WASHINGTON (April 27, 2010) The National Association of Mutual Insurance Companies (NAMIC) responded to the House Financial Services Committee voting to approve three pieces of legislation that could have significant impact on the homeowners insurance market and the American taxpayer.
NAMIC applauded the committee vote in favor of H.R. 5114, the Flood Insurance Reform Priorities Act of 2010, which would provide a long-term extension of the National Flood Insurance Program. It would also implement vital reforms by phasing in actuarially sound rates, eliminating subsidies and increasing coverage limits available to homeowners and businesses.
“By helping to get the NFIP back on track financially, this bill will ensure that the program is there when homeowners need it,” said NAMIC federal affairs director Kathy Mitchell. “Having already allowed the NFIP to expire twice this year, we appreciate the committee making this issue a priority before the start of the hurricane season.”
The committee also voted to pass H.R. 1264, which would expand the NFIP to interject the federal government into the private windstorm insurance market. The two bills had been combined during the prior congress, but Mitchell noted that “the committee wisely chose to keep the windstorm legislation separate.
“By keeping the two separate, Congress can pass the reforms the NFIP needs without adding a massive new exposure that could sink the entire program while undermining the private market,” Mitchell said.
Also approved by the committee was H.R. 2555, a “Beach House Bailout” which could enable states with artificially suppressed rates and underfunded state catastrophe funds to shift that risk to the American taxpayers. “It is appalling to think that taxpayers from across the country would be forced to effectively subsidize insurance coverage for those who want to live along the coast of Florida, especially during these difficult economic times,” said Mitchell. “As it is written, this bill would only benefit Floridians who live in high risk coastal areas, at the expense of everyone else.”
“Both the Beach House Bailout and H.R. 1264 would be a disaster for the federal government, and ultimately the taxpayers,” Mitchell said. “They would shift an enormous amount of risk to the federal government that is, and should be, covered in the private market.”
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