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Committee on Financial Services

United States House of Representatives

Archive Press Releases

April 28, 1999

Rick Lazio, Chairman, House Subcommittee on
Housing and Community Opportunity

Today, we meet to hear testimony on the growing threat of natural disasters and the impact on homeowners’ insurance availability.

My opening comments will be brief as Mr. Frank and I have agreed to limit opening statements to 10 minutes on each side.

Evidence accumulated during the 1990s has demonstrated that the rising toll from natural disasters is placing a significant strain on homeowners’ insurance markets in many parts of the country. In particular, Hurricane Andrew in Florida and the California Northridge Earthquake have led many insurers to withdraw from these vulnerable areas. In some cases, insurers have stopped underwriting business in these areas entirely, leaving families with very little opportunity for protection against catastrophic loss. These trends are disturbing, and represent a real crisis for homeowners across the country.

Three states have created their own programs to address an insurance availability crisis - California, Florida and Hawaii. In the face of the growing threat of natural disasters, a number of other states are considering similar proposals. Forecasters predict that both the East and Gulf Coasts of America may be entering a long-anticipated, prolonged siege of more frequent and more destructive hurricanes. More frequent and more forceful storms coupled with the increase in population and development in coastal areas mean that disasters resulting in multi-billion losses will become increasingly common.

Since 1983, the Federal government has spent more than $75 billion on natural disaster assistance. It may only be a matter of time before a single storm exacts $50 billion in damages. In my own state of New York, in the worst of cases, a single catastrophic event could cause as much as $100 billion in damages if we stand by and do nothing. If we fail to plan for such a future, what will be the cost, not only to taxpayers, but to the families devastated by natural disaster?

Congressional response, particularly over the last half-decade, has been hopeful. Just last month, the House passed two separate bills designed to address disaster mitigation, clearly an important element in preparing for natural disasters, but an element that lies outside the jurisdiction of this Committee.

Legislation before this Committee this year is based on proposals originally devised in the 103rd Congress by Republicans and Democrats from both the House and the Senate. Our legislation passed the Committee last year with strong support from both sides of the aisle by a vote of 33 to 12.

This year, we reintroduced our proposal with the support of the Chairman of the Committee, Mr. Leach, the Vice-Chairman, Mr. McCollum, the Ranking Member, Mr. LaFalce, and almost 50 other Republicans and Democrats. I intend to recommend to Chairman Leach that the Committee hold additional hearings on the substantive issues of our proposal, from a variety of perspectives, and then move to Committee markup soon thereafter.

On the most basic level, our proposal is about providing security for unprotected families with responsible and minimal government intervention. Families will have the satisfaction knowing they will be able to take care of loved ones and enjoy a better quality of life because of it.

With more ability to safeguard what is in many cases their greatest financial investment, more Americans will have the peace of mind that they can protect their homes and ultimately provide for the greater wellbeing of their families.

Mr. Frank.






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