,i #aaith ,,congress #ast ,session ,h4 ,r4 #hbg ,,in ,,the ,,house ,,of ,,representatives ,january #bh1 #bjbe,ms4 ,wilson of ,florida introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to ensure the availability and affordability of homeowners' insurance coverage for catastrophic events4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,homeowners' ,defense ,act of #bjbe4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,sec4 #b4 ,findings and purposes4 ,title ,i--,national ,catastrophe ,risk ,consortium ,sec4 #aja4 ,establishment2 chairperson2 membership2 bylaws4 ,sec4 #ajb4 ,functions4 ,sec4 #ajc4 ,authorization of appropriations4 ,title ,,ii--,catastrophe ,obligation ,guarantees ,sec4 #bja4 ,purposes4 ,sec4 #bjb4 ,establishment of debt guarantee program4 ,sec4 #bjc4 ,effect of guarantee4 ,sec4 #bjd4 ,full faith and credit4 ,sec4 #bje4 ,fees for guarantees2 amount2 collection4 ,sec4 #bjf4 ,payment of losses4 ,sec4 #bjg4 ,regulations4 ,title ,,iii--,reinsurance coverage for eligible ,state programs ,sec4 #cja4 ,program authority4 ,sec4 #cjb4 ,contract principles4 ,sec4 #cjc4 ,terms of reinsurance contracts4 ,sec4 #cjd4 ,maximum ,federal liability4 ,sec4 #cje4 ,federal ,natural ,catastrophe ,reinsurance ,fund4 ,sec4 #cjf4 ,consideration of rebuilding4 ,sec4 #cjg4 ,regulations4 ,title ,,iv--,mitigation grant program ,sec4 #dja4 ,mitigation grant program4 ,title ,v--,general provisions ,sec4 #eja4 ,eligible ,state programs4 ,sec4 #ejb4 ,study and conditional coverage of commercial residential lines of insurance4 ,sec4 #ejc4 ,study of risk-based pricing and ,state program rates4 ,sec4 #ejd4 ,definitions4 ,sec4 #eje4 ,regulations4 #b4 ,findings and purposes 7a7 ,findings ,the ,congress finds that-- 7#a7 the ,united ,states has a history of catastrophic natural disasters1 including hurricanes1 tornadoes1 flood1 fire1 earthquakes1 and volcanic eruptions2 7#b7 although catastrophic natural disasters occur infrequently1 their costs are likely to escalate in the coming years1 in part because of the intensifying impacts of climate change1 coastal development patterns1 and increasing property values along the hurricane-prone or earthquake-vulnerable coastlines of the ,united ,states2 7#c7 such disasters present physical risk to assets1 publicly traded securities1 private investments1 and companies2 7#d7 as the risk of catastrophe losses grows1 so do the risks that any premiums collected by private insurers for extending coverage will be insufficient to cover future catastrophes1 and private insurers1 to protect their shareholders and policyholders 7in the case of mutually owned companies71 have thus significantly raised premiums and curtailed insurance coverage in ,states exposed to major catastrophes2 7#e7 such effects on the insurance industry have been harmful to economic activity in ,states exposed to major catastrophes and have placed significant burdens on residents of such ,states and the ,federal ,government2 and 7#f7 under the current disaster risk management system1 the ,federal ,government and1 hence1 taxpayers pay for rebuilding through government grants and low-interest loans4 7b7 ,purposes ,the purposes of this ,act are to establish a program to provide ,federal support for ,state-sponsored insurance programs to help homeowners prepare for and recover from the damages caused by natural catastrophes1 to encourage mitigation and prevention for such catastrophes1 to promote the use of private market capital as a means to insure against such catastrophes1 to expedite the payment of claims and better assist in the financial recovery from such catastrophes4 ,i ,national ,catastrophe ,risk ,consortium #aja4 ,establishment2 chairperson2 membership2 bylaws 7a7 ,establishment ,there is established an entity to be known as the ,national ,catastrophe ,risk ,consortium 7in this title referred to as the ,consortium74 7b7 ,chairperson ,the ,secretary of the ,treasury1 or the designee of the ,secretary1 shall serve as the chairperson of the ,consortium4 7c7 ,membership ,any ,state shall be eligible to participate in the ,consortium4 7d7 ,considerations ,in selecting members of the ,consortium1 the ,states shall-- 7#a7 select members who have a background and expertise relevant to the functions of the ,consortium2 and 7#b7 ensure the participation of one individual or representative of an organization that represents consumers1 minorities1 and low- and moderate-income housing persons by reflecting the communities that are being affected by catastrophic natural disasters4 7e7 ,bylaws ,the ,consortium may prescribe1 amend1 and repeal such bylaws as necessary to carry out the functions of the ,consortium4 #ajb4 ,functions ,the ,consortium shall-- 7#a7 work with ,states to gather and maintain an inventory of catastrophe risk obligations held by providers of natural catastrophe insurance2 7#b7 assess issues or gaps in the insurance sector of the ,united ,states financial system and any related effects on insurance affordability for policyholders2 7#c7 advance consistent1 clear1 intelligible1 comparable1 and accurate disclosure of catastrophic risk2 7#d7 submit annual reports to the ,congress describing the activities of the ,consortium for the preceding year1 and the first such annual report shall include an assessment of the costs to ,states and the regions associated with catastrophe risk2 7#e7 assess the potential for major disruptions of private insurance coverage in ,united ,states markets particularly vulnerable to catastrophes2 7#f7 make such other recommendations on how identified financial risk can be mitigated1 including through new or revised regulatory standards1 as appropriate2 and 7#g7 account for and identify disparate impacts of catastrophic risks on disadvantaged communities and communities of color4 #ajc4 ,authorization of appropriations ,there are authorized to be appropriated to carry out this title such sums as may be necessary for each of fiscal years #bjbf through #bjbi4 ,,ii ,catastrophe ,obligation ,guarantees #bja4 ,purposes ,the purposes of this title are to establish a program-- 7#a7 to promote the availability of private capital to provide liquidity and capacity to ,state catastrophe insurance programs2 and 7#b7 to expedite the payment of claims under ,state catastrophe insurance programs and better assist the financial recovery from significant natural catastrophes by authorizing the ,secretary of the ,treasury to guarantee debt for such purposes4 #bjb4 ,establishment of debt guarantee program 7a7 ,authority of ,secretary ,the ,secretary of the ,treasury is authorized and shall have the powers and authorities necessary to guarantee1 and to enter into commitments to guarantee1 holders of debt against loss of principal or interest1 or both1 on any such debt issued by eligible ,state programs for purposes of this title1 provided that the total principal amount of debt obligations guaranteed by the ,secretary-- 7#a7 for eligible ,state programs that cover earthquake peril shall not exceed #c1ejj1jjj1jjj2 and 7#b7 for eligible ,state programs that cover all other perils shall not exceed #ag1jjj1jjj1jjj4 7b7 ,conditions for guarantee eligibility ,a debt guarantee under this section may be made only if the ,secretary has issued a commitment to guarantee to an eligible ,state program4 ,the commitment to guarantee shall be for a period of #c years and may be extended by the ,secretary for a period of #a year on each annual anniversary of the issuance of the commitment to guarantee4 ,the commitment to guarantee and each extension of such commitment may be issued by the ,secretary only if the following requirements are satisfied3 7#a7 ,the eligible ,state program submits to the ,secretary a report setting forth1 in such form and including such information as the ,secretary shall require1 how the eligible ,state program plans to repay the debt4 7#b7 ,based upon the eligible ,state program's report submitted pursuant to paragraph 7#a71 the ,secretary determines there is reasonable assurance that the eligible ,state program can meet its repayment obligation under the debt4 7#c7 ,the eligible ,state program enters into an agreement with the ,secretary1 as the ,secretary shall require1 that the eligible ,state program will not use ,federal funds of any kind or from any ,federal source 7including any disaster or other financial assistance1 loan proceeds1 and any other assistance or subsidy7 to repay the debt4 7#d7 ,the commitment to guarantee shall specify the fees for debt guarantee coverage4 7#e7 ,the maximum term of the debt that shall be specified in a commitment issued under this section may not exceed #cj years4 7#f7 ,the ,secretary determines that the eligible ,state program does not cover losses arising from floods to properties that are required to be covered by flood insurance1 covered by flood insurance1 or located in areas having special flood hazards 7as such term is defined for purposes of the ,national ,flood ,insurance ,act of #aifh and the ,flood ,disaster ,protection ,act of #aigc74 7c7 ,mandatory assistance for eligible ,state programs ,the ,secretary shall upon the request of an eligible ,state program and pursuant to a commitment to guarantee issued under subsection 7b71 provide a guarantee under subsection 7d7 for such eligible ,state program in the amount requested by such eligible ,state program1 subject to the limitation under subsection 7d77#b74 7d7 ,catastrophic debt guarantee ,a debt guarantee under this subsection for an eligible ,state program shall be subject to the following requirements3 7#a7 ,preconditions ,the eligible ,state program shows to the satisfaction of the ,secretary that insured losses in the ,state to the eligible ,state program arising from the event or events covered by the commitment to guarantee are likely to exceed the eligible ,state program's available cash resources1 as of immediately before the date of the event4 7#b7 ,amount ,the aggregate principal amount of the debt guaranteed following an event or events referred to in paragraph 7#a7 may not exceed the amount by which the insured losses expected to be sustained by the ,state program as a result of such event or events exceed #hj percent of the qualifying assets of the eligible ,state program as stated in the most recent quarterly financial statement filed with the domiciliary regulator of the program prior to the event or events1 except that1 for eligible ,state programs that are not required to file such quarterly financial statements1 the aggregate principal amount of the debt guaranteed may not exceed the amount by which insured losses sustained by the ,state program as a result of such event or events exceed #hj percent of the unrestricted net assets as stated in the annual financial statement for the program's fiscal year ending immediately prior to the event or events4 7#c7 ,use of funds ,amounts of debt guaranteed under this section shall be used only to pay the costs of issuing debt and to pay the insured losses and loss adjustment expenses incurred by an eligible ,state program4 ,such amounts shall not be used for any other purpose4 7e7 ,funding ,there are authorized to be appropriated such sums as may be necessary to carry out this section4 #bjc4 ,effect of guarantee ,the issuance of any guarantee by the ,secretary under this title shall be conclusive evidence that-- 7#a7 the guarantee has been properly obtained2 7#b7 the underlying debt qualified for such guarantee2 and 7#c7 the guarantee is valid1 legal1 and enforceable4 #bjd4 ,full faith and credit ,the full faith and credit of the ,united ,states is pledged to the payment of all guarantees issued under this title with respect to principal and interest4 #bje4 ,fees for guarantees2 amount2 collection ,the ,secretary shall charge and collect fees for each guarantee in amounts specified in the commitment to guarantee1 which shall be in amounts sufficient in the judgment of the ,secretary at the time of issuance of the commitment to guarantee to cover applicable administrative costs and probable losses on the guaranteed obligations covered by the commitment to guarantee1 but in any event not to exceed one-half of #a percent per annum of the outstanding indebtedness covered by each guarantee4 #bjf4 ,payment of losses 7a7 ,in general ,the ,secretary agrees to pay to the duly appointed paying agent or trustee 7in this section referred to as the ,fiscal ,agent7 for the eligible ,state program that portion of the principal and interest on any debt guaranteed under this title that shall become due for payment but shall be unpaid by the eligible ,state program as a result of such program having provided insufficient funds to the ,fiscal ,agent to make such payments4 ,the ,secretary shall make such payments on the date such principal or interest becomes due for payment or on the business day next following the day on which the ,secretary shall receive notice of failure on the part of the eligible ,state program to provide sufficient funds to the ,fiscal ,agent to make such payments1 whichever is later4 ,upon making such payment1 the ,secretary shall be subrogated to all the rights of the ultimate recipient of the payment4 ,the ,secretary shall be entitled to recover from the eligible ,state program the amount of any payments made pursuant to any guarantee entered into under this title4 7b7 ,role of the ,attorney ,general ,the ,attorney ,general shall take such action as may be appropriate to enforce any right accruing to the ,united ,states as a result of the issuance of any guarantee under this title4 7c7 ,right of the ,secretary ,notwithstanding any other provision of law relating to the acquisition1 handling1 or disposal of property by the ,united ,states1 the ,secretary shall have the right in the discretion of the ,secretary to complete1 recondition1 reconstruct1 renovate1 repair1 maintain1 operate1 or sell any property acquired by the ,secretary pursuant to the provisions of this title4 #bjg4 ,regulations ,the ,secretary shall issue any regulations necessary to carry out the debt-guarantee program established under this title4 ,,iii ,reinsurance coverage for eligible ,state programs #cja4 ,program authority ,the ,secretary of the ,treasury1 shall make available for purchase1 only by eligible ,state programs1 contracts for reinsurance coverage under this title4 #cjb4 ,contract principles ,contracts for reinsurance coverage made available under this title-- 7#a7 shall be priced on an actuarially sound basis2 7#b7 shall minimize the administrative costs of the ,federal ,government2 and 7#c7 shall provide coverage based solely on insured losses covered by the eligible ,state program purchasing the contract4 #cjc4 ,terms of reinsurance contracts 7a7 ,minimum attachment point and levels of coverage ,the ,secretary shall establish attachment points at which reinsurance coverage under this title is provided to eligible ,state programs4 ,in setting attachment points and in determining the levels of reinsurance coverage provided1 the ,secretary shall take into consideration-- 7#a7 the coverage available through eligible ,state programs2 7#b7 the availability and accessibility of reinsurance in the private market2 and 7#c7 other factors as deemed appropriate by the ,secretary4 7b7 ,eighty to ninety 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 be equal to at least #hj percent1 but not more than #ij percent1 of the amount of insured losses of the eligible ,state program in excess of the amount of retained losses that the contract requires1 pursuant to subsection 7a71 to be incurred by such program4 7c7 ,maturity ,the term of each contract for reinsurance coverage under this title shall not exceed #a year or such other term as the ,secretary may determine4 7d7 ,payment condition ,each contract for reinsurance coverage under this title shall authorize claims payments to the eligible ,state program purchasing the coverage only for insured losses provided under the contract4 7e7 ,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 occur1 the retained losses requirement under subsection 7a7 shall apply on a calendar year basis1 in the aggregate and not separately to each individual event4 7f7 ,timing of claims ,claims under a contract for reinsurance coverage under this title shall include only insurance claims that are reported to the eligible ,state program within the #c-year period beginning upon the event or events for which payment under the contract is provided4 7g7 ,actuarial pricing ,the price of coverage under a reinsurance contract under this title shall be an amount1 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 7which may not be equal only to average annual costs71 loss adjustment expenses1 all administrative costs of reinsurance coverage offered under this title1 and any such outwards reinsurance1 as described in section #cje7;c77#c71 as the ,secretary considers prudent taking into consideration the demand for reinsurance coverage under this title4 ,the anticipated 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 non-profit and tax-exempt status of the ,fund established under section #cje4 7h7 ,information ,each contract for reinsurance coverage under this title shall contain a condition providing that the ,secretary may require the eligible ,state program that is covered under the contract to submit to the ,secretary all information on the eligible ,state program relevant to the duties of the ,secretary under this title4 7i7 ,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 title4 #cjd4 ,maximum ,federal liability 7a7 ,in general ,subject to subsection 7b7 and notwithstanding any other provision of law1 the aggregate potential liability for payment of claims under all contracts for reinsurance coverage under this title sold in any single year shall be determined by the ,secretary based on review of the market for reinsurance coverage under this title4 7b7 ,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 title4 #cje4 ,federal ,natural ,catastrophe ,reinsurance ,fund 7a7 ,establishment ,there is established within the ,treasury of the ,united ,states a fund to be known as the ,federal ,natural ,catastrophe ,reinsurance ,fund 7in this section referred to as the ,fund74 7b7 ,credits ,the ,fund shall be credited with-- 7#a7 amounts received annually from the sale of contracts for reinsurance coverage under this title2 7#b7 any amounts appropriated for the aggregate potential liability for payment of claims under all contracts for reinsurance coverage under this title2 and 7#c7 any amounts earned on investments of the ,fund pursuant to subsection 7d74 7c7 ,uses ,amounts in the ,fund shall be available to the ,secretary only for the following purposes3 7#a7 ,contract payments ,for payments to purchasers covered under contracts for reinsurance coverage for eligible losses under such contracts4 7#b7 ,administrative expenses ,to pay for the administrative expenses incurred by the ,secretary in carrying out the reinsurance program under this title4 7#c7 ,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 title4 7d7 ,investment ,the ,secretary shall invest such amounts in the ,fund as the ,secretary considers advisable in obligations issued or guaranteed by the ,united ,states4 ,for purposes of the grant mandate in section #dja7;f7 for a fiscal year1 the ,secretary shall disclose the annual net investment income available not later than #fj days after the conclusion of such fiscal year and disperse appropriate funds not later than #ij days after the conclusion of such fiscal year4 #cjf4 ,consideration of rebuilding ,nothing in this title may be construed to prevent counties1 municipalities1 and other localities from undertaking land and environmental assessments to determine the efficacy of rebuilding4 #cjg4 ,regulations ,the ,secretary shall issue any regulations necessary to carry out the program for reinsurance coverage under this title4 ,,iv ,mitigation grant program #dja4 ,mitigation grant program 7a7 ,establishment ,the ,secretary of ,housing and ,urban ,development shall establish and carry out a program to provide grants to eligible entities to develop1 enhance1 or maintain programs to prevent and mitigate losses from natural catastrophes4 7b7 ,grants ,a grant provided under subsection 7a7 shall be used to reduce loss of life and property by-- 7#a7 encouraging awareness of risk factors and what steps can be taken to eliminate or reduce them1 including public education campaigns to promote citizen and community preparedness2 7#b7 assisting in the determination of the location of risk by giving careful consideration to the natural risks for the location of a property2 7#c7 providing inspections of homes to identify areas to strengthen such homes and reduce exposure to natural catastrophes2 7#d7 providing financial assistance to homeowners to retrofit homes to reduce exposure to natural catastrophes2 or 7#e7 supporting disaster response readiness programs1 including initiatives that develop1 enhance 1or maintain the capacity of a public safety organization to be better prepared1 equipped1 and trained to respond to natural catastrophes4 7c7 ,priority ,in making grants under the program under subsection 7a71 the ,secretary shall give priority to applicants demonstrating greater financial need1 including applicants serving lower income individuals and areas4 7d7 ,consultation with experts ,in carrying out the program established under subsection 7a71 the ,secretary of ,housing and ,urban ,development shall consult with-- 7#a7 disaster preparedness and response organizations2 7#b7 homebuilders2 7#c7 real estate professionals2 7#d7 building code enforcement agencies2 and 7#e7 any other person that the ,secretary considers appropriate4 7e7 ,eligible entity defined ,in this section1 the term eligible entity means a ,state or local government1 a part or program of a ,state or local government1 or a nationally recognized1 congressionally chartered disaster response non-profit organization4 7f7 ,grant mandate ,the ,secretary shall1 to the extent provided in advance in appropriation ,acts1 use not less than #ce percent of the net investment income from the ,federal ,natural ,catastrophe ,reinsurance ,fund earned in each fiscal year pursuant to section #cje7;d7 for grants under this section4 ,v ,general provisions #eja4 ,eligible ,state programs 7a7 ,eligible ,state programs ,a ,state program shall be considered an eligible ,state program for purposes of this ,act if the ,secretary certifies1 in accordance with the procedures established under subsection 7c71 that the ,state program complies with the following requirements3 7#a7 ,state program design ,the ,state program is established and authorized by ,state law as an insurance program or a reinsurance program that is designed to improve private insurance markets and that offers residential property insurance coverage for losses arising from any personal residential line of insurance1 as defined in the ,uniform ,property and ,casualty ,product ,coding ,matrix of the ,national ,association of ,insurance ,commissioners4 7#b7 ,operation ,the ,state program shall meet the following requirements3 7,a7 ,a majority of the members of the governing body of the ,state program shall be public officials or appointed by public officials4 7,b7 ,the ,state shall have a financial interest in the ,state program4 7,c7 ,if the ,state has at any time appropriated amounts from the ,state program's funds for any purpose other than payments for losses insured under the ,state program1 or payments made in connection with any of the ,state program's authorized activities1 the ,state shall have returned such amounts to the ,state fund1 together with interest as determined by the individual ,state on such amounts4 7#c7 ,tax status ,the ,state program shall have received from the ,secretary 7or the ,secretary's designee7 a written determination1 within the meaning of section #faaj7;b7 of the ,internal ,revenue ,code of #aihf1 that the program either-- 7,a7 constitutes an integral part of the ,state that has created it2 or 7,b7 is otherwise exempt from ,federal income taxation4 7#d7 ,earnings ,the ,state program may not provide for any distribution of any part of any net profits of the ,state program to any insurer that participates in the ,state program4 7#e7 ,prevention and mitigation 7,a7 ,mitigation of losses ,the ,state program shall include provisions designed to encourage and support programs to mitigate losses from natural catastrophes for which the ,state insurance or reinsurance program was established to provide insurance coverage4 7,b7 ,operational requirements ,the ,state program shall operate in a ,state that-- 7i7 requires that an appropriate public body within the ,state shall have adopted adequate mitigation measures with effective enforcement provisions which the ,secretary finds are consistent with the criteria for construction described in the ,international ,code ,council building codes2 7ii7 has taken actions to establish an insurance rate structure that takes into account measures to mitigate insured losses2 and 7iii7 ensures1 to the extent that reinsurance coverage made available under the eligible ,state program results in any cost savings in providing insurance coverage for risks in such ,state1 such cost savings are reflected in premium rates charged to consumers for such coverage4 7#f7 ,requirements regarding coverage ,the ,state program-- 7,a7 may not1 except for charges or assessments related to post-event financing or bonding1 involve cross-subsidization between any separate property and casualty insurance lines covered under the ,state program pursuant to paragraph 7#a72 7,b7 shall be subject to a requirement under ,state law that for any insurance coverage made available under the ,state insurance program or for any reinsurance coverage for such insurance coverage made available under the ,state reinsurance program1 the premium rates charged shall cover the expected value of all future costs associated with insurance policies or reinsurance contracts written by such program1 in accordance with the principles under section #cjc7;g72 7,c7 shall make available to all qualifying policyholders insurance or reinsurance coverage1 as applicable1 and mitigation services on a basis that is not unfairly discriminatory2 and 7,d7 publishes1 and displays in a prominent location on a website for the ,state insurance program1 information for the ,state insurance program of estimated assessments and surcharges on policyholders1 in accordance with ,state laws1 regulations1 or other requirements1 for a range of natural disaster or catastrophic events having a varying magnitude of losses1 including an event projected to result in losses of such magnitude that they have a #a percent chance of being equaled or exceeded in any single year1 based on the current year estimated aggregate funding capacity of the ,state insurance program and ,state reinsurance program4 7#g7 ,land use and zoning ,the ,state program1 to the extent possible1 seeks to encourage appropriate ,state and local government units to develop comprehensive land use and zoning plans that include natural hazard mitigation4 7#h7 ,risk-based capital requirements ,the ,state program-- 7,a7 complies with such risk-based capital requirements as applicable ,state law may impose and shall take into consideration asset risk1 credit risk1 underwriting risk1 and such other relevant risk as determined by the ,secretary2 and 7,b7 for each calendar year1 prepares and submits to the ,secretary a report identifying its claim-paying capacity at such time after the conclusion of such year1 and containing such information and in such form1 as the ,secretary shall require4 7#i7 ,other requirements ,the ,state program complies with such additional organizational1 underwriting1 and financial requirements as the ,secretary shall1 by regulation1 provide to carry out the purposes of this ,act4 7b7 ,certification ,the ,secretary shall establish procedures for initial certification and recertification as an eligible ,state program4 7c7 ,transitional ,mechanisms ,for the #e-year period beginning on the date of the enactment of this ,act1 in the case of a ,state that does not have an eligible ,state program for the ,state1 a ,state residual insurance market entity1 or ,state-sponsored provider of natural catastrophe insurance1 for such ,state shall be considered to be an eligible ,state program1 but only if such ,state residual insurance market entity1 or ,state-sponsored provider of natural catastrophe insurance1 was in existence before such date of enactment4 7d7 ,reinsurance ,to cover exposure ,this section may not be construed to limit or prevent any eligible ,state program from obtaining reinsurance coverage for insured losses retained by insurers pursuant to this section4 #ejb4 ,study and conditional coverage of commercial residential lines of insurance ,the ,secretary shall study1 on an expedited basis1 the need for and impact of expanding the programs established by this ,act to apply to insured losses of eligible ,state programs for losses arising from all commercial insurance policies which provide coverage for properties that are composed predominantly of residential rental units4 ,the ,secretary shall consider the catastrophic insurance and reinsurance market for commercial residential properties1 and specifically the availability of adequate private insurance coverage when an insured event occurs1 the impact any such capacity restrictions have on housing affordability for renters1 and the likelihood that such an expansion of the program would increase insurance capacity for this market segment4 #ejc4 ,study of risk-based pricing and ,state program rates ,the ,comptroller ,general of the ,united ,states shall conduct a study to analyze-- 7#a7 risk-based rate pricing1 to determine the use of actuarially sound pricing for ,state insurance1 reinsurance1 or residual market programs1 including what measures ,states are taking to implement actuarially sound rates2 7#b7 rates for ,state insurance1 reinsurance1 or residual market programs that fail to cover the expected value of all future costs1 including the cost of capital1 associated with insurance policies or reinsurance contracts written by such programs or fail to have sufficient assets above their indebtedness to meet their obligations2 and 7#c7 any financial complications arising for policyholders resulting from increased policy costs4 ,not later than #f months after the date of the enactment of this ,act1 the ,comptroller ,general shall submit a report to the ,congress on the results of the study under this section4 #ejd4 ,definitions ,in this ,act3 7#a7 ,commitment to guarantee ,the term commitment to guarantee means a commitment to make debt guarantees to an eligible ,state program pursuant to section #bjb7;c74 7#b7 ,eligible ,state program ,the term eligible ,state program means a ,state program that the ,secretary certifies as an eligible ,state program under section #eja4 7#c7 ,insured loss ,the term insured loss means any loss that is determined by an eligible ,state program as being covered by insurance or reinsurance made available under that eligible ,state program4 7#d7 ,qualifying assets ,the term qualifying assets means the policyholder surplus of the eligible ,state program as stated in the most recent quarterly financial statement filed by the program with the domiciliary regulator of the program in the last quarter ending prior to the event or events4 7#e7 ,secretary ,the term ,secretary means the ,secretary of the ,treasury4 7#f7 ,state ,the term ,state includes the several ,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 #eje4 ,regulations ,the ,secretary shall issue such regulations as may be necessary to carry out this ,act4