119-hr827

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 827 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 827

 To ensure the availability and affordability of homeowners' insurance 
 coverage for catastrophic events.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 January 28, 2025

Ms. Wilson of Florida introduced the following bill; which was referred 
 to the Committee on Financial Services

_______________________________________________________________________

 A BILL

 To ensure the availability and affordability of homeowners' insurance 
 coverage for catastrophic events.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Homeowners' 
Defense Act of 2025''.

    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.
 TITLE I--NATIONAL CATASTROPHE RISK CONSORTIUM

Sec. 101. Establishment; chairperson; membership; bylaws.

Sec. 102. Functions.

Sec. 103. Authorization of appropriations.
 TITLE II--CATASTROPHE OBLIGATION GUARANTEES

Sec. 201. Purposes.

Sec. 202. Establishment of debt guarantee program.

Sec. 203. Effect of guarantee.

Sec. 204. Full faith and credit.

Sec. 205. Fees for guarantees; amount; collection.

Sec. 206. Payment of losses.

Sec. 207. Regulations.
 TITLE III--REINSURANCE COVERAGE FOR ELIGIBLE STATE PROGRAMS

Sec. 301. Program authority.

Sec. 302. Contract principles.

Sec. 303. Terms of reinsurance contracts.

Sec. 304. Maximum Federal liability.

Sec. 305. Federal Natural Catastrophe Reinsurance Fund.

Sec. 306. Consideration of rebuilding.

Sec. 307. Regulations.
 TITLE IV--MITIGATION GRANT PROGRAM

Sec. 401. Mitigation grant program.
 TITLE V--GENERAL PROVISIONS

Sec. 501. Eligible State programs.

Sec. 502. Study and conditional coverage of commercial residential 
 lines of insurance.

Sec. 503. Study of risk-based pricing and State program rates.

Sec. 504. Definitions.

Sec. 505. Regulations.

SEC. 2. FINDINGS AND PURPOSES.

    (a) 

=== Findings ===
-The Congress finds that--

    (1) the United States has a history of catastrophic natural 
 disasters, including hurricanes, tornadoes, flood, fire, 
 earthquakes, and volcanic eruptions;

    (2) although catastrophic natural disasters occur 
 infrequently, their costs are likely to escalate in the coming 
 years, in part because of the intensifying impacts of climate 
 change, coastal development patterns, and increasing property 
 values along the hurricane-prone or earthquake-vulnerable 
 coastlines of the United States;

    (3) such disasters present physical risk to assets, 
 publicly traded securities, private investments, and companies;

    (4) as the risk of catastrophe losses grows, so do the 
 risks that any premiums collected by private insurers for 
 extending coverage will be insufficient to cover future 
 catastrophes, and private insurers, to protect their 
 shareholders and policyholders (in the case of mutually owned 
 companies), have thus significantly raised premiums and 
 curtailed insurance coverage in States exposed to major 
 catastrophes;

    (5) 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 Government; and

    (6) under the current disaster risk management system, the 
 Federal Government and, hence, taxpayers pay for rebuilding 
 through government grants and low-interest loans.

    (b) 

=== 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 catastrophes, to encourage mitigation and prevention for such 
catastrophes, to promote the use of private market capital as a means 
to insure against such catastrophes, to expedite the payment of claims 
and better assist in the financial recovery from such catastrophes.

 TITLE I--NATIONAL CATASTROPHE RISK CONSORTIUM

SEC. 101. ESTABLISHMENT; CHAIRPERSON; MEMBERSHIP; BYLAWS.

    (a) Establishment.--There is established an entity to be known as 
the ``National Catastrophe Risk Consortium'' (in this title referred to 
as the ``Consortium'').

    (b) Chairperson.--The Secretary of the Treasury, or the designee of 
the Secretary, shall serve as the chairperson of the Consortium.
            (c) Membership.--Any State shall be eligible to participate in the 
Consortium.
            (d) Considerations.--In selecting members of the Consortium, the 
States shall--

    (1) select members who have a background and expertise 
 relevant to the functions of the Consortium; and

    (2) ensure the participation of one individual or 
 representative of an organization that represents consumers, 
 minorities, and low- and moderate-income housing persons by 
 reflecting the communities that are being affected by 
 catastrophic natural disasters.

    (e) Bylaws.--The Consortium may prescribe, amend, and repeal such 
bylaws as necessary to carry out the functions of the Consortium.

SEC. 102. FUNCTIONS.

 The Consortium shall--

    (1) work with States to gather and maintain an inventory of 
 catastrophe risk obligations held by providers of natural 
 catastrophe insurance;

    (2) assess issues or gaps in the insurance sector of the 
 United States financial system and any related effects on 
 insurance affordability for policyholders;

    (3) advance consistent, clear, intelligible, comparable, 
 and accurate disclosure of catastrophic risk;

    (4) submit annual reports to the Congress describing the 
 activities of the Consortium for the preceding year, and the 
 first such annual report shall include an assessment of the 
 costs to States and the regions associated with catastrophe 
 risk;

    (5) assess the potential for major disruptions of private 
 insurance coverage in United States markets particularly 
 vulnerable to catastrophes;

    (6) make such other recommendations on how identified 
 financial risk can be mitigated, including through new or 
 revised regulatory standards, as appropriate; and

    (7) account for and identify disparate impacts of 
 catastrophic risks on disadvantaged communities and communities 
 of color.

SEC. 103. 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 2026 through 
2029.

 TITLE II--CATASTROPHE OBLIGATION GUARANTEES

SEC. 201. PURPOSES.

 The purposes of this title are to establish a program--

    (1) to promote the availability of private capital to 
 provide liquidity and capacity to State catastrophe insurance 
 programs; and

    (2) to expedite the payment of claims under State 
 catastrophe insurance programs and better assist the financial 
 recovery from significant natural catastrophes by authorizing 
 the Secretary of the Treasury to guarantee debt for such 
 purposes.

SEC. 202. ESTABLISHMENT OF DEBT GUARANTEE PROGRAM.

    (a) Authority of Secretary.--The Secretary of the Treasury is 
authorized and shall have the powers and authorities necessary to 
guarantee, and to enter into commitments to guarantee, holders of debt 
against loss of principal or interest, or both, on any such debt issued 
by eligible State programs for purposes of this title, provided that 
the total principal amount of debt obligations guaranteed by the 
Secretary--

    (1) for eligible State programs that cover earthquake peril 
 shall not exceed $3,500,000,000; and

    (2) for eligible State programs that cover all other perils 
 shall not exceed $17,000,000,000.

    (b) 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 program. The commitment to guarantee 
shall be for a period of 3 years and may be extended by the Secretary 
for a period of 1 year on each annual anniversary of the issuance of 
the commitment to guarantee. The commitment to guarantee and each 
extension of such commitment may be issued by the Secretary only if the 
following requirements are satisfied:

    (1) The eligible State program submits to the Secretary a 
 report setting forth, in such form and including such 
 information as the Secretary shall require, how the eligible 
 State program plans to repay the debt.

    (2) Based upon the eligible State program's report 
 submitted pursuant to paragraph

    (1) , the Secretary determines 
 there is reasonable assurance that the eligible State program 
 can meet its repayment obligation under the debt.

    (3) The eligible State program enters into an agreement 
 with the Secretary, as the Secretary shall require, that the 
 eligible State program will not use Federal funds of any kind 
 or from any Federal source (including any disaster or other 
 financial assistance, loan proceeds, and any other assistance 
 or subsidy) to repay the debt.

    (4) The commitment to guarantee shall specify the fees for 
 debt guarantee coverage.

    (5) The maximum term of the debt that shall be specified in 
 a commitment issued under this section may not exceed 30 years.

    (6) 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 insurance, covered by 
 flood insurance, or located in areas having special flood 
 hazards (as such term is defined for purposes of the National 
 Flood Insurance Act of 1968 and the Flood Disaster Protection 
 Act of 1973).
            (c) 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

    (b) , 
provide a guarantee under subsection
            (d) for such eligible State 
program in the amount requested by such eligible State program, subject 
to the limitation under subsection
            (d) (2) .
            (d) Catastrophic Debt Guarantee.--A debt guarantee under this 
subsection for an eligible State program shall be subject to the 
following requirements:

    (1) 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 resources, as of 
 immediately before the date of the event.

    (2) Amount.--The aggregate principal amount of the debt 
 guaranteed following an event or events referred to in 
 paragraph

    (1) may not exceed the amount by which the insured 
 losses expected to be sustained by the State program as a 
 result of such event or events exceed 80 percent of the 
 qualifying assets of the eligible State program as stated in 
 the most recent quarterly financial statement filed with the 
 domiciliary regulator of the program prior to the event or 
 events, except that, for eligible State programs that are not 
 required to file such quarterly financial statements, the 
 aggregate principal amount of the debt guaranteed may not 
 exceed the amount by which insured losses sustained by the 
 State program as a result of such event or events exceed 80 
 percent of the unrestricted net assets as stated in the annual 
 financial statement for the program's fiscal year ending 
 immediately prior to the event or events.

    (3) 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 program. Such amounts shall not be used 
 for any other purpose.

    (e) Funding.--There are authorized to be appropriated such sums as 
may be necessary to carry out this section.

SEC. 203. EFFECT OF GUARANTEE.

 The issuance of any guarantee by the Secretary under this title 
shall be conclusive evidence that--

    (1) the guarantee has been properly obtained;

    (2) the underlying debt qualified for such guarantee; and

    (3) the guarantee is valid, legal, and enforceable.

SEC. 204. 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 interest.

SEC. 205. FEES FOR GUARANTEES; AMOUNT; COLLECTION.

 The Secretary shall charge and collect fees for each guarantee in 
amounts specified in the commitment to guarantee, which shall be in 
amounts sufficient in the judgment of the Secretary at the time of 
issuance of the commitment to guarantee to cover applicable 
administrative costs and probable losses on the guaranteed obligations 
covered by the commitment to guarantee, but in any event not to exceed 
one-half of 1 percent per annum of the outstanding indebtedness covered 
by each guarantee.

SEC. 206. PAYMENT OF LOSSES.

    (a) In General.--The Secretary agrees to pay to the duly appointed 
paying agent or trustee (in this section referred to as the ``Fiscal 
Agent'') for the eligible State program that portion of the principal 
and interest on any debt guaranteed under this title that shall become 
due for payment but shall be unpaid by the eligible State program as a 
result of such program having provided insufficient funds to the Fiscal 
Agent to make such payments. The Secretary shall make such payments on 
the date such principal or interest becomes due for payment or on the 
business day next following the day on which the Secretary shall 
receive notice of failure on the part of the eligible State program to 
provide sufficient funds to the Fiscal Agent to make such payments, 
whichever is later. Upon making such payment, the Secretary shall be 
subrogated to all the rights of the ultimate recipient of the payment. 
The Secretary shall be entitled to recover from the eligible State 
program the amount of any payments made pursuant to any guarantee 
entered into under this title.

    (b) 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 
title.
            (c) Right of the Secretary.--Notwithstanding any other provision of 
law relating to the acquisition, handling, or disposal of property by 
the United States, the Secretary shall have the right in the discretion 
of the Secretary to complete, recondition, reconstruct, renovate, 
repair, maintain, operate, or sell any property acquired by the 
Secretary pursuant to the provisions of this title.

SEC. 207. REGULATIONS.

 The Secretary shall issue any regulations necessary to carry out 
the debt-guarantee program established under this title.

 TITLE III--REINSURANCE COVERAGE FOR ELIGIBLE STATE PROGRAMS

SEC. 301. PROGRAM AUTHORITY.

 The Secretary of the Treasury, shall make available for purchase, 
only by eligible State programs, contracts for reinsurance coverage 
under this title.

SEC. 302. CONTRACT PRINCIPLES.

 Contracts for reinsurance coverage made available under this 
title--

    (1) shall be priced on an actuarially sound basis;

    (2) shall minimize the administrative costs of the Federal 
 Government; and

    (3) shall provide coverage based solely on insured losses 
 covered by the eligible State program purchasing the contract.

SEC. 303. TERMS OF REINSURANCE CONTRACTS.

    (a) 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 programs. In setting 
attachment points and in determining the levels of reinsurance coverage 
provided, the Secretary shall take into consideration--

    (1) the coverage available through eligible State programs;

    (2) the availability and accessibility of reinsurance in 
 the private market; and

    (3) other factors as deemed appropriate by the Secretary.

    (b) 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 80 percent, but not more than 90 percent, of the 
amount of insured losses of the eligible State program in excess of the 
amount of retained losses that the contract requires, pursuant to 
subsection

    (a) , to be incurred by such program.
            (c) Maturity.--The term of each contract for reinsurance coverage 
under this title shall not exceed 1 year or such other term as the 
Secretary may determine.
            (d) Payment Condition.--Each contract for reinsurance coverage 
under this title shall authorize claims payments to the eligible State 
program purchasing the coverage only for insured losses provided under 
the contract.

    (e) Multiple Events.--The contract shall cover any insured losses 
from one or more events that may occur during the term of the contract 
and shall provide that if multiple events occur, the retained losses 
requirement under subsection

    (a) shall apply on a calendar year basis, 
in the aggregate and not separately to each individual event.

    (f) Timing of Claims.--Claims under a contract for reinsurance 
coverage under this title shall include only insurance claims that are 
reported to the eligible State program within the 3-year period 
beginning upon the event or events for which payment under the contract 
is provided.

    (g) Actuarial Pricing.--The price of coverage under a reinsurance 
contract under this title shall be an amount, established by the 
Secretary at a level that annually produces expected premiums that 
shall be sufficient to pay the reasonably anticipated cost of all 
claims (which may not be equal only to average annual costs), loss 
adjustment expenses, all administrative costs of reinsurance coverage 
offered under this title, and any such outwards reinsurance, as 
described in 

section 305
            (c) (3) , as the Secretary considers prudent 
taking into consideration the demand for reinsurance coverage under 
this title. The anticipated cost of all claims shall be comparable to 
amounts being included in the price for similar layers of coverage in 
the private sector, taking into account the savings associated with 
non-profit and tax-exempt status of the Fund established under 

section 305.

    (h) 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 title.
            (i) Others.--Contracts for reinsurance coverage under this title 
shall contain such other terms as the Secretary considers necessary to 
carry out this title and to ensure the long-term financial integrity of 
the program under this title.

SEC. 304. MAXIMUM FEDERAL LIABILITY.

    (a) In General.--Subject to subsection

    (b) and notwithstanding any 
other provision of law, the aggregate potential liability for payment 
of claims under all contracts for reinsurance coverage under this title 
sold in any single year shall be determined by the Secretary based on 
review of the market for reinsurance coverage under this title.

    (b) Limitation.--The authority of the Secretary to enter into 
contracts for reinsurance coverage under this title shall be effective 
for any fiscal year only to such extent or in such amounts as are or 
have been provided in appropriation Acts for such fiscal year for the 
aggregate potential liability for payment of claims under all contracts 
for reinsurance coverage under this title.

SEC. 305. FEDERAL NATURAL CATASTROPHE REINSURANCE FUND.

    (a) Establishment.--There is established within the Treasury of the 
United States a fund to be known as the Federal Natural Catastrophe 
Reinsurance Fund (in this section referred to as the ``Fund'').

    (b) Credits.--The Fund shall be credited with--

    (1) amounts received annually from the sale of contracts 
 for reinsurance coverage under this title;

    (2) any amounts appropriated for the aggregate potential 
 liability for payment of claims under all contracts for 
 reinsurance coverage under this title; and

    (3) any amounts earned on investments of the Fund pursuant 
 to subsection
            (d) .
            (c) Uses.--Amounts in the Fund shall be available to the Secretary 
only for the following purposes:

    (1) Contract payments.--For payments to purchasers covered 
 under contracts for reinsurance coverage for eligible losses 
 under such contracts.

    (2) Administrative expenses.--To pay for the administrative 
 expenses incurred by the Secretary in carrying out the 
 reinsurance program under this title.

    (3) Outwards reinsurance.--To obtain retrocessional or 
 other reinsurance coverage of any kind to cover risk reinsured 
 under contracts for reinsurance coverage made available under 
 this title.
            (d) Investment.--The Secretary shall invest such amounts in the 
Fund as the Secretary considers advisable in obligations issued or 
guaranteed by the United States. For purposes of the grant mandate in 

section 401

    (f) for a fiscal year, the Secretary shall disclose the 
annual net investment income available not later than 60 days after the 
conclusion of such fiscal year and disperse appropriate funds not later 
than 90 days after the conclusion of such fiscal year.

SEC. 306. CONSIDERATION OF REBUILDING.

 Nothing in this title may be construed to prevent counties, 
municipalities, and other localities from undertaking land and 
environmental assessments to determine the efficacy of rebuilding.

SEC. 307. REGULATIONS.

 The Secretary shall issue any regulations necessary to carry out 
the program for reinsurance coverage under this title.

 TITLE IV--MITIGATION GRANT PROGRAM

SEC. 401. MITIGATION GRANT PROGRAM.

    (a) Establishment.--The Secretary of Housing and Urban Development 
shall establish and carry out a program to provide grants to eligible 
entities to develop, enhance, or maintain programs to prevent and 
mitigate losses from natural catastrophes.

    (b) Grants.--A grant provided under subsection

    (a) shall be used to 
reduce loss of life and property by--

    (1) encouraging awareness of risk factors and what steps 
 can be taken to eliminate or reduce them, including public 
 education campaigns to promote citizen and community 
 preparedness;

    (2) assisting in the determination of the location of risk 
 by giving careful consideration to the natural risks for the 
 location of a property;

    (3) providing inspections of homes to identify areas to 
 strengthen such homes and reduce exposure to natural 
 catastrophes;

    (4) providing financial assistance to homeowners to 
 retrofit homes to reduce exposure to natural catastrophes; or

    (5) supporting disaster response readiness programs, 
 including initiatives that develop, enhance ,or maintain the 
 capacity of a public safety organization to be better prepared, 
 equipped, and trained to respond to natural catastrophes.
            (c) Priority.--In making grants under the program under subsection

    (a) , the Secretary shall give priority to applicants demonstrating 
greater financial need, including applicants serving lower income 
individuals and areas.
            (d) Consultation With Experts.--In carrying out the program 
established under subsection

    (a) , the Secretary of Housing and Urban 
Development shall consult with--

    (1) disaster preparedness and response organizations;

    (2) homebuilders;

    (3) real estate professionals;

    (4) building code enforcement agencies; and

    (5) any other person that the Secretary considers 
 appropriate.

    (e) Eligible Entity Defined.--In this section, the term ``eligible 
entity'' means a State or local government, a part or program of a 
State or local government, or a nationally recognized, congressionally 
chartered disaster response non-profit organization.

    (f) Grant Mandate.--The Secretary shall, to the extent provided in 
advance in appropriation Acts, use not less than 35 percent of the net 
investment income from the Federal Natural Catastrophe Reinsurance Fund 
earned in each fiscal year pursuant to 

section 305
            (d) for grants under 
this section.

 TITLE V--GENERAL PROVISIONS

SEC. 501. ELIGIBLE STATE PROGRAMS.

    (a) Eligible State Programs.--A State program shall be considered 
an ``eligible State program'' for purposes of this Act if the Secretary 
certifies, in accordance with the procedures established under 
subsection
            (c) , that the State program complies with the following 
requirements:

    (1) 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 insurance, as defined in the Uniform 
 Property and Casualty Product Coding Matrix of the National 
 Association of Insurance Commissioners.

    (2) Operation.--The State program shall meet the following 
 requirements:
        (A) A majority of the members of the governing body 
 of the State program shall be public officials or 
 appointed by public officials.
        (B) The State shall have a financial interest in 
 the State program.
            (C) If the State has at any time appropriated 
 amounts from the State program's funds for any purpose 
 other than payments for losses insured under the State 
 program, or payments made in connection with any of the 
 State program's authorized activities, the State shall 
 have returned such amounts to the State fund, together 
 with interest as determined by the individual State on 
 such amounts.

    (3) Tax status.--The State program shall have received from 
 the Secretary (or the Secretary's designee) a written 
 determination, within the meaning of 

section 6110

    (b) of the 
 Internal Revenue Code of 1986, that the program either--
        (A) constitutes an ``integral part'' of the State 
 that has created it; or
        (B) is otherwise exempt from Federal income 
 taxation.

    (4) 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 program.

    (5) Prevention and mitigation.--
        (A) 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 coverage.
        (B) Operational requirements.--The State program 
 shall operate in a State that--
            (i) requires that an appropriate public 
 body within the State shall have adopted 
 adequate mitigation measures with effective 
 enforcement provisions which the Secretary 
 finds are consistent with the criteria for 
 construction described in the International 
 Code Council building codes;
            (ii) has taken actions to establish an 
 insurance rate structure that takes into 
 account measures to mitigate insured losses; 
 and
            (iii) ensures, to the extent that 
 reinsurance coverage made available under the 
 eligible State program results in any cost 
 savings in providing insurance coverage for 
 risks in such State, such cost savings are 
 reflected in premium rates charged to consumers 
 for such coverage.

    (6) Requirements regarding coverage.--The State program--
        (A) may not, except for charges or assessments 
 related to post-event financing or bonding, involve 
 cross-subsidization between any separate property and 
 casualty insurance lines covered under the State 
 program pursuant to paragraph

    (1) ;
        (B) shall be subject to a requirement under State 
 law that for any insurance coverage made available 
 under the State insurance program or for any 
 reinsurance coverage for such insurance coverage made 
 available under the State reinsurance program, the 
 premium rates charged shall cover the expected value of 
 all future costs associated with insurance policies or 
 reinsurance contracts written by such program, in 
 accordance with the principles under 

section 303

    (g) ;
            (C) shall make available to all qualifying 
 policyholders insurance or reinsurance coverage, as 
 applicable, and mitigation services on a basis that is 
 not unfairly discriminatory; and
            (D) publishes, and displays in a prominent location 
 on a website for the State insurance program, 
 information for the State insurance program of 
 estimated assessments and surcharges on policyholders, 
 in accordance with State laws, regulations, or other 
 requirements, for a range of natural disaster or 
 catastrophic events having a varying magnitude of 
 losses, including an event projected to result in 
 losses of such magnitude that they have a 1 percent 
 chance of being equaled or exceeded in any single year, 
 based on the current year estimated aggregate funding 
 capacity of the State insurance program and State 
 reinsurance program.

    (7) Land use and zoning.--The State program, to the extent 
 possible, seeks to encourage appropriate State and local 
 government units to develop comprehensive land use and zoning 
 plans that include natural hazard mitigation.

    (8) Risk-based capital requirements.--The State program--
        (A) complies with such risk-based capital 
 requirements as applicable State law may impose and 
 shall take into consideration asset risk, credit risk, 
 underwriting risk, and such other relevant risk as 
 determined by the Secretary; and
        (B) for each calendar year, prepares and submits to 
 the Secretary a report identifying its claim-paying 
 capacity at such time after the conclusion of such 
 year, and containing such information and in such form, 
 as the Secretary shall require.

    (9) Other requirements.--The State program complies with 
 such additional organizational, underwriting, and financial 
 requirements as the Secretary shall, by regulation, provide to 
 carry out the purposes of this Act.

    (b) Certification.--The Secretary shall establish procedures for 
initial certification and recertification as an eligible State program.
            (c) Transitional Mechanisms.--For the 5-year period beginning on 
the date of the enactment of this Act, in the case of a State that does 
not have an eligible State program for the State, a State residual 
insurance market entity, or State-sponsored provider of natural 
catastrophe insurance, for such State shall be considered to be an 
eligible State program, but only if such State residual insurance 
market entity, or State-sponsored provider of natural catastrophe 
insurance, was in existence before such date of enactment.
            (d) 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 section.

SEC. 502. STUDY AND CONDITIONAL COVERAGE OF COMMERCIAL RESIDENTIAL 
 LINES OF INSURANCE.

 The Secretary shall study, on an expedited basis, the need for and 
impact of expanding the programs established by this Act to apply to 
insured losses of eligible State programs for losses arising from all 
commercial insurance policies which provide coverage for properties 
that are composed predominantly of residential rental units. The 
Secretary shall consider the catastrophic insurance and reinsurance 
market for commercial residential properties, and specifically the 
availability of adequate private insurance coverage when an insured 
event occurs, the impact any such capacity restrictions have on housing 
affordability for renters, and the likelihood that such an expansion of 
the program would increase insurance capacity for this market segment.

SEC. 503. STUDY OF RISK-BASED PRICING AND STATE PROGRAM RATES.

 The Comptroller General of the United States shall conduct a study 
to analyze--

    (1) risk-based rate pricing, to determine the use of 
 actuarially sound pricing for State insurance, reinsurance, or 
 residual market programs, including what measures States are 
 taking to implement actuarially sound rates;

    (2) rates for State insurance, reinsurance, or residual 
 market programs that fail to cover the expected value of all 
 future costs, including the cost of capital, associated with 
 insurance policies or reinsurance contracts written by such 
 programs or fail to have sufficient assets above their 
 indebtedness to meet their obligations; and

    (3) any financial complications arising for policyholders 
 resulting from increased policy costs.
Not later than 6 months after the date of the enactment of this Act, 
the Comptroller General shall submit a report to the Congress on the 
results of the study under this section.

SEC. 504. DEFINITIONS.

 In this Act:

    (1) Commitment to guarantee.--The term ``commitment to 
 guarantee'' means a commitment to make debt guarantees to an 
 eligible State program pursuant to 

section 202
            (c) .

    (2) Eligible state program.--The term ``eligible State 
 program'' means a State program that the Secretary certifies as 
 an eligible State program under 

section 501.

    (3) 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 program.

    (4) 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 events.

    (5) Secretary.--The term ``Secretary'' means the Secretary 
 of the Treasury.

    (6) State.--The term ``State'' includes the several States, 
 the District of Columbia, the Commonwealth of Puerto Rico, 
 Guam, the Commonwealth of the Northern Mariana Islands, the 
 United States Virgin Islands, and American Samoa, and any other 
 territory or possession of the United States.

SEC. 505. REGULATIONS.

 The Secretary shall issue such regulations as may be necessary to 
carry out this Act.
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