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(6) 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;

(7) 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;

(8) may receive from or exchange with any State 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 information as may be necessary to the establishment of premium rates for reinsurance authorized to be issued by the Corporation upon a sound actuarial basis and upon the lowest practicable level;

(9) shall be entitled to use of the United States mails without prepayment of postage; and

(10) may exercise, by the Board or duly authorized officers or agents of the Corporation, all powers specifically granted by the provisions of this Act and such incidental powers as are necessary to carry out the functions and powers of the Corporation.


SEC. 7. The Corporation is authorized to provide insurance or reinsurance, or both, against damage to, or loss of, real and personal property (excluding property owned by Federal, State, and local governments) due to natural disasters occurring within the United States and its Territories and possessions. Such insurance and reinsurance will provide cash reimbursement to the insured.


SEC. 8. (a) The Corporation is also authorized to enter into loan contracts pursuant to which—

(1) the Corporation will guarantee in whole or in part any public or pri vate financing institution against loss in connection with any loan (including interest thereon) by such institution to any party for the purpose of financing such party in connection with any loss of or damage to real and personal property as a result of a natural disaster; and

(2) if any such loan from such institution is not obtainable or available, to make a loan directly, without interest or other charges, to such party, upon application therefor, in an amount not to exceed the amount of such loss or damage.

(b) In connection with any contract of guaranty authorized by paragraph (1) of subsection (a) of this section, the Corporation may enter into any such contract through the agency of private insurance companies or any Federal Reserve bank. Any Federal Reserve bank may also act as fiscal agent of the United States in carrying out any such contract of guaranty with funds supplied and disbursed by the Corporation out of the National Disaster Insurance Fund. Each such bank and private insurance company shall be reimbursed by the Corporation for all administrative expenses incurred in connection with its functions under this subsection including attorneys' fees and expenses of litigation. Such contracts of guaranty shall contain provisions limiting the amount of guaranty and such terms and conditions and require such monetary consideration therefore as the Corporation may prescribe. Such monetary consideration shall be in the lowest practicable amount.

(c) Loans under paragraphs (1) and (2) of subsection (a) of this section shall be on an extended, long-term basis if so requested by the party to whom such loan is to be made.


SEC. 9. The Corporation is also authorized and directed to establish, under such regulations as it may prescribe, a program combining direct insurance and loans in order to provide the greatest variety and amount of protection against loss and damage due to natural disaster to the greatest number of affected parties in accordance with individual needs.


SEC. 10. (a) The Corporation shall prescribe premium rates for the insurance and reinsurance authorized by this act upon consideration of (1) the risks involved and (2) the desirability in the public interest of provinding insurance protection which would not otherwise be available.

(b) The Corporation shall by regulation provide for the determination of (1) the types of property with respect to which insurance, reinsurance, and loans will be granted, (2) the nature and limits of losses or damage which may be covered by such insurance, reinsurance and loans, and (3) such other matters as may be necessary to carry out the purposes of this Act.

(c) Insurance, reinsurance, and loans shall be provided by the Corporation under this Act only to the extent that they are not otherwise available at reason. able rates and upon reasonable conditions from private sources. In providing such insurance and reinsurance, the Commission shall utilize the facilities and services of private insurance companies to the maximum extent practicable.

(d) The Corporation 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 and its Territories and possessions such loss experience and other information as may be necessary for the establishment of premium rates under this Act.

(e) The Corporation 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 may be advisable to carry out the purposes of this Act.


SEC. 11. (a) Insurance, reinsurance, and loans shall be provided under this Act only with respect to amounts exceeding the first $ of the approved claim.

(b) The aggregate amount of insurance or reinsurance under this Act covering loss of or damage to a single item of property shall not exceed $250,000. The amount of each loan (including interest thereon) covered by contracts of guar anty entered into by the Corporation and the amount of each direct loan made by the Corporation, shall not exceed $1,000,000.

(c) The aggregate amount of insurance and reinsurance by the Corporation under this Act outstanding and in force at any one time shall not exceed $1,000,000,000. The aggregate amount of direct and guaranteed loans under this Act outstanding and in force at any one time shall not exceed $2,000,000,000. Each such aggregate amount may be increased, with the approval of the President, by not to exceed $500,000,000 in any one fiscal year.


SEC. 12. Under such regulations as the Corporation may prescribe it shall adjust and pay valid claims for losses covered by insurance, reinsurance, and contracts of guaranty under this Act. In the investigation of claims under this Act, the Corporation is authorized, by contract or otherwise, to utilize the facilities, services, information, and agency of private insurance companies. Upon disallowance by the Corporation of any such claim, the claimant, within one year after the date of mailing of notice of disallowance by the Corporation, may institute an action on such claim in the United States district court for the district in which the insured property or the major part thereof shall have been situated. Exclusive jurisdiction is hereby conferred upon such court to hear and determine such action without regard to the amount in controversy.


SEC. 13. (a) There is hereby established in the Treasury of the United States a fund to be known as the "National Disaster Insurance Fund" (referred to hereinafter as the "fund"). All premiums paid to the Corporation for insurance and reinsurance and monetary considerations for loans under this Act shall be deposited and covered into the Treasury to the credit of the fund, which, together, with interest earned thereon, shall be available for the payment of liabilities under such insurance, reinsurance, loan contracts, and direct loans. Payments from the fund shall be made upon and in accordance with awards by or under authority of the Corporation.

(b) The Corporation is authorized to set aside out of the fund such reserve amounts as may be required under accepted actuarial principles to meet all liabilities under such insurance, reinsurance, loan contracts, and direct loans. The Secretary of the Treasury is authorized to invest or reinvest all or any part of the remainder thereof in interest-bearing obligations of the Government of the United States, or in obligations guaranteed as to principal and interest by such Government, and to sell such obligations for the purposes of such fund.

(c) Administrative expenses of the Corporation shall not be paid from the fund, but out of specific appropriations for such purpose. There is hereby authorized to be appropriated to the Corporation, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the administration and operation of the Corporation.


SEC. 14. (a) The Corporation shall appoint an advisory committee, consisting of not less than twenty members experienced in the writing of insurance against property loss, to advise the Corporation with respect to the execution of its functions under this Act and may also employ such consultants and advisory personnel as the Corporation may deem necessary in carrying out the purpose of this Act. Persons so employed who, while so serving, hold other offices or positions under the Government of the United States or the government of the District of Columbia shall receive no additional compensation for such service. Other persons so employed shall serve without compensation; but they shall be allowed in accordance with the Travel Expense Act of 1949 and the Standardized Government Travel Regulations actual transportation expenses, without regard to section 10 of the Act of March 3, 1933 (5 U. S. C., sec. 73b), and other travel expenses, including not to exceed $50 per diem in lieu of subsistence, while away from their homes or their regular places of business.

(b) Service of an individual under this section shall not be deemed subject to the provisions of section 281 or 283 of title 18 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.


SEC. 15. The Corporation is authorized and directed to collect information with respect to the public need for other types of insurance not presently available from private sources and to study methods of providing a program for making such insurance available to the public. The Corporation shall make a special study of the problems of war damage insurance with a view to the practicability of providing an insurance, reinsurance, and loan program covering the loss of and damage to real and personal property as a result of risks of war and shall report to the Congress the result of such special study as soon as practicable. The Corporation shall submit to the Congress, as soon as practicable before the first day of February each year, a report of its operations under this Act and shall include therein a review of the work, activities, and functions authorized under this Act for the preceding year.


SEC. 16. The Corporation, including its franchise, capital, reserves and surplus, and its income and property, shall be exempt from all taxation now or hereafter imposed by the Government of the United States, any Territory, dependency or possession thereof, any State, county, or municipality, or by any other local taxing authority.


SEC. 17. The Board shall designate an agent upon whom service of process may be made in each State, Territory, or jurisdiction in which property upon which the Corporation has issued insurance may be situated.


SEC. 18. Section 101 of the Government Corporation Control Act is amended (a) by striking out "and" immediately preceding the name "Tennessee Valley Associated Cooperatives, Incorporated," and (b) by inserting immediately after such name a semicolon and the following: "and National Disaster Insurance Corporation."

69096-56-pt. 1——48

Senator LEHMAN. Senator Bush.

Senator BUSH. Has the Congressman given any thought as to whether we should have a term bill here, as has been proposed in some of these proposals, where it might be set up for a period of 3 to 5 years, or whether we should attempt to set up a permanent program?

Mr. DODD. I have thought about it, Senator Bush, and I will tell you just how I thought about it. It is my hope, and I am sure it is the hope of all of us, that we can reduce the incidence of loss by reason of water or flood damage, for example, very greatly, by flood-prevention work. If we ever reached the time where we had very few floods, obviously the need for this type of insurance on water damage would be negligible.

What we can do about earthquakes I do not know. I do not know how you ever prevent them, or how you can prevent hurricanes or tornadoes and other great natural disasters. Thus it seems to me we had better fix it as a permanent thing now, because while you can prevent floods, or the engineers can, I do not know of anybody who can prevent an earthquakes or a tornado. The solution to it may come down the road one of these days and I am sure we will all be glad to see and hear about it. However, for the reason that we do not have any solution to those now, I am of the view that it ought to be permanent.

Senator BUSH. One of the difficult problems the committee has, I think, came up on the question of retroactive recognition in this situation.

Mr. DODD. Yes.

Senator BUSH. Have you given any thought to that?

Mr. DODD. Yes; I have. I would like to restore everybody who ever suffered a loss to the position he or she occupied before the loss. It is an easy thing to say and I am sure it will have great popular appeal to people who have suffered recently. As a practical matter I think it presents the largest of difficulties.

As someone suggested here today, how far back are you going to go? People who suffered this year deserve and will receive our full sympathy and help. But I cannot forget about the people who were terribly hurt in 1954 in the hurricane, and a few years earlier than that also. There have been floods and all kinds of disasters that have occurred.

It seems to me it would be impossible to achieve. If anyone knows an easy way to do it, I will be for it, but I have not been able to think of one.

Senator LEHMAN. I want to compliment you on a very interesting statement. Thank you very much.

Mr. EDELSTEIN. Congressman Seely-Brown.


Mr. SEELY-BROWN. Mr. Chairman, certainly I want to congratulate you and your committee for coming to Connecticut. I think the promptness of your coming is certainly gratifying to all of us here in Connecticut, and we do unite very sincerely in thanking you for making this public hearing possible. In the Congress we are trained

to operate under the 5-minute rule and I hope my training will not be in vain.

Senator LEHMAN. Take as much time as you want, within reason. Mr. SEELY-BROWN. The job of a Congressman certainly involves the responsibility of doing all that he possibly can to protect the lives and livelihood of people. As you have conducted these hearings I have been very pleased to hear you talk in terms of Federal disaster insurance, rather than in terms of Federal flood insurance alone. I look on a Federal disaster-insurance program as basically a job-protection-insurance program. The man who was the hardest-hit man in my district was the man who not only lost his house in the flood, but who lost his job. It was either washed downstream when the factory was destroyed, or was burned up by fires that were caused by the floodwaters.

I think a Federal disaster-insurance program will be of real and vital help to that individual, and certainly a proper program of that type, I am sure, will have the full and united support of the New England delegation.

I personally believe, sir, that the committee at this time may best be served by hearing from the local authorities, who might find it difficult to come to Washington to testify at some later time. So with your permission I will yield the balance of my time, hoping that later in Washington, if necessary, I may appear before you again on behalf of a proper program to help all of the people.

Senator LEHMAN. Thank you very much indeed, Congressman.
Mr. EDELSTEIN. Congressman Cretella, of the third district.


Mr. CRETELLA. Mr. Chairman and members of the committee, I join with my colleagues in expressing my thanks and gratitude for the opportunity to appear before you. I represent the Third Congressional District of Connecticut, bounded on the west by the Hammonasset River and on the east by the Housatonic River.

My district was not really affected physically by the recent floods. However, many of my constituents have all of their interests other than physical property, such as business and business associations, with people of the affected areas. As soon as the first flood arose and came into being, while I say my district was not affected, I traversed all of the fifth district and parts of Congressman Morano's district, which was vitally damaged, to view the damage that was done. In this regard and at this time I want to pay special tribute to Senator Bush, who devoted his time and energy at all times during that flood, and has continued up to the present time. I know he has had ever so many meetings because I have been at some with him, and I know he has devoted all of his energies to this problem.

As for my own position, I have no particular legislation in mind at this time. I am in the same position that you members of the committee are in, in trying to ascertain all the facts in order that proposed legislation may be brought into being. I subscribe, however, to a form of insurance that will cover all types of catastrophes. I know it cannot be all-inclusive, so as to take in every type of catastrophe. When we talk about earthquakes, for instance, how far can we go

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