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Subsection (b) requires insurers to add to the premium rate on insurance coverages for which the assessment is made an amount, to be approved by the Commissioner, sufficient to recover within not more than 3 years, any amounts assessed under subsection (a) during the preceding calendar year. The amount added to the premium rate for this purpose is to be stated as a separate charge made in addition to the premium and no commission of any form is to be paid or allowed on the separate charge to any agent or broker producing or selling the policy of insurance.

Section 1212. Delegation

This section authorizes the Commissioner to delegate any or all the functions vested in him by the bill.

Section 1213. Judicial review

This section would amend section 11-742(a) of the District of Columbia Code to make all final orders and decisions of the Commissioner under the act reviewable by the District of Columbia Court of Appeals.


Section 1301. Short title

This section provides that title XIII may be cited as the "National Flood Insurance Act of 1968."

Section 1302. Findings and declaration of purpose

This section sets forth congressional findings and purposes stating that a flood insurance program is feasible, can be initiated, and should complement and encourage measures to prevent flood damage; that if the program is commenced on a gradual basis, time and experience will enable it to be reappraised and expanded to make flood insurance available to other persons needing it; that the program can be carried out most effectively through a cooperative effort on the part of the Federal Government and the private insurance industry; and that a critical ingredient of such a program will be the encouragement of State and local governments to adopt land use regulations to govern the development of land exposed to flood damage. This section also calls upon the President to submit to the Congress, within 2 years after the enactment of the bill, a unified national program for flood plain management, including any further proposals for the allocation of costs among beneficiaries of flood protection.

Section 1303. Amendments to the Federal Flood Insurance Act of 1956

This section repeals all of the now inactive Federal Flood Insurance Act of 1956 (for which program funds were never appropriated) except section 15 (e). That section vested the Administrator of HUD's predecessor agency (the Housing and Home Finance Agency) with authority to borrow $500 million in the aggregate (or greater sums if authorized by the President) from the Secretary of the Treasury for flood insurance purposes. Under section 1309 of the bill, a portion of this authority is made available to the Secretary of HUD to carry out the responsibilities vested in him by the title.

Chapter I-The National Flood Insurance Program

Section 1304. Basic authority

Subsection (a) provides the basic authority for the Secretary of Housing and Urban Development to establish and carry out a national flood insurance program to facilitate the purchase by interested persons of insurance to provide against loss from physical damage to real and related personal property resulting from flood.

Subsection (b) directs the Secretary to carry out the program, to the maximum extent practicable, through arrangements for financial participation and risk-sharing by companies in the private insurance industry, and through other appropriate participation on a non-risksharing basis by insurance companies, agents, brokers, and adjustment organizations.

Section 1305. Scope of program and priorities

Subsection (a) provides that the flood insurance program is to be made available initially for one- to four-family residential properties, and for properties which are owned or leased and operated by small business concerns.

Subsection (b) provides that if the Secretary, on the basis of his studies and investigations under section 1307 and such other information as may be necessary, determines that coverage may feasibly be extended to other properties he shall take such action as may be necessary to provide for the extension of coverage to any types or classes of other residential or business properties, agricultural properties, private nonprofit organization properties or State or local governmental properties.

Subsection (c) limits flood insurance under the program to those States or areas (or subdivisions of areas) which the Secretary determines have evidenced a positive interest in the flood insurance program, and have given satisfactory assurances that by June 30, 1970, permanent land use and control measures consistent with prescribed criteria for land management and use will have been adopted, with the application and enforcement of these measures scheduled to commence as soon as technical information on floodways and on controlling flood elevations is available.

Section 1306. Nature and limitation of insurance coverage

Subsection (a) authorizes the Secretary, after consultation with the advisory committee (established by sec. 1318), representatives of the industry flood insurance pool (created under sec. 1331), and representatives of the State insurance commissioners, to provide by regulation for the general terms and conditions of insurability applicable to properties eligible for flood insurance. These terms and conditions would include the types and locations of eligible properties; the nature and limits of insurable losses; the classification, limitation, and rejection of risk; and appropriate minimum premiums and lossdeductibles.

Subsection (b) places limits on the amount of flood insurance coverage which may be made available at below-cost premium rates under the program. In the case of one- to four-family residential property, the limit would be $17,500 for any single dwelling unit and $30,000 for a two- to four-family structure, plus $5,000 per dwelling unit for its contents. In the case of small business properties, the limit with re

spect to any structure and its contents would be $30,000, plus $5,000 multiplied by the number of small business occupants, with the total thus derived being allocated among the small business occupants (or among them and the owner) in accordance with regulations prescribed by the Secretary; except that in no case could coverage for the structure itself exceed $30,000. In the case of any other type of property which may be covered in the future under subsequent legislation, the limit would be $30,000 for the structure itself and $5,000 per nonresidential occupant or dwelling unit for any contents related to the insured property.

Any of these limits may be doubled, but coverage in excess of the limit involved (whether such limit is one of the specified dollar limits or represents the limit of the coverage allocated to a small business concern) would require the payment of premium rates at full cost. Section 1307. Estimates of premium rates

Subsection (a) authorizes the Secretary, on the basis of studies and investigations and on information from the Government agencies most experienced in assessing the risks in flood plains, to estimate, on an area, subdivision, or other appropriate basis, (1) the risk premium (full-cost) rates for flood insurance, (2) the rates (if lower) which would be reasonable, would encourage the purchase of flood insurance, and would be consistent with the purposes of the title, and (3) the extent to which federally assisted or other flood protection measures initiated after the enactment of the bill affect the estimates of these rates. The Secretary would base his estimates of risk premium rates on a consideration of the risks involved and accepted actuarial principles; the rates would reflect applicable operating costs and allowances of participating private insurers, and, on a discretionary basis nondevelopmental Federal administrative expenses which may be incurred in carrying out the flood insurance program.

Subsection (b) directs the Secretary, to the maximum extent feasible in conducting the necessary rate studies and investigations, to utilize on a reimbursement basis the services of the Army Corps of Engineers, the Geological Survey, the Soil Conservation Service, the Environmental Science Services Administration, the Tennessee Valley Authority, and other appropriate Federal agencies.

Subsection (c) directs the Secretary to give a priority in conducting studies and investigations and making estimates under this section to those States or areas which have evidenced a positive interest in securing flood insurance under the program.

Section 1308. Establishment of chargeable premium rates

Subsection (a) authorizes the Secretary, after consultation with the advisory committee representatives of the industry flood insurance pool and representatives of the State insurance authorities, and on the basis of the rate estimates discussed above (sec. 1307), to establish chargeable premium rates and the areas, terms, and conditions for the application of such rates.

Subsection (b) provides that in prescribing chargeable rates the Secretary is to be guided by a number of factors, including the consideration of the respective risks involved, the differences in risks due to land-use measures, floodproofing, flood forecasting, and similar measures. The Secretary could, however, prescribe chargeable rates

at reasonable levels lower than those computed on this basis, where necessary, in order to encourage the purchase of flood insurance. The chargeable rates would be stated so as to reflect their basis, including the difference (if any) from the estimated full-cost risk premium


Subsection (c) provides that, in the case of property on which construction is started or which is substantially improved after the area involved is identified as one having special flood hazards (and such identification has been published under sec. 1360), the chargeable rate for insurance of such property or its contents will not be less than the estimated full-cost premium rate.

Subsection (d) provides that, where any chargeable premium rate is not less than the estimated risk premium rate for the area and includes an amount for administrative expenses of the Federal Government in carrying out the flood insurance program, a sum equal to that amount is to be paid to the Secretary for deposit in the national flood insurance fund established under section 1310.

Section 1309. Financing

Subsection (a) provides that the authority vested in the Housing and Home Finance Administrator by section 15(e) of the Federal Flood Insurance Act of 1956 (pertaining to the issue of notes or other obligations to the Secretary of the Treasury) will be available to the Secretary so as to permit him to borrow up to $250 million in carrying out his responsibilities under the program. It also rescinds the remainder of the borrowing authority created by the 1956 act above the amount permitted to be used in this program.

Subsection (b) requires that borrowed Treasury funds be deposited in the national flood insurance fund established under section 1310. Section 1310. National flood insurance fund

Subsection (a) authorizes the Secretary to establish in the U.S. Treasury a national flood insurance fund, which shall be available to make premium equalization payments to private insurers, reinsurance claims of insurers, and repayments of borrowed moneys to the Secretary of the Treasury. The fund would also be available to finance the operation of the flood insurance program in the event it is carried out through the facilities of the Federal Government, as provided in subsection (d).

Subsection (b) provides that the fund is to be credited with (1) borrowed Treasury funds, (2) reinsurance premiums payable by private insurers, (3) amounts advanced to the fund from appropriations in order to maintain it at adequate levels, (4) interest on the investment of surplus amounts in the fund, (5) administrative expenses included in chargeable premium rates and paid to the Secretary, and (6) receipts from other operations incident to the insurance program; and, in the event the flood insurance program is carried out through the facilities of the Federal Government, the insurance premiums paid. Subsection (c) provides for the investment of any surplus moneys in the fund in obligations issued or guaranteed by the United States. Subsection (d) provides that the fund will be available for all purposes incident to the operation of the flood insurance program if the Secretary finds (under section 1340) that the operation of such program should, in whole or in part, be carried out through the facilities

of the Federal Government. This would include the payment of costs incurred in the adjustment and payment of loss claims, and the payment of applicable operating costs of private insurers. Premiums paid by policyholders would be deposited in the fund.

Subsection (e) provides that an annual business-type budget for the fund will be prepared, transmitted to the Congress, considered and enacted in the manner prescribed by law for wholly owned Government corporations.

Section 1311. Operating costs and allowances

Subsection (a) directs the Secretary to negotiate with appropriate representatives of the insurance industry, from time to time, for the purpose of prescribing a current schedule of operating costs applicable to risk-sharing and non-risk-sharing participants in the program, and a current schedule of operating allowances applicable to risk-sharing insurers.

Subsection (b) provides that "operating costs" will include (1) expense reimbursements covering the direct and necessary expenses of selling and servicing flood insurance coverage, (2) reasonable compensation or commissions payable for selling and servicing flood insurance coverage, (3) loss adjustment expenses, and (4) other direct and necessary expenses which the Secretary finds are incurred in connection with selling or servicing flood insurance. "Operating allowances" will include amounts for profit and contingencies which the Secretary finds reasonable and necessary to carry out the purposes of the title.

Section 1312. Payment of claims

This section authorizes the Secretary to prescribe regulations establishing methods for the adjustment and payment of claims for losses to property covered by insurance under the flood insurance program.

Section 1313. Dissemination of flood insurance information

This section directs the Secretary to make information and data available to the public and to any State and local agency with regard to (1) the flood insurance program, its coverage and objectives, and (2) estimated risk premium rates and chargeable flood insurance premium rates, including the basis for and difference between such


Section 1314. Prohibition against certain duplications of benefits

Subsection (a) prevents Federal disaster assistance from being made available for any loss to the extent it is covered by flood insurance under the program, or (subject to subsection (b)) could have been so covered (at the maximum limits) if flood insurance had been available in the area involved more than 1 year prior to the loss.

Subsection (b) makes the prohibition against disaster assistance contained in subsection (a) inapplicable to low-income persons who might otherwise benefit from such assistance to the extent that the Secretary so provides by regulation in order to avoid undue hardship. Subsection (c) defines "Federal disaster assistance" to include any Federal financial assistance made available to any person as a result of (1) a major disaster, as determined by the President pursuant to "An Act to authorize Federal assistance to State and local govern

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