to select the plan or plans of reinsurance which he believes will best effectuate the purposes of the act. Reinsurance is to be provided only where such insurance would not otherwise be available. Section 202 This section authorizes the Administrator to prescribe premium rates for reinsurance made available under the act. The premium rates shall be based on the risks involved and must be adequate, in the judgment of the Administrator, to establish a reserve for all losses. No consideration shall be given to administrative expenses in establishing such rates. The rates shall be uniform throughout the United States for similar risks. Section 203 This section authorizes the Administrator to issue regulations pertaining to reinsurance. He is given specific authority to determine by regulation the terms and conditions of policies of insurance against flood risks, which are to be issued by private companies who are reinsured under the act, including (1) the types of property to be covered, (2) the maximum premium rate to be charged, and (3) the nature and limits of losses to be covered. Section 204 Under this section the Administrator is prohibited from providing reinsurance when it is available at reasonable rates and upon reasonable terms from private sources. Section 205 This section provides that reinsurance in force at any one time shall not exceed $100 million. TITLE III-ADMINISTRATION AND FINANCING Section 301-Federal Flood Indemnity Administration Subsection (a) establishes in the Housing and Home Finance Agency a new constituent unit to be known as the Federal Flood Indemnity Administration. The new unit is to be headed by a Commissioner appointed by the Administrator, who is to receive the same rate of compensation as the commissioners of other constituents of this Agency. Subsection (b) makes the Federal Flood Indemnity Administration subject to the Government Corporation Control Act, as amended, in the same manner as wholly owned corporations. Subsection (c) provides that the Administrator, in carrying out his functions under the act, shall maintain an integral set of accounts which shall be audited annually by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions, as provided by the Government Corporation Control Act, as amended. It provides further that no other audit shall be required. Certain financial transactions of the Administrator, such as the issuance of indemnity contracts, and the making of reinsurance agreements, and the approval of vouchers by the Administrator in connection with such financial transactions are made final and conclusive on all officers of the Government. Section 302-financing This section authorizes the Administrator to establish a Federal flood indemnity fund and a Federal flood reinsurance fund. Indemnity fees and State and Federal contributions under section 102 of the act are to be deposited in the Federal flood indemnity fund and reinsurance premiums are to be deposited in the Federal flood reinsurance fund. The Administrator is authorized to invest the moneys in such funds, and the income from these investments, together with the proceeds from any properties acquired under either the indemnity or reinsurance programs, shall be deposited in the respective funds. Section 303 This section authorizes the Administrator to borrow from the Secretary of the Treasury an amount not exceeding $500 million at any one time, to finance the activities under the act, by the issuance of notes and other obligations. The terms of such obligations are to be prescribed by the Administrator with the approval of the Secretary of the Treasury. Provision is also made for the interest rate on such notes or obligations. Funds borrowed under this subsection are to be deposited in the Federal flood indemnity fund and the Federal flood reinsurance fund in such proportions as the Administrator deems feasible. Section 304 The Federal Flood Indemnity Fund is to be used to pay approved claims for losses under indemnity contracts as well as other expenses (excluding administrative expenses) incurred under title I of the act. The Federal Flood Reinsurance Fund is to be used to pay approved claims under reinsurance agreements and other expenses (excluding administrative expenses) incurred under title II of the act. The respective funds are also to be used to repay sums borrowed from the Secretary of the Treasury. This section also authorizes the appropriation of moneys for administrative expenses of the Federal Government under the act. Section 305 This section provides that the Secretary of the Treasury shall pay any valid claim under either an indemnity contract or a reinsurance agreement if the Administrator is unable to pay the same and authorizes money to be appropriated for this purpose out of any money in the Treasury not otherwise appropriated. TITLE IV--GENERAL PROVISIONS Section 401-Participation by private companies and public agencies Under this section the Administrator, in providing indemnities and reinsurance under this act, is authorized and directed to use the facilities and services of private insurance companies, established insurance agents and brokers, established insurance adjustment organizations and other public agencies insofar as practicable, consistent with minimum cost of providing such protection. He is authorized to pay reasonable compensation for such services. Section 402 This section directs the Administrator to develop means of expanding the reinsurance program and facilitating the assumption of flood risks by private carriers. In performing this function he shall consult with representatives of the insurance industry and make necessary studies and investigations. Section 403 This section provides that on or before January 3, 1961, the Administrator is required to make a report to the President for submission to the Congress concerning all operations under the act, including the extent to which private insurance companies have participated in the indemnity and reinsurance programs, and to make such recommendations as he considers appropriate. The report must contain either a legislative proposal for the termination of the Government indemnity and reinsurance program and for the assumption of flood risks by private carriers, or an explanation as to why such legislation would not be feasible or desirable. Section 404-Payment of claims Subsection (a) authorizes the Administrator to adjust, compromise, and pay claims (under indemnity contracts and reinsurance agreements), either directly or through agents. Claims shall not be approved in excess of the actual cash value of the damaged or lost property or the cost of replacing, repairing, or rebuilding the property with material of like kind and quality (less depreciation at the time of damage or loss) whichever is lower. Subsection (b) permits the claimant to sue the Administrator if a claim is disallowed in whole or in part. The suit must be brought within 1 year after the date of mailing the notice of disallowance. Suits must be brought in the United States District Court for any district in which the property or a part thereof is located. The Administrator is required to appoint agents upon whom service of process may be made. The United States District Courts are given exclusive jurisdiction to determine such actions without regard to the amount in controversy. The courts shall sit without juries in such cases. Section 405-Coordination with other programs Subsection (a) authorizes the Administrator to consult with Federal interstate, State, and local agencies having responsibilities for land use, flood control, flood zoning, and flood damage prevention, for the purpose of coordinating the respective programs. The Secretary of Agriculture and the Administrator are directed to coordinate the administration of their respective programs concern, ing indemnities, insurance, and reinsurance on agricultural commodities. 922 Under subsecton (b) the Admiinstrator is authorized to receive from or exchange with State insurance commissions and private insurance companies information pertaining to the problems of indemnities and reinsurance. Section 406-Addtional powers Under subsection (a) the Administrator may sue or be sued. Subsection (b) authorizes the Admiinstrator to enter into and perform contracts, leases, or other transactions on such terms as he deems appropriate, with Federal agencies or with any State or agency or political subdivision thereof and with private persons, firms, or corporations. He may consent to the modification of such agreements and make progress payments in connection therewith. Subsection (c) authorizes the Administrator to acquire real and personal property by purchase, lease, or donation, and to make advance or progress payments in connection therewith. He is also authorized to sell, lease, or otherwise dispose of such property and to use, maintain, and insure such property. Subsection (d) authorizes the Administrator to appoint, pursuant to civil service regulations and laws, officers, attorneys, and employees and to fix their compensation; define their authority and duties; to require bonds of them and to delegate to them and authorize successive redelegation by them of the powers vested in him by the act. These positions Subsection (e) authorizes the Administrator to establish 1 position in grade 17 and 2 in grade 16, in carrying out his functions under this act. are in addition to any position presently allocated to the Housing and Home Finance Agency under section 505 of the Classification Act of 1949. The Administrator is authorized under subsection (f) to make necessary investigations, surveys, and researches pertaining to flood indemnities and reinsurance. Subsection (g) authorizes the Administrator to issue such rules and regulations as he deems necessary. Under subsection (h) the Administrator is authorized to exercise all powers specifically granted and such incidental powers as are necessary to carry out the purposes of the act. Section 407-Exemption of claims from levy This section provides that all claims under either indemnity contracts or reinsurance agreements for losses shall not be liable to attachment, levy, or garnishment or any other legal process or to deduction because of any indebtedness of the insured or his estate to the United States, except claims of the United States under the act. Section 408-Reservation of rights in real estate acquired Under this section any State or political subdivision shall not be deprived of its civil or criminal jurisdiction concernng real property acqured by the Administrator under this act nor shall such acquisition impair the civil rights of the inhabitants concerning such property under State and local laws. Section 409-Taxation This section provides that nothing in the act shall be construed to exempt property, acquired by the Administrator in connection with claims under indemnity contracts and reinsurance agreements, from local taxation. Section 410-Separability of provisions This section contains the usual separability clause. [S. 3137, 84th Cong., 2d sess.] A BILL To provide insurance against flood damage, and for other purposes FINDINGS AND DECLARATION OF PURPOSE With speSEC. 2. (a) The Congress finds that in the case of recurring natural disasters, including recurring floods, insurance protection against individual and public loss is not always practically available through private or public sources. cific, reference to insurance against flood loss, the Congress finds that insurance against certain losses resulting from this peril is not so available. Since preventive and protective means and structures against the effects of these disasters can never wholly anticipate the geographic incidence and infinite variety of the de structive aspects of these forces, the Congress finds that the safeguards of insurance are a necessary adjunct of preventive and protective means and structures. Inasmuch as these disasters impede interstate and foreign commerce, hamper national defense, and cause widespread distress and hardship adversely affecting the general welfare, without regard to State boundary lines, and in the absence of insurance protection from private or public sources, the Congress ought to provide for such protection in the case of flood, and study the feasibility and need for similar programs in the case of other forms of natural disaster against which insurance protection is not generally and practically available. (b) (1) It is the purpose of this Act to authorize and direct the establishment of a program of Federal insurance and reinsurance against the risks of loss resulting from flood as hereinafter defined, and to require a study and report on insurance and reinsurance against still other natural disaster perils hereinafter defined and specified, to the extent that such insurance or reinsurance is not available on reasonable terms and conditions from other public or private sources; and (2) It is the purpose of this Act to encourage private insurance companies to write insurance covering the extent of the risk above $10,000 in the case of residential property, as defined in section 8 (a) (1), and the risk above $100,000 for any other property, as defined in section 8 (a) (2), and to provide Federal reinsurance to the extent desirable and necessary to carry out this purpose. FEDERAL FLOOD INSURANCE ADMINISTRATION SEC. 3. (a) To carry out the functions authorized by this Act, there is hereby created, as a constituent agency of and within the Housing and Home Finance Agency, an agency to be known as the Federal Flood Insurance Administration (hereinafter referred to as the "Administration"), which shall be headed by a Federal Flood Insurance Commissioner (hereinafter referred to as the "Commissioner") to be appointed by the President, by and with the advice and consent of the Senate, who shall be paid at the same basic rate of compensation established for the commissioners of the other constituent agencies or units of the Housing and Home Finance Agency. The management of the Administration shall be vested in the Commissioner. The Housing and Home Finance Administrator shall be responsible for the general supervision and coordination of the functions of the Administration with the functions of other constituent agencies and units of the Housing and Home Finance Agency, but, notwithstanding any other provisions of law, the Commissioner shall establish general operating policies of the Administration and, unless hereafter expressly authorized by law, none of the functions of the Administration shall be reassigned nor shall any of its administrative funds be reallocated. (b) Section 101 of the Government Corporation Control Act, as amended, is hereby amended by inserting "Federal Flood Insurance Administration;" after "Federal Housing Administration ;". (c) In the performance of, and with respect to, the functions, powers, and duties vested in him by this Act, the Commissioner, notwithstanding the provisions of any other law, shall maintain an integral set of accounts which shall be audited annually by the General Accounting Office in accordance with the principles and procedures applicable to commercial transactions as provided by the Government Corporation Control Act, as amended, and no other audit shall be required: Provided, That such financial transactions of the Commissioner as the issuing of insurance policies and the making of reinsurance agreements, and vouchers approved by the Commissioner in connection with such financial transactions, shall be final and conclusive upon all officers of the Government. AUTHORITY TO INSURE AND REINSURE SEC. 4. To aid in carrying out the purposes of this Act, the Commissioner is authorized and directed to provide insurance and reinsurance against loss resulting from damage to or destruction of real or personal property (including property owned by State or local governments) due to flood, as hereinafter defined, occuring within the United States (including the District of Columbia), its Territories, and possessions and the Commonwealth of Puerto Rico. PREMIUM RATES SEC. 5. The Commissioner shall from time to time to time prescribe (1) premium rates for each type of insurance and reinsurance he shall make available under authority of this Act, and (2) terms and conditions upon which and areas (including subdivisions thereof) within which each rate shall apply. Such rates shall be based insofar as practicable upon consideration of the risks involved and upon calculations of amounts needed to cover all administrative and operating expenses arising under this Act, as well as reserves for probable losses, to be accumulated over a reasonable period of years, but such basis shall be used only to such extent as in the judgment of the Commissioner shall be consistent with the aim of offering insurance and reinsurance at rates reasonable enough to make available to those who need it, at rates they can afford, the protection intended to be provided by this Act. PROPERTY AND LOSS LIMITS SEC. 6. The Commissioner is authorized to provide for the determination of types and location of property with respect to which insurance or reinsurance shall be made available under this Act, the nature and limits of loss or damage in any area (including subdivisions thereof) which may be covered by such insurance or reinsurance, and such other matters as may be necessary to carry out the purposes of this Act. RISK CLASSIFICATION SEC. 7. (a) During a reasonable period of time following the effective date of this Act, the Commissioner may grant a processing preference to any original application for insurance filed hereunder, over any subsequent application for insurance hereunder filed by a person whose original application for such insurance has been granted. (b) The Commissioner may from time to time establish appropriate regulations regarding the classification and limitation of risks assumed by him under authority of this Act. POLICY AND PROGRAM LIMITS SEC. 8. (a) The aggregate face amount of insurance issued by the Commissioner under this Act against loss of or damage to (1) any one residential property (including personal property thereon) designed for occupancy by one to four families shall not exceed $10,000, and (2) any other single piece of real property and any other personal property in any single location shall not exceed $100,000. No claim for loss shall be approved which exceeds the lesser of (1) the actual value of the insured property at time of loss or (2) the cost of replacing, repairing, or rehabilitating the property destroyed or damaged with material of like kind and quality in such a manner as to restore it to the condition it was in at the time such destruction or damage occurred. Each insurance policy issued by the Commissioner shall contain a loss-deductible clause relieving him from any liability for paying the first $100 of a proved and approved claim for loss, or such greater amount in multiples of $25, not exceeding $200, as may be specified by the Commissioner upon issuance of the insurance policy. (b) The liability of the Commissioner under insurance or reinsurance outstanding and in force at any one time under this Act shall not exceed $1,000,000,000: Provided, That such limit shall be increased by further amounts of $1,000,000,000 each on July 1, 1957, and July 1, 1958. REINSURANCE REGULATORY AUTHORITY SEC. 9. (a) The Commissioner is authorized to issue such regulations regarding reinsurance under this Act as he deems advisable in order to carry out the purposes of this Act. (b) The premium rate and terms and conditions of any policy reinsured under the provisions of this Act shall be subject to aproval by the Commissioner. (c) The Commissioner shall use his best efforts to encourage private insurance companies to undertake the issuance of insurance policies covering that portion of the loss in excess of the limits specified in section 8 (a) of this Act resulting from damage to or destruction of real or personal property due to flood as defined in this Act. The Commissioner shall seek to achieve this end by offering a program of appropriate reinsurance within the authority granted him by this Act. (d) Wherever practicable, the Commissioner shall encourage, by offering suitable reinsurance subject to the provisions of this Act, the issuance by private insurance companies of policies insuring against loss resulting from damage to or destruction of real or personal property due to flood. |