42 USC 4017a - Reserve Fund

U.S Code last checked for updates: Jan 18, 2025

§ 4017a.

Reserve Fund

(a)

Establishment of Reserve Fund

In carrying out the flood insurance program authorized by this subchapter, the Administrator shall establish in the Treasury of the United States a National Flood Insurance Reserve Fund (in this section referred to as the “Reserve Fund”) which shall—

(1)

be an account separate from any other accounts or funds available to the Administrator; and

(2)

be available for meeting the expected future obligations of the flood insurance program, including—

(A)

the payment of claims;

(B)

claims adjustment expenses; and

(C)

the repayment of amounts outstanding under any note or other obligation issued by the Administrator under section 4016(a) of this title.

(b)

Reserve ratio

Subject to the phase-in requirements under subsection (d), the Reserve Fund shall maintain a balance equal to—

(1)

1 percent of the sum of the total potential loss exposure of all outstanding flood insurance policies in force in the prior fiscal year; or

(2)

such higher percentage as the Administrator determines to be appropriate, taking into consideration any circumstance that may raise a significant risk of substantial future losses to the Reserve Fund.

(c)

Maintenance of reserve ratio

(1)

In general

The Administrator shall have the authority to establish, increase, or decrease the amount of aggregate annual insurance premiums to be collected for any fiscal year necessary—

(A)

to maintain the reserve ratio required under subsection (b); and

(B)

to achieve such reserve ratio, if the actual balance of such reserve is below the amount required under subsection (b).

(2)

Considerations

In exercising the authority granted under paragraph (1), the Administrator shall consider—

(A)

the expected operating expenses of the Reserve Fund;

(B)

the insurance loss expenditures under the flood insurance program;

(C)

any investment income generated under the flood insurance program; and

(D)

any other factor that the Administrator determines appropriate.

(3)

Limitations

(A)

Rates

(B)

Use of additional annual insurance premiums

(4)

Deposit of premium surcharges

(d)

Phase-in requirements

The phase-in requirements under this subsection are as follows:

(1)

In general

(2)

Amount satisfied

(3)

Exception

(e)

Limitation on reserve ratio

In any given fiscal year, if the Administrator determines that the reserve ratio required under subsection (b) cannot be achieved, the Administrator shall submit, on a calendar quarterly basis, a report to Congress that—

(1)

describes and details the specific concerns of the Administrator regarding the consequences of the reserve ratio not being achieved;

(2)

demonstrates how such consequences would harm the long-term financial soundness of the flood insurance program; and

(3)

indicates the maximum attainable reserve ratio for that particular fiscal year.

(f)

Investment

(Pub. L. 90–448, title XIII, § 1310A, as added Pub. L. 112–141, div. F, title II, § 100212, July 6, 2012, 126 Stat. 922; amended Pub. L. 113–89, §§ 8(b), 20, Mar. 21, 2014, 128 Stat. 1024, 1028.)

cite as: 42 USC 4017a