(d) "Inspection bureau" means the rating bureau or other organization designated by the Comissioner to perform inspections to determine the condition of the properties for which basic property insurance is sought.

(e) "Industry placement facility" means the facility formed by all insurers licensed to write and engaged in writing basic property insurance (including homeowners and commercial multiperil policies) within the District of Columba to assist agents, brokers and applicants in securing basic property insurance.

(f) "Premiums written" means gross direct premiums written on all policies of such basic property insurance as may be designated by the Commissioner and such basic property insurance components of all multiperil policies as may be designated and computed by the Commissioner, less all premiums and dividends returned to policyholders or the unusued or unabsorbed portions of premium deposits.

(g) "Property owner" means any person having an insurable interest in real, personal, or mixed real and personal property.

FAIR ACCESS TO INSURANCE REQUIREMENTS

SEC. 4. The Commissioner is authorized to adopt such rules and regulations applicable to insurers, agents, and brokers as he deems necessary to assure all propery owners fair access to basic property insurance through the normal insurance markets, including, but not limited to, rules and regulations concerning

(a) the manner and scope of inspections of risks by an inspection bureau; (b) the preparation and filing of inspection reports and reports on actions taken in connection with inspected risks, and summaries thereof;

(c) prohibition against penalizing agents and brokers for soliciting applications for insurance on properties which are inspected; and (d) the operation of an industry placement facility.

INDUSTRY PLACEMENT FACILITY

SEC. 5. (a) Within thirty days after the effective date of this Act all insurers licensed to write and engaged in writing in the District of Columbia, on a direct basis, basic property insurance or any component thereof in multiperil policies, shall establish an Industry Placement Facility to formulate and administer a program, subject to disapproval by the Commissioner in whole or in part, to seek the equitable apportionment among such insurers of basic property insurance which may be afforded applicants in the District of Columbia whose property is insurable in accordance with reasonable underwriting standards and who individually or through their insurance agent or broker request the aid of the Facility to procure such insurance. The Facility shall seek to place insurance with one or more participating companies up to the full insurable value of the risk, if requested, except to the extent that deductibles, percentage participation clauses and other underwriting devices are employed to meet special problems of insurability.

(b) Each such insurer shall participate in the Industry Placement Facility program in accordance with the established rules of the program as a condition of its authority to transact such kinds of insurance in the District of Columbia: Provided, That in lieu of revoking or suspending the certificate of authority of any company for any failure to comply with the requirements of this subsection, the Commissioner may subject such company to a penalty of not more than $5,000 when in his judgment he finds that the public interest would be best served by the continued operation of the company in the District of Columbia.

JOINT UNDERWRITING ASSOCIATION

SEC. 6. (a) The Commissioner is authorized to establish by order of a joint underwriting association if he finds, after notice and hearing, that such association is necessary to carry out the purposes of this Act. Such joint underwriting association shall consist of all insurers licensed to write and engaged in writing in the District of Columbia, on a direct basis, such basic property insurance as may be designated by the Commissioner or any component thereof in multiperil policies.

(b) Every such insurer shall be and remain a member of the association and shall comply with all requirements of membership as a condition of its authority to transact such kinds of insurance in the District of Columbia: Provided, That

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in lieu of revoking or suspending the certificate of authority of any company for failure to comply with any requirement of this subsection, the Commissioner may subject such company to a penalty of not more than $5,000 when in his judgment he finds that the public interest would be best served by the continued operation of the company in the District of Columbia.

(c) (1) Within sixty days following the effective date of the order of the Commissioner under this section the association shall submit to him a proposed plan of operation, consistent with the provisions of this Act, which shall provide for economical, fair, and nondiscriminatory administration of the association and for the prompt and efficient provision directly, through reinsurance, or both, of such basic property insurance as may be designated by the Commissioner without regard to environmental hazards, including, but not limited to, provisions concerning

(A) preliminary assessment of all members for initial expenses necessary to commence operations;

(B) establishment of necessary facilities;

(C) management and operation of the association;

(D) assessment of members to defray losses and expenses;

(E) commission arrangements;

(F) reasonable underwriting standards; and

(G) such other matters as the Commissioner may designate.

(2) The plan of operation shall be subject to approval by the Commissioner in whole or in part. If the Commissioner disapproves all or any part of the proposed plan of operation, the association shall within thirty days thereafter submit for his review an appropriately revised plan of operation and, if the association fails so to do, or if the revised plan so filed is unacceptable to the Commissioner, the Commissioner shall promulgate a plan of operation.

(3) The association may, on its own initiative amend such plan, subject to approval by the Commissioner, and shall amend such plan at the direction of the Commissioner if he finds such action is necessary to carry out the purposes of this

Act.

(d) All members of the association shall participate in its writings, expenses, profits, and losses, or in such categories thereof as may be separately established by the Association, subject to approval by the Commissioner, in the proportion that the premuims written by each such member (but excluding (1) premiums for insurance on automobiles and (2) that portion of premiums attributable to any insurance written directly by the association) during the preceding calendar year bear to the aggregate premiums written in the District of Columbia by all members of the association, or in accordance with such other formula as devised by the association, subject to approval by the Commissioner. Such participation by each insurer in the association shall be determined annually on the basis of such premiums written during the preceding calendar year as disclosed in the annual statements and other reports filed by the insurer with the Commissioner. (e) The association shall be governed by a Board of eleven directors, elected annually by cumulative voting by the members of the association, whose votes in such election shall be weighted in accordance with the proportionate amount of each member's net direct premiums written in the District of Columbia during the preceding calendar year. The first board shall be elected at a meeting of the members or their authorized representatives, which shall be held within thirty days after the effective date of the order under this section establishing the association, at a time and place designated by the Commissioner.

EXAMINATION BY COMMISSIONER

SEC. 7. The operation of the inspection bureau, the industry placement facility, and any joint underwriting association shall at all times be subject to the supervision and regulation of the Commissioner. The Commissioner shall have the power of visitation of and examination into such operations and free access to all the books, records, files, papers, and documents that relate to such operations, may summon and quality witnesses under oath, and may examine directors, officers, agents, or employees or any other person having knowledge of such operations.

WAIVER OF LIABILITY

SEC. 8. There shall be no liability on the part of, and no cause of action of any nature shall arise against insurers, the inspection bureau, the industry placement

facility, the joint underwriting association or their agents or employees, or any officer or employee of the District of Columbia, for any statements made in good faith by them concerning the insurability of property in any reports or other communications or at the time of the hearings conducted in connection therewith, or in the findings with respect thereto required by the provisions of this Act. The reports and communications of the inspection bureau, the industry placement facility, and joint underwriting association with respect to individual properties shall not be open to inspection by, or otherwise available to, the public.

ANNUAL REPORTS BY ASSOCIATION

SEC. 9. The association shall file with the Commissioner, annually on or before the first day of March, a statement which shall contain information with respect to its transactions, condition, operations, and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed by the Commissioner and shall be in such form as is approved by him. The Commissioner may at any time require the association to furnish him with additional information with respect to its transactions, condition or any matter connected therewith which he considers to be material and which will assist him in evaluating the scope, operation, and experience of the association.

APPEALS

SEC. 10. (a) Any applicant for insurance and any affected insurer may appeal to the Commissioner within ninety days after any ruling, action, or decision by or on behalf of the inspection bureau, industry placement facility, or joint underwriting association.

(b) All final orders or decisions of the Commissioner made pursuant to this Act shall be subject to review by the District of Columbia Court of Appeals pursuant to section 11-742 of the District of Columbia Code.

REIMBURSEMENT OF NATIONAL INSURANCE DEVELOPMENT CORPORATION

SEC. 11. In order to carry out the purposes of this Act and to make available to insurers who participate hereunder reinsurance against losses resulting from riots or civil disorders afforded under the National Insurance Development Corporation Act of 1968, the Commissioner is authorized to assess each insurance company authorized to do business in the District of Columbia an amount, in the proportion that the premiums written by each such company, on lines reinsured by the National Insurance Development Corporation, during the preceding calendar year bears to the aggregate premiums written on those lines in the District of Columbia by all insurance companies, sufficient to provide a fund to reimburse the Corporation in the manner set forth in section 1223 (a)(1) of the National Insurance Development Corporation Act of 1968. Such fund may be added to or such a fund may be created by moneys appropriated therefor by the Congress.

DELEGATION

SEC. 12. The Commissioner is authorized to delegate any of the functions vested in him by this Act.

APPROPRIATIONS

SEC. 13. There are hereby authorized to be appropriated such sums as may be necessary to carry out this Act.

JUDICIAL REVIEW

SEC. 14. Section 11-742 (a) of the District of Columbia Code is amended (a) by striking "and" immediately following clause (9); (b) by striking the period following clause (10) and inserting in lieu thereof "; and"; and (c) by adding the following:

"(11) final orders and decisions of the Commissioner under the provisions of the District of Columbia Insurance Placement Act."

(H.R. 17607, 90th Cong., second sess., by Mr. O'Konski on June 3, 1968; and H.R. 18149 by Mr. Brasco on June 26, 1968.)

A BILL To establish a joint underwriting association to provide fire, extended coverage, and essential property insurance in the District of Columbia

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, as used in this Act

(1) The term "association" means the joint underwriting association established under the provisions of this Act.

(2) The term "Commissioner" means the Commissioner of the District of Columbia.

(3) The term "environmental hazard" means any hazardous condition that might give rise to loss under an insurance contract, but which is beyond the control of the property owner.

(4) The term "essential property insurance" means (A) insurance against direct loss to property as defined and limited in standard fire policies and extended coverage endorsements on such policies, as approved by the Commissioner, and (B) insurance for such types, classes, and locations of property against the perils of vandalism, malicious mischief, burglary, theft, holdup, and robbery. Such term shall not include automobile insurance and insurance on such types of manufacturing risks as may be excluded by the Commissioner.

(5) The term "extended coverage insurance" means insurance coverage against direct loss to property by windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, and smoke.

(6) The term "fire insurance" means insurance coverage against loss of or damage to any property resulting from fire.

(7) The term "insurable property" means real or personal property anywhere in the District of Columbia with an insurable value not in excess of the limits provided in the plan of operation of the association and in no event more than $1,500,000, which property is determined by the association, after inspection and under criteria specified in the plan of operation, to be in insurable condition. Neighborhood or area location shall not be considered in determining insurable condition and property shall not be deemed insurable which has characteristics of ownership, condition, occupancy, or maintenance which are violative of public policy.

(8) The term "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 the District of Columbia.

(9) The term "net direct premiums" means gross direct premiums written on property in the District of Columbia for fire, extended coverage, and essential property insurance (including the fire, extended coverage, and essential property components of homeowners and commercial multiple peril package policies) as computed by the Commissioner less return premiums or the unused or unabsorbed portions of premium deposits.

(10) The term "person" includes any individual or group of individuals, corporation, partnership, association, or any other organized group of persons.

(11) The term "plan of operation" means the plan of operation approved under section 2 of this Act.

(12) The term "pool" means any pool or association of insurance companies in the District of Columbia which is formed, associated, or otherwise created for the purpose of making property insurance more readily available.

(13) The term "property owner", with respect to any real, personal, or other property, means any person having an insurable interest in such property. (14) The term "standard line of property insurance" includes insurance providing coverage against

and insurance providing such other coverages as are generally offered to the public (including protection against damage from riot or civil commotion) as the Commissioner by regulation may determine.

SEC. 2. (a) (1) A joint underwriting association is created in the District of Columbia. The association shall consist of all insurers engaged in writing within the District of Columbia, on a direct basis, fire, extended coverage, and essential property insurance. The association shall also include insurers providing such insurance in homeowners and commercial multiple peril package policies. Each insurer described in the preceding sentences of this paragraph shall be a member of the association and shall remain a member as a condition of his authority to continue to write fire, extended coverage, and essential property insurance in the District of Columbia.

(2) The association shall be governed by a board of directors to be composed of 11 individuals elected annually by cumulative voting by the members of the association. The vote of a member of the association in such election shall be weighted in accordance with his net direct premiums written during the preceding calendar year. The first board of directors shall be elected at a meeting of the members, or their authorized representatives, which shall be held within thirty days after the date of the enactment of this Act and at a time and place designated by the Commissioner.

(b) In the case of fire, extended coverage, and essential property insurance on insurable property, the association may, on behalf of its members—

(1) cause policies of insurance to be issued to applicants;

(2) assume reinsurance from its members; and

(3) cede reinsurance.

(c) (1) Within thirty days following the date of the enactment of this Act, the board of directors of the association shall submit to the Commissioner, for his approval, a proposed plan of operation, consistent with the provisions of this Act, which shall provide for economical, fair, and nondiscriminatory administration, and for the prompt and efficient provision, of fire, extended coverage, and essential property insurance to promote orderly community development. The proposed plan shall also provide for preliminary assessment of all members for initial expenses necessary to commence operations, additional assessments of members to defray losses and expenses, establishment of necessary facilities, management of the association, commission arrangements, reasonable and objective underwriting standards, acceptance and cession of reinsurance, and procedures for determining amounts of insurance to be provided.

(2) In reviewing the proposed plan of operation the Commissioner shall consult with affected individuals and organizations. The proposed plan shall take effect ten days after the date of its approval by the Commissioner. If the Commissioner disapproves all or any part of the proposed plan of operation, the board of directors of the association shall, within thirty days from the date the Commissioner gives notice of his disapproval, submit to the Commissioner an appropriately revised plan of operation, and, if the board of directors fails to do so, the Commissioner shall promulgate a plan of operation.

(3) The board of directors of the association may, on its own initiative, prepare amendments to the plan of operation. Such amendments must be approved by the Commissioner and shall take effect ten days after the date of his approval. The board of directors shall make any amendments to the plan required by the Commissioner.

SEC. 3. (a) (1) Any person having an insurable interest in insurable property, who after making a diligent effort in the normal insurance market has been unable to procure fire, extended coverage, or essential property insurance from an authorized insurer, may, on or after the effective date of the plan of operation, apply to the association for such insurance. Such application may be made on behalf of an applicant by a broker, or agent authorized by such applicant.

(2) If the association determines that the property is insurable and that there is no uncontested premium due from the applicant for prior insurance on the property (as shown by the insured having failed to make written objection to premium charges within thirty days after billing), the association, upon receipt of the amount of the premium prescribed in the plan of operation, shall issue for a term of one year a policy for the type of insurance for which the applicant applied.

(b) To the extent (if any) and on the terms and conditions set forth in the plan of operation, any member of the association may cede to the association fire, extended coverage, and essential property insurance written on insurable property.

SEC. 4. (a) Rates, rating plans, and rating rules applicable to insurance written by the association shall be in accordance with filings approved from time to