the plan4 7,e7 ,reinsurance premiums ,in the case of ,state plans providing reinsurance coverage1 the plan or the law in effect in each covered ,state shall require that to the extent that reinsurance coverage made available under the program under this section results in cost savings in providing insurance coverage for risks in such ,state1 such cost savings be reflected in premium rates charged to consumers for such coverage4 7,f7 ,termination ,the ,state plan shall include provisions that authorize the entity for the covered ,state or ,states that is authorized to make such a determination to terminate the ,state plan or1 in the case of a multi-,state plan1 membership in such ,plan1 if such entity determines that the ,state plan is no longer necessary to ensure the availability or affordability of residential property insurance for all residents of any covered ,state4 7,g7 ,actuarial soundness ,the ,state plan shall have actuarially sound rates4 7#c7 ,treatment of earnings ,the entity for the covered ,state or ,states that is authorized to make such determinations certifies to the ,secretary that the ,state plan does not provide for redistribution of any part of any net profits under the ,state plan to any insurer that participates in the ,state plan4 7#d7 ,support for mitigation and prevention 7,a7 ,requirements ,except as provided in subparagraph 7,b71 the ,secretary determines that1 for any year for which the coverage is in effect1 the provision of reinsurance coverage under the program under this section to the ,state plan supports mitigation and prevention of risk associated with covered events and that the ,state plan meets all of the following requirements3 7i7 ,building codes ,each covered ,state has in effect1 or appropriate local governments within each covered ,state have in effect1 and enforce building codes and standards that offer risk responsive resistance to earthquakes or high winds4 7ii7 ,mitigation ,each covered ,state has taken actions to mitigate losses caused by natural catastrophes4 7iii7 ,prohibition of price gouging ,each covered ,state has in effect laws or regulations sufficient to prohibit price gouging1 during the term of reinsurance coverage provided under the program under this section for the ,state plan in any catastrophe area located within the covered ,state4 7iv7 ,homeowners insurance rates ,for any covered ,state that has in effect laws that require insurers providing homeowners insurance to file their rates for review or regulatory approval1 the covered ,state has confirmed that homeowners insurance rates associated with catastrophe coverage for covered events are actuarially sound4 7v7 ,land use and zoning plans ,each covered ,state1 to the extent feasible1 shall encourage ,state and local government units to develop1 comprehensive land use and zoning plans that are designed to limit additional natural hazard exposure and promote natural hazard mitigation4 7vi7 ,emergency preparedness actions ,each covered ,state1 in consultation and cooperation with localities in the ,state1 the ,administrator of the ,federal ,emergency ,management ,agency1 and other appropriate agencies and organizations1 shall have taken actions to continuously improve emergency preparedness4 7,b7 ,transition period ,to provide sufficient time for adoption of the provisions of this subsection and to support implementation of prevention and mitigation measures set forth in subparagraph 7,a7 of this paragraph1 during the #e-year period that begins on the date of the enactment of this ,act1 a ,state plan shall not be precluded from qualifying as an eligible ,state plan because the ,secretary is unable to make any of the determinations required under subparagraph 7,a74 7e7 ,terms of reinsurance contracts ,each contract for reinsurance coverage under this section shall be subject to the following terms and conditions3 7#a7 ,maturity ,the contract shall have a minimum term of #a year or such longer duration as the ,secretary may determine4 7#b7 ,payment condition ,the contract shall authorize claims payments only for eligible losses to the eligible ,state plan purchasing the coverage4 7#c7 ,retained losses requirement ,for each covered event1 the contract shall not reimburse any losses until the total incurred covered losses exceeds the applicable attachment point established pursuant to subsection 7f77#b74 7#d7 ,multiple events ,the contract shall cover any eligible losses from one or more covered events that may occur during the term of the contract and shall provide that if multiple events occur1 the retained losses requirement under paragraph 7f7 shall apply in the aggregate and not separately to each individual event4 7#e7 ,pricing ,the price of reinsurance coverage under the contract shall be an amount established by the ,secretary as follows3 7,a7 ,recommendations ,the ,secretary shall take into consideration the recommendations of the ,commission in establishing the price1 but the price may not be less than the amount recommended by the ,commission4 7,b7 ,fairness to taxpayers ,the price shall be established at an actuarially sound level that protects taxpayers from liability and takes into consideration models that estimate losses from covered events4 7,c7 ,self-sufficiency ,the rates for reinsurance coverage for an eligible ,state plan shall be established at an actuarially sound level that produces expected premiums sufficient to pay-- 7i7 the expected annualized cost of all claims2 7ii7 loss adjustment expenses2 7iii7 the cost of funding emergency preparedness and mitigation efforts2 and 7iv7 the costs of operating the ,commission and all administrative costs of reinsurance coverage offered under this subsection4 ,the expected annualized cost of all claims shall be comparable to amounts being included in the price for similar layers of coverage in the private sector1 taking into account the savings associated with the funding mechanisms and the non-profit and tax-exempt status of the ,fund4 7,d7 ,offset ,the ,secretary shall ensure1 to the maximum extent practicable1 that in each fiscal year an amount equal to any amount appropriated pursuant to section #aja7;h7 for such fiscal year is obtained from purchasers of reinsurance coverage under this section by incorporating the costs described in subparagraph 7,c77iv7 of this paragraph into the pricing of the contracts for such coverage4 7#f7 ,taxpayer protection1 rapid cash build-up1 and post-event pricing adjustments 7,a7 ,first #e years ,notwithstanding any other provision of this section1 during the first five years of the program under this section1 the ,secretary shall increase the price that is charged for reinsurance coverage provided under the program under this section by at least five percent1 or such higher amount as the ,secretary deems1 above the actuarially sound price calculated under paragraph 7#e71 to facilitate and accelerate the accumulation of reserves and to support the creation of the readiness1 preparedness1 and mitigation grant program under section #bja4 7,b7 ,post-event ,notwithstanding any other provision of this section1 after any covered event triggering any payment under a contract for reinsurance coverage that requires the ,fund to issue obligations under subsection 7g77#d7 to make such payment and to provide additional taxpayer protection and ensure that the program under this section is fully funded on an ongoing basis1 the ,secretary shall require the inclusion of an additional amount in the price that is charged for reinsurance coverage provided under the program equal to at least five percent of the actuarially sound price calculated under paragraph 7#e7 to ensure that the program collects all revenue necessary-- 7i7 to provide the reinsurance coverage authorized under this section2 7ii7 to administer the program under this section1 and 7iii7 to account for any losses paid with funds acquired from obligations issued under subsection 7g77#d7 during a period having a duration not longer than five years1 if feasible4 ,any such obligations issued under subsection 7g77#d7 shall be repaid in full from the surcharges assessed under this paragraph4 7#g7 ,information ,the contract shall contain a condition providing that the ,commission may require the eligible ,state plan that is covered under the contract to submit to the ,commission all information regarding the eligible ,state plan relevant to the duties of the ,commission1 as determined by the ,secretary4 7#h7 ,additional contract option ,the contract shall provide that the purchaser of the contract may1 during the term of such original contract1 purchase additional contracts from among those offered by the ,secretary at the beginning of the term1 subject to the limitations under subsection 7f71 at the prices at which such contracts were offered at the beginning of the term1 prorated based upon the remaining term as determined by the ,secretary4 ,such additional contracts shall provide coverage beginning on a date #ae days after the date of purchase1 but shall not provide coverage for losses for an event that has already occurred4 ,eligible ,state plans may arrange for prospective contracts for planning purposes and to enhance stability and predictability in managing risk and accounting for costs associated with risk transfer4 7#i7 ,other terms ,the contract shall contain such other terms as the ,secretary considers necessary to carry out this ,act and to ensure the long-term financial integrity of the program under this section4 ,the contract shall also specify how payouts shall be administered if multiple events occur that affect more than one eligible ,state plan4 7#aj7 ,encouragement for private sector to participate 7,a7 ,establishment of competitive procedure ,the ,congress encourages private market reinsurers and other private sector entities to participate in the program under this section4 ,accordingly1 the ,secretary shall establish1 by regulation1 a competitive procedure under this paragraph that provides qualified entities an opportunity1 on a basis consistent with the contract cycle established under this section by the ,secretary1 to offer to provide1 in lieu of reinsurance coverage under this section1 reinsurance coverage that is substantially similar to coverage otherwise made available under this section4 7,b7 ,competitive procedure ,under the procedure established under this paragraph-- 7i7 the ,secretary shall establish criteria for private insurers1 reinsurers1 and capital market companies1 and consortia of such entities to be treated as qualified entities for purposes of this paragraph1 which criteria shall require such an entity to have at all times capital sufficient to satisfy the terms of the reinsurance contracts and shall include such other industry and credit rating standards as the ,secretary considers appropriate2 7ii7 not less than #cj days before the beginning of each contract cycle during which any reinsurance coverage under this section is to be made available1 the ,secretary may request proposals and shall publish in the ,federal ,register the rates and terms for contracts for coverage under this section that are to be made available during such contract cycle2 7iii7 the ,secretary shall provide qualified entities a period of not less than #aj days 7which shall terminate not less than #bj days before the beginning of the contract cycle7 to submit to the ,secretary a written expression of interest in providing reinsurance coverage in lieu of the coverage otherwise to be made available under this section2 7iv7 the ,secretary shall provide any qualified entity submitting an expression of interest during the period referred to in clause 7iii7 a period of not less than #bj days 7which shall terminate before the beginning of the contract cycle7 to submit to the ,secretary an offer to provide1 in lieu of the reinsurance coverage otherwise to be made available under this section1 coverage that is substantially similar to such coverage2 7v7 if the ,secretary determines that an offer submitted during the period referred to in clause 7iii7 is a bona fide offer to provide reinsurance coverage during the contract cycle at rates and terms that are substantially similar to the rates and terms for reinsurance coverage otherwise to be provided under this section by the ,secretary1 the ,secretary shall accept the offer 7if still outstanding7 and1 notwithstanding any other provision of this ,act1 provide for such entity to make reinsurance coverage available in accordance with the offer2 and 7vi7 if the ,secretary accepts an offer pursuant to clause 7v7 to make reinsurance coverage available1 notwithstanding any other provision of this ,act1 the ,secretary shall reduce1 to an equivalent extent1 the amount of reinsurance coverage available under this section during the contract cycle to which the offer relates1 unless and until the ,secretary determines that the entity is not complying with the terms of the accepted offer4 7#aa7 ,participation by multi-state plans ,the ,congress hereby explicitly encourages ,states to create and maintain catastrophe funds for their ,states or with other ,states1 and nothing in this ,act may be interpreted to prohibit or discourage the creation of multi-,state plans1 or the participation by such plans in the program established pursuant to subsection 7a74 ,the ,secretary shall1 by regulation1 provide for the application of the provisions of this ,act to multi-,state catastrophe insurance and reinsurance plans4 ,the ,commission shall develop a process to evaluate and encourage the creation of regional programs and approaches to advance the purposes of this ,act through the establishment of multi-,state plans4 7f7 ,treatment of insured losses and maximum federal liability 7#a7 ,available levels of retained losses ,in making reinsurance coverage available under this section1 the ,secretary shall make available for purchase contracts for such coverage that require the sustainment of retained losses from covered events 7as required under subsection 7e77#c7 for payment of eligible losses7 in various amounts1 as the ,secretary1 in consultation with the ,commission1 determines appropriate and subject to the requirements under paragraph 7#b74 7#b7 ,standard attachment point 7,a7 ,establishment ,the ,secretary1 in consultation with the ,commission1 shall establish a standard attachment point at which coverage is provided to eligible ,state plans for all contracts4 7,b7 ,considerations ,in setting a standard attachment point1 the ,secretary and the ,commission shall take into consideration-- 7i7 how many and which eligible ,state plans are seeking contracts for reinsurance coverage under this section2 7ii7 the capital and surplus positions of the eligible ,state plans2 7iii7 the coverage preferences of eligible ,state plans2 7iv7 the availability and price of reinsurance in the private market2 7v7 that pooling reinsurance from different geographic locations and covering different events is more efficient than stand-alone programs2 7vi7 affordability of homeowners insurance2 and 7vii7 other factors deemed appropriate to operating a long-term national reinsurance backstop program4 7,c7 ,use ,the standard attachment point established pursuant to this paragraph shall be used in establishing reinsurance contracts for each eligible ,state plan1 unless the ,secretary1 in consultation with the ,commission1 determines that market conditions or the financial position of an eligible ,state plan warrants a lower attachment point in a contract for such eligible ,state plan in a given year4 7,d7 ,lower attachment points ,if a reinsurance contract is contemplated for an eligible ,state plan having an attachment point lower than the standard attachment point1 the cost of such contract shall include or otherwise take into account the additional costs associated with such additional layer of protection4 7#c7 ,minimum level of retained losses ,for each covered event1 the minimum level of retained losses shall be the amount of cash available to the eligible ,state plan to pay covered losses4 7#d7 ,ceiling coverage level ,notwithstanding any other provision of law and subject to any limitations in future appropriations ,acts1 the aggregate potential liability for payment of claims under all contracts for reinsurance coverage sold under this title to any single eligible ,state plan during a #ab-month period shall not exceed the difference between-- 7,a7 the amount equal to the covered loss projected to be incurred once every #fjj years from a single event by the eligible ,state plan2 and 7,b7 the amount equal to the cash available in the eligible ,state plan to pay covered losses4 7g7 ,catastrophe preparedness fund for pre-,funding preparedness and recovery 7#a7 ,establishment ,there is established within the ,treasury of the ,united ,states a fund to be known as the ,catastrophe ,preparedness ,fund4 7#b7 ,credits ,the ,fund shall be credited with-- 7,a7 amounts received from the sale of contracts for reinsurance coverage under this section2 7,b7 any amounts borrowed under paragraph 7#d72 7,c7 any amounts earned on investments of the ,fund pursuant to paragraph 7#e72 and 7,d7 such other amounts as may be credited to the ,fund4 7#c7 ,uses ,amounts in the ,fund shall be available to the ,secretary only for the following purposes3 7,a7 ,contract payments ,for payments to covered purchasers under contracts for reinsurance coverage under this section for eligible losses under such contracts4 7,b7 ,commission costs ,for the operating costs of the ,commission4 7,c7 ,administrative expenses ,for the administrative expenses incurred by the ,secretary in carrying out the reinsurance program under this ,act4 7,d7 ,cost of national readiness1 preparedness1 and mitigation committee ,for the operating costs of the ,national ,readiness1 ,preparedness1 and ,mitigation ,committee established under section #bja and for disbursements under section #bja7;f77#b7 for catastrophe readiness1 preparedness1 prevention1 and mitigation4 7,e7 ,termination ,upon termination under section #ajd1 as provided in such section4 7#d7 ,liquidity 7,a7 ,authority ,to the extent that the amounts in the ,fund are insufficient to pay claims and expenses under paragraph 7#c71 the ,secretary may issue such obligations of the ,fund as may be necessary to cover the insufficiency and shall purchase any such obligations issued4 7,b7 ,public debt transaction ,for the purpose of purchasing any such obligations1 the ,secretary may use as a public debt transaction the proceeds from the sale of any securities issued under chapter #ca of title #ca1 ,united ,states ,code1 and the purposes for which securities are issued under such chapter are hereby extended to include any purchase by the ,secretary of such obligations under this paragraph4 7,c7 ,characteristics of obligations ,obligations issued under this paragraph shall be in such forms and denominations1 bear such maturities1 bear interest at such rate and be subject to such other terms and conditions as the ,secretary shall determine4 7,d7 ,treatment ,all redemptions1 purchases1 and sales by the ,secretary of obligations under this paragraph shall be treated as public debt transactions of the ,united ,states4 7,e7 ,repayment ,any obligations issued under this paragraph shall be repaid1 including interest1 from the ,fund and shall be recouped from surcharges under subsection 7e77#f77;,b7 on premiums for reinsurance coverage provided under this section4 7#e7 ,investment ,the ,secretary shall invest accumulated amounts in the ,fund as the ,secretary considers advisable in obligations issued or guaranteed by the ,united ,states4 7#f7 ,prohibition on federal appropriations ,except for amounts made available pursuant to paragraph 7#d77;,a7 of this subsection and section #aja7;h71 no ,federal funds shall be authorized or appropriated for the ,fund or for carrying out the reinsurance liquidity protection program under this section4 #ajc4 ,post-catastrophe market stabilization program for liquidity loans 7a7 ,purposes ,the purposes of this section are to establish a program-- 7#a7 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 to issue loans for such purposes2 and 7#b7 to promote the availability of private capital to provide liquidity and capacity to ,state catastrophe insurance programs and to augment the efforts of such programs4 7b7 ,liquidity loans ,the ,secretary may make liquidity loans under this section to ,state plans for the purposes of this section1 and shall have the powers and authorities necessary to make such loans1 subject to the requirements of this section4 7c7 ,conditions for loan eligibility ,a loan under this section may be made to a ,state plan only if-- 7#a7 the plan has a capital liquidity shortage1 in accordance with regulations that the ,secretary shall establish1 such that the obligations of the plan resulting from a covered event exceed the amount of cash available to the plan to pay covered losses2 7#b7 the plan cannot access capital in the private market at a cost lower and for similar duration than that provided under a loan under this section1 as determined by the ,secretary2 and 7#c7 7,a7 the plan is an eligible ,state plan2 and 7,b7 the loan complies with the requirements under subsection 7e74 ,the ,secretary may not require an eligible ,state plan to purchase reinsurance coverage made available under the program under section #ajb to be eligible for a liquidity loan under this section4 7d7 ,states with eligible state plans 7#a7 ,contracts ,the ,secretary may enter into contracts with eligible ,state plans to carry out the purposes of this section by providing for liquidity loans for such plans1 as the ,secretary may deem appropriate4 7#b7 ,eligible state plan pre-certification ,the ,secretary shall establish procedures and standards for ,state plans to apply to the ,secretary at any time for pre-certification 7and recertification7 as eligible ,state plans1 which procedures and standards shall provide as follows3 7,a7 ,the ,secretary shall administer the pre-certification 7and recertification7 of ,state plans as eligible ,state plans4 7,b7 ,state plans that are pre-certified as eligible ,state plans may enter into contracts described in paragraph 7#a74 7#c7 ,interest rate ,subject to subsection 7h71 a liquidity loan made under this section to an eligible ,state plan shall bear interest at an annual rate to be established by the ,secretary1 in consultation with the ,commission1 which shall be equal to the rate of interest on ,state and local government series securities have the same duration as the liquidity loan outstanding as of the date the loan is made4 7#d7 ,mandatory assistance for eligible state plans ,the ,secretary shall1 upon the request of an eligible ,state plan and subject to paragraphs 7#a7 and 7#b7 of subsection 7c71 make a loan for such plan in the amount requested by such plan 7subject to the limitations under subsection 7f774 7e7 ,states without eligible state plans 7#a7 ,authority ,subject to subsection 7c71 the ,secretary may make a liquidity loan under this section to a ,state plan that is not an eligible ,state plan1 but only if the ,secretary determines that-- 7,a7 the loan is necessary to avoid a capital shortfall2 and 7,b7 the provisions providing for repayment of the loan are comparable in providing protection to taxpayers as provisions providing for repayment of liquidity loans under this section by eligible ,state plans4 7#b7 ,interest rate ,subject to subsection 7h71 a liquidity loan made under this section to a ,state plan that is not an eligible ,state plan shall bear interest at an annual rate that exceeds the rate required under subsection 7d77#c7 for a loan made to an eligible ,state plan4 ,such rate shall be determined in accordance with a schedule of interest rates1 which shall be established by the ,secretary and shall provide lower rates for loans to ,state plans that comply with more of the requirements for eligible ,state plans under section #ajb7;d7 and higher rates for loans to ,state plans that comply with fewer of such requirements4 7f7 ,amount ,the principal amount of a liquidity loan under this subsection may not exceed the difference between the applicable attachment point as determined by the ,secretary in section #ajb7;f77#b7 and the amount of funds the eligible ,state plan had to pay losses at the time of the covered event for which the loan is made4 7g7 ,use ,amounts from a liquidity loan under this section may be used only to pay losses covered by the ,state plan to which the loan is made4 7h7 ,exception to interest rate limitation ,in the case of liquidity loan under this section made pursuant to a large covered event that occurs early in the existence of a ,state plan1 the ,secretary may charge an interest rate for the loan that allows the ,state plan to repay the loan and interest without causing significant increases in the cost of insurance for covered events in the covered ,state or ,states4 7i7 ,premiums under state plan 7#a7 ,determination of actuarially sound premiums ,in making a request for a liquidity loan under this section1 a ,state plan shall determine1 and the ,secretary1 in consultation with the ,commission1 shall approve1 a premium amount for the coverage layer under the ,state plan for which the liquidity loan is sought that is actuarially sound4 7#b7 ,chargeable premiums ,unless otherwise provided by the ,secretary1 a ,state plan shall charge1 for the coverage layer under the ,state plan for which the liquidity loan is made an annual premium1 for coverage during the period that begins upon the making of the liquidity loan and ends upon full repayment of the loan1 in an amount that is not less than #aej percent of the actuarially sound premium determined pursuant to paragraph 7#a74 7j7 ,repayment of loans 7#a7 ,in general ,any liquidity loan made under this section to a ,state plan shall be repaid solely through premiums charged by such plan in accordance with subsection 7i77#b71 unless alternative arrangements have been made pursuant to paragraph 7#c74 ,the ,secretary1 in consultation with the ,commission1 shall determine the expected duration of each loan and monitor repayment of such loans4 7#b7 ,amount of payment ,to repay a liquidity loan under this section1 the ,state plan shall pay to the ,fund1 from all amounts collected for the coverage layer referred to in subsection 7i77#b7 during the period referred to in such subsection1 an amount equal to a minimum of #ajj percent of the actuarially sound premium determined under subsection 7j77#a7 for such coverage layer1 and shall retain the remainder of such amount collected to build reserves for future events1 or such other amount or percentage of such amounts as the ,secretary1 in consultation with the ,commission and ,state plans1 determines is appropriate4 7#c7 ,other options ,a ,state plan may petition the ,secretary for other repayment terms1 including repayment from sources such as dedicated ,state sales taxes or other means1 and the ,secretary may1 in consultation with the ,commission1 agree to such other terms4 7k7 ,regulations ,the ,secretary shall issue any regulations necessary to carry out the program under this section4 #ajd4 ,termination 7a7 ,in general ,except as provided in subsection 7b71 the ,secretary may not-- 7#a7 provide any new reinsurance coverage under section #ajb that covers any period after the expiration of the #bj-year period beginning on the date of the enactment of this ,act2 or 7#b7 make any new liquidity loan under section #ajc having a term to maturity that concludes after the expiration of such #bj-year period4 7b7 ,extension ,if upon the expiration of the period under subsection 7a7 the ,secretary1 in consultation with the ,commission1 determines that continuation of the program for reinsurance coverage under section #ajb or for liquidity loans under section #ajc is necessary or appropriate to carry out the purposes this ,act because of insufficient growth of capacity in the private homeowners insurance market1 the ,secretary shall continue to make such coverage and loans available and subsection 7a7 shall be applied by substituting #be-year period for #bj-year period each place such term appears4 7c7 ,repeal ,effective upon the first date that reinsurance coverage under section #ajb is no longer available or in force and that liquidity loans under section #ajc are no longer available or outstanding1 pursuant to subsection 7a7 or 7b71 this ,act 7except for this section7 is repealed4 7d7 ,deficit reduction ,the ,secretary shall pay into the ,general ,fund of the ,treasury any amounts remaining in the ,fund upon the repeal of this ,act under subsection 7c74 ,,ii ,,catastrophe ,,readiness1 ,,citizen ,,and ,,community ,,preparedness1 ,,and ,,mitigation #bja4 ,national ,readiness1 ,preparedness1 and ,mitigation ,committee 7a7 ,establishment ,there is established a ,national ,readiness1 ,preparedness and ,mitigation ,committee 7in this section referred to as the ,committee74 7b7 ,members ,the ,committee shall consist of #i members appointed by the ,secretary of ,housing and ,urban ,development or the ,secretary's designee1 as follows3 7#a7 ,three individuals from nationally recognized organizations representing ,state or local catastrophe response providers or catastrophe management professionals4 7#b7 ,three individuals representing nationally recognized non-profits active in catastrophe preparedness and response4 7#c7 ,three individuals representing nationally recognized organizations with expertise in contingency planning1 residential construction1 building code development and implementation1 and land use policy4 7c7 ,terms 7#a7 ,in general ,except as provided in paragraphs 7#b7 and 7#c71 each member of the ,committee shall be appointed for a term of #c years4 7#b7 ,initial members ,of the members initially appointed to the ,committee-- 7,a7 one member appointed under each of paragraphs 7#a71 7#b71 and 7#c7 of subsection 7b7 shall be appointed for a term of #a year2 7,b7 one member appointed under each of paragraphs 7#a71 7#b71 and 7#c7 of subsection 7b7 shall be appointed for a term of #b years2 and 7,c7 one member appointed under each of paragraphs 7#a71 7#b71 and 7#c7 of subsection 7b7 shall be appointed for a term of #c years4 7#c7 ,vacancies ,a member appointed to fill an unexpired term shall serve the remainder of that term4 7#d7 ,termination ,in the event that the ,committee terminates1 all appointments shall terminate4 7d7 ,prohibition of compensation2 reimbursement ,members of the ,committee shall receive no compensation by reason of their service on the ,committee1 but shall be reimbursed as provided by rules and by-laws established by the ,national ,commission on ,natural ,catastrophe ,preparation and ,protection established under section #aja4 7e7 ,duties ,the members of the ,committee shall administer the program under subsection 7f7 and conduct oversight of the program and activities under such program4 7f7 ,readiness1 preparedness1 and mitigation grant program 7#a7 ,allocation of amount ,beginning upon the expiration of the #ab-month period that begins on the date of the enactment of this ,act1 the ,secretary shall ensure that1 to the extent provided in appropriation ,acts1 approximately #ce percent of the annual net investment income of the ,fund under sec4 #ajb7;g71 but not less than #ae1jjj1jjj1 and not more than #bj percent of the premium charged for reinsurance coverage under section #ajb in any given year1 shall be used for grants to ,states1 units of local government1 nonprofit organizations1 and other appropriate public and private entities to develop1 enhance1 or maintain programs and initiatives to improve and maintain catastrophe response1 citizen preparedness and protection1 and prevention and mitigation of losses from natural catastrophes4 7#b7 ,program elements ,the amounts made available under paragraph 7#a7 shall be allocated for each of the following purposes in equal amounts3 7,a7 ,catastrophe response readiness ,for catastrophe response readiness programs1 which shall include national initiatives that develop1 enhance1 or maintain the capacity of a public safety agency or other organization to be better prepared1 equipped1 and trained to respond to natural catastrophes4 7,b7 ,citizen and community preparedness ,for citizen and community preparedness1 which shall include programs and initiatives1 such as those offered by the ,american ,red ,cross1 to improve education and training to ensure that citizens and organizations in their community are better prepared for natural catastrophes4 7,c7 ,prevention and mitigation ,for prevention and mitigation of loss from natural catastrophes1 which shall include methods to reduce loss of life and property1 including appropriate measures to-- 7i7 encourage awareness of the risk factors and what steps can be taken to eliminate or reduce them2 7ii7 identify location of risks1 by giving careful consideration to the natural risks for the location of the property and providing that information to the builder1 developer and homeowner2 and 7iii7 provide for construction relative to the risk and hazards1 including-- 7,i7 establishment and adoption of ,state1 or locally mandated building codes1 as amended by the governing body2 7,,ii7 adequate enforcement of the building codes2 and 7,,iii7 focusing on prevention and mitigation for existing homes1 with an emphasis on how structures can be retrofitted cost-effectively to make them compliant with building codes4 7g7 ,continuous improvement1 coordination and integration ,the ,national ,commission on ,natural ,catastrophe ,preparation and ,protection established under section #aja shall work with eligible ,state plans and the ,committee to continuously improve1 coordinate1 and integrate catastrophe readiness1 citizen and community preparedness1 and loss prevention and mitigation at the local1 ,state1 regional1 and national levels4