of coverage it agrees to write, and if the insurer declines the risk, it must clearly state the specific reasons;

(6) An insurer declining a risk, or agreeing to provide coverage only if the property is improved, will promptly send a copy of the inspection and action reports to the property owner who requested the insurance and the State insurance authority. At the time the insurer sends these reports to the property owner, it must also explain clearly his right to appeal the decision of the insurer to the State insurance authority;

(7) All policies under the plan will be written promptly and will be separately coded for compilation and study purposes;

(8) The inspection facility will submit periodic reports on the operation of the plan to the State insurance authority and to the Secretary. This report would set forth, by individual insurer, the number of risks inspected under the plan, the number of risks accepted, the number or risks conditionally accepted and reinspections made, the number of risks declined, and other information;

(9) Each insurer participating in the plan must give a policyholder sufficient notice prior to cancellation or nonrenewal to allow the policyholder to seek a new policy under the plan and will explain to the policyholder the procedures for obtaining insurance through the plan; and

(10) A cooperative and continuing public education program will be undertaken by the participating insurers, agents, and brokers.

Section 1212. All-industry placement facility

This section requires all plans to include an all-industry placement facility, doing business with every insurer in the State participating in the plan. This facility would help agents and brokers place insurance up to the full insurable value of a property, except to the extent that deductibles, percentage participation clauses, and other underwriting devices might be employed to meet special problems of insurability. The facility would seek to place this business equitably among the companies with which it is doing business.

Section 1213. Industry cooperation

This section requires every insurer participating in a plan to file a statement pledging its full participation and cooperation in carrying out the plan with the State insurance authority and with the Secretary. It would prohibit an insurance company from discouraging in any way its agents and brokers from submitting applications for insurance through a plan.

Section 1214. Plan evaluation

Subsection (a) provides for the State insurance authority to transmit copies of a plan, and any amendments, to the Secretary and to advise him concerning the operation of the plan, and the need to adopt other programs to make essential property insurance more readily available.

Subsection (b) authorizes the Secretary, after full consultation with the advisory board, to modify the criteria for plans if he finds, on the basis of experience, such action is necessary or desirable to carry out the purposes of the title. The Secretary would also be authorized to waive compliance with one or more of the plan criteria upon certification by the State insurance authority that compliance is unnecessary or inadvisable under local conditions or State law.

Part B-Reinsurance Coverage

Section 1221. Reinsurance of losses from riots or civil disorders Subsection (a) authorizes the Secretary to offer to any insurer or pool, subject to the conditions set forth in section 1223, reinsurance against property losses resulting from riots or civil disorders. Reinsurance would be offered on fire and extended coverage, vandalism and malicious mischief, other allied lines of fire insurance, burglary and theft, and those portions of multipleperil policies covering perils similar to the foregoing. Reinsurance would be offered on all of these lines, taken together. Companies acquiring reinsurance on all such lines would be eligible to purchase reinsurance on any other individual standard lines of property insurance.

Subsection (b) provides that reinsurance coverage may be provided immediately following enactment of the title by means of a written binder which is to expire at the end of a 90-day period or upon the effective date of the reinsurance contract between an insurer and the Secretary, whichever is earlier.

Subsection (c) provides that no reinsurance will be offered to an insurer in a State after the expiration of the binder referred to in subsection (b) unless the insurer is participating in that State's plan as described in part A.

Section 1222. Reinsurance agreements and premiums

Subsection (a) authorizes the Secretary, during the first year following enactment of the title, to enter into reinsurance contracts in consideration of payment of such premium or other charge which the Secretary deems adequate to obtain an aggregate fund in excess of the estimated amount of insured riot losses during 1967, assuming a substantial proportion of property insurance written will be reinsured. Thereafter, the Secretary may increase or decrease such premiums for reinsurance if it is found, after full consultation with the advisory board and the National Association of Insurance Commissioners, that such action is necessary or appropriate.

Subsection (b) provides that the reinsurance offered shall reimburse an insurer for its total proved and approved claims for losses resulting from riots or civil disorders during the term of the reinsurance contract, in excess of the amount of the insurer's retention of such losses as provided in the reinsurance contract. Subsection (c) authorizes the Secretary to include such terms and conditions in reinsurance contracts as are necessary to carry out the purposes of the title, but such terms and conditions shall be uniform throughout the country.

Subsection (d) provides that reinsurance contracts will be for a term expiring on April 30, 1969, and on April 30 each year thereafter and shall be entered into within 90 days of the effective date of this title or within 90 days prior to April 30 each year thereafter, or within 90 days after an insurer is authorized to write insurance in a State which it was not so authorized to write in the preceding year.

Section 1223. Conditions of reinsurance

Subsection (a) sets forth various conditions under which the Secretary will terminate existing reinsurance and will not offer new coverage on policies written after the termination date.

Paragraph (1) provides that reinsurance will not be offered in any State if the State itself, its political subdivisions, or a governmental corporation or fund established pursuant to State law, does not assume a portion of the responsibility for assisting the Secretary to reinsure against losses resulting from riots or civil disorders, within 1 year after the effective date of the act, or if the appropriate State legislative body has not met in regular session during that year by the close of its next regular session. The State would not be called on to reimburse the Secretary until the reinsured losses paid by the Secretary in a calendar year are in excess of (A) the total reinsurance premiums received in the State during the year, plus (B) the excess of reinsurance premiums received in the State over reinsured losses paid by the Secretary during the preceding period measured from the most recent calendar year in which the State had reimbursed the Secretary for reinsured losses. After the Secretary has paid such amount of reinsured losses in a calendar year, the State would reimburse the Secretary for his additional reinsured losses in that State during the year, in an amount up to 5 percent of the aggregate property insurance premiums earned in the State during the preceding calendar year on those lines of insurance reinsured by the Secretary in the State in the current year. Under the foregoing formula, State sharing would not be required unless losses in a State exceeded the sum of (1) the premiums paid by the insurance industry for reinsurance in that State (premiums paid in the year in which the losses occurred plus premiums paid in previous years in excess of reinsured losses paid), and (2) the companies' retained losses.

Paragraph (2) provides that reinsurance will cease to be available on new policies written in a State after 30 days following the Secretary's notification to the insurer that the Secretary, after consultation with the State insurance authority, finds that a suitable program, in addition to the plan set forth in part A, is required to make essential property insurance more readily available in the State without regard to environmental hazards, and that such program has not been adopted. This paragraph, however, would not become effective until 2 years after the effective date of this act, or at such earlier date as the Secretary, after consultation with the State insurance authority, may determine. Paragraph (3) provides that reinsurance will cease to be available on policies written in a State after 30 days following notification to the insurer that the Secretary or the State insurance author

ity finds that the insurer is not fully participating in the plan in the State, in an existing pool, or in any other existing program found by the Secretary to aid in making essential property insurance more readily available in the State. The Secretary could not make such a finding unless he has requested and considered the views of the State insurance authority, or the State authority has failed to respond to a written request for such views within a reasonable period of time.

Paragraph (4) provides that reinsurance will not be available on new policies writen by an insurer following a merger, acquisition, consolidation, or reorganization involving an insurer with reinsurance on one or more lines of insurance and an insurer with or without such reinsurance unless the surviving company meets the criteria of eligibility for reinsurance other than as provided in section 1222(d) and promptly pays any reinsurance premiums due.

Paragraph (5) provides that reinsurance will terminate upon. cancellation by the insurer.

Subsection (b) provides that if reinsurance is terminated or canceled under this section coverage may continue for policies written during the time reinsurance was in force upon payment of an appropriate premium or other charge.

Section 1224. Recovery of premiums; statute of limitations

This section authorizes the Secretary to recover any unpaid premiums for reinsurance. It imposes a 5-year statute of limitations on the recovery by an insurer of excess premiums paid to the Secretary or the recovery by the Secretary for reinsurance premiums due; and provides that if an insurer has filed false documents with the Secretary with the intent to evade payment of the appropriate premium the 5-year period will not begin until the Secretary discovers the deception.

Part C-Provisions of General Applicability

Section 1231. Claims and judicial review

This section authorizes the Secretary to adjust and pay claims, for proved and approved losses covered by reinsurance and authorizes any claimant, upon disallowance of a claim, to institute an action within 1 year after the receipt of the notice of disallowance in the U.S. district court for the district in which the insured property was situated. Jurisdiction would be conferred on the district court without regard to the amount in controversy. Section 1232. Fiscal intermediaries and servicing agents

Subsection (a) authorizes the Secretary to enter into contracts with any insurer or private organization for performance of any or all of the following functions: (1) Estimating or determining reinsurance claim payment amounts; (2) receiving funds and disbursing and accounting for them in making reinsurance claim payments; (3) auditing the records of any insurer to assure proper payments; (4) establishing the basis of liability for reinsurance; and (5) otherwise furthering the purposes of the act as provided in the contract.

Subsection (b) provides that surety bonds may be required from the insurer or private organization, or any of its officers or employees participating in carrying out the contract, in amounts deemed appropriate by the Secretary. No individual designated to certify payments and no officer in the Federal Government disbursing funds in accordance with a proper certification of payments would be liable with respect to such payments in the absence of gross negligence or intent to defraud the United States. Section 1233. National insurance development fund

Subsection (a) authorizes a national insurance development fund to be used by the Secretary to carry out the programs authorized under this new title. The fund would be available without fiscal year limitation to: (1) Pay reinsurance claims under the reinsurance coverages provided in part B; (2) pay the administrative expenses of the program; and (3) repay with interest, sums which may be borrowed from the Secretary of the Treasury under section 520(b) of the National Housing Act.

Subsection (b) provides that the fund is to be credited with: (1) Reinsurance premiums paid by insurers in connection with the reinsurance coverages provided under part B; (2) amounts advanced to the fund from appropriations to maintain the fund in a condition adequate to meet its liabilities; (3) interest on investments of the fund; (4) receipts from other sources which may be deposited in the fund; and (5) funds which may be borrowed under section 520 (b) and deposited in the fund.

Subsection (c) authorizes the Secretary, after determination that fund moneys exceed current needs, to invest such amounts as he deems advisable through the Secretary of the Treasury, in obligations isued or guaranteed by the United States.

Subsection (d) provides that an annual business-type budget for the fund shall be prepared, transmitted to Congress, considered, and enacted in the manner prescribed by sections 102, 103, and 104 of the Government Corporation Control Act. Section 1234. Records, annual statements, and audits

Subsection (a) requires any insurer acquiring reinsurance to furnish the Secretary with summaries and analyses of information in their records in such forms as the Secretary, in cooperation with the State insurance authority, shall prescribe by rules and regulations. The Secretary would be required to use Štate insurance authority examination reports and facilities to the maximum extent feasible.

Subsection (b) requires every insurer acquiring reinsurance to file with the Secretary a copy of the annual statement, or any amendment thereto, that it files with the State insurance authority of its domiciliary State, at the time it files the statement or amendment with the insurance authority.

Subsection (c) requires insurers or other persons executing contracts with the Secretary under sections 1222 or 1232 to keep such reasonable records as will facilitate an effective audit of liability for reinsurance payments by the Secretary.

Subsection (d) authorizes the Secretary and the Comptroller General of the United States, or their designees, to have access to