To establish a Federal program to provide reinsurance to improve the availability of homeowners' insurance.

February 16, 2005

Ms. GINNY BROWN-WAITE of Florida (for herself, Mr. DAVIS of Florida, Mr. SHERMAN, Ms. ROS-LEHTINEN, Mr. LARSEN of Washington, Ms. BORDALLO, Mr. LEWIS of Georgia, Mr. WELDON of Florida, Ms. HOOLEY, Mr. WOLF, Ms. WASSERMAN SCHULTZ, Mr. BILIRAKIS, Mr. GENE GREEN of Texas, and Mr. FEENEY) introduced the following bill; which was referred to the Committee on Financial Services

To establish a Federal program to provide reinsurance to improve the availability of homeowners' insurance.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `Homeowners' Insurance Availability Act of 2005'.

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

Sec. 1. Short title and table of contents.

Sec. 2. Program authority.

Sec. 3. Qualified lines of coverage.

Sec. 4. Covered perils.

Sec. 5. Auction of contracts for reinsurance coverage.

Sec. 6. Minimum level of retained losses and maximum Federal liability.

Sec. 7. Disaster Reinsurance Fund.

Sec. 8. National Commission on Catastrophe Risks and Insurance Loss Costs.

Sec. 9. Definitions.

Sec. 10. Regulations.

Sec. 11. Termination.

Sec. 12. Annual study of cost and availability of disaster insurance and program need.

SEC. 2. PROGRAM AUTHORITY.

(a) In General- The Secretary of the Treasury shall carry out a program under this Act to make reinsurance coverage available through contracts for reinsurance coverage under section 5, which shall be made available for purchase by purchasers under section 5(a)(1) only through auctions under section 5(a).

(b) Purpose- The program shall be designed to make reinsurance coverage under this Act available to improve the availability of homeowners' insurance for the purpose of facilitating the pooling, and spreading the risk, of catastrophic financial losses from disasters and to improve the solvency of homeowners' insurance markets.

(c) Contract Principles- Under the program under this Act, the Secretary shall offer reinsurance coverage through contracts with covered purchasers, which contracts--

(1) shall not displace or compete with the private insurance or reinsurance markets or capital markets;

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

(3) shall provide coverage based solely on insured losses within the region established pursuant to section 5(a) for which the auction is held.

SEC. 3. QUALIFIED LINES OF COVERAGE.

Each contract for reinsurance coverage made available under this Act shall provide insurance coverage against residential property losses to homes (including dwellings owned under condominium and cooperative ownership arrangements) and the contents of apartment buildings.

SEC. 4. COVERED PERILS.

Each contract for reinsurance coverage made available under this Act shall cover losses that are proximately caused by--

(1) earthquakes;

(2) perils ensuing from earthquakes, including fire and tsunamis; and

(3) tropical cyclones having maximum sustained winds of at least 74 miles per hour, including hurricanes and typhoons.

The Secretary shall, by regulation, define the disaster perils under this section.

SEC. 5. AUCTION OF CONTRACTS FOR REINSURANCE COVERAGE.

(a) Auction Program Requirements- The Secretary shall carry out a program to auction contracts for reinsurance coverage under this Act made available pursuant to section 2(a), which shall comply with the following requirements:

(1) PURCHASERS- The auction program shall provide for auctioning all contracts made available under this section to private insurers and reinsurers, State insurance and reinsurance programs, and other interested entities.

(2) REGIONAL AUCTIONS- The auction program shall provide for auctions on a regional basis. The Secretary shall divide the States into not less than 6 regions for the purpose of holding such regional auctions, which shall include separate regions for all or part of the State of California and all or part of the State of Florida. In determining the boundaries for such regions, the Secretary shall consider which areas have greater risks of losses from covered perils and which areas have lesser risks of losses from covered perils, and shall attempt not to combine those different types of areas. Auctions for each region shall be conducted not less often than annually.

(3) RESERVE PRICE- In auctioning contracts under this section for reinsurance coverage, the Secretary shall set, for each contract, a reserve price that is the minimum price at which the contract may be sold, based upon the recommendations of the Commission. The reserve price shall be determined on the basis of the following components:

(A) RISK-BASED PRICE- A risk-based price, which shall reflect the anticipated annualized payout of the contract according to the actuarial analysis and recommendations of the Commission.

(B) RISK LOAD- A risk load in an amount that is not less than the risk-based price under subparagraph (A).

(C) ADMINISTRATIVE COSTS- A sum sufficient to provide for the operation of the Commission and the administrative expenses incurred by the Secretary in carrying out this section.

(D) MITIGATION- An adjustment based on an actuarial analysis that takes into account any efforts that are being made to reduce losses to property in the region in which the contract is being sold.

(4) PRICE GOUGING PROTECTIONS- The auction program may provide reinsurance coverage for losses incurred only for property located in a State for which the State entity authorized to make such determinations has certified to the Secretary that there are in effect, in such State, laws or regulations sufficient to prohibit price gouging, during the term of such reinsurance coverage, in any disaster area located within the State.

(5) MITIGATION REQUIREMENTS-

(A) IN GENERAL- The auction program shall require each purchaser of a contract, as a condition of such purchase, to contribute an amount, that the Secretary (in consultation with the Director of the Federal Emergency Management Agency) shall establish and which shall not exceed 5 percent of the price paid for the contract, to communities that--

(i) are located in the State in which the reinsurance coverage under the contract is provided (or in the case of multiple States, among such States, as determined by the Secretary);

(ii) are designated by the Director of the Federal Emergency Management Agency and the appropriate emergency management agency for the State as Project Impact communities (for purposes of the pre-disaster mitigation program of such Agency); and

(iii) are participating in such programs or initiatives as the Secretary may require that provide incentives for construction of structures and communities that are resistant to damage from covered perils, which shall include the Building Code Effectiveness Grading Schedule of the Insurance Services Office.

(B) USE OF CONTRIBUTIONS- Amounts contributed to communities pursuant to the requirement under subparagraph (A) shall be used only--

(i) for activities to reduce losses from covered perils to properties covered under the reinsurance contract purchased under the auction program that are located in such communities; and

(ii) in accordance with such requirements as the Secretary, in consultation with the Director of the Federal Emergency Management Agency and appropriate State agencies, shall establish to ensure cost-effective use of such amounts.

(C) ALLOCATION- The Secretary, in consultation with the Director of the Federal Emergency Management Agency, shall establish requirements for allocation of contributions among communities eligible under subparagraph (A) to receive such contributions.

(6) OTHER REQUIREMENTS- The Secretary may establish such other requirements for the auction program as the Secretary considers necessary to carry out this Act.

(b) Contract Terms and Conditions- Each contract for reinsurance coverage under this Act shall include the following terms and conditions:

(1) MATURITY- The term of each such contract shall not exceed 1 year or such other term as the Secretary may determine.

(2) TRANSFERABILITY- The contract shall at all times be fully transferable, assignable, and divisible.

(3) THRESHOLD OF COVERAGE- The contract shall provide that the covered purchaser may receive a payment for losses covered under the contract if, under a process specified in the contract, the Secretary determines that the insurance industry will, as a result of a single event of a covered peril, incur losses within the coverage area for the region established under subsection (a)(2) for which the contract was auctioned that are covered by one or more lines of insurance under section 4 in an aggregate amount, for such event, greater than the level of retained losses specified in section 6.

(4) 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 occur, the retained losses requirement under paragraph (3) shall apply to each event.

(5) ADDITIONAL CONTRACT OPTION- The contract shall provide that the purchaser of the contract may, during the term of such original contract, purchase additional contracts from among those offered by the Secretary at the beginning of the term, subject to the limitations under section 6, at the prices at which such contracts were offered at the beginning of the term, prorated based upon the remaining term as determined by the Secretary. Such additional contracts shall provide coverage beginning on a date 15 days after the date of purchase but shall not provide coverage for losses for an event that has already occurred.

(6) SUBMISSION OF INFORMATION- The contract shall include terms that--

(A) require the purchaser to notify the Secretary of any sale, transfer, assignment, or division of the contract or any interest in the contract, identify the interest involved, and identify the price paid or compensation provided; and

(B) authorize the disclosures required under subsection (c)(2).

(7) 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 Act.

(c) GAO Audit-

(1) IN GENERAL- For each fiscal year, the Comptroller General of the United States shall conduct an audit of prices for contracts made available under the auction program under this section during such fiscal year that determines--

(A) the reserve prices established for such contracts;

(B) the prices paid for such contracts that are purchased;

(C) the prices paid, or compensation provided, in any sales, transfers, assignments, or divisions of any such contracts (or any interests in such contracts) in the secondary market or to any third party; and

(D) pursuant to the information obtained under subparagraphs (A) through (C), the appropriate reserve prices for such contracts that are to be made available in the succeeding fiscal year.

(2) USE OF INFORMATION- The Secretary shall provide any information referred to in subsection (b)(6) that is obtained by the Secretary to the Comptroller General, the Director of the Congressional Budget Office, and the Director of the Office of Management and Budget, and shall make such information publicly available. The Secretary, the Director of the Congressional Budget Office, the Director of the Office of Management and Budget shall each take such information into consideration in preparing any budget, report, estimate, or recommendation to the extent it relates to the auction program under this section, and in any determinations relating to the Budget of the United States or the concurrent resolution on the budget (as such term is defined in section 3 of the Congressional Budget Act of 1974). The Secretary shall take such information into consideration in establishing reserve prices for contracts made available under this section.

(d) Private Sector Right to Participate-

(1) ESTABLISHMENT OF COMPETITIVE PROCEDURE- The Secretary shall establish, by regulation, a competitive procedure under this subsection that provides qualified entities an opportunity, on a basis consistent with the regional auction procedure and contract cycle established under this section by the Secretary, to offer to provide, in lieu of reinsurance coverage under this Act made available by the Secretary, reinsurance coverage that is substantially similar to such coverage.

(2) COMPETITIVE PROCEDURE- Under the procedure established under this subsection--

(A) the Secretary shall establish criteria for private insurers, reinsurers, and capital market companies, and consortia of such entities to be treated as qualified entities for purposes of this subsection, 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 appropriate;

(B) not less than 30 days before the beginning of each regional auction during which any reinsurance coverage under this Act is to be made available, the Secretary shall publish in the Federal Register the reserve prices and terms for contracts for such reinsurance coverage that are to be made available during the auction;

(C) the Secretary shall provide qualified entities a period of not less than 10 days (which shall terminate not less than 20 days before the beginning of the auction) 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 Act by the Secretary;

(D) the Secretary shall provide any qualified entity submitting an expression of interest during the period referred to in subparagraph (C) a period of not less than 20 days (which shall terminate before the commencement of the auction) to submit to the Secretary an offer to provide, in lieu of the reinsurance coverage under this Act otherwise to be made available under an auction under this section, coverage that is substantially similar to such coverage;

(E) if the Secretary determines that an offer submitted during the period referred to in subparagraph (D) is a bona fide offer to provide reinsurance coverage to be made available during the auction for the same contract cycle and at a reserve price and terms that are substantially similar to the reserve price and terms for reinsurance coverage otherwise to be made available at the auction under this section by the Secretary, the Secretary shall accept the offer (if still outstanding) and, notwithstanding any other provision of this Act, provide that the reinsurance coverage provided by such entity in accordance with the offer shall be made available at the auction; and

(F) if the Secretary accepts an offer pursuant to subparagraph (E) to make reinsurance coverage available at the auction, notwithstanding any other provision of this Act, the Secretary shall reduce, to an equivalent extent, the amount of reinsurance coverage otherwise to be made available under this Act by the Secretary at the auction, unless and until the Secretary determines that the entity is not complying with the terms of the accepted offer.

SEC. 6. MINIMUM LEVEL OF RETAINED LOSSES AND MAXIMUM FEDERAL LIABILITY.

(a) Available Levels of Retained Losses- In making reinsurance coverage available under this Act, the Secretary shall make available for purchase contracts for such coverage that require the sustainment of retained losses from a single event of a covered peril (as required under section 5(b)(3) for payment of eligible losses) in various amounts, as the Secretary, in consultation with the Commission, determines appropriate and subject to the requirements under subsection (b) of this section.

(b) Minimum Level of Retained Losses-

(1) CUMULATIVE AMOUNT- Subject to paragraphs (2), (3), and (4) and notwithstanding any other provision of this Act, a contract for reinsurance coverage may not be made available or sold under section 5 through a regional auction unless the contract requires that the insurance industry in the region for which the auction was conducted sustains a cumulative amount of retained losses (in covered lines resulting from covered perils) of not less than an amount, determined by the Secretary in consultation with the Commission, that is in the range between the amount equal to the eligible loss projected to be incurred once every 100 years from a single event in the region and the amount equal to the eligible loss projected to be incurred once every 250 years from such an event.

(2) INITIAL ADJUSTMENT BASED ON PRIVATE MARKET- The Secretary may, before making contracts for reinsurance coverage under this Act initially available under section 5, raise the minimum level of retained losses from the amount required under paragraph (1) for a region to ensure, as determined by the Secretary, that such contracts comply with the principle under section 2(c)(1).

(3) ANNUAL ADJUSTMENT- The Secretary may annually raise the minimum level of retained losses established under paragraph (1) for a region to reflect, as determined by the Secretary--

(A) changes in the capacity of public reinsurance programs or the private insurance and reinsurance market;

(B) increases in the market value of properties; or

(C) such other situations as the Secretary considers appropriate.

The Secretary shall consider the minimum level of retained losses requirement in paragraph (1) as a minimum requirement only and shall have full authority, effective on the date of the enactment of this Act, to establish levels of required minimum retained losses in any amount greater than the amounts specified in such paragraph. In making any determination under this paragraph in the minimum level of retained losses, the Secretary shall establish such level at an amount such that the program under this Act for making reinsurance coverage available does not displace or compete with the private insurance or reinsurance markets or capital markets, as determined by the Secretary after the Secretary has provided interested parties an opportunity to submit to the Commission market information relevant to such determination and has provided the Commission with an opportunity to advise the Secretary regarding such information and determination.

(4) OPTIONAL ANNUAL INFLATIONARY OR EXPOSURE ADJUSTMENT- The Secretary may, on an annual basis, raise the minimum level of retained losses established under paragraph (1) for each region to reflect the annual rate of inflation or growth in exposures, whichever is greater. Any such raise shall be made in accordance with an inflation index or exposure index, as appropriate, that the Secretary determines to be appropriate. The first such raise may be made one year after contracts for reinsurance coverage under this Act are first made available for purchase.

(c) Maximum Federal Liability-

(1) IN GENERAL- Notwithstanding any other provision of law, the Secretary may sell only contracts for reinsurance coverage under this Act in various amounts which comply with the following requirements:

(A) ESTIMATE OF AGGREGATE LIABILITY- The aggregate liability for payment of claims under all such contracts in any single year is unlikely to exceed $25,000,000,000 (as such amount is adjusted under paragraph (2)).

(B) ELIGIBLE LOSS COVERAGE SOLD- Eligible losses covered by all contracts sold within a State or region during a 12-month period do not exceed the difference between the following amounts (each of which shall be determined by the Secretary in consultation with the Commission):

(i) The amount equal to the eligible loss projected to be incurred once every 500 years from a single event in the State or region.

(ii) The amount equal to the eligible loss projected to be incurred once every 100 years from a single event in the State or region.

(2) ANNUAL ADJUSTMENTS- The Secretary shall annually adjust the amount under paragraph (1)(A) (as it may have been previously adjusted) to provide for inflation in accordance with an inflation index that the Secretary determines to be appropriate.

(d) Limitation on Percentage of Risk in Excess of Retained Losses-

(1) IN GENERAL- The Secretary may not make available for purchase contracts for reinsurance coverage under this Act that would pay out more than 50 percent of eligible losses in excess of retained losses for the region for which the contract was made available.

(2) PAYOUT- For purposes of this subsection, the amount of payout from a reinsurance contract shall be the amount of eligible losses in excess of retained losses multiplied by the percentage under paragraph (1).

SEC. 7. DISASTER REINSURANCE FUND.

(a) Establishment- There is established within the Treasury of the United States a fund to be known as the Disaster 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 Act;

(2) any amounts borrowed under subsection (d);

(3) any amounts earned on investments of the Fund pursuant to subsection (e); and

(4) such other amounts as may be credited to the Fund.

(c) Uses- Amounts in the Fund shall be available to the Secretary only for the following purposes:

(1) CONTRACT PAYMENTS- For payments to covered purchasers under contracts for reinsurance coverage under this Act for eligible losses under such contracts.

(2) COMMISSION COSTS- To pay for the operating costs of the Commission.

(3) ADMINISTRATIVE EXPENSES- To pay for the administrative expenses incurred by the Secretary in carrying out the reinsurance program under this Act.

(4) TERMINATION- Upon termination under section 11, as provided in such section.

(d) Borrowing-

(1) AUTHORITY- To the extent that the amounts in the Fund are insufficient to pay claims and expenses under subsection (c), the Secretary may issue such obligations of the Fund as may be necessary to cover the insufficiency and shall purchase any such obligations issued.

(2) PUBLIC DEBT TRANSACTION- For the purpose of purchasing any such obligations, the Secretary may use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, United States Code, 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 subsection.

(3) CHARACTERISTICS OF OBLIGATIONS- Obligations issued under this subsection shall be in such forms and denominations, bear such maturities, bear interest at such rate, and be subject to such other terms and conditions, as the Secretary shall determine.

(4) TREATMENT- All redemptions, purchases, and sales by the Secretary of obligations under this subsection shall be treated as public debt transactions of the United States.

(5) REPAYMENT- Any obligations issued under this subsection shall be repaid, including interest, from the Fund and shall be recouped from premiums charged for reinsurance coverage provided under this Act.

(e) Investment- If the Secretary determines that the amounts in the Fund are in excess of current needs, the Secretary may invest such amounts as the Secretary considers advisable in obligations issued or guaranteed by the United States.

(f) Prohibition of Federal Funds- Except for amounts made available pursuant to subsection (d) of this section and section 8(h), no Federal funds shall be authorized or appropriated for the Fund or for carrying out the reinsurance program under this Act.

SEC. 8. NATIONAL COMMISSION ON CATASTROPHE RISKS AND INSURANCE LOSS COSTS.

(a) Establishment- The Secretary shall establish a commission to be known as the National Commission on Catastrophe Risks and Insurance Loss Costs.

(b) Duties- The Commission shall meet for the sole purpose of advising the Secretary regarding the estimated loss costs associated with the contracts for reinsurance coverage under this Act and carrying out the functions specified in this Act.

(c) Members- The Commission shall consist of not more than 5 members, who shall be appointed by the Secretary and shall be broadly representative of the public interest. Members shall have no personal, professional, or financial interest at stake in the deliberations of the Commission. The membership of the Commission shall at all times include at least 1 representative of a nationally recognized consumer organization.

(d) 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 202 and 208 of title 18, United States Code.

(e) Experts and Consultants- The Commission may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, but at a rate not in excess of the daily equivalent of the annual rate of basic pay payable for level V of the Executive Schedule, for each day during which the individual procured is performing such services for the Commission.

(f) 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 Schedule, for each day (including travel time) during which such member is engaged in the performance of the duties of the Commission. 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 States.

(g) Obtaining Data- The Commission and the Secretary may solicit loss exposure data and such other information either deems necessary to carry out its responsibilities from governmental agencies and bodies and organizations that act as statistical agents for the insurance industry. The Commission and the Secretary shall take such actions as are necessary to ensure that information that either deems is confidential or proprietary is disclosed only to authorized individuals working for the Commission or the Secretary. No company which refuses to provide information requested by the Commission or the Secretary may participate in the program for reinsurance coverage authorized under this Act, nor may any State insurance or reinsurance program participate if any governmental agency within that State has refused to provide information requested by the Commission or the Secretary.

(h) Funding-

(1) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated--

(A) $1,000,000 for fiscal year 2006 for the initial expenses in establishing the Commission and the initial activities of the Commission that cannot timely be covered by amounts obtained pursuant to section 5(a)(3)(C), as determined by the Secretary;

(B) such additional sums as may be necessary to carry out subsequent activities of the Commission;

(C) $1,000,000 for fiscal year 2006 for the initial expenses of the Secretary in carrying out the program authorized under section 2; and

(D) such additional sums as may be necessary to carry out subsequent activities of the Secretary under this Act.

(2) OFFSET- The Secretary shall provide, to the maximum extent practicable, that an amount equal to any amount appropriated under paragraph (1) is obtained from purchasers of reinsurance coverage under this Act and deposited in the Fund established under section 7. Such amounts shall be obtained by inclusion of a provision for the Secretary's and the Commission's expenses incorporated into the pricing of the contracts for such reinsurance coverage, pursuant to section 5(a)(3)(C).

(i) Termination- The Commission shall terminate upon the effective date of the repeal under section 11(c).

SEC. 9. DEFINITIONS.

For purposes of this Act, the following definitions shall apply:

(1) COMMISSION- The term `Commission' means the National Commission on Catastrophe Risks and Insurance Loss Costs established under section 8.

(2) COVERED PERILS- The term `covered perils' means the disaster perils under section 4.

(3) COVERED PURCHASER- The term `covered purchaser' means, with respect to reinsurance coverage made available under a contract under section 5, the purchaser of the contract auctioned under such section or any subsequent holder or holders of the contract.

(4) DISASTER AREA- The term `disaster area' means a geographical area, with respect to which--

(A) a covered peril has occurred; and

(B) a declaration that a major disaster exists, as a result of the occurrence of such peril--

(i) has been made by the President of the United States; and

(ii) is in effect.

(5) ELIGIBLE LOSSES- The term `eligible losses' means losses in excess of the sustained and retained losses, as defined by the Secretary after consultation with the Commission.

(6) PRICE GOUGING- The term `price gouging' means the providing of any consumer good or service by a supplier for a price that the supplier knows or has reason to know is greater, by at least the percentage set forth in a State law or regulation prohibiting such act (notwithstanding any real cost increase due to any attendant business risk and other reasonable expenses that result from the major disaster involved), than the price charged by the supplier for such consumer good or service immediately before the disaster.

(7) QUALIFIED LINES- The term `qualified lines' means lines of insurance coverage for which losses are covered under section 3 by reinsurance coverage under this Act.

(8) REINSURANCE COVERAGE- The term `reinsurance coverage under this Act' means coverage under contracts made available under section 5 by the Secretary.

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

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

SEC. 10. REGULATIONS.

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

SEC. 11. TERMINATION.

(a) In General- Except as provided in subsection (b), the Secretary may not provide any reinsurance coverage under this Act covering any period after the expiration of the 10-year period beginning on the date of the enactment of this Act.

(b) Extension- If upon the expiration of the period under subsection (a) the Secretary, in consultation with the Commission, determines that continuation of the program for reinsurance coverage under this Act is necessary to carry out the purpose of this Act under section 2(b) because of insufficient growth of capacity in the private homeowners' insurance market, the Secretary shall continue to provide reinsurance coverage under this Act until the expiration of the 5-year period beginning upon the expiration of the period under subsection (a).

(c) Repeal- Effective upon the date that reinsurance coverage under this Act is no longer available or in force pursuant to subsection (a) or (b), this Act (except for this section) is repealed.

(d) Deficit Reduction- The Secretary shall cover into the General Fund of the Treasury any amounts remaining in the Fund under section 7 upon the repeal of this Act.

SEC. 12. ANNUAL STUDY OF COST AND AVAILABILITY OF DISASTER INSURANCE AND PROGRAM NEED.

(a) In General- The Secretary shall, on an annual basis, conduct a study and submit to the Congress a report on the cost and availability of homeowners' insurance for losses resulting from catastrophic disasters covered by the reinsurance program under this Act.

(b) Contents- Each annual study under this section shall determine and identify, on an aggregate basis--

(1) for each State or region, the capacity of the private homeowners' insurance market with respect to coverage for losses from catastrophic disasters;

(2) for each State or region, the percentage of homeowners who have such coverage, the disasters covered, and the average cost of such coverage;

(3) for each State or region, the progress that private reinsurers and capital markets have made in providing reinsurance for such homeowners' insurance;

(4) for each State or region, the effects of the Federal reinsurance program under this Act on the availability and affordability of such insurance; and

(5) the appropriate time for termination of the Federal reinsurance program under this Act.

(c) Timing- Each annual report under this section shall be submitted not later than March 30 of the year after the year for which the study was conducted.

(d) Commencement of Reporting Requirement- The Secretary shall first submit an annual report under this section not later than 2 years after the date of the enactment of this Act.

END