§1436c Insurance for Public Housing Agencies and Indian Housing Authorities

Summary

Starting October 28, 1991, public housing agencies and Indian housing authorities may buy insurance from nonprofit insurers that they own and control, if those insurers are approved by the Secretary of Housing and Urban Development. They can do this without following competitive bidding rules, even if other laws would normally require competition. The Secretary must write rules, after public notice and comment, that take effect no later than one year after October 28, 1991. Those rules must make sure the nonprofit insurers have enough surplus money to cover expected losses, reliable accounting, sound actuarial plans, and experienced insurance staff. If a nonprofit is already regulated by a State insurance department, the Secretary will not add investment limits beyond the State’s rules. For nonprofits not regulated by a State, the Secretary will set similar investment guidelines. The Secretary cannot approve new nonprofits until the rules are final, and cannot remove earlier approvals except for cause and after a hearing. Until HUD issues rules about what insurance is needed for liability from testing and removing lead-based paint in federally supported housing, those housing authorities may buy insurance for that risk as a modernization expense. That insurance must be chosen through competitive selection, and the authority must certify that the coverage reasonably protects against the liability risks and reflects the management and quality assurance duties involved.