WASHINGTON (Sept. 24, 2007) – The National Association of Mutual Insurance Companies (NAMIC) today expressed concerns about H.R. 3355, The Homeowners Defense Act. The proposal, introduced by Florida Democratic Reps. Ron Klein and Tim Mahoney, is scheduled to be considered tomorrow by the House Financial Services Committee.
“We are encouraged that members of the committee are looking into developing a comprehensive natural disaster plan to address concerns about coastal insurance affordability and availability,” said Justin Roth, NAMIC’s senior federal affairs director. “However, we are concerned that this legislation would expand the federal government’s role to the point that it could potentially crowd out the private insurance market. It could also encourage unwise residential and commercial development in high-risk coastal regions.”
The legislation would create a non-governmental entity – the National Catastrophe Risk Consortium – through which participating states would be able to pool their resources to purchase reinsurance. “The bill leaves unanswered the question of how this arrangement would compete with the private reinsurance market and who would bear liability from the consortium’s actions, since the bill indicates the federal government would assume no liability,” Roth said.
A second provision of H.R. 3355 would allow the Treasury Secretary to make both liquidity and catastrophe loans to state and regional reinsurance programs, “but the bill does not explain what would happen if the programs defaulted on the loans, potentially making the taxpayers liable to repay them.”
Roth urged the House to instead consider a recent bill passed by a Senate panel. “The legislation passed in the Senate Banking Committee would establish a bi-partisan commission to look into and make recommendations on natural disaster issues,” he said.
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Posted: Monday, September 24, 2007 12:00:00 AM. Modified: Wednesday, September 26, 2007 11:28:33 AM.
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