“To establish a Natural Disaster Risk Reinsurance Program, and for other purposes.”
No CRS summary available for this bill.
This section establishes in the Department of the Treasury the Natural Disaster Risk Reinsurance Program (Program), applicable only to covered events occurring on or after January 1, 2026, to protect insurers from insolvency due to significant natural disaster losses while promoting affordable coverage. The Secretary of the Treasury administers the Program, in consultation with the Federal Insurance Office Director, and makes payments to voluntarily participating states for aggregate industry-wide insured losses in the state exceeding a state-specific trigger amount, with payments made in installments of approximately 25% of the estimated total. To participate, a state must submit an approved plan assuring (1) insurers cover claims up to the trigger amount, (2) submission of required data on losses and premiums, (3) appropriate distribution of federal payments to insurers by market share, (4) pledge of the state's full faith and credit for repayment of federal payments within 10 years on a regular schedule, and (5) appropriate treatment for state residual market insurers. The National Academy of Sciences proposes trigger amounts for each participating state and covered event type—set at the lesser of total direct written premiums for covered insurance or the amount needed to protect insurers from insolvency in a covered event with a 2% annual probability—subject to Secretary approval and review at least every 24 months; the Academy also assesses post-event insured losses. The Program applies to policy renewals after a state's participation begins but does not affect existing policies.
This section directs the Secretary to require the insurance regulator of each participating state to submit (1) annual reports, for each covered event with federal payments under section 2(b)(1) that remain unrepaid under section 2(b)(4), detailing insured losses incurred, additional expected insured losses (including timing), and repayment progress; and (2) a final report, upon full repayment of all such payments for the covered event, containing information as specified by the Secretary.
This section authorizes the Secretary to administer the Program, including by (1) investigating and auditing claims for covered events in a state, (2) prescribing regulations and procedures, (3) consulting with the National Association of Insurance Commissioners (NAIC) as appropriate, (4) contracting for necessary services, (5) annually compiling insurers' premium rates for covered insurance (requiring submission via NAIC if needed) and making the information available to Congress upon request, and (6) using appropriated funds for reasonable administrative costs.
This section defines terms used in the Act, including (1) affiliate; (2) control (generally requiring 25% or more voting securities, majority director election control, or a Secretary determination of controlling influence, with a rule of construction excluding attorneys-in-fact for reciprocal insurers as of January 1, 2026, absent other control); (3) covered event (i.e., volcanic eruption, severe storm, tropical storm, hurricane, earthquake, tsunami, fire, tornado, hail, or other natural disaster not eligible for National Flood Insurance Program coverage, certified by the Secretary of the Treasury on a nondelegable basis); (4) covered insurance (i.e., property and casualty coverage for single-family or multifamily residences, excluding private mortgage insurance and title insurance); (5) insured loss (i.e., losses from covered events under covered insurance, including claims adjustment costs); (6) insurer (i.e., licensed providers of covered insurance, eligible surplus lines carriers, federally approved entities, or state residual market entities); (7) participating State; (8) person; (9) Program (i.e., the Natural Disaster Risk Reinsurance Program); (10) Secretary (i.e., Secretary of the Treasury); (11) State (i.e., any state, territory, or possession); (12) State insurance regulator; and (13) a rule of construction treating referenced dates as beginning at 12:01 a.m. and ending at midnight.