Number: RS22756
Title: The Homeowners' Defense Act: An Overview
Authors: Rawle O. King, Government and Finance Division 
Abstract: Legislation (H.R. 3355/S 2310) has been introduced to establish a not-for-profit corporation, the National Catastrophe Risk Consortium, to facilitate states in creating pools of catastrophe risks that are partially transferred to capital market investors through ILS and financial products that provide insurers with a mechanism to generate sufficient funds if an event occurs. The bill also would extend federal direct loans to qualified state reinsurance programs experiencing capital liquidity shortages and longterm debt needs. The aim of the liquidity loans, which must be repaid, is to ensure that participating programs can access immediate cash to make good on their obligations after a catastrophic event. The objective of the long-term loan program is to ensure that qualifying reinsurance programs can find a buyer of long-term debt to finance large loss events. Both the Consortium and loan programs seek to promote a stable catastrophe insurance market and avoid widespread insurer insolvencies after a natural catastrophe. The Consortium would operate as a congressionally chartered not-for-profit corporation. H.R. 3355 also clarifies that the federal government will bear no liabilities from the actions of the Consortium.
Pages: 6
Date: January 30, 2008