WASHINGTON (July 2, 2009) – To properly address coastal insurance issues there must be an appropriate balance between the private insurance sector and the government that avoids encouraging risky behavior in disaster-prone areas. That is what the National Association of Mutual Insurance Companies (NAMIC) today told the House Subcommittee on Oversight and Investigations at a field hearing in West Palm Beach, Fla. titled “The Homeowners’ Insurance Crisis: Solutions for Homeowners, Communities, and Taxpayers.” Testifying on behalf of NAMIC was Robert Detlefsen, Ph.D., vice president of public policy.
The hearing centered on the affordability and availability of coastal insurance with a particular focus on H.R. 2555, the Homeowners Defense Act, legislation recently introduced by Rep. Ron Klein, D-Fla. “While this is an important issue that needs attention, NAMIC has serious concerns that this specific proposal would expand the federal government’s role to a point that it would artificially suppress insurance rates, begin to crowd out the private insurance market, and encourage unwise residential and commercial development in high-risk coastal regions,” Detlefsen said in his testimony.
The lone industry voice among the three panels, Detlefsen cautioned against making politically motivated decisions that result in bad policy with unintended costs that would inevitably harm consumers. “The federal government should be careful not to subsidize states that enact disaster insurance ‘reforms’ by transferring the cost of such measures to federal taxpayers,” he said.
“NAMIC realizes that anyone who lives or does business in coastal areas faces serious challenges from natural disasters,” said Detelfsen. “We believe that the most effective mechanism for addressing these challenges is a private insurance market that is free to appropriately match rate to risk.”
“However, Congress can play a key role by reforming the National Flood Insurance Program, creating incentives for states to enact and enforce effective statewide building codes, and providing targeted grants that would enable low-income property owners to pay risk-based property insurance premiums.”
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Posted: Thursday, July 02, 2009 12:00:00 AM. Modified: Thursday, July 02, 2009 11:56:14 AM.
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