WASHINGTON (June 8, 2010) An estimate from the Congressional Budget Office(CBO) shows that legislation potentially putting the American taxpayers on the hook for Florida’s underfunded catastrophe fund would add to the already massive budget deficit, the National Association of Mutual Insurance Companies said today.
The CBO has projected that HR 2555, which has also been called the “Beach House Bailout” bill, will add $1.7 billion to the deficit over the next five years. The measure was introduced by Rep. Ron Klein, D-Fla., to ensure that homeowners’ insurance rates in his state would remain artificially low at the expense of the rest of the country. Additionally, the bill would remove any incentive for Florida lawmakers to fix the broken catastrophe fund, and would instead incentivize other states to follow Florida’s flawed, under-funded, and risky example.
“If enacted, this bill would be a financial disaster for the federal budget and the taxpayers,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “It’s worth noting that the CBO projections don’t recognize the potential impact of an active storm season. If Florida were to be hit by the same type of storm season that we had in 2005, the costs could rise into the hundreds of billions.”
Grande also noted the perverse incentives created by the bill, which as it is written would only provide federal backing to Florida’s catastrophe fund. By assuming the financial risks of the state catastrophe fund, the bill would remove any reason for lawmakers in Florida to fix the broken insurance system in their state. By keeping insurance rates in high risk coastal areas artificially low, the bill would also encourage development of ecologically sensitive coastal wetlands.
“Rather than trying to solve the problems facing the state of Florida, this bill would simply pass the buck to the federal government, and the American people, while further threatening the environment” Grande said. “The American people are deeply concerned by the federal budget deficit and the record debt facing this country, the last thing they want to see is another bailout.”
For further information, contact
Director of Media Relations
(202) 580-6742 Tel
(202) 379-6490 Mobile
Posted: Tuesday, June 08, 2010 10:21:45 AM.
317.875.5250 - Indianapolis | 202.628.1558 - Washington, D.C.