42 U.S.C. § 4081 — Services by insurance industry

Page 6055 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4081 Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsec. (a), was in the original a reference to ‘‘this title’’ meaning title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, known as the National Flood Insurance Act of 1968, which is classi- fied principally to this chapter. For complete classi- fication of this Act to the Code, see Short Title note set out under section 4001 of this title and Tables. AMENDMENTS 2012—Pub. L. 112–141 substituted ‘‘Administrator’’ for ‘‘Director’’ wherever appearing in text. 1989—Subsec. (b). Pub. L. 101–137 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as fol- lows: ‘‘Upon making the determination referred to in subsection (a) of this section, and at least thirty days prior to implementing the program of flood insurance authorized under subchapter I of this chapter through the facilities of the Federal Government, the Director shall make a report to the Congress and such report shall— ‘‘(1) state the reasons for such determination, ‘‘(2) be supported by pertinent findings, ‘‘(3) indicate the extent to which it is anticipated that the insurance industry will be utilized in pro- viding flood insurance coverage under the program, and ‘‘(4) contain such recommendations as the Director deems advisable.’’ 1983—Subsec. (a). Pub. L. 98–181, § 451(d)(1), in provi- sions preceding par. (1), substituted ‘‘Director’’ for ‘‘Secretary’’. Subsec. (a)(2). Pub. L. 98–181, § 451(d)(4), struck out ‘‘officers and employees of the Department of Housing and Urban Development, and’’ before ‘‘such other offi- cers’’. Pub. L. 98–181, § 451(d)(1), substituted ‘‘Director’’ for ‘‘Secretary’’. Subsec. (b). Pub. L. 98–181, § 451(d)(1), substituted ‘‘Di- rector’’ for ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 120 days following Aug. 1, 1968, or such later date prescribed by the Secretary but in no event more than 180 days following Aug. 1, 1968, see sec- tion 1377 of Pub. L. 90–448, set out as a note under sec- tion 4001 of this title. TRANSFER OF FUNCTIONS For transfer of all functions, personnel, assets, com- ponents, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emer- gency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security. For transfer of functions, personnel, assets, and li- abilities of the Federal Emergency Management Agen- cy, including the functions of the Director of the Fed- eral Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treat- ment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. § 4072. Adjustment and payment of claims; judi- cial review; limitations; jurisdiction In the event the program is carried out as pro- vided in section 4071 of this title, the Adminis- trator shall be authorized to adjust and make payment of any claims for proved and approved losses covered by flood insurance, and upon the disallowance by the Administrator of any such claim, or upon the refusal of the claimant to ac- cept the amount allowed upon any such claim, the claimant, within one year after the date of mailing of notice of disallowance or partial dis- allowance by the Administrator, may institute an action against the Administrator on such claim in the United States district court for the district in which the insured property or the major part thereof shall have been situated, and original exclusive jurisdiction is hereby con- ferred upon such court to hear and determine such action without regard to the amount in the controversy. (Pub. L. 90–448, title XIII, § 1341, Aug. 1, 1968, 82 Stat. 584; Pub. L. 98–181, title I [title IV, § 451(d)(1), (5)], Nov. 30, 1983, 97 Stat. 1229; Pub. L. 112–141, div. F, title II, § 100238(b)(1), July 6, 2012, 126 Stat. 958.) Editorial Notes AMENDMENTS 2012—Pub. L. 112–141 substituted ‘‘Administrator’’ for ‘‘Director’’ wherever appearing. 1983—Pub. L. 98–181, § 451(d)(5), inserted ‘‘original ex- clusive’’ before ‘‘jurisdiction’’. Pub. L. 98–181, § 451(d)(1), substituted ‘‘Director’’ for ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 120 days following Aug. 1, 1968, or such later date prescribed by the Secretary but in no event more than 180 days following Aug. 1, 1968, see sec- tion 1377 of Pub. L. 90–448, set out as a note under sec- tion 4001 of this title. TRANSFER OF FUNCTIONS For transfer of all functions, personnel, assets, com- ponents, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emer- gency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security. For transfer of functions, personnel, assets, and li- abilities of the Federal Emergency Management Agen- cy, including the functions of the Director of the Fed- eral Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treat- ment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. PART C—GENERAL PROVISIONS § 4081. Services by insurance industry (a) Contracting for services and facilities In administering the flood insurance program under this subchapter, the Administrator is au- thorized to enter into any contracts, agree- ments, or other appropriate arrangements which may, from time to time, be necessary for the purpose of utilizing, on such terms and condi- tions as may be agreed upon, the facilities and services of any insurance companies or other in- surers, insurance agents and brokers, or insur- ance adjustment organizations; and such con- Page 6056 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4081 tracts, agreements, or arrangements may in- clude provision for payment of applicable oper- ating costs and allowances for such facilities and services as set forth in the schedules pre- scribed under section 4018 of this title. (b) Certain laws inapplicable to contracting Any such contracts, agreements, or other ar- rangements may be entered into without regard to the provisions of section 6101 of title 41 or any other provision of law requiring competitive bid- ding and without regard to the provisions of chapter 10 of title 5. (c) Hold harmless The Administrator of the Federal Emergency Management Agency shall hold any agent or broker selling or undertaking to sell flood insur- ance under this chapter harmless from any judg- ment for damages against such agent or broker as a result of any court action by a policyholder or applicant arising out of an error or omission on the part of the Federal Emergency Manage- ment Agency, and shall provide any such agent or broker with indemnification, including court costs and reasonable attorney fees, arising out of and caused by an error or omission on the part of the Federal Emergency Management Agency and its contractors. The Administrator of the Federal Emergency Management Agency may not hold harmless or indemnify an agent or broker for his or her error or omission. (d) FEMA authority on transfer of policies Notwithstanding any other provision of this chapter, the Administrator may, at the discre- tion of the Administrator, refuse to accept the transfer of the administration of policies for coverage under the flood insurance program under this chapter that are written and adminis- tered by any insurance company or other in- surer, or any insurance agent or broker. (e) Risk transfer The Administrator may secure reinsurance of coverage provided by the flood insurance pro- gram from the private reinsurance and capital markets at rates and on terms determined by the Administrator to be reasonable and appro- priate, in an amount sufficient to maintain the ability of the program to pay claims. (Pub. L. 90–448, title XIII, § 1345, Aug. 1, 1968, 82 Stat. 585; Pub. L. 97–35, title III, § 341(e), Aug. 13, 1981, 95 Stat. 419; Pub. L. 98–181, title I [title IV, § 451(d)(1)], Nov. 30, 1983, 97 Stat. 1229; Pub. L. 103–325, title V, § 574, Sept. 23, 1994, 108 Stat. 2278; Pub. L. 112–141, div. F, title II, §§ 100238(b)(1), 100245, July 6, 2012, 126 Stat. 958, 966; Pub. L. 113–89, § 10, Mar. 21, 2014, 128 Stat. 1025; Pub. L. 117–286, § 4(a)(263), Dec. 27, 2022, 136 Stat. 4334.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (c) and (d), was in the original a reference to ‘‘this title’’ meaning title XIII of Pub. L. 90–448, Aug. 1, 1968, 82 Stat. 572, known as the National Flood Insurance Act of 1968, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 4001 of this title and Tables. CODIFICATION In subsec. (b), ‘‘section 6101 of title 41’’ substituted for ‘‘section 3709 of the Revised Statutes (41 U.S.C. 5)’’ on authority of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Con- tracts. AMENDMENTS 2022—Subsec. (b). Pub. L. 117–286 substituted ‘‘chapter 10 of title 5.’’ for ‘‘the Federal Advisory Committee Act (5 U.S.C. App.).’’ 2014—Subsec. (e). Pub. L. 113–89 added subsec. (e). 2012—Subsecs. (a), (c). Pub. L. 112–141, § 100238(b)(1), substituted ‘‘Administrator’’ for ‘‘Director’’ wherever appearing. Subsec. (d). Pub. L. 112–141, § 100245, added subsec. (d). 1994—Subsec. (b). Pub. L. 103–325 inserted before pe- riod at end ‘‘and without regard to the provisions of the Federal Advisory Committee Act (5 U.S.C. App.)’’. 1983—Subsec. (a). Pub. L. 98–181 substituted ‘‘Direc- tor’’ for ‘‘Secretary’’. 1981—Subsec. (c). Pub. L. 97–35 added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see section 371 of Pub. L. 97–35, set out as an Effective Date note under section 3701 of Title 12, Banks and Banking. EFFECTIVE DATE Section effective 120 days following Aug. 1, 1968, or such later date prescribed by the Secretary but in no event more than 180 days following Aug. 1, 1968, see sec- tion 1377 of Pub. L. 90–448, set out as a note under sec- tion 4001 of this title. TRANSFER OF FUNCTIONS For transfer of all functions, personnel, assets, com- ponents, authorities, grant programs, and liabilities of the Federal Emergency Management Agency, including the functions of the Under Secretary for Federal Emer- gency Management relating thereto, to the Federal Emergency Management Agency, see section 315(a)(1) of Title 6, Domestic Security. For transfer of functions, personnel, assets, and li- abilities of the Federal Emergency Management Agen- cy, including the functions of the Director of the Fed- eral Emergency Management Agency relating thereto, to the Secretary of Homeland Security, and for treat- ment of related references, see former section 313(1) and sections 551(d), 552(d), and 557 of Title 6, Domestic Secu- rity, and the Department of Homeland Security Reor- ganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6. OVERSIGHT AND EXPENSE REIMBURSEMENTS OF INSURANCE COMPANIES Pub. L. 112–141, div. F, title II, § 100224, July 6, 2012, 126 Stat. 936, provided that: ‘‘(a) SUBMISSION OF BIENNIAL REPORTS.— ‘‘(1) TO THE ADMINISTRATOR.—Not later than 20 days after the date of enactment of this Act [July 6, 2012], each property and casualty insurance company par- ticipating in the Write Your Own program shall sub- mit to the Administrator any biennial report re- quired by the Federal Emergency Management Agen- cy to be prepared in the prior 5 years by such com- pany. ‘‘(2) TO GAO.—Not later than 10 days after the sub- mission of the biennial reports under paragraph (1), the Administrator shall submit all such reports to the Comptroller General of the United States. ‘‘(3) NOTICE TO CONGRESS OF FAILURE TO COMPLY.— The Administrator shall notify and report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Serv- ices of the House of Representatives on any property and casualty insurance company participating in the Write Your Own program that failed to submit its bi- ennial reports as required under paragraph (1). Page 6057 TITLE 42—THE PUBLIC HEALTH AND WELFARE § 4082 ‘‘(4) FAILURE TO COMPLY.—A property and casualty insurance company participating in the Write Your Own program which fails to comply with the report- ing requirement under this subsection or the require- ment under section 62.23(j)(1) of title 44, Code of Fed- eral Regulations (relating to biennial audit of the flood insurance financial statements) shall be subject to a civil penalty in an amount of not more than $1,000 per day for each day that the company remains in noncompliance with either such requirement. ‘‘(b) METHODOLOGY TO DETERMINE REIMBURSED EX- PENSES.—Not later than 180 days after the date of en- actment of this Act [July 6, 2012], the Administrator shall develop a methodology for determining the appro- priate amounts that property and casualty insurance companies participating in the Write Your Own pro- gram should be reimbursed for selling, writing, and servicing flood insurance policies and adjusting flood insurance claims on behalf of the National Flood Insur- ance Program. The methodology shall be developed using actual expense data for the flood insurance line and can be derived from— ‘‘(1) flood insurance expense data produced by the property and casualty insurance companies; ‘‘(2) flood insurance expense data collected by the National Association of Insurance Commissioners; or ‘‘(3) a combination of the methodologies described in paragraphs (1) and (2). ‘‘(c) SUBMISSION OF EXPENSE REPORTS.—To develop the methodology established under subsection (b), the Administrator may require each property and casualty insurance company participating in the Write Your Own program to submit a report to the Administrator, in a format determined by the Administrator and with- in 60 days of the request, that details the expense levels of each such company for selling, writing, and servicing standard flood insurance policies and adjusting and servicing claims. ‘‘(d) FEMA RULEMAKING ON REIMBURSEMENT OF EX- PENSES UNDER THE WRITE YOUR OWN PROGRAM.—Not later than 12 months after the date of enactment of this Act [July 6, 2012], the Administrator shall issue a rule to formulate revised expense reimbursements to property and casualty insurance companies partici- pating in the Write Your Own program for their ex- penses (including their operating and administrative expenses for adjustment of claims) in selling, writing, and servicing standard flood insurance policies, includ- ing how such companies shall be reimbursed in both catastrophic and noncatastrophic years. Such reim- bursements shall be structured to ensure reimburse- ments track the actual expenses, including standard business costs and operating expenses, of such compa- nies as closely as practicably possible. ‘‘(e) REPORT OF THE ADMINISTRATOR.—Not later than 60 days after the effective date of the final rule issued pursuant to subsection (d), the Administrator shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Fi- nancial Services of the House of Representatives a re- port containing— ‘‘(1) the specific rationale and purposes of such rule; ‘‘(2) the reasons for the adoption of the policies con- tained in such rule; and ‘‘(3) the degree to which such rule accurately rep- resents the true operating costs and expenses of prop- erty and casualty insurance companies participating in the Write Your Own program. ‘‘(f) GAO STUDY AND REPORT ON EXPENSES OF WRITE YOUR OWN PROGRAM.— ‘‘(1) STUDY.—Not later than 180 days after the effec- tive date of the final rule issued pursuant to sub- section (d), the Comptroller General of the United States shall— ‘‘(A) conduct a study on the efficacy, adequacy, and sufficiency of the final rules issued pursuant to subsection (d); and ‘‘(B) report to the Committee on Banking, Hous- ing, and Urban Affairs of the Senate and the Com- mittee on Financial Services of the House of Rep- resentatives on the findings of the study conducted under subparagraph (A). ‘‘(2) GAO AUTHORITY.—In conducting the study and report required under paragraph (1), the Comptroller General— ‘‘(A) may use any previous findings, studies, or reports that the Comptroller General previously completed on the Write Your Own program; ‘‘(B) shall determine if— ‘‘(i) the final rule issued pursuant to subsection (d) allows the Federal Emergency Management Agency to access adequate information regarding the actual expenses of property and casualty in- surance companies participating in the Write Your Own program; and ‘‘(ii) the actual reimbursements paid out under the final rule issued pursuant to subsection (d) accurately reflect the expenses reported by prop- erty and casualty insurance companies partici- pating in the Write Your Own program, including the standard business costs and operating ex- penses of such companies; and ‘‘(C) shall analyze the effect of the final rule issued pursuant to subsection (d) on the level of participation of property and casualty insurers in the Write Your Own program.’’ [For definitions of terms used in section 100224 of Pub. L. 112–141, set out above, see section 4004 of this title.] § 4082. Use of insurance pool, companies, or other private organizations for certain pay- ments (a) Authorization to enter into contracts for cer- tain responsibilities In order to provide for maximum efficiency in the administration of the flood insurance pro- gram and in order to facilitate the expeditious payment of any Federal funds under such pro- gram, the Administrator may enter into con- tracts with pool formed or otherwise created under section 4051 of this title, or any insurance company or other private organizations, for the purpose of securing reinsurance of insurance coverage provided by the program or for the pur- pose of securing performance by such pool, com- pany, or organization of any or all of the fol- lowing responsibilities: (1) Estimating and later determining any amounts of payments to be made. (2) Receiving from the Administrator, dis- bursing, and accounting for funds in making such payments. (3) Making such audits of the records of any insurance company or other insurer, insurance agent or broker, or insurance adjustment or- ganization as may be necessary to assure that proper payments are made. (4) Placing reinsurance coverage on insur- ance provided by such program. (5) Otherwise assisting in such manner as the contract may provide to further the pur- poses of this chapter. (b) Terms and conditions of contract Any contract with the pool or an insurance company or other private organization under this section may contain such terms and condi- tions as the Administrator finds necessary or appropriate for carrying out responsibilities under subsection (a), and may provide for pay- ment of any costs which the Administrator de- termines are incidental to carrying out such re- sponsibilities which are covered by the contract.