HouseH.R. 10686119th Congress
Community Disaster Protection Act
Full Text
Official text as published. Use Ctrl+F / Cmd+F to search within the document.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10686 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 10686
To direct the Secretary of Homeland Security, acting through the
Administrator of the Federal Emergency Management Agency, to establish
a pilot program to award grants to covered entities to support the
design, development, facilitation, or implementation of community-based
catastrophe insurance.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 1, 2026
Mr. Min (for himself, Mr. Olszewski, Mr. Bera, Ms. Bonamici, Mr. Case,
Ms. Castor of Florida, Mr. Cisneros, Mr. Cohen, Ms. Dexter, Mr. Kennedy
of New York, Mr. Levin, Mr. Mullin, Ms. Ross, Ms. Salinas, and Mr.
Thanedar) introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To direct the Secretary of Homeland Security, acting through the
Administrator of the Federal Emergency Management Agency, to establish
a pilot program to award grants to covered entities to support the
design, development, facilitation, or implementation of community-based
catastrophe insurance.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Community Disaster Protection Act''.
SEC. 2. COMMUNITY-BASED CATASTROPHE INSURANCE PILOT PROGRAM.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Secretary, acting through the Administrator, shall
establish a pilot program to award grants to covered entities for the
design, development, or implementation of community-based catastrophe
insurance programs to--
(1) facilitate or offer community-based catastrophe
insurance for properties with high financial exposure to losses
from natural hazards or disasters, where such losses--
(A) are not covered under traditional property
insurance products offered on public or private markets
and available to members of the community; or
(B) present material and growing risks to existing
property insurance carriers or other members of the
insurance or risk transfer community;
(2) help stabilize the traditional private property
insurance market through innovative risk transfer approaches;
and
(3) promote or incentivize community-wide or individual
measures to reduce potential losses from, or increase
resilience to, natural hazards or disasters covered by such
program.
(b) Eligible Uses of Funds.--A covered entity receiving a grant
under this section may use such funds to carry out 1 or more of the
following activities in furtherance of a community-based catastrophe
insurance program pursuant to subsection (a):
(1) Conducting consumer research, including assessments of
the financial exposure of households to natural hazards or
disasters, anticipated or potential household recovery needs,
insurance literacy, property insurance coverage gaps,
affordability constraints, and preferred insurance delivery
channels.
(2) Conducting consumer outreach, education, and enrollment
activities targeted to community members, including through
community-based organizations, local governments, housing
providers, insurers or reinsurers, insurance or reinsurance
producers, financial institutions, or other entities.
(3) Utilizing or configuring catastrophe risk models,
hazard assessments, exposure data, or other analytical tools to
better understand or help identify the magnitude, nature, or
geographic scope of natural hazard or disaster risks in the
community.
(4) Designing and evaluating program features, including
with respect to parametric programs--
(A) evaluating, testing, and validating parametric
triggers based on objective, independently verifiable
hazard data, including meteorological, hydrological,
geological, or other available data sources; or
(B) evaluating and reducing basis risk, including
through an analysis of the correlation between proposed
parametric triggers and expected recovery costs and
losses.
(5) Developing regulatory, actuarial, and operational
frameworks or modifications necessary for the approval,
administration, and oversight of community-based catastrophe
insurance products.
(6) Establishing systems for delivery of insurance claims
or benefit payments within a reasonable period following a
triggering event.
(7) Conducting program evaluation and collecting data on
participation rates, payout timeliness, recovery outcomes,
consumer satisfaction, and cost-effectiveness with respect to
the program.
(8) Securing non-Federal financial support for a community-
based catastrophe insurance program, including--
(A) identifying, evaluating, soliciting, or
negotiating potential sources of non-Federal premium
assistance or risk capital, including State and local
appropriations, philanthropic contributions, community
development financial institutions, insurance-linked
securities, or other sources;
(B) establishing and administering accounts,
trusts, or other vehicles necessary to receive, hold,
and disburse non-Federal funds for the payment of
premiums or the provision of risk capital;
(C) designing premium assistance mechanisms to be
funded with non-Federal sources, including eligibility
criteria and contribution structures; and
(D) developing plans for the long-term financial
sustainability of the program, including identification
of sources of premium assistance and risk capital
following the conclusion of the pilot program.
(9) Entering into partnerships with 1 or more entities
identified in subsection (d).
(c) Program Features.--
(1) Policy requirements.--A community-based catastrophe
insurance product designed, developed, facilitated, or
implemented with funds awarded under this section shall--
(A) supplement traditional property insurance
products on existing public or private markets and not
be designed to replace or displace available private
market insurance coverage;
(B) limit coverage to losses attributable to
specified natural hazards or disasters that present
high financial risk to the community or the stability
of the private property insurance market pursuant to
subsection (a)(1);
(C) to the extent possible, provide clear and
conspicuous consumer disclosures, in plain language and
in the languages commonly used in the community, before
enrollment and upon each renewal, regarding--
(i) the perils covered, the perils
excluded, and any coverage limits, deductibles,
or waiting periods applicable to the product;
(ii) the manner in which coverage under the
product interacts with traditional property
insurance products held by the participant,
including whether recovery under the product
affects any claim, premium, or renewal under
such products;
(iii) the effect, if any, that receipt of a
payout under the product may have on
eligibility for, or the amount of, Federal,
State, or local disaster assistance, including
assistance subject to section 312 of the Robert
T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5155);
(iv) whether the product satisfies any
Federal or State requirement to obtain and
maintain insurance, including any requirement
under section 311 of such Act (42 U.S.C. 5154)
or under the Flood Disaster Protection Act of
1973 (42 U.S.C. 4002 et seq.);
(v) the identity of the entity bearing the
risk of loss, any financial strength rating of
such entity, and whether obligations under the
product are covered by any State insurance
guaranty association or similar mechanism;
(vi) the amount of the premium, the portion
of the premium paid by any party other than the
participant, the expected duration of any such
assistance, and the effect on the participant
if such assistance is reduced or discontinued;
(vii) the term of coverage, the conditions
under which coverage may be cancelled,
nonrenewed, or terminated, and the effect on
participants if the community-based catastrophe
insurance program is discontinued;
(viii) whether participation is voluntary
and the process by which a member of the
community may decline or withdraw from
participation;
(ix) the process for submitting questions,
claims, and complaints, including contact
information for the applicable State insurance
regulator; and
(x) any other disclosure applicable under
State law or regulatory requirements;
(D) ensure any premiums are actuarially sound,
transparent, and designed to support program
sustainability while promoting broad participation;
(E) promote or incentivize community-wide or
individual measures to reduce potential losses from, or
increase resilience to, natural hazards or disasters
covered by such product, including through, to the
extent possible--
(i) reinvestment of any excess funds of the
community-based catastrophe insurance program
to mitigate natural hazard or disaster risks
covered under the product; or
(ii) disclosure of community-wide or
individual measures that may reduce the risk of
losses covered under the product;
(F) provide for streamlined enrollment and claims
disbursement processes to the extent practicable;
(G) in instances where such a program is a
parametric program pursuant to paragraph (3)(B)--
(i) utilize an objective and predetermined
trigger condition or conditions for payout of
benefits, and provide for distribution of
benefits in a timely manner after verification
that such condition or conditions have been
met;
(ii) include a strategy to minimize basis
risk and regularly evaluate trigger
performance; and
(iii) in addition to the disclosures
required under subparagraph (C), provide clear
consumer disclosures regarding the differences
between indemnity insurance and parametric
products, trigger conditions, payout amounts
and limitations, potential effects of payouts
on other Federal assistance, potential basis
risk, and other relevant details; and
(H) comply with all applicable State insurance laws
and regulatory requirements, including any applicable
licensing, form filing, rate filing, and market conduct
requirements, and in furtherance of such compliance--
(i) prior to offering the product, seek
from the insurance regulator of each State in
which the product will be offered a
determination or written confirmation as to
whether the product constitutes insurance under
the laws of such State and, if so, the
licensing and filing requirements applicable to
the product and to the covered entity;
(ii) place coverage with an insurer
authorized or eligible to transact such
business in each such State, or with a risk-
bearing entity established and operating in
accordance with the laws of such State;
(iii) ensure that any sale, solicitation,
negotiation, or enrollment activity conducted
by the covered entity, or by any partner of the
covered entity, is performed by persons
licensed as insurance producers under
applicable State law or pursuant to an
exemption available under such law; and
(iv) provide the insurance regulator of
each such State with notice of the program
prior to implementation and with reasonable
access to program data for regulatory and
oversight purposes.
(2) Program requirements.--A covered entity administering a
community-based catastrophe insurance program designed,
developed, or implemented with funds awarded under this section
shall--
(A) to the extent feasible, facilitate or provide
access to financial incentives, technical assistance,
or guidance to members of the community to promote
investments, best practices, or other actions to reduce
potential losses from, or increase resilience to,
natural hazards or disasters risks covered by such
program;
(B) assess and communicate, publicly and to the
property insurance community, changes in the natural
hazard or disaster risk of policyholders or the region
served by such program, including changes resulting
from participation in community-based catastrophe
insurance and risk reduction investments undertaken by
property owners, renters, businesses, and other members
pursuant to such program, for the purposes of
negotiating insurance product terms that are
actuarially justified;
(C) comply with all applicable State insurance laws
and regulatory requirements, including securing
appropriate authorization from each State in which the
product will be offered with respect to covered
entities seeking to offer, issue, underwrite, or
administer community-based catastrophe insurance
pursuant to subparagraph (D)(iii); and
(D) utilize 1 or a mixture of the following
community-based insurance frameworks:
(i) The covered entity facilitates the
purchase of insurance between insurers and
members of the community, where such members
contract directly with the insurer and the
covered entity oversees community outreach and
education and conducts premium negotiation with
the insurer.
(ii) The covered entity arranges a
community-based catastrophe insurance product
on behalf of members of a community, where the
covered entity facilitates enrollment of such
members in the insurance product, payment to
the insurer, and payout of claims to such
members.
(iii) The covered entity establishes a
risk-bearing entity to offer, issue,
underwrite, or administer community-based
catastrophe insurance for members of the
community, including purchasing reinsurance,
managing the payment of insurance claims,
setting insurance product terms, and other
functions necessary to administer such
insurance.
(3) Authorized activities.--A covered entity administering
a community-based catastrophe insurance program designed,
developed, or implemented with funds awarded under this section
may--
(A) utilize mobile-based technologies or other
technologies for insurance delivery, consumer
information, and other purposes; or
(B) operate such program as a parametric risk
transfer model through which fixed or graduated
payments are provided to enrolled members of the
community when predetermined trigger conditions are met
following specified natural hazard or disaster events.
(d) Coordination.--In designing, developing, or implementing a
community-based catastrophe insurance program pursuant to subsection
(a), a covered entity receiving a grant under this section shall
coordinate with--
(1) members of the community, including property owners,
renters, businesses, and other entities targeted for
participation in the community-based catastrophe insurance
product;
(2) the insurance regulator of each State in which the
community-based catastrophe insurance program will operate;
(3) private industry, including insurers and reinsurers;
and
(4) other relevant entities with expertise in natural
hazard and disaster risk assessment, mitigation, recovery, or
insurability, or in the delivery of financial assistance or
benefits, including--
(A) other covered entities;
(B) insurance or reinsurance producers;
(C) nonprofit organizations;
(D) catastrophe risk modeling firms;
(E) academic and research institutions; or
(F) financial technology providers.
(e) Prioritization of Applicants.--In awarding grants under this
section, the Administrator shall conduct a competitive process for
considering and identifying applications from covered entities to
ensure grant recipients--
(1) represent broad geographic conditions, demographics,
unmet natural hazard or disaster resiliency or recovery needs,
and other factors to produce a wide range of data to evaluate
program performance and viability;
(2) target communities with high potential financial
exposure to losses from natural hazards or disasters covered
under the proposed community-based catastrophe insurance
program for participation in such program; and
(3) identify sufficient capital sources and public-private
partnerships to ensure the long-term sustainability and
effectiveness of the community-based catastrophe insurance
program developed with funds under this section.
(f) Guidance.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Administrator shall issue guidance
for the implementation of the pilot program established under
subsection (a), including with respect to--
(A) application requirements and evaluation
criteria;
(B) the minimum requirements described in
subsection (c)(1);
(C) allowable uses of funds under subsection (b),
including any limitation on administrative costs;
(D) coordination with State insurance regulators
regarding the requirements of subsection (c)(1)(H),
including model approaches to determining whether a
community-based catastrophe insurance product
constitutes insurance under the laws of a State; and
(E) the data reporting required under subsection
(h)(5).
(2) Consultation.--In developing guidance under paragraph
(1), the Administrator shall consult with--
(A) the National Association of Insurance
Commissioners;
(B) State insurance regulators;
(C) the Federal Insurance Office of the Department
of the Treasury;
(D) covered entities and organizations representing
covered entities; and
(E) insurers, reinsurers, and other participants in
the private risk transfer market, including insurance
and reinsurance producers.
(g) Termination.--The authorization to carry out the community-
based catastrophe insurance pilot program established under subsection
(a) shall terminate on September 30, 2031.
(h) GAO Reports.--
(1) Reports required.--The Comptroller General of the
United States shall, with respect to community-based
catastrophe insurance programs designed, developed, or
implemented pursuant to this section, conduct and submit to
Congress--
(A) a study not later than 1 year after at least 3
covered entities utilized such programs to address a
natural hazard or disaster event or not later than 3
years after establishment of the pilot program under
subsection (a), whichever occurs earlier; and
(B) a study not later than 1 year after the
conclusion of the pilot program established under
subsection (a).
(2) Evaluation criteria.--Each study conducted under
paragraph (1) shall contain an evaluation of the effectiveness
of programs designed, developed, or implemented pursuant to
this section with respect to--
(A) the timeliness of insurance claim, benefit
determinations, and payout delivery;
(B) the extent to which claim and benefit payments
addressed immediate natural hazard or disaster-related
financial losses and recovery expenses;
(C) the extent to which risk reduction investments
undertaken through the program were reflected in
premium, terms, or capacity;
(D) participation rates among eligible households
and communities, including demographic, geographic, and
income-based characteristics of participating and
nonparticipating households;
(E) affordability of coverage and the effectiveness
of any premium assistance mechanisms, including the
sources, sufficiency, and durability of any non-Federal
premium assistance or risk capital secured pursuant to
subsection (b)(8);
(F) administrative costs relative to benefits
delivered;
(G) impacts of the program on--
(i) post-disaster financial stability,
recovery outcomes, and reliance on other forms
of public assistance; and
(ii) awareness, assessment, mitigation, and
reduction of natural hazard or disaster risks
covered under such program;
(H) with respect to members of the community--
(i) understanding of program terms, trigger
conditions, and payout expectations, and the
effectiveness of outreach, education, and
enrollment strategies; and
(ii) satisfaction with program
administration and benefit delivery; and
(I) any statutory, regulatory, operational,
actuarial, or data-related barriers to broader
implementation of community-based catastrophe
insurance.
(3) Recommendations.--The study required under paragraph
(1)(B) shall include recommendations regarding--
(A) opportunities for Congress, the Department of
Homeland Security, and other Federal agencies to
support covered entities in the design, development,
and implementation of community-based catastrophe
insurance programs; and
(B) whether Congress should authorize, expand,
modify, or make permanent the pilot program established
under subsection (a).
(4) Evaluation of non-traditional risk transfer.--The study
required under paragraph (1)(B) shall include--
(A) an examination of what the Federal Emergency
Management Agency considers to be insurance under
section 311 of the Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5154);
(B) a review of recent developments and
advancements in the private risk transfer market,
including--
(i) the creation of risk transfer
mechanisms and instruments beyond traditional
property insurance since 1988; and
(ii) the efficacy of other community-based
catastrophe insurance demonstrations or
policies implemented in the United States; and
(C) an evaluation of--
(i) whether community-based catastrophe
insurance would adequately encourage
individuals, States, local governments, and
other covered entities to reduce exposure to
losses from natural hazards or disasters by
obtaining private coverage to supplement and
replace governmental assistance;
(ii) the design parameters and contract
terms required for non-traditional insurance
risk transfer mechanisms and instruments to be
considered by the Federal Emergency Management
Agency as insurance for purposes of any
requirements to obtain and maintain insurance
coverage under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C.
5121 et seq.); and
(iii) the impact that denial of recognition
of non-traditional insurance risk transfer
mechanisms and instruments by the Federal
Emergency Management Agency has on the
utilization of such products by States, local
governments, and other covered entities to
supplement or replace government assistance
through private options.
(5) Data sharing requirement.--A covered entity receiving
grant funding under this section shall be required to provide
appropriate and reasonable data to the Comptroller General on
the performance of the community-based catastrophe insurance
product designed, developed, facilitated, or implemented with
funds from this section to support reporting requirements under
this subsection. Nothing in this section shall require
disclosure of proprietary, trade secret, or confidential
insurer, reinsurer, or catastrophe-modeling information.
(6) Consultation.--In conducting each study required under
paragraph (1), the Comptroller General shall consult with--
(A) the National Association of Insurance
Commissioners;
(B) State insurance regulators;
(C) the Federal Insurance Office of the Department
of the Treasury; and
(D) recipients of grants awarded under this
section.
(i) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Federal Emergency Management Agency.
(2) Alaska native corporation.--The term ``Alaska Native
Corporation'' has the meaning given the term ``Native
Corporation'' in section 3 of the Alaska Native Claims
Settlement Act (42 U.S.C. 1602).
(3) Basis risk.--The term ``basis risk'' means the
potential difference between the actual loss from a natural
hazard or disaster event and the payout from a parametric
program.
(4) Community.--The term ``community'' means a defined
geographic region encompassing a group of properties, including
those owned or utilized by homeowners, renters, businesses, and
other relevant stakeholders.
(5) Community-based catastrophe insurance.--The term
``community-based catastrophe insurance'' means natural hazard
or disaster insurance that is arranged by a covered entity to
provide coverage to a community.
(6) Covered entities.--The term ``covered entities''--
(A) means--
(i) States, Tribal governments, or any
political subdivision thereof;
(ii) Native Hawaiian organizations;
(iii) Alaska Native Corporations;
(iv) community-based, nonprofit
organizations; or
(v) other relevant stakeholders as
identified by the Administrator with sufficient
authority to facilitate or offer coverage of
catastrophe insurance for a group of
properties; and
(B) shall, to the extent a covered entity offers,
issues, underwrites, administers, or otherwise bears
insurance risk, only include entities described in
subparagraph (a) that are authorized to do so under
applicable State insurance laws and regulatory
requirements.
(7) Native hawaiian organization.--The term ``Native
Hawaiian organization''--
(A) means an organization that--
(i) serves and represents the interests of
Native Hawaiians;
(ii) provides services to Native Hawaiians;
and
(iii) has expertise in Native Hawaiian
affairs; and
(B) includes Native Hawaiian organizations
registered with Office of Native Hawaiian Relations of
the Department of the Interior.
(8) Secretary.--The term ``Secretary'' means the Secretary
of Homeland Security.
(9) Tribal government.--The term ``Tribal government''
means the recognized governing body of an Indian Tribe.
(j) Preservation of State Authority.--Nothing in this Act,
including any grant condition, guidance, program requirement, or other
action taken pursuant to this Act, shall be construed to preempt,
supersede, impair, or otherwise affect the application of State
insurance laws or the authority of a State insurance regulator to
regulate the business of insurance. To the extent any provision of this
Act relates to the business of insurance, the Act of March 9, 1945
(commonly known as the ``McCarran-Ferguson Act'') shall apply. No
provision of this Act shall be construed to authorize any Federal
department, agency, officer, employee, contractor, grantee, or program
administrator to approve insurance products, establish insurance rates,
license insurers or producers, approve policy forms, regulate claims
handling, establish market conduct standards, or otherwise exercise
authority reserved to State insurance regulators under applicable State
laws and regulatory requirements.
(k) Authorization of Appropriations.--There is authorized to be
appropriated to the Secretary $20,000,000 for each of fiscal years 2027
through 2031 to carry out the grant program established under
subsection (a).
<all>