Homeowners' Insurance Availability Act of 1998

Homeowners' Insurance Availability Act of 1998 - Directs the Secretary of the Treasury to carry out a program under this Act to make reinsurance coverage available for purchase by: (1) eligible State programs; and (2) private insurers and reinsurers, State insurance and reinsurance programs, and other interested entities through auctions. Requires that such program shall be designed to improve the availability of homeowners' insurance for the purpose of facilitating the pooling, and spreading the risk, of catastrophic financial losses from natural disasters and to improve the solvency of homeowners' insurance markets.

Directs the Secretary to offer reinsurance coverage through contracts with covered purchasers which shall: (1) not displace or compete with the private insurance, reinsurance, or capital markets; (2) minimize the administrative costs of the Federal Government; and (3) provide coverage based solely on insured losses within the State of the eligible State program purchasing the contract or within the region for which the auction for contract purchase is held.

(Sec. 4) Sets forth: (1) qualified lines of coverage; and (2) covered perils.

(Sec. 6) Describes requirements for eligible State programs, including that such programs: (1) be State-operated insurance programs (or reinsurance programs designed to improve private insurance markets) that offer coverage for homes and the contents of apartments based on a finding that such programs are necessary to provide for the continued availability of coverage for all residents; (2) are structured to be exempt from Federal taxation; (3) cover only a single peril; (4) require at least ten percent of net investment income to be used for programs to mitigate disaster losses, with an exception; and (5) meet specified coverage requirements.

Establishes one-year contract terms. Sets forth considerations to be made by the Secretary in determining the cost of reinsurance coverage and requires the cost to consist of a risk-based price, risk load, and administrative costs.

Grants purchasers whose coverage is exhausted before contract termination the option of making a single purchase for the remaining contract term.

Makes State programs eligible to purchase contracts only if a State has in effect laws to prohibit price gouging, during the term of coverage, in disaster areas.

(Sec. 7) Sets forth: (1) requirements for regional auctions for the purchase of reinsurance contracts; and (2) contract terms and conditions, including maximum one-year terms and prohibitions on price gouging.

(Sec. 8) Requires eligible State programs to sustain an amount of retained losses from a single event of a covered peril of at least the greater of: (1) $2 billion; (2) the program's claims-paying capacity; and (3) an amount determined by the Secretary sufficient to cover eligible losses in the State during a 12-month period for all events having a likelihood of occurrence once every 100 years. Applies the requirements of (1) and (3) above to auctioned contracts as well.

Establishes transitional requirements for the minimum level of retained losses applicable to certain existing and new State programs.

Authorizes the Secretary to raise the minimum level of retained losses annually.

Limits the maximum annual amount paid by the Secretary pursuant to claims under contracts to: (1) $25 billion, as adjusted for inflation; or (2) for any year during the four-year period beginning on the date contracts are first made available for purchase, an amount that the Secretary shall establish and revise, not exceeding $25 billion. Requires claimants to receive prorated portions of the amount available for claims in any year in which claims exceed such maximum amount.

Limits contracts to 50 percent of the risk of insured losses in excess of retained losses for States or regions.

(Sec. 9) Establishes, within the Treasury, the Disaster Reinsurance Fund. Specifies: (1) the amounts with which the Fund shall be credited; and (2) the uses of the amounts in the Fund.

(Sec. 10) Directs the Secretary to establish the National Commission on Catastrophe Risks and Insurance Loss Costs. Requires the Commission to meet for the sole purpose of advising the Secretary regarding the estimated loss costs associated with the reinsurance contracts and carrying out this Act's functions. Authorizes appropriations. Provides for an offset amount to be obtained from purchasers of reinsurance coverage and deposited in the Fund.

(Sec. 12) Terminates reinsurance coverage ten years after this Act's enactment. Provides a five-year extension of such deadline if the Secretary determines such coverage necessary because of insufficient growth of capacity in the private homeowners' insurance market.

(Sec. 13) Requires the Secretary to report annually to the Congress on the cost and availability of homeowners' insurance for losses resulting from catastrophic natural disasters covered by the reinsurance program under this Act.