House Panel Passes Coastal Homeowners Insurance Bill

09/26/2007

WASHINGTON, DC – The House Financial Services Committee today approved legislation that will help coastal states expand access to affordable homeowners insurance.

“I want to commend Chairman Frank and the Financial Services Committee for addressing the growing crisis in the availability and affordability of homeowners insurance,” Delahunt said. “I look forward to working with my colleagues in Congress as we move forward to pass this important legislation which not only will help those who live in my district, but in coastal communities throughout the United States.”

The Homeowners Defense Act, HR 3355, was introduced by Congressmen Ron Klein and Tim Mahoney of Florida and provides an opportunity for states to responsibly plan for disasters ahead of time, while offering emergency relief for those states that may be in lower-risk regions.

This proposal will enable states to set up a consortium to voluntarily pool their disaster risk which is transferred to private markets through the use of catastrophe bonds and reinsurance contracts.  This takes away the burden for American taxpayers, who would otherwise be saddled with the cost of a bail-out in the event of a natural disaster.

It would also create a National Homeowners Insurance Stabilization Program, which would provide low-interest federal loans to states impacted by severe natural disasters. By doing so, the federal government will be providing the capital needed to begin the rebuilding process.

Specifically, the Stabilization Program will make available two types of loans: liquidity loans and catastrophic loans.  Liquidity loans would allow a state’s catastrophe fund to cover its liability in the event that it is not fully funded. Catastrophic loans would allow these funds to cover damages that exceed its liability. 

Delahunt is a co-sponsor of this legislation that will now move to the House of Representatives for full consideration.

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