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merce, by providing direct governmental insurance of certain flood risks or by making insurance of such risks available through private insurance companies by means of governmental reinsurance.

FUNCTIONS

Sec. 3. (a) To carry out the purposes of this Act, the Administrator of the Small Business Administration (hereinafter referred to as "the Administrator") is authorized to provide, upon the payment of such premiums and subject to such terms and conditions as he may establish, either insurance or reinsurance, or both insurance and reinsurance, against damage to or loss of privately owned real property, including commercial, industrial, and residential property, due to any flood as defined by the Administrator occurring within the limits of the United States, its Territories and possessions, with such general exceptions as the Administrator may deem advisable, whenever in the opinion of the Administrator such insurance or reinsurance cannot be obtained at reasonable rates or upon reasonable conditions from approved companies authorized to do insurance business in any State, Territory, or possession of the United States: Provided, That such program of insurance shall be so administered as not to serve as an inducement for unwarranted acquisition of facilities in areas which are subject to recurring floods.

(b) The Administrator shall from time to time prescribe (1) uniform premium rates for each type of insurance and/or reinsurance which he shall make available under authority of this Act for each type or class of property to be insured, and (2) the terms and conditions under which and the areas and subdivisions thereof within which each rate shall be applicable. All such rates shall be based insofar as practicable upon consideration of the risks involved and shall to the extent deemed practicable by the Administrator be adequate to cover all administrative and operating expenses arising under this Act, as well as reserves for probable losses. The Administrator may receive from or exchange with any State or Territorial insurance commission or agency or with any private corporation or association engaged in the writing of insurance against property loss within the United States such loss experience and other information as may be necessary for the establishment of such premium rates.

(c) The Administrator shall by regulation provide for the determination of (1) the types and location of property with respect to which insurance and/or reinsurance shall be granted, (2) the nature and limits of loss or damage in any area or subdivision thereof which may be covered by such insurance or reinsurance, (3) rates, terms, and conditions of such insurance or reinsurance, and (4) such other matters as may be necessary to carry out the purposes of this Act. The Administrator may decline such applications and risks and may establish from time to time such regulations with respect to the classification, limitation, and rejection of applications and risks as he shall deem advisable in order to carry out the purposes of this Act.

(d) In providing insurance and/or reinsurance, the Administrator may by contract arrange for the financial participation of any person or company authorized to do insurance business in any State of the United States in the underwriting of risks assumed, and for their proportionate participation in premiums and in any profits or losses realized or sustained. The Administrator shall utililize the facilities and services of private insurance companies, established insurance agents and brokers and established insurance adjustment organizations to the fullest extent possible, consistent with minimum cost of providing insurance protection.

(e) The aggregate amount of insurance issued by the Administrator covering the loss of or damage to any single piece of real property shall not exceed $230,000. No claim shall be approved in an aggregate amount which exceeds the actual cash value or the cost of replacing, repairing, or rebuilding the damaged property with material of like kind and quality (less depreciation at the time of damage), whichever is lower: Provided, That the approved amount of any claim shall be reduced by $300 plus 10 per centum of the remainder, or by such larger amount or percentage as may be prescribed by the Administrator in the insurance contract. The Administrator shall prescribe such regulations applicable to reinsurance as he may deem appropriate to give effect to the intent of the limitations in this subsection. The Administrator may from time to time prescribe such regulations regarding coverage available to subsidiary and affiliated corporations as it shall deem appropriate to effectuate the purpose of this subsection.

(f) The Administrator, on and after the first day of the sixth month following the enactment of this Act, may provide insurance or reinsurance in an aggregate amount not to exceed $500,000,000 outstanding and in force at any one time, which limit may be increased, with the approval of the President, by further amounts of $500,000,000 each on July 1, 1957, and July 1, 1958.

FINANCING

SEC. 4. (a) To carry out the functions authorized by this Act, there is authorized to be established in the Treasury of the United States a National Flood Insurance Fund (referred to hereinafter as the “Fund"). The capital of the Fund sball consist of such amounts as may be advanced to it from appropriations. Such sums as may be required are authorized to be appropriated without fiscal year limitations for the purposes of the Fund.

(b) Advances shall be made to the Fund from the appropriations made therefor only when requested by the Administrator, with the approval of the President. The Administrator shall pay into miscellaneous receipts of the Treasury, at the close of each fiscal year, interest on such advances at a rate determined by the Secretary of the Treasury, taking into consideration the average rate on outstanding interest-bearing marketable public debt obligations of the United States

(c) Premiums paid to the Administrator for insurance and reinsurance under this Act, interest earned on investments of the Fund, and receipts from any other operations under this Act, including salvage operations, shall be credited to the Fund. The Fund shall be available for the payment of liabilities under such insurance and reinsurance and for payment of all expenses of the Administrator under this Act.

(d) Whenever any capital in the Fund is determined by the Administrator to be in excess of its current needs, such capital shall be credited to the appropriation from which advanced where it shall be held for future advances. After liquidation of all outstanding advances, any cash in excess of current needs may be invested or reinvested by the Administrator in interest-bearing obligations of the l'nited States or in obligations guaranteed as to interest and principal by the United States. The proceeds from the sale or redemption of the obligations held by the Administrator pursuant to this Act shall be credited to the Fund.

PAYMENT OF CLAIMS Sec. 5. Under such regulations as the Administrator may prescribe, he shall adjust and pay valid claims either directly or through agents for losses covered by insurance and reinsurance under this Act. The Administrator shall collect from participating insurance companies such amounts as they may be obligated to contribute toward such losses.

COORDINATION WITH OTHER PROGRAMS SEC. 6. (a) In carrying out the functions authorized in this Act, the Administrator shall consult with other agencies of the Federal Government and interstate, State, and local agencies having responsibilities for flood control and flood damage prevention in order to assure that the insurance facilities offered are consistent with the programs of such agencies, and shall utilize the facilities and services of these and other public agencies to the fullest extent possible.

(b) No insurance or reinsurance shall be issued (1) for risks eligible for insurance provided by other Federal programs, or to the extent that coverage is available on reasonable terms from other private or public sources, or (2) for properties whose use is in conflict with State or local flood zoning laws.

ic) Any department or agency of the Federal Government engaged in making direct loans or advances, or in participating in, insuring, or guaranteeing loans made by private lending institutions, for the construction, modernization, repair, or purchase of property eligible for insurance under this Act may require as a condition for such future financial assistance that such property be insured against flood damage to the extent such insurance is available.

INSURANCE ADVISORY COMMITTEE

Sec. 7. The Administrator shall appoint an advisory committee, consisting of not less than six individuals experienced in the writing of insurance against property loss, to advise him with respect to the execution of his functions pursuant to this Act.

SECTIONAL ANALYSIS OF NATIONAL FLOOD INSURANCE ACT OF 1956 (PROPOSED

KENNEDY-SALTONSTALL BILL)

Short title

National Flood Insurance Act of 1956. Section 2. Declaration of purpose

To promote national welfare by alleriating economic distress in United States from floods and impairment of interstate and foreign commerce by providing direct Government insurance of certain flood risks or Government reinsurance. Section 3. Functions

(a) The Small Business Administrator is authorized to provide insurance and reinsurance against damage to privately owned real property (whether commercial, industrial, or residential) due to flood within the United States, its Territories and possessions. Such insurance and reinsurance will be issued only when the Administrator believes it is not obtainable at reasonable rates or on reasonable conditions from insurance companies. The Administrator may make general exceptions from the program and shall handle it so as not to induce unwarranted acquisition of facilities in areas subject to recurring floods. The Administrator shall establish the terms and conditions and require premiums.

(b) The Administrator shall prescribe (1) uniform premium rates for each type of insurance and reinsurance offered for each type or class of property covered, and (2) terms and conditions under which each rate applies and the areas and subdivisions within which it applies. Rates shall be based as far as practicable upon consideration of risks involved. To the extent the Administrator deems practicable, rates shall be adequate to pay administrative and operating expenses, plus loss reserves. The Administrator may receive from, and exchange with any State or Territorial insurance commission or agency or private property-insurance corporation or association, loss experience and other information necessary to establish premium rates.

(c) The Administrator shall regulate (1) types and location of property insured or reinsured, (2) nature and limits of damage in any area or subdivision coverable by insurance or reinsurance, (3) rates, terms, and conditions, and (4) other necessary matters. The Administrator may decline applications and risks and establish regulations as to classification, limitation, and rejection of applications and risks as he deems advisable.

(d) The Administrator may contract for financial participation of any person or company authorized to write insurance in United States in underwriting risks, and for share in premiums and profits or losses. The Administrator shall use facilities and services of private insurance companies and establish agents, brokers, and adjustment organizations to fullest possible extent consistent with minimum cost of insurance.

(e) Limit of insurance under this act for any piece of real property is $250,000. No claims shall be approved in excess of the lower of (1) actual cash value or (2) cost of replacing damaged property with similar material (less depreciation). Minimum loss deductible is $300 plus 10 percent of remainder. The Administrator may increase this amount. His reinsurance regulations shall carry out limits set in this section. The Administrator may regulate coverage for subsidiary and affiliated corporations.

(f) On first day of sixth month after passage of act, the Administrator may provide insurance or reinsurance to limit of one-half billion dollars outstanding. This may be increased with Presidential approval by one-half billion dollars each on July 1 in 1957 and 1958. Section 4. Financing

(a) Authorizes establishment of national flood insurance fund in United States Treasury, supplied by appropriation, Authorizes appropriations required without fiscal year limits.

(b) Appropriations shall be placed in fund upon Administrator's request, with President's approval. The Administrator shall pay interest to United States Treasury on appropriations so used. Interest rate Secretary of the Treasury sets shall reflect average rate on United States public debt obligations.

(c) Premiums, interest earned on fund investments, and salvage and other operating receipts go into fund. The fund is available for insurance and reinsurance liabilities and operating expenses.

(d) Administrator may credit to appropriation for future use any excess capital in the fund. Excess cash in fund may be invested in United States obligations proceeds going to fund. Section 5. Payment of claims

The Administrator shall adjust and pay valid claims directly or through agents. He shall collect amounts due from participating insurance companies. Section 6. Coordination with other programs

(a) The Administrator shall consult Federal agencies and interstate, State and local flood-control agencies to assure that flood insurance offered will be consistent with their programs. He shall use the facilities and services of these and other public agencies as much as possible.

(b) No insurance or reinsurance shall be issued (1) for risks eligible for other Federal insurance or to the extent coverage can be had from other public or private sources on reasonable terms, or (2) for properties used in conflict with State or local flood zoning laws.

(c) Any Federal agency lending or advancing money or participating in, insuring or guaranteeing loans by private lenders for construction, repair or purchase of property may in future require carriage of flood insurance on the property, if eligible, as condition for such aid. Section 7. Insurance Advisory Committee

The Administrator shall name an advisory committee of six or more persons experienced in writing property insurance. The committee will advise the Administrator about carrying out his functions under this act.

[Committee print, October 25, 1955, intended to be proposed by Mr. Carlson]

(S. 84th Cong., 2d sess.) A BILL To establish a National Disaster Insurance Corporation, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "National Disaster Insurance Corporation Act of 1956".

DECLARATION OF PURPOSE

SEC. 2. It is the purpose of this Act to promote the national welfare by alleviating the widespread economic distress suffered from time to time within the United States from certain national disasters, and the attendant impairment of the free flow of interstate and foreign trade and commerce, by providing, through a program of reinsurance of insurance companies, for reasonable cost insurance against property loss or damage caused by flood, tidal wave, earthquake, or hurricane.

ESTABLISHMENT OF CORPORATION SEC. 3. (a) To carry out the purposes of this Act, there is hereby created as an agency of the United States a body corporate to be known as the National Disaster Insurance Corporation (hereinafter referred to as the “Corporation"). The principal office of the Corporation shall be located in the District of Columbia, but agencies or branch offices, may be established elsewhere in the United States under rules and regulations prescribed by the Board of Directors.

(b) The Corporation shall have a nonassessable capital stock of $50,000,000 subscribed by the United States of America. There is hereby authorized to be appropriated to the Secretary of the Treasury not more than $50,000,000 for the purpose of subscribing to such stock. Receipts for payments by the l'nited States of America for or on account of such stock shall be issued by the Corporation to the Secretary of the Treasury, and shall be evidence of the stock ownership by the United States of America. Sums so received by the Corporation shall be deposited to its credit in the National Disaster Insurance Fund established by section 10 of this Act.

MANAGEMENT AND PERSONNEL

SEC. 4. (a) The management of the Corporation shall be vested in a Board of Directors (hereinafter called the “Board”) consisting of three persons appointed by the President of the United States by and with the advice and consent of the Senate, one of whom shall be designated by the President as Chairman of the Board. Not more than two members of the Board shall be members of the same political party. Each such appointment shall be for a term of six years, except that (1) the directors first appointed shall be appointed for terms of two, four, and six years, respectively, and (2) whenever a vacancy shall occur other than by expiration of term, the person appointed to fill such vacancy shall hold office for the unexpired portion of the term of his predecessor. The Chairman shall receive a salary at the rate of $16,000 per annum, and other directors at the rate of $15,000 per annum.

(b) Each director shall devote his time principally to the business of the Corporation. No person shall hold office as a director of the Corporation while holding any office, position, or employment in any privately or publicly owned insurance company.

(c) So long as there shall be two members in office, vacancies shall not impair the powers of the Board tu execute the functions of the Corporation, and two of the members in office shall constitute a quorum.

Sec. 5. Within the limitation of appropriated funds, the Board shall (1) select, appoint, employ, and fix the compensation of such officers, attorneys, experts, employees, and agents as shall be necessary for the transaction of the business of the Corporation, (2) define their authority and duties, (3) delegate to them such of the powers vested in the Corporation as the Board may determine, (4) require bond of such of them as the Board may designate, and (5) fix the penalties and pay the premiums of such bonds.

SEC. 6. (a) The Board may appoint from time to time (1) an advisory committee, consisting of not more than five members experienced in the writing of insurance against property loss, to advise the Corporation with respect to the execution of its functions pursuant to this Act, and (2) such part-time consultants and advisory personnel as the Board may deem necessary in carrying out the functions of the Corporation. Persons so appointed who, while so serving, hold other offices or positions under the United States shall receive no additional compensation for such service. Other persons so appointed shall receive (1) while actually so employed, such compensation, not in excess of $50 per diem, as may be determined by the Board, and (2) actual necessary traveling and subsistence expenses, or a per diem allowance in lieu thereof.

(b) Service of an individual under this section shall not be deemed subject to the provisions of section 281 or 283 of the United States Code, unless the conduct made unlawful by such section is performed with respect to a matter in which the Corporation is directly involved.

GENERAL POWERS

Sec. 7. The Corporation

(a) shall have succession in its corporate name until dissolved by or pursuant to an Act of Congress ;

(b) may adopt, alter, and use a corporate seal, which shall be judicially noticed ;

(c) may adopt, amend, and repeal bylaws, rules, and regulations for the conduct of its business and the exercise of the powers granted to it by law;

(d) may make contracts and purchase, lease, hold, and dispose of such real and personal property as may be necessary and incident to the conduet of its business ;

(e) may sue and be sued in its corporate name in any State or Federal court of competent jurisdiction;

(f) may conduct or cause to be conducted such researches, surveys, and investigations as may be determined by the Board to be necessary and incident to the performance of its functions or the exercise of its powers :

(g) with the consent of any board, commission, independent establishment, or executive department of the Government, including any field service thereof, or of any wholly-owned or mixed-ownership Government corporation, may avail itself of the use of information, services, facilities, officers, and employees thereof in carrying out the provisions of this Act;

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