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FEDERAL INSURANCE ADMINISTRATOR

Sec. 1105. (a) There is hereby established the position of Federal Insurance Administrator, Federal Emergency Management Agency.

(b) Section 5315 of title 5, United States Code, is amended by adding at the end thereof the following new paragraph:

“(91) Federal Insurance Administrator, Federal Emergency Management Agency."

Approved August 1, 1968, 11:52 a.m.

EXCERPT FROM NATIONAL HOUSING ACT

(12 U.S.C. 1749 bbb)

TITLE XII-NATIONAL INSURANCE DEVELOPMENT

PROGRAM

PROGRAM AUTHORITY Sec. 1201. (a) The Director is authorized to establish and carry out the programs provided for in parts A, B, C, and D of this title.

(b)(1) The powers of the Director under part B shall terminate on November 30, 1983, and parts A, C, and D shall terminate on September 30, 1985, except to the extent necessary

(A) to continue reinsurance and direct insurance in accordance with the provisions of sections 1223(b) and 1231(c) until September 30, 1985, and September 30, 1986, respectively;

(B) to process, verify, and pay claims for reinsured losses and directly insured losses and perform other necessary functions in connection therewith; and

(C) to complete the liquidation and termination of the reinsurance and direct insurance programs. (2) On September 30, 1981, the Director shall submit to the Congress, for its approval, a plan for the liquidation and termination of the reinsurance and direct insurance programs.

(3) The Administrator shall notify participating insurers under part B that the reinsurance authority of the Administrator under such part shall terminate on November 30, 1983.

ADVISORY BOARD; MEETINGS, DUTIES, COMPENSATION, AND EXPENSES

Sec. 1202. (a)(1) There is established an Advisory Board (hereinafter called the "Board”) consisting of nineteen members appointed by the Director. Members of the Board shall be selected from among representatives of the general public, the insurance industry, State and local governments including insurance authorities, and the Federal Government. Of these members of the Board, not more than six shall be regular full-time employees of the Federal Government, and not less than four shall be representatives of the private insurance industry and not less than four shall be representatives of State insurance authorities.

(2) The Director shall designate a Chairman and a Vice Chairman of the Board.

(3) Each member shall serve for a term of two years, or until his successor has been appointed, except that no person who is appointed while a full-time employee of a State or the Federal Government shall serve in such position after he ceases to be so employed, unless he is reappointed.

(4) Any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of that term.

(b) The Chairman shall preside at all meetings, and the Vice Chairman shall preside in the absence or disability of the Chairman. In the absence of both the Chairman and Vice Chairman, the Director may appoint any member to act as Chairman pro tempore. The Board shall meet at such times and places as it or the Director may fix and determine, but shall hold at least four regularly scheduled meetings a year. Special meetings may be held at the call of the Chairman or any three members of the Board, or at the call of the Director.

(c) The Board shall review general policies and shall advise the Director with respect thereto, and perform such other functions as are specified in this title.

(d) The members of Board shall not, by reason of such membership, be deemed to be employees of the United States, and such members, except those who are regular full-time employees of the Government, shall receive for their services, as members, the per diem equivalent to the rate for grade GS-18 of the General Schedule under section 5332 of title 5, United States Code, when engaged in the performance of their duties, and each member of the Board shall be allowed travel expenses, including per diem in lieu of subsistence as authorized by section 5703 of such title for persons in the Government service employed intermittently.

DEFINITIONS Sec. 1203. (a) When used in this title, unless the context otherwise requires, the term

(1) “affordable rate” means such premium rate as the Director determines would permit the purchase of a specific type of insurance coverage by a reasonably prudent person in similar circumstances with due regard to the costs and benefits involved;

(2) "crime insurance” means insurance against losses resulting from robbery, burglary, larceny, and similar crimes, and may include broad form personal theft insurance, mercantile open stock insurance, mercantile robbery and mercantile safe burglary insurance, storekeepers burglary and robbery insurance, office burglary and robbery insurance, and may include business interruption insurance as the Director may designate; the term does not include automobile insurance or losses resulting from embezzlement;

(3) "directly insured losses" means losses on direct insurance claims and all direct expenses incurred in connection therewith, including but not limited to expenses for processing, verifying, and paying such losses;

(4) “environmental hazard” means any hazardous condition that might give rise to less under an insurance contract, but which is beyond the control of the property owner;

(5) "essential property insurance” means insurance against direct loss to property as defined and limited in standard fire policies and extended coverage endorsement thereon, as approved by the State insurance authority, and insurance for such types, classes, and locations of property against the perils of vandalism, malicious mischief, burglary, or theft, as the Director by rule shall designate. Such insurance shall not include automobile insurance and shall not include insurance on such types of manufacturing risks as may be excluded by the State insurance authority;

(6) "inspection facility”, with respect to any State, means any rating bureau or other person designated by the State insurance authority to perform inspections under fair access to insurance requirements plan under part A;

(7) "insurer" includes any insurance company or group of companies under common ownership which is authorized to engage in the insurance business under the laws of any State;

(8) "pool" means any pool or association of insurance companies in any State which is formed, associated, or otherwise created for the purpose of making property insurance more readily available;

(9) "losses resulting from riots or civil disorders” means losses resulting from riots or civil disorders under policies for standard lines of property insurance for which reinsurance is offered under section 1221, as determined under regulations of the Director;

(10) “property owner”, with respect to any real, personal, or mixed real and personal property, means any person having an insurable interest in such property;

(11) "person" includes any individual or group of individuals, corporation, partnership, or association, or any other organized group of persons;

(12) “reinsured losses” means losses on reinsurance claims and all direct expenses incurred in connection therewith including, but not limited to, expenses for processing, verifying, and paying such losses; (13) "standard line of property insurance” includes

(A) fire and extended coverage;
(B) vandalism and malicious mischief;
(C) other allied lines of fire insurance;
(D) burglary and theft;

(E) those portions of multiple peril policies covering perils similar to those provided for in subparagraphs (A), (B), (C), and (D);

(F) inland marine;
(G) glass;
(H) boiler and machinery;
(I) ocean marine;
(J) aircraft physical damage; and

(K) such other lines generally offered to the public which include protection against damage from riot or civil

commotion as the Director by regulation may designate; (14) “State” means the several States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions, and the Trust Territory of the Pacific Islands;

(15) “urban area” includes any municipality or other political subdivision of a State, subject to population or other limita

a tions defined in rules and regulations of the Director and such additional areas as may be designated by the State insurance authority;

(16) "year" means a calendar year, fiscal year of a company, or such other period of twelve months as may be designated by the Director; and

(17) "Director" means the Director of the Federal Emergency Management Agency. (b) The Director is authorized to define, by rules and regulations, any technical or trade term, insofar as such definition is not inconsistent with the provisions of this title.

PART A-STATEWIDE PLANS TO ASSURE FAIR ACCESS TO INSURANCE

REQUIREMENTS

FAIR PLANS

SEC. 1211. (a) Each insurer reinsured under this title shall cooperate with the State insurance authority in each State in which it is to acquire such reinsurance in establishing and carrying out statewide plans to assure fair access to insurance requirements (FAIR plans).

(b) Such plans must be approved by, and administered under the supervision of, the State insurance authority, or be authorized or required by State law, and shall be designed to make essential property insurance more readily available in, but not necessarily limited to, urban areas. Such plans may vary in detail from State to State because of local conditions, but all plans shall contain provisions that

(1) no risk shall be written at surcharged rates or be denied insurance coverage for essential property insurance unless there has first been an inspection of the risk, without cost to the owner, by an inspection facility and a determination by the insurer, based on information in the inspection report and other sources, that the risk does not meet reasonable underwriting standards at the applicable premium rate;

(2) inspection under the plan may be requested by the property owner or his representative, the insurer, or the insurance agent, broker or other producer, and such requests need not be made in writing;

(3) the absence of a building owner or his representative during an inspection shall not preclude a tenant seeking insurance from obtaining an inspection under the plan;

(4) following the inspection, a copy of the inspection report shall be promptly sent by the inspection facility to the insurer or insurers, or to an all-industry placement facility referred to under section 1212, as may be designated by the person requesting the inspection;

(5) after the inspection report is received by an insurer, it shall promptly determine if the risk meets reasonable underwriting standards at the applicable premium rate, and shall promptly return to the inspection facility the inspection report and provide an action report setting forth

(A)(i) the amount of coverage it agrees to write; and if the insurer agrees to write the coverage with a surcharge (if such a surcharge is authorized by the State insurance authority), the improvements necessary before it will provide coverage at an unsurcharged premium rate; and

(ii) the amount of coverage it agrees to write if certain improvements specified in the action report are made; or

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