U.S. House Passes Homeowners Defense Act of 2007

Today, November 8, 2007, the United States House of Representatives passed the Homeowners Defense Act of 2007 (H.R. 3355) by 258 (Y)-155 (N) with 19 Members not voting.  The vote count, consisting of a large Democratic majority, can be viewed by clicking here. 

H.R. 3355‘s intent is to ensure the availability and affordability of homeowners’ insurance coverage for catastrophic events.

To read a summary of Republican concerns regarding the bill, click here.

Florida Governor Charlie Crist said of H.R. 3355‘s passage:  “As a candidate for Governor, I heard from Floridians across our state concerned about the burden of the high cost of property insurance.  Thanks to the Florida Legislature, I was pleased to sign legislation earlier this year to address Florida’s insurance crisis.  Our actions include a freeze on rate hikes and greater protection for consumers.

“Today, the U.S. House of Representatives has taken a good first step toward providing additional help for homeowners by approving federal support in the aftermath of a natural disaster.  I commend U.S. Representatives Ron Klein and Tim Mahoney and members of the Florida delegation who have worked in a bipartisan manner to increase awareness of the need for a federal backstop for natural catastrophes.”

Florida Insurance Commissioner Kevin McCarty also commented: “I want to congratulate the U.S. House of Representatives on having the vision and leadership to pass HR 3355, The Homeowners’ Defense Act of 2007. I especially want to extend my personal thanks and gratitude to the bill’s authors, Congressmen Ron Klein and Tim Mahoney, both of Florida.

“Congressmen Klein and Mahoney have delivered an important piece of legislation that goes a long way to shoring up the economic security of communities and individuals devastated by catastrophic natural disasters. Their hard work and effort, along with their colleagues, will pay big dividends for our citizens, our communities and our economies.

“Proactive measures, like those in this legislation, that protect our policyholders’ homes and that will help to restore their lives as quickly as possible following a natural disaster will ultimately help us achieve the goal of lowering insurance rates for all Floridians.

“As a long time advocate and vocal proponent of a rational public-private partnership for protecting Americans from a natural disaster’s financial hardship and ruin, one thing is certain, states and the federal government cannot just throw the checkbook at the problem following a disaster.” 

 

News coverage by the Washington Post on the issue is reprinted below:

 

House Passes Disaster Insurance Bill

By JIM ABRAMS
The Associated Press
Thursday, November 8, 2007;

WASHINGTON — Disaster-prone states would get help confronting the crisis in available and affordable homeowner insurance under legislation passed Thursday by the House.

The bill, passed 258-155, was primarily the work of Florida lawmakers from both parties who said they are hearing an outcry from constituents who have lost access to insurance as private insurance companies, following disastrous hurricanes, pull out of the market or dramatically raise premiums.

“In some situations, like in my home state of Florida, the market has deteriorated so drastically, homeowners can’t get insurance, regardless of price,” said Rep. Tim Mahoney, D-Fla., a bill sponsor with Rep. Ron Klein, D-Fla.

“Those fortunate enough to still have coverage have experienced 200 and 300 percent increases in premiums even though they have not filed a single claim. This is a terrible situation,” said Rep. Robert Wexler, another Florida Democrat.

But the White House said a main premise of the bill, the creation of a federally backed consortium of states to pool catastrophe risk, was unacceptable, and that the president would be advised to veto the bill if it reaches his desk. The legislation must still be considered by the Senate.

The White House, in a statement, said states can already join for catastrophe risk and the consortium would create an implicit guarantee that the federal government would backstop its financial obligations.

Mahoney and Klein said their bill would allow state-sponsored insurance funds to voluntarily bundle their catastrophe risk. Private markets would take on the risk through catastrophe bonds and reinsurance contracts.

The bill also creates the National Homeowners Insurance Stabilization Program under which the Treasury secretary can extend loans to states impacted by severe natural disasters.

Several lawmakers offered amendments to assure that the program would not end up subsidizing insurance rates for homes in overdeveloped or high-risk areas and would not result in taxpayers carrying the burden of defaulted loans.

The National Wildlife Federation and the Florida Coalition for Preservation, in a letter to Congress, said they opposed the bill out of concerns the “subsidies could inadvertently result in continued encouragement of risky development in our nation’s coastal areas and floodplains.”

 

 

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