Congress on road to tackle insurance
Feb 12, 2008
By RANDY DIAMOND
Palm Beach Post–Feb. 12, 2008
WEST PALM BEACH — Florida’s property insurance problems are spreading quickly to other states, four congressmen said Monday as they pushed for federal intervention to shore up the marketplace.
"It is important to understand that insurance availability and affordability problems have become a national issue," said U.S. Rep. Ron Klein, D-Boca Raton. "Hundreds of thousands of homeowners across the county have already had their insurance coverage dropped or are currently slated for nonrenewal by their insurance company."
Klein is a member of the House Financial Services Committee’s subcommittee on oversight, which convened a field hearing Monday afternoon in West Palm Beach.
At the hearing, Klein said states such as New York, New Jersey, Delaware, Massachusetts, Connecticut and Texas have seen insurance companies cancel or stop issuing new policies in the past year.
The solution crafted by Klein and U.S. Rep. Tim Mahoney, D-Palm Beach Gardens, includes creating a federal backstop to limit insurance company losses. But the plan faces an uncertain future.
The Homeowners Defense Act passed the U.S. House in November but has yet to emerge from the Senate Banking, Housing and Urban Development Committee.
If the bill does get out of the committee, it must garner support in a legislative chamber in which 60 out of the 100 senators have to agree to end floor debate on an issue and send it to the floor for a vote, said U.S. Rep. Melvin Watt, D-N.C., who chairs the financial services subcommittee.
”It’s hard to get anything passed in the Senate, much less anything controversial,” Watt said.
Klein insisted passage in the Senate ”was doable,” but he acknowledged that it would be very difficult for the Senate to override a veto by President Bush, who opposes the legislation.
Klein, Mahoney and U.S. Rep. Robert Wexler, D-Delray Beach, said at the sparsely attended hearing in the county commission chambers that they receive hundreds of letters from constituents who are unable to afford rising homeowner insurance rates.
State Insurance Commissioner Kevin McCarty, one of several witnesses, stressed the importance of the federal backstop to encourage insurers in Florida and other coastal states and keep premiums affordable.
"There is a limit to what a single state can do," he said.
The Homeowners Defense Act would allow Florida, which is the only state with a catastrophe fund that sells discounted backup insurance to insurance companies, to join with other states in sharing potential catastrophe losses.
The states would bear some of the risk, as would investors who buy bonds.
The proposed legislation also would require the federal government to provide a backstop for exorbitant losses in the form of low-interest loans to states.