Flood Insurance News…
PRESS RELEASE: (Washington, DC) — SmarterSafer.org today said they oppose reintroduction of legislation by Rep. Albio Sires (D-NJ) that would create a national catastrophe fund because it would put taxpayers on the hook for billions of dollars in losses, encourage risky development in environmentally sensitive areas, and do nothing to protect people and property in harm’s way.
“A federal backstop for disaster insurance replaces private-sector insurance with the American taxpayer,” said SmarterSafer.org. “It is a ‘Beach House Bailout’ that would displace private property and casualty insurance with a costly federal reinsurance scheme – putting billions of taxpayer dollars at risk to help those who have beach houses and other types of beachfront properties”
SmarterSafer.org said that the Sires bill (HR.1101), would encourage people to build and rebuild homes in hurricane-prone, environmentally-sensitive areas by creating programs that subsidize homeowner’s insurance; and that the bill is designed primarily to subsidize expensive Florida beachfront homes at taxpayers’ expense. The coalition said such legislation would add significant new taxpayer obligations that would do little to dis-incentivize the risky behaviors that exacerbate the impact of major climate events.
Proponents of legislation based on 2007’s Homeowner’s Defense Act – a bill that creates a public insurance scheme and would make taxpayers responsible for most insured losses – are advocating a program that has the potential to cost taxpayers more than $200 billion, according to a study done in 2008. By supplanting the private insurance and reinsurance markets, this approach would create a government backstop akin to Fannie Mae and Freddie Mac, the two government-sponsored entities that have now cost American taxpayers $180 billion.
Ironically, legislation based on the Homeowner’s Defense Act will not actually defend homes. Instead, it will result in even more environmentally damaging and high-risk coastal development. Setting up U.S. taxpayers to be the backstop of unstable catastrophe insurance funds is almost certain to result in more, not less, damage to peoples’ homes, because it fundamentally undercuts needed and vital efforts to mitigate, control and reduce hurricane and storm risks.
SmarterSafer.org said national mitigation strategy would protect properties and communities so they can withstand the next storm. Mitigation measures are estimated to have saved more than 200 lives between 1993 and 2003 and prevented 4,700 injuries over 50 years. Mitigation saves lives, reduces damage and is cost effective. For every dollar spent on risk-reducing measures, four dollars are saved in clean up and rebuilding costs.
SmarterSafer.org is a national coalition made up of a diverse set of voices united to support environmentally-responsible, fiscally-sound approaches that promote public safety. The Coalition strongly opposes legislative proposals that encourage people to build homes in hurricane-prone, environmentally-sensitive areas by creating new programs that directly or indirectly subsidize their homeowner’s insurance.
Contact: Matt Englehart
(202) 415-5313 www.smartersafer.org
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