Hurricane Katrina: Insurance Losses and National Capacities for Financing Disaster Risks

Hurricane Katrina: Insurance Losses and National Capacities for Financing Disaster Risks

Order Code RL33086
Hurricane Katrina: Insurance Losses and National
Capacities for Financing Disaster Risks
Updated January 31, 2008
Rawle O. King
Analyst in Financial Economics and Risk Assessment
Government and Finance Division

Hurricane Katrina: Insurance Losses and National
Capacities for Financing Disaster Risks
Summary
On August 29, 2005, Hurricane Katrina made landfall on the Gulf Coast with
high velocity winds and a 30-foot storm surge accompanied by heavy rainfall.
Katrina has proven to be the most devastating disaster in recent U.S. history,
exceeding Hurricane Andrew (1992) and the terrorist attacks on the World Trade
Center (2001). Coastal towns and cities were flooded, with parts of Mississippi
completely devastated and no buildings left standing in some towns. New Orleans
was deluged by flood water from Lake Pontchartrain and also from the Mississippi
River after levees broke.
Catastrophe-insured losses in 2005 totaled $66.1 billion from 24 disasters.
Estimated insured losses from Katrina alone were $43.6 billion stemming from 1.75
million claims. Despite the severity of storm damages, Hurricane Katrina and other
catastrophes in 2005 did not threaten the solvency and claims-paying ability of the
property/casualty (p/c) insurance industry. Insurers benefitted from favorable market
conditions during the last three years and experienced significant growth in
policyholder surplus. Insurers, in fact, earned record profits in each of the last three
years — 2004-2006.
In the aftermath of Katrina, policymakers, disaster experts, and insurance
company representatives have expressed concerns about the potential vulnerability
of the insurance industry to a future mega-catastrophic event and raised questions
about what role, if any, the federal government should play in financing catastrophe
risks. Most insurance market analysts note that there is no state in the union that is
not subject to catastrophe exposure, and the current state of affairs suggests that the
exposures are far greater than the insurance industry is now prepared to handle.
Although the insurance industry has emerged largely intact from Hurricane
Katrina and is better capitalized now than ever, it simply does not have sufficient
capital to pay for a mega-catastrophe. This fact is not new. Insurers and financial
market experts knew after Hurricane Andrew in 1992 that outside capital was needed
to supplement industry capacity.
As Members of Congress explore ways to respond to the increasing risk and
uninsured losses from tropical storms, earthquakes, and disruptive and costly inland
flooding, they may be called upon to consider federal policy alternatives to build
national capabilities for disaster risk management. Among measures that might be
explored are various legislative proposals to pre-fund the cost of disasters with
insurance or capital market instruments (risk securitization).
This report will be updated as events warrant.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The U.S. Economy and Natural Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Catastrophe Losses from 2005 Hurricanes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Property/Casualty Insurers Withstood Record Catastrophe Losses . . . . . . . . 5
Major Federal Disaster Insurance Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
108th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Concluding Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Tables
Table 1. Ten Most Costly Catastrophes in the United States . . . . . . . . . . . . . . . . 4
Table 2. Property/Casualty Insurance Industry Financial Results:
2002-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Appendix A. Summary of Federal Disasters Insurance Legislation:
1973-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Hurricane Katrina: Insurance Losses and
National Capacities for Financing Disaster
Risks
Introduction
On August 29, 2005, Hurricane Katrina struck several states along the Gulf
Coast from Louisiana to the western edge of the Florida panhandle (including
Mississippi and Alabama), causing deaths, injuries, property and infrastructure
damage, economic loss, and human suffering.1 The storm caused an unprecedented
amount of damage to residential, industrial (largely oil and chemical-related), and
commercial property. Hurricane Katrina was different from other hurricanes because
of the extensive flooding that resulted from a record 30-foot storm surge and the
breaching of three levees that protected New Orleans from Lake Pontchartrain and
the Mississippi River. Katrina left over a million people without electricity,
communications, and drinking water; casualties are expected to number in the
hundreds.2
In the aftermath of Hurricane Katrina, concerns have been expressed by
insurance industry participants, emergency managers, policymakers, and disaster
policy experts about the following:
! the unprecedented property damages and huge recovery costs and
challenges facing the region — Louisiana, Mississippi, and Alabama
— and nation;
! the long-term budgetary implication of federal disaster recovery
expenses, given that the American people will ultimately be
responsible for the cost of Hurricane Katrina through either taxes,
insurance policy premiums, or federal post-disaster assistance;
1 According to the U.S. National Hurricane Center, Hurricane Katrina initially made landfall
between Hallandale Beach and Aventura, Florida as a Category 1 storm on August 25, 2005,
then made a second landfall on August 29th near southeastern Louisiana (Buras-Triumph,
Louisiana) as a Category 4 storm with winds of 140 miles per hour.
2 The last hurricane that made a direct hit on New Orleans was Hurricane Betsy in 1965.
The storm surge from Betsy left 50% of the city under water and 60,000 residents homeless.
Following Hurricane Katrina, New Orleans evacuation plans removed 80% of the
metropolitan area’s 1.4 million people, but failed to empty the city of thousands who were
forced to remain for various reasons in neighborhoods susceptible to flooding.

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! whether or not, in light of the massive flood-related claims filed by
property owners and the resulting financial deficits in the NFIP, the
program should be overhauled/restructured to operate more like a
private insurance company;
! the vulnerability of the property insurance industry to a future mega-
catastrophic event of such magnitude that a substantial portion of the
industry could not support its various obligations, which could lead
to a ripple effect of potential insolvencies of multi-state insurers; and
! whether and how the federal government could improve our nation’s
ability to insure and mitigate risks of large-scale natural disasters.
There appears to be growing support among policymakers and disaster policy
experts on the need to reexamine how the country manages and finances economic
(non-insured) and insured losses and to seek new and innovative ways to do both.3
Traditional disaster policy has focused on coping with disasters, using warnings
before the disaster strikes, emergency relief and hazard insurance after a disaster
occurs, and hazard reduction measures, such as levees and floodplain
management/land-use ordinances, to reduce damages from disasters. With this in
mind, economists note that individual households and businesses have two options
to reduce losses from natural disasters: pre-disaster mitigation that reduces
physical/environmental vulnerabilities, and risk financing designed to reduce
financial vulnerabilities. The first step in the disaster risk management framework
is to mitigate damages from disasters. The residual economic risk can then be
managed with risk financing strategies. Financing is thus an integral part of
managing catastrophe risk; it would not be feasible to quickly reconstruct the
damaged property and infrastructure following Hurricane Katrina, and also to restore
the livelihood of the affected persons, without adequate financial arrangements.
As Members of Congress explore ways to respond to the destruction caused by
Hurricane Katrina, the long-term budgetary implications of disaster recovery
expenses incurred by the federal government, as well as federal potential alternatives
to build national capabilities for financing disaster risk may emerge as a prime
consideration. The 110th Congress will likely continue to consider various
approaches to ensure the availability and affordability of disaster insurance to protect
residential and commercial property against future disasters. This debate could
involve finding ways to improve insurers’ access to capital in the reinsurance,
banking, and securities markets to ensure adequate capacity and solvency of the
industry to meet consumer needs.
The U.S. Economy and Natural Disasters
When a disaster occurs, productive resources in a particular region or state are
destroyed or crippled. Resources from other parts of the country must be redirected
3 Jeff Harrington, “A Spur for a National Fund?,” St. Petersburg Florida Times, August 30,
2005, p. 1.

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to compensate the victims and rebuild or repair that which is lost. Whether the
disaster-affected region or state is better or worse off depends on what portion of
their losses, if any, are covered by insurance or government disaster assistance.
Physical damage to the general building stock and the infrastructure following
Hurricane Katrina could very well lead to a reduction in the flow of goods and
services and an aggregate loss of income to the local, state and national economy.
The degree to which the storm disrupts the economy depends on the magnitude and
duration of the disaster, the structure of the local economy, the geographical areas
affected, the population base, and the time of day the disaster occurs. The largest
effects on output, employment, wages, and capital stock occur at the local or regional
level, and to a lesser extent at the national level, depending on whether economic
activity is sufficiently impeded or whether the disaster affects a large enough
percentage of the population or an important industry. For example, the U.S.
economy in 1994 was adversely affected by the Northridge earthquake and the winter
storms in the South, Midwest, and East, which affected 50% of the U.S. population,
disrupted construction in the housing industry, and caused significant reductions in
the output of automobiles, steel and appliances. National estimates for economic
growth/output were revised downwards as a result of these series of natural disasters.
During a disaster recovery period, the affected region or state will engage in
redevelopment and cleanup efforts (assuming a willingness on the part of investors
and the public to redevelop the area) that tend to increase local employment and other
economic activities. Insurance payments and disaster assistance (government
purchases and income transfer payments) provide a flow of funds into the area.
Realizing the potential for profits, investors will likely be attracted to the building
boom in the devastated area.
Although private domestic investment becomes important in terms of
facilitating production, employment, and the demand for products, the apparent
positive contribution to the area’s aggregate income from increased investment
spending is largely ambiguous. The reason is that the investment does not represent
net additions to the stock of capital. As destroyed physical assets are replaced with
assets that incorporate the latest advanced technology, the productivity of a
community’s physical assets and the incomes generated from those assets will be
enhanced. Depending on how much of the loss is recovered from the rest of the
country, the affected region may be better off. The nation as a whole, however, is
unambiguously hurt by the disaster.
Catastrophe Losses from 2005 Hurricanes
According to the Insurance Services Office’s (ISO) Property Claim Services
unit, catastrophe-insured losses in 2005 totaled $66.1 billion from 24 disasters.4 As
Table 1 shows, catastrophe losses from Hurricane Katrina alone are estimated at
about $43.6 billion, making Hurricane Katrina the costliest disaster in U.S. history,
4 ISO defines a catastrophe as an event that causes $25 million or more in insured property
losses and affects a significant number of property and casualty policyholders and insurers.

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exceeding Hurricane Andrew (1992) and the terrorist attacks on the World Trade
Center (2001).5
Table 1. Ten Most Costly Catastrophes in the United States
($ billions)
Dollar Losses
When
In 2007
Rank
Date
Disaster
Occurred
Dollars
1
Aug. 2005
Hurricane Katrina
$41,100
$43,625
2
Aug. 1992
Hurricane Andrew
15,500
22,902
3
Sept.2001
WTC Terrorist Attacks
18,800
22,006
4
Jan. 1994
Northridge, CA Earthquake
12,500
17,485
5
Oct. 2005
Hurricane Wilma
10,300
10,933
6
Aug. 2004
Hurricane Charley
7,475
8,203
7
Sept. 2004
Hurricane Ivan
7,110
7,803
8
Sep. 1989
Hurricane Hugo
4,195
7,013
9
Sep. 2005
Hurricane Rita
5,627
5,973
10
Sept. 2004
Hurricane Frances
4,595
5,043
Source: Insurance Services Office’s Property Claims Service; Insurance Information Institute.
Total economic (non-insured) damages from 2005 hurricanes are expected to
exceed $200 billion, with the federal government expected to spend over $109 billion
for post-disaster assistance, plus more than $8 billion in tax relief.6 This $109 billion
amount includes $89.6 billion in post-disaster assistance and $19.3 billion in
insurance claim payments under the NFIP. As of December 31, 2007, the NFIP had
borrowed $17.535 billion from the U.S. Treasury — an amount that far exceeds the
aggregate amount of claims paid in the history of the program. The $89.6 billion
appropriated by Congress includes $11.5 billion in U.S. Department of Housing and
Urban Development (HUD) Community Development Block Grant (CDBG) funds
for five states (Alabama, Florida, Louisiana, Mississippi, and Texas) affected by
Hurricanes Katrina, Rita, and Wilma.7 The majority of the CDBG funds will be used
5 Insured loss estimates for Hurricane Katrina are likely to change as the extent of losses
becomes better known. Disaster experts and catastrophe modeling firms expect the insured
loss figures to change as more is known about the levels of water contamination and
economic losses from business interruption and adjustments for losses covered by residual
market mechanisms and foreign reinsurers. The figures will also change as the courts
resolve lawsuits filed on behalf of policyholders involved in disputes (i.e., wind versus flood
damages) with their insurers over claims for damages from Hurricane Katrina.
6 Matt Fellowes and Amy Liu, “Federal Allocations in Response to Katrina, Rita and Wilma:
An Update,” The Brookings Institutions, located at [http://www.brookings.edu/metro/pubs/
20060712_katrinafactsheet.pdf#search=%22community%20development%20block%20g
rant%20and%20katrina%20flood%20relief%22].
7 The CDBG funds were allocated as follows among the Gulf states: Alabama, $74.4
million; Florida, $82.9 million; Louisiana, $6.2 billion; Mississippi, $5.1 billion; and Texas,
$74.5 million. For more information, see CRS Report RL33330, Community Development
(continued...)

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to compensate homeowners in Louisiana and Mississippi for the value of their
homes, up to their insured value or $150,000, whichever is less.8 Grants are now
available to thousands of homeowners outside of Special Flood Hazard Areas,
commonly known as the flood plain or the flood zone, who were not required by
federal law to purchase flood insurance.9
Property/Casualty Insurers Withstood
Record Catastrophe Losses
The p/c industry experienced favorable financial and underwriting conditions
during 2005 despite record catastrophe losses. There are four reasons the p/c industry
emerged financially strong from record catastrophe losses of $66.1 billion in 2005
following record losses of $30.2 billion in 2004.
First, insurers learned important lessons from Hurricane Andrew in 1992, and
these lessons prompted them to make changes to both protect the industry’s balance
sheets and stabilize the property insurance markets in the aftermath of a moderate
hurricane.10 For example, after Hurricane Andrew, the Florida state legislature
worked with private insurers and regulators to create a hurricane catastrophe system
designed to mitigate losses to the insurance industry and prevent insurers from
withdrawing from the Florida insurance market. The Florida Hurricane Catastrophe
Fund was created as a reinsurance-like entity funded by a portion of insurance
premiums and managed by the Florida State Board of Administration. Florida also
began using percentage deductibles tied to the value of homes instead of a dollar
amount such as $500 per claim. Florida created a state regulated insurer of last resort
to provide insurance when no company is willing to underwrite disaster risks. These
strategies for countering the challenges presented by hurricanes saved the property
insurance industry from financial disaster after the 2004 and 2005 hurricane seasons.
Second, insurers experienced strong underwriting gains following the imposition
of sound risk management practices. After the four major hurricanes in 2004,
insurers imposed tighter underwriting standards and sought regulatory approval for
7 (...continued)
Block Grant Funds in Disaster Relief and Recovery, by Eugene Boyd.
8 On June 15, 2006, President Bush signed into law the fourth emergency supplemental, for
$19.8 billion, in support of short- and longer-term needs of the Gulf Coast. The $19.8
billion includes $5.2 billion in additional CDBG funds, with $4.2 billion intended for
Louisiana and the remaining $1 billion to support the renovation and construction of
affordable rental housing in the affected states.
9 In order to qualify for the $150,000 compensation, the home must: (1) be outside the flood
zone established by the federal government; (2) be owner-occupied; and (3) have had
homeowner or similar insurance coverage at the time of Katrina’s landfall. These criteria
were established to eliminate the possibility of assistance to homeowners who lived within
a known flood area and yet did not maintain flood insurance or homeowners who did not
maintain standard home insurance.
10 For more information on insurance lessons learned form Hurricane Andrew, see CRS
Report RL32825, Hurricanes and Disaster Risk Financing Through Insurance: Challenges
and Policy Options, by Rawle O. King.

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higher rates. However, insurers faced regulatory scrutiny when they sought to adjust
rates to reflect higher catastrophe risk and higher reinsurance costs. Not able to get
approval to charge higher rates, some insurers opted to limit their overall exposure
in hurricane-prone areas along the Gulf and Atlantic coasts. This, in turn,
precipitated an insurance availability and affordability problem that continues
through early 2007.
Third, insures were able to withstand record catastrophe losses in 2005 because
policyholder surplus11 — a measure of claims-paying capacity — rose unexpectedly
by 9.2% in 2005, from $393.5 billion at year-end 2004 to $427.1 billion as of
December 31, 2005. Table 2 shows that at the end of the third quarter of 2007, the
p/c industry had $521.8 billion in policyholder surplus, supporting about $323.3
billion in earned premiums. Only a fraction of this industry-wide total surplus,
however, would be available to compensate victims of a catastrophic event. Insurers
must rely on this same limited pool of surplus to pay for other potentially catastrophic
and unpredictable risks, such as terrorism, mold, and medical malpractice and
asbestos liability claims.
Prior to Hurricane Hugo in 1989, the insurance industry had not experienced any
losses from a single disaster of over $1 billion. Today, a one billion dollar disaster
is quite common, predictable, and manageable, but most insurance experts would
agree that the $100 billion-plus catastrophic event remains a challenge for the U.S.
property/casualty insurance industry.12 Estimates of the probable maximum losses
(PMLs) from a catastrophic earthquake or hurricane striking the U.S. range up to
$120 billion, and this figure could be even higher depending on the location, time,
and intensity of the event. The PML loss from a Category 5 hurricane directly hitting
a densely populated area along the Gulf and Atlantic Coasts (e.g., Miami-Ft.
Lauderdale) could exceed the total capacity (policyholder surplus) of the U.S.
insurance industry.13
The fourth reason insurers were able to withstand record catastrophe losses in
2005 was their high investment income. Rising interest rates that boost the industry’s
substantial bond portfolio and strong stock market gains allowed insurers to generate
$49.5 billion in 2005 and $52.3 billion in 2006 on their investment portfolio.
11 Policyholder surplus is referred to as “net worth” or “owners equity” in other industries.
It represents the financial resources (capital) that stand behind every policy underwritten by
an insurer.
12 Ross J. Davidson, Jr., “Working Toward a Comprehensive National Strategy for Funding
Catastrophe Exposures,” Journal of Insurance Regulation, vol. 7, no. 2, winter 1998, p. 134.
13 David J. Cummins, Neil A. Doherty, and Anita Lo, “Can Insurers Pay for the ‘Big One’?
Measuring the Capacity of an Insurance Market to Respond to Catastrophic Losses,”
Journal of Banking and Finance, 2002, vol. 26, p. 557-583.

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Table 2. Property/Casualty Insurance Industry Financial
Results: 2002-2007
(2002-2007)
2002
2003
2004
2005
2006
2007a
Net Earned Premiums
348.2
388.1
412.6
417.7
435.8
323.3
Incurred Losses (Including LAE)b
282.5
289.8
299.5
311.4
283.7
219.6
Expenses
94.3
101.1
106.4
110.3
117.5
90.4
Policyholder Dividends
1.9
1.9
1.6
1.9
3.4
1.2
Net Underwriting Gain (Loss)
(30.5)
(4.6)
5.0
(5.9)
31.2
18.1
Investment Income
36.7
38.7
39.6
49.5
52.3
39.5
Other Items
(0.9)
(0.4)
(0.5)
0.9
1.0
(1.0)
Pre-Tax Operating Gain
5.3
33.7
44.1
44.5
84.6
55.6
Realized Capital Gains (Losses)
(1.1)
6.9
9.3
9.7
3.4
8.2
Pre-Tax Income
4.2
40.6
53.4
54.2
88.0
63.8
Taxes
(1.2)
(10.7)
14.7
11.2
24.2
(15.4)
Net After-Tax Income
2.9
29.9
38.7
43.0
63.7
49.4
Surplus (End of Period)
285.2
347.0
393.5
427.1
487.1
521.8
Combined Ratio
107.2
100.1
98.1
100.9
92.4
93.8
Sources: Insurance Services Office, National Association of Independent Insurers, and the
Insurance Information Institute.
a. Nine-month 2007 financial results
b. Incurred losses include loss adjustment expenses.
Since the late 1980s, several major catastrophes14 have caused insurers,
reinsurers, stakeholder groups, and policymakers to question whether the p/c
insurance industry has the capacity to insure a mega-catastrophic event. In the
aftermath of Hurricane Katrina, some Members of Congress have expressed concerns
about the availability and affordability of natural disaster insurance for residents and
business owners in disaster-prone states.15 In the short-run, in order to make
homeowners insurance available and affordable, state governments have created
state-sponsored insurance pools to provide catastrophe insurance (or reinsurance)
coverage at subsidized rates. These state-sponsored insurance programs, however,
are inadequately capitalized to handle the mega-catastrophic event. The Florida
Hurricane Catastrophe Fund (FHCF), for example, began 2007 with about $1 billion
in cash and total insured residential values of $1.8 trillion. FHCF issues up to $15
billion of reinsurance to residential insurers at about 30% the up-front cost of private
reinsurance by shifting the actual cost of risk into the future with long-term post-
event debt financing. Given the short-term nature of the state-sponsored disaster risk
14 These natural disasters include Hurricanes Hugo and Georges (1989); Loma Prieta,
California earthquake (1989); Hurricanes Andrew and Iniki (1992); Midwest floods (1993);
Northridge, California earthquake (1994); Hurricane Fran (1996); Red River floods (1997);
World Trade Center and Pentagon terrorist attacks (2001); and Hurricane Katrina (2005).
15 Mark Foley, “Insurance Industry in Need of Change”, The Miami Herald, September 8,
2005, p. A18.

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financing, some disaster experts have proposed that the federal government play a
role in the financing of natural disaster risks.

Major Federal Disaster Insurance Legislation
Appendix A provides a summary of major federal disaster insurance legislation
introduced in Congress from 1973 through 2007. Since the early 1970s, Congress
has considered several legislative proposals to establish a federal disaster
insurance/reinsurance program, but none were enacted until the passage of the
Terrorism Risk Insurance Act (TRIA) of 2002.16 Most of those calls for action
typically followed a major disaster and public policy debate about how best to
respond to the U.S. exposure to high levels of risk from natural disasters, primarily
hurricanes, floods, earthquakes, and windstorm risks. TRIA provided a temporary
federal reinsurance backstop once a high insurance industry loss is sustained. The
law, which was scheduled to expire at the end of 2005, was extended through
December 31, 2014.17
The first of these proposals — H.R. 4480 and H.R. 4462, introduced in the 101st
Congress — sought to address only the earthquake hazard.18 Later bills, such as H.R.
21 in the 106th Congress and H.R. 1552 in the 108th Congress, adopted an “all-
hazard” approach to covering most natural hazards, including hurricanes,
earthquakes, and volcanoes. Both H.R. 21 and H.R. 1552 would have established a
federal program to provide reinsurance to improve the availability of homeowners’
insurance. The two bills took slightly different approaches, however. Whereas H.R.
21 would have established a new federal disaster reinsurance fund to provide up to
$25 billion in annual coverage to state insurance pools, H.R. 1552 would have
authorized the Secretary of the Treasury to establish a program to make reinsurance
coverage available through the auctioning of contracts.
110th Congress
Federal disaster insurance legislation has been introduced in the 110th Congress
that would
! establish a commission on catastrophic disaster risk and insurance
— H.R. 537 (Meek); H.R. 3644 (Shays); S. 292 (Nelson); S. 928
(Nelson); S. 2286 (Dodd)
! establish a federal program to provide reinsurance to improve the
availability of homeowners’ insurance — H.R. 91 (Grown-Waite);
H.R. 330 (Brown-Waite); S. 928 (Nelson)
16 P.L. 107-297; 116 Stat. 2322.
17 CRS Report RL34219, Terrorism Risk Insurance Legislation in 2007: Issue Summary and
Side-by-Side, by Baird Webel.
18 Elliott Mitter, “Alternative National Earthquake Insurance Programs,” Earthquake
Spectrum, August 1991, vol. 7, no. 3, p. 757.

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! establishes a state-run non-profit corporation to allow states to pool
catastrophic risks and transfer it directly to investors in the capital
markets — H.R. 3355 (Klein); S. 2310 (Clinton)
! establish a federal program to provide reinsurance for state natural
catastrophe insurance programs to help the United States better
manage and insure risks of large-scale natural disasters — H.R. 91;
! change U.S. tax law to allow insurers to accumulate catastrophe
reserves on a tax-preferred basis — H.R. 164 (Jindal); S. 926
(Nelson)
! amend the Internal Revenue Code to create tax-exempt catastrophe
savings accounts — H.R. 1787 (Feeney); S. 927 (Nelson)
! amend the Internal Revenue Code to allow individual taxpayers in
certain hurricane disaster areas a tax credit for 50% of their
homeowner insurance premiums, up to $250 annually.
109th Congress
In the 109th Congress, Representative Ginny Brown-Waite introduced two
federal disaster insurance bills. The Homeowners’ Insurance Availability Act of
2005 (H.R. 846) would have allowed the Secretary of the Treasury to auction $25
billion of contracts for reinsurance coverage to private insurers and reinsurers in six
regions across the country. A newly established National Commission and Insurance
Loss Costs would have been established to advise the Treasury regarding the
estimated loss costs associated with the contracts for reinsurance coverage. The
Homeowners’ Insurance Protection Act (H.R. 4366) would have established a
National Commission on Catastrophe Preparation and Protection and authorized the
sale of reinsurance contracts backed by the federal government to eligible state
catastrophe funds. Senator Bill Nelson introduced similar legislation (S. 3117).
Representative Mark Foley introduced the Policyholder Disaster Protection Act
(H.R. 2668) that would have amended the Internal Revenue Code (IRC) to permit
insurers to establish tax-deductible reserve funds for catastrophic events. Senator
Bill Nelson introduced similar legislation (S. 3116) in the Senate.
Representative Carolyn Maloney introduced the Natural Catastrophe Insurance
Act (H.R. 4507) that would have authorized the Secretary of the Treasury to establish
a federal reinsurance program to provide reinsurance to state-sponsored catastrophe
insurance programs and “qualified” entities. The purpose of the program was to be
twofold: improve the availability of property insurance for residential and
commercial property and improve the solvency of private catastrophe insurance
markets. The minimum level of retained losses from a single event of covered peril
was to be $50 billion for the state-sponsored catastrophe insurance/reinsurance
program, and the maximum aggregate federal liability was $25 billion. (The federal
government covers the reinsurance layer between $50-$75 billion.)

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Senator Bill Nelson introduced S. 3114 to establish the bipartisan Commission
on Catastrophic Disaster Risk and Insurance Act of 2006 to assess the condition of
the property and casualty insurance and reinsurance markets in the aftermath of
Hurricanes Katrina, Rita, and Wilma in 2005. Representatives Kendrick B. Meek
and Debbie Wasserman Schultz introduced similar legislation (H.R. 5587/H.R.
5891).
Senator Bill Nelson also introduced S. 3115, the Catastrophe Savings Accounts
Act of 2006, to amend the Internal Revenue Code to create tax-exempt catastrophe
savings accounts to pay expenses resulting from a presidentially declared major
disaster. Representative Tom Feeney introduced similar legislation in the House
(H.R. 4836).
108th Congress
The 108th Congress considered several major federal disaster insurance bills, but
the approach that received the most attention involved changing federal tax law to
authorize tax-deferred treatment of private insurers’ catastrophe reserves.19 Allowing
private insurers to build up catastrophe reserves to pay natural disaster-related claims
that have a low probability of occurrence, it is argued, would lower insurers’ costs
of holding capital and, in turn, lower the premiums they must charge for a given level
of disaster coverage. Alternatively, critics charge that the tax deductibility of
catastrophe reserves would cause the U.S. Treasury to lose tax revenue paid by
insurers. Would the lost tax revenue be an acceptable price to pay to achieve the
public-sector goal of reducing overall disaster losses? How would someone measure
success? These were central questions in the debate.
All federal disaster insurance/reinsurance bills, including TRIA, share one
feature: they seek to improve the nation’s ability to finance catastrophe risk through
insurance, as opposed to increased direct spending for federal disaster assistance.
Their justification has been based on the argument that such initiatives will: (1)
enhance the current catastrophe funding system; (2) make property insurance more
available and affordable in high-risk areas; (3) promote the funding of research
studies (i.e., earthquake science, actuarial science, economics, and finance) on
disaster insurance issues; and (4) expand our knowledge and understanding of the
scientific and financial aspects of natural hazards. In addition, proponents of federal
disaster insurance have argued that such a scheme would reduce dependence on
“free” disaster assistance and support efficient risk management by households and
businesses.20
19 For more information on the catastrophe insurance market failure and possible tax policy
approaches to solving the catastrophe funding problems see CRS Report RL33060, Tax
Deductions for Catastrophic Risk Insurance Reserves: Explanation and Economic Analysis,
by David Brumbaugh and Rawle King.
20 Ross J. Davidson Jr., “Working Toward a Comprehensive National Strategy for Funding
Catastrophic Exposures,” Journal of Insurance Regulation, vol. 7, no. 2, winter 1998,
p. 134.

CRS-11
Opponents to federal intervention in catastrophe insurance markets believe there
is sufficient private sector capacity and federal intervention would only crowd out
private capital for insuring disasters and stifle innovative catastrophe risk financing
through insurance. Moreover, critics of federal intervention say such measures
would conflict with long-established sociological, economic, and actuarial principles
that focus on the “true” cost of government programs (the opportunity cost of the
funds), the foregone benefits of a competitive insurance marketplace (e.g., cost
efficiency and rate competition), and the absence of consumer choice (the ability to
decide whether to purchase coverage).21
Citing the development of new financial instruments to fund catastrophe
coverage and expanded reinsurance capacity, critics of public insurance systems say
there is no need for a federal insurance program at this time. They insist that such
programs would shield the private sector from loss while creating sizable taxpayer-
financed subsidies that undermine private-sector incentives for efficient risk
management. Moreover, it has been argued that these programs would encourage
population growth and development in high-risk, hurricane-prone areas that should
not be developed, and would allow insurers to “cherry pick” the best risks and send
the federal government the poor risks.
Concluding Remarks
Historically, Congress has been reluctant to enact federal disaster insurance
legislation because of a lack of consensus on what will work, and concerns about
adequate provisions for mitigation and avoidance of unnecessary government
intrusion into markets being adequately served by private sector financial entities.
Congressional reluctance to establish a federal disaster insurance program has been
based on the recognition that such a program would conflict with sociological,
economic, and actuarial principles that emphasize the “true” cost of government
programs (the opportunity cost of the funds), the forgone benefits of a competitive
insurance marketplace (e.g., cost efficiency and rate competition), and the absence
of consumer choice (the ability to decide whether to purchase coverage).22
The federal government has played an important role in the U.S. economic
system by assuming risks that the private sector either will not undertake at any price,
or will accept but at a price so high that most potential beneficiaries will not purchase
the coverage. For example, government risk-bearing now occurs in environmental
disasters, nuclear-plant accidents, toxic waste dumps, and flooding. Establishing an
explicit federal disaster insurance system to ameliorate the potential damages to
homes and commercial buildings stemming from natural disasters would represent
another government risk-bearing program — one that could expose taxpayers to
21 Howard Kunreuther and Richard J. Roth, Sr., Paying the Price: The Status and Role of
Insurance Against Natural Disasters in the United States (Washington: Joseph Henry Press,
1998), p. 92.
22 Paul R. Kleindorfer and Howard Kunreuther, “Challenges Facing the Insurance Industry
in Managing Catastrophic Risks,” in The Financing of Catastrophe Risk, ed., Kenneth A.
Front (Chicago: University of Chicago Press, 1999), p. 149.

CRS-12
funding demands if program revenues fail to cover costs, or if returns are lower than
expected. Nevertheless, supporters of a federal disaster insurance program argue that
it would be justified by the national scope of the Hurricane Katrina disaster, and by
the inability of the private insurance industry to handle future high payouts from a
mega-catastrophic event without federal government involvement.
As Members of the 110th Congress explore long-term ways to respond to
Hurricane Katrina, consideration might be given to whether there is a need to
improve the nation’s ability to finance catastrophic risk and, if so, how. Previous
Congresses responded to similar concerns by considering legislation to create a
federal catastrophe reinsurance program for residential property. Despite broad
support for several bills over the past few years, Congress did not authorize a federal
reinsurance program until the enactment of the Terrorism Risk Insurance Act of
2002.
Finally, most observers would agree that for the very highest layers of
catastrophe risk, the government (and consequently the taxpayer) is now, by default,
the insurer of last resort. In the 110th Congress, any one of a number of policy
options could be pursued, and will likely be influenced by whether it can be shown
that potential losses from Hurricane Katrina are beyond the capacity of private
markets to diversify natural hazard risks. Members will likely be grappling with
several policy questions. For example, will reinsurance and securitization be enough
to maintain insurance solvency after a mega-catastrophic hurricane or earthquake?
How can the various funding sources available for catastrophe insurance be expanded
and refined to cope with a catastrophic hurricane? Finally, what role, if any, should
the federal government play in catastrophe insurance?

CRS-13
Appendix A. Summary of Federal Disasters Insurance
Legislation: 1973-2007
Bill Number
(Sponsor)
Bill Title
Purpose
110th Congress (2007-2008)
S. 292/H.R. 537
Commission on Catastrophic
Establishes a bipartisan commission
(Nelson/Meek)
Disaster Risk and Insurance Act of
on catastrophic disaster risk to
2007
assess the condition of the property
and casualty insurance and
reinsurance markets in the
aftermath of Hurricanes Katrina,
Rita, and Wilma in 2005.
S. 926/H.R 164
Policyholder Disaster Protection
Changes U.S. tax law to allow
(Nelson/Jindal)
Act of 2007
insurers to accumulate catastrophe
reserves on a tax-preferred basis.
S. 927/H.R. 1787
Catastrophe Savings Accounts Act
Amends the Internal Revenue Code
(Nelson/Feeney)
of 2007
to create tax-exempt catastrophe
savings accounts to pay expenses
resulting from a presidentially
declared major disaster.
S. 928
Homeowners Protection Act of
Establishes a commission to advise
(Nelson)
2007
the Secretary of the Treasury
regarding estimated loss costs
associated with federal contracts for
reinsurance coverage.
S. 2286/H.R. 3644
C o m m i s s i o n o n N a t u r a l
Establishes a commission on
(Dodd/Shay)
Catastrophe Risk Management and
catastrophic risk to report to
Insurance Act of 2007
Congress on its finding and
assessments regarding the risk
posed to the United States by
natural catastrophes, and means for
mitigating those risks and paying
for losses caused by such
catastrophes.
S. 2284/H.R. 3121
Flood Insurance Reform and
Amends the National Flood
Modernization Act of 2007
Insurance Program to restore the
financial solvency of the flood
insurance program.
S. 2327
Homeowners Insurance Assistance
Amends the Internal Revenue Code
Act of 2007
to allow individual taxpayers in
certain hurricane disaster areas a
tax credit for 50% of their
homeowner insurance premiums,
up to $250 annually.
H.R. 91
Homeowners Insurance Protection
Establishes a federal program to
(Brown-Waite)
Act of 2007
provide reinsurance for state natural
catastrophe insurance programs to
help the United States better
manage and insure risks of large-
scale natural disasters.

CRS-14
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 330
H o m e o w n e r s ’ I n s u r a n c e
Establishes a federal program to
(Brown-Waite)
Availability Act of 2007
provide reinsurance to improve the
availability of homeowners’
insurance.
H.R. 920
Multiple Peril Insurance Act of
Amends the National Flood
(Taylor)
2007
Insurance Program (NFIP) to allow
policyholders to purchase insurance
against loss resulting from physical
damage caused by flood or
windstorm (any hurricane, tornado.
Cyclone, typhoon) .
H.R. 3121
Flood In
H.R. 3355/S/ 2310
Homeowners’ Defense Act of 2007
Establishes a state-run non-profit
(Klein/Clinton)
corporation to allow states to pool
catastrophic risks and transfer it
directly to investors in the capital
market.
109th Congress (2005-2006)
S. 3114
Commission on Catastrophic
Establi s he s t h e b i partisan
(Nelson)
Disaster Risk and Insurance Act of
Commission on Catastrophic
2006
Disaster Risk and Insurance Act of
2006 to assess the condition of the
property and casualty insurance and
reinsurance markets in the
aftermath of Hurricanes Katrina,
Rita, and Wilma in 2005
S. 3115
Catastrophe Savings Accounts Act
Amends the Internal Revenue Code
(Nelson)
of 2006
to create tax-exempt catastrophe
savings accounts to pay expenses
resulting from a presidentially
declared major disaster.
S. 3117
Homeowners Protection Act of
Amends the Internal Revenue Code
(Nelson)
2006
of 1986 to permit insurers to
establish tax-deductible reserve
funds for catastrophes.
H.R. 4836
Catastrophe Savings Accounts Act
Same as S. 3115.
(Feeney)
of 2006
H.R. 5891
Catastrophic Disaster Risk and
Same as S. 3114.
(Wasserman)
Insurance Commission Act of 2006
H.R. 5587
Commission on Catastrophic
Same as S. 3114.
(Meek)
Disaster Risk and Insurance Act of
2006

CRS-15
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 4507
Natural Catastrophe Insurance Act
Establishes a federal reinsurance
(Maloney)
of 2006
program to provide reinsurance to
state-sponso red catastrophe
i n s u r a n c e p r o g r a m s , a n d
“qualified” entities.
H.R. 4366
Homeowners’ Insurance Protection
Establishes a national commission
(Brown-Waite)
Act of 2005
on catastrophe preparation and
protection and authorizes the sale
of federal reinsurance contracts to
eligible state catastrophe funds.
H.R. 4320
National Flood Insurance Program
Amends the Flood Disaster
(Oxley)
Commitment to Policyholders and
Protection Act of 1973 and the
Reform Act of 2005
National Flood Insurance Act of
1968 to increase the defined area
having special flood hazards,
increase from $350 to $2,000 the
civil monetary penalty for mortgage
lenders failures to require flood
insurance, establishes a flood
insurance appeals process,
increases FEMA’s borrowing
authority, requires FEMA to report
semi-annually to Congress on the
financial status of the NFIP, and
other purposes.
H.R. 4133
National Flood Insurance Program
Amends the National Flood
P.L. 109-106
Further Enhanced Borrowing
Insurance Act of 1968 to increase
(Fitzpatrick)
Authority Act of 2005
from $3.5 billion to $18.5 billion,
through FY2008, the total amount
which FEMA may borrow from the
Secretary of the Treasury.
H.R. 2668
Policyholder Disaster Protection
Same as S. 3117.
(Foley)
Act of 2005
H.R. 846
H o m e o w n e r s ’ I n s u r a n c e
Instructs the Secretary of the
(Brown-Waite)
Availability Act of 2005
T rea s ury to implement a
reinsurance program available only
through contracts for reinsurance
coverage purchased at regional
auctions.
S. 24
Emergency Reserve Fund Act of
Establish an emergency reserve
(Hutchison)
2005
fund to provide timely financial
assistance in response to domestic
disasters and emergencies.
108th Congress (2003-2004)
H.R. 253/S. 2238
Flood Insurance Reform Act of
Amends the NFIA to extend the
P.L. 108-264
2003
NFIP’s authorization through
(Bereuter/Bunning)
September 3 0 , 2008, and
establishes a pilot program for
mitigation of severe repetitive loss
properties.

CRS-16
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 670
Flood Loss Mitigation Act of 2003
Amends the NFIA to authorize the
(Baker)
Director of FEMA to carry out
mitigation activities that reduce
flood damages to qualified
repetitive loss structures.
H.R. 1552
H o m e o w n e r s ’ I n s u r a n c e
Same as H.R. 846 in the 109th
(Weldon)
Availability Act of 2003
Congress.
H.R. 2020
Hurricane, Tornado, and Related
Requires the Director of Office of
(Moore)
Hazards Research Act
Science and Technology Policy to
establish an Interagency Group to
be responsible for the development
and implement a t i o n of a
coordinated federal windstorm and
related hazards reduction research
development, and technology
transfer program (the Windstorm
and Related Hazard Impact
Reduction Program).
H.R. 4186
Policyholder Disaster Protection
Same as H.R. 2668 in 109th
(Foley)
Act of 2004
Congress.
S. 1607
H o m e o w n e r s ’ I n s u r a n c e
Same as H.R. 4186 in 108th
(Graham)
Availability Act of 2003
Congress.
107th Congress (2001-2002)
H.R. 785
Policyholder Disaster Protection
Same as H.R. 268 in 109th
(Foley)
Act of 2001
Congress.
H.R. 1428
Two Floods and You Are Out of
Amends NFIA to require the
(Bereuter)
the Taxpayers’ Pocket Act of 2001
Director of FEMA, in awarding
grants for mitigation activities, to
give priority to properties for which
repetitive flood insurance claim
payments have been made
(repetitive claim properties), and
other purposes.
H.R. 1789
Amend the IRC to Exempt from
Amends the Internal Revenue Code
(Shaw)
Income Tax State-Created
of 1986 to exempt from income tax
Organizations
s t a t e -c r e a t e d o r g a n i z a t io ns
providing property and casualty
insurance for property for which
such coverage is otherwise
unavailable.
H.R. 3210
Terrorism Risk Insurance Act of
Establishes a three-year Terrorism
P.L. 107-297
2002
Insurance Program in the
(Oxley)
Department of the Treasury to pay
the federal share of compensation
for insured losses resulting from
acts of terrorism.

CRS-17
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 3592
Hurricane, Tornado, and Related
Same as H.R. 2020 in 108th
(Moore)
Natural Hazards Research Act
Congress.
H.R. 4025
H o m e o w n e r s ’ I n s u r a n c e
Same as H.R. 846 in 109th
(Weldon)
Availability Act of 2002
Congress.
S. 797
Policyholder Disaster Protection
Amends the Internal Revenue Code
(Gramm)
Act of 2001
of 1986 to add to the list of 501(c)
(tax-exempt) organizations any
nonprofit association created before
January 1, 1999, by state law and
organized and operated exclusively
to provide property and casualty
insurance coverage for losses
occurring due to natural disasters
within the state, for which the state
has determined that coverage in the
authorized insurance market is not
reasonably available to a substantial
number of insurable real properties.
S. 1748
Terrorism Risk Insurance Act of
Establishes in the Department of
(Gramm)
2001
the Treasury the Terrorism Insured
Loss Shared Compensation
Program to pay the federal share of
compensation for insured losses
resulting from an act of terrorism
occurring during specified periods
through December 31, 2004.
S. 1751
Terrorism Risk Insurance Act of
Substantially similar to S. 1748.
(Gramm)
2001
106th Congress (1999-2000)
H.R. 21
Homeowners’ Insurance
Establishes a federal program to
(Lazio)
Availability Act of 1999
provide reinsurance to state
insurance programs and private
insurers/reinsurers, covering
earthquakes and fires following
hurricanes, tsunamis, volcanic
eruptions, and tornadoes.
H.R. 481
Earthquake, Volcanic Eruption, and
Requires the Director of FEMA to
(Mink)
Hurricane Hazards Insurance Act of
establish a three-part insurance,
1999
reinsurance and mitigation
program to provide national
coverage and mitigation for
residential property losses in
earthqua ke -p r o ne , vo l canic
eruption-prone, or hurricane-prone
states.
H.R. 2728
Two Floods and You Are Out of
Same as H.R. 1428 in 107th
(Bereuter)
the Taxpayers’ Pocket Act of 1999
Congress.

CRS-18
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 2749
Policyholder Disaster Protection
Amends the Internal Revenue Code
(Foley)
Act of 1999
of 1986 to allow insurers to create
tax-deferred reserves to fund future
catastrophic losses from natural
disasters.
H.R. 3303
Natural Disaster Insurance
Establishes the National Disaster
(Burr)
Solvency Act of 1999
Insurance Solvency Fund (NDISF)
as a non-federal agency to hold,
invest, and distribute private
insurance solvency reserve amounts
for rare catastrophic events.
Directs the NDISF to establish and
maintain a Catastrophe Emergency
Solvency Reserve Account as a tax-
exempt custodial account to hold
all contributions of solvency
reserve amounts.
S. 1361
Natural Disaster Protection and
Amends Earthquake Hazards
(Stevens)
Insurance Act of 1999
Reduction Act of 1977 to provide
for an expanded federal program of
hazard mitigation, relief, and
insurance against the risk of
catastrophic natural disasters, such
as hurricanes, earthquakes, and
volcanic eruptions.
105th Congress (1997-1998)
H.R. 219
H o m e o w n e r s ’ I n s u r a n c e
Creates a federal reinsurance
(Lazio)
Availability Act of 1997
program to allow states to purchase
reinsurance contracts to cover
natural disaster losses above $25
billion in a single year.
H.R. 230
Natural Disaster Protection and
Creates an integrated three-part
(McCollum)
Insurance Act of 1997
program to encourage disaster risk
mitigation, expand catastrophe
insurance coverage at adequate rate
levels, and mandate several
catastrophe insurance studies on
tax-deductibility of pre-event
catastrophe reserves and flood
insurance. To expand the supply of
catastrophe reinsurance in the
private market, the Treasury
Secretary would auction federal
excess-of-loss contracts in the $25-
$50 billion layer of insured losses
to insurers, reinsurers, and state,
regional and privately established
and capitalized national pools.
H.R. 579
Earthquake, Volcanic Eruption, and
Same as H.R. 481 in 106th
(Mink)
Hurricane Hazards Insurance Act of
Congress.
1997

CRS-19
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 3728
Disaster Relief Partnership Act
Amends the Robert T. Stafford
(Obey)
Disaster Relief and Emergency
Assistance Act to return primary
responsibility for disaster relief to
the states; establishes a national
disaster insurance program to
provide coverage to states against
certain losses and costs arising from
disasters.
104th Congress (1995-1996)
H.R. 1731
Earthquake, Volcanic Eruption, and
Same as H.R. 579 in 105th
(Mink)
Hurricane Hazards Insurance Act of
Congress.
1995
H.R. 1856
Natural Disaster Protection Act of
Amends the Stafford Act to
(Emerson)
1995
establish a federal disaster
mitigation and insurance program.
H.R. 4115
Residential Windstorm Insurance
Instructs the Director of FEMA to
(Frazer)
Plan Act of 1996
study the advisability and feasibility
of establishing a residential
windstorm insurance program
designed to provide windstorm
insurance to residential property
owners unable to obtain coverage in
the private market.
S. 1043
National Disaster Protection and
Amends the Earthquake Hazards
(Stevens)
Insurance Act of 1995
Reduction Act of 1977 by adding
new definitions to the existing acts,
as well as three interrelated
programs — hazard mitigation,
relief, and insurance and
reinsurance — against the risk of
catastrophic natural disaster, such
as hurricanes, earthquakes, volcanic
eruptions, and tsunami.
103rd Congress (1993-1994)
H.R. 62
N a t i o n a l F l o o d I n s u r a n c e
Amends the NFIA to make changes
(Bereuter)
Compliance, Mitigation, and
designed to increase compliance
Erosion Management Act of 1993
with the mandatory purchase
requirement, to establish ratings
and incentives for community
floodplain management programs,
and to mitigate flood and erosion
risks.
H.R. 764
Windstorm Hazard Reduction Plan
Directs the Director of FEMA to
(de Lugo)
Act of 1993
develop a plan for establishing and
carrying out a national windstorm
insurance program and to submit it
to specified committees of
Congress.

CRS-20
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 935
Earthquake, Volcanic Eruption, and
Same as H.R. 1731 in the 104th
(Mink)
Hurricane Hazards Insurance Act of
Congress.
1993
H.R. 1302
Hurricane Hazard Reduction Act of
Establishes a national hurricane
(Shaw)
1993
insurance program that features an
excess loss reinsurance program to
provide reinsurance coverage to
private insurers and reinsurers for
hurricane-related losses that would
otherwise be ineligible for
coverage.
H.R. 2873
Natural Disaster Protection
Amends the Robert T. Stafford Act
(Mineta)
Partnership Act of 1994
by adding several new definitions
and three new titles relating to
disaster mitigation, mandatory
purchase of disaster coverage, and
the establishment of the Natural
Disaster Protection Fund, with three
accounts to provide: (1) direct loans
to insurers and state insurance
pools; (2) grants to eligible states
for the repair of facilities and
infrastructure; and (3) funds for
hazard mitigation activities of the
states.
H.R. 3185
Flood Insurance Reform and Relief
Amends the NFIA to make changes
(Talent)
Act of 1993
to the NFIP in the area of structural
elevation requirements.
H.R. 3191
National Flood Insurance Reform
Amends the NFIA to make changes
(Kennedy)
Act of 1994
designed to increase compliance
with the mandatory purchase
requirement, establish ratings and
i n c e n t i v e s fo r c o mmu n i t y
floodplain management programs,
and mitigate flood and erosion
risks.
S. 1350
Natural Disaster Protection Act of
Amends the Earthquake Hazard
(Inouye)
1993
Reduction Act of 1977 to authorize
FEMA to estab lish three
interrelated programs focusing on
disaster loss mitigation, expanded
insurance protection against
earthquakes, and an excess-loss
reinsurance program for multi-
hazards, including hurricanes,
tornadoes, and volcanic eruptions.
102nd Congress (1991-1992)
H.R. 3021
Presidential Insurance Commission
E s t a b l i s he s a P residential
(Rinaldo)
Act of 1991
Commission on Insurance.
H.R. 4792
Earthquake and Volcanic Eruption
Same as H.R. 935 in 105th Congress
(Mink)
Hazard Reduction Act

CRS-21
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 5447
Riot Reinsurance Act of 1992
Reauthorizes the program under
(Campbell)
title XII of the National Housing
Act to provide reinsurance through
FEMA against property losses
resulting from riots or civil
disorders.
S. 1276
Presidential Insurance Commission
Same as H.R. 3021.
(Dodd)
Act of 1991
S. 2533
Earthquake and Volcanic Eruption
Same as H.R. 4792.
(Inouye)
Hazard Reduction Act
101st Congress (1989-1990)
H.R. 4480
Federal Earthquake Insurance and
Creates the Federal Earthquake
(Swift)
Reinsurance Act of 1990
Insurance and Reinsurance
Corporation to make earthquake
and volcanic eruption insurance
available to homeowners and
business owners.
H.R. 4462
National Earthquake Insurance and
Requires the Director of FEMA to
(Brown)
Reinsurance Act of 1990
identify earthquake hazards
nationwide and make this
information available to affected
communities. Also authorizes the
Director to establish a national
e a r t h q u a k e i n s u r a n c e a n d
reinsurance program.
H.R. 4915
Earthquake Hazards Reduction
Amends the Earthquake Hazards
(Brown)
Amendment Act of 1990
Reduction Act of 1977 to carry out
a newly established National
Earthquake Insurance Program.
100th — 99th — 98th (1983-1988)
No major federal disaster insurance bills introduced.
97th Congress (1981-1982)
H.R. 1369
Federal Disaster Insurance Act of
Establishes within the Department
(Danielson)
1981
of the Treasury the Federal Disaster
Insurance Corporation to provide
every citizen and resident of the
United States who makes an
application and qualifies, with
insurance against damage to or loss
of property due to natural disasters.
Repeals the National Flood
Insurance Act of 1968.
96th Congress (1979-1980)
H.R. 1922
Federal Disaster Insurance Act of
Same as H.R. 1369 in 97th
(Danielson)
1979
Congress.
95th Congress (1977-1978)

CRS-22
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 4643
Disaster Insurance Corporation Act
Establishes a Disaster Insurance
(St. Germain)
of 1977
Corporation to encourage private
insurance companies to provide
insurance against catastrophic
losses, and to reinsure such
companies against abnormally high
losses resulting form the provision
of such insurance.
94th Congress (1975-1976)
H.R. 1677
National Catastrophic Disaster
Establishes within the Office of
(Flood)
Insurance Act of 1975
Federal Insurance Administrator in
the Department of Housing and
Urban Development a program of
fe d e r a l i n s u r a n c e a g a i n s t
catastrophic natural disasters
utilizing the private insurance
industry, particularly risk-sharing
pools of insurance companies,
while preserving state regulation.
H.R. 8718
Federal Disaster Insurance Act of
Same as H.R. 1369 in 97th
(Danielson)
1975
Congress.
S. 741
National Catastrophic Disaster
Establishes a program of federal
(Scott)
Insurance Act of 1975
insurance against catastrophic
disasters. Similar to H.R. 1677.
S. 3884
Federal Insurance Administrator
Establishes a Federal Insurance
(Brooke)
Act
Administrator in HUD whose
function would be to issue charters
to corporations for carrying out the
business of insurance, particularly
as it relates to floods and federal
entities set up to manage flood
hazards under the National Flood
Insurance Act of 1968.
93rd Congress (1973-1974)
H.R. 4772
National Catastrophic Disaster
Same as H.R. 1677 in 94th
(Flood)
Insurance Act of 1973
Congress.
H.R. 4920
Federal Disaster Insurance
Creates a Federal Disaster
H.R. 6317
Corporation Act of 1973
Insurance Corporation to insure
H.R. 6317
against losses due to major natural
H.R. 7457
disaster.
H.R. 8833
(Danielson)
H.R. 6744
Natural Disaster Insurance Act of
Authorizes the Secretary of HUD to
(Roybal)
1973
establish a program of federal
insurance against natural disasters.
H.R. 6903
Federal Disaster Insurance Act of
Establishes a national program of
H.R. 6904
1973
f e d e r a l i n s u r a n c e a g a i n s t
H.R. 6905
catastrophic disasters.
(Flood)

CRS-23
Bill Number
(Sponsor)
Bill Title
Purpose
H.R. 7433
National Catastrophic Disaster
Same as H.R. 4772.
(Rees)
Insurance Act of 1973
H.R. 7604
Federal Disaster Insurance Act of
Establishes a national program of
(Morgan)
1973
f e d e r a l i n s u r a n c e a g a i n s t
catastrophic disasters.