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Committee on Financial Services

United States House of Representatives

Archive Press Releases

July 30, 1999


Thank you, Mr. Chairman. And again, thank you for holding today’s hearing and for your leadership on this critical issue.

I must congratulate the Chairman for putting together the balanced presentation we will hear today. It is clear that all sides in this debate are being provided a fair opportunity for discourse, and I will continue to support this sort of open dialogue.

Mr. Chairman, the time to deal with the issue of available and affordable homeowners’ insurance in disaster-prone areas is now. Congress has been debating the merits of proposals designed to address homeowners’ insurance availability for much of this decade. Our Committee has spent considerable time examining the issue over the last three years. Last year, we reported out legislation identical to the bill before us today with strong support from both sides of the aisle.

In the simplest terms, our efforts today are about providing greater opportunities for families across America to protect their own homes. Many of us here take the ability to insure our homes for granted. But it is not so easy for working families in Missouri, North Carolina, Texas and other states, not to mention California and Florida. For them, the forecasts of more frequent and more forceful storms over the next few decades only bring uncertainty and fear of the future.

Its about people like 87 year-old Mildred O’Shaughnessy whose home of 51 years was destroyed just last year when Hurricane Georges hit Louisiana. Mrs. O’Shaughnessy had been unable to find insurance to protect her home. So now, she is forced to rely on her family and donations from the community for shelter and the necessities of life.

Some states have been able to rebuild in the aftermath of natural disasters from the early 1990s. But for the most part, that ability has been simply a matter of luck. Devastated by $16 billion in insured losses from Hurricane Andrew in 1992, the property insurance market in Florida collapsed. Since then, Florida has been somewhat successful in encouraging the re-expansion of the private market, and today can absorb $11 billion in insured residential losses. But that success has only been possible for one reason—Mother Nature has spared Florida a major disaster during that time.

Other Committees have already acted this Congress to address issues associated with the rising costs of natural disasters. In March, the House passed two separate bills designed to address the issue of disaster mitigation.

The first bill, the "Disaster Mitigation Coordination Act," sponsored by Rep. Talent and two Members of this Committee, Ms. Velazquez and Ms. Schakowsky, will provide $75 million over the next five years to establish a program for making loans to small businesses to implement disaster mitigation measures.

The second bill, the "Disaster Mitigation and Cost Reduction Act," sponsored by Rep. Fowler and two other Members of this Committee, Mr. Terry and Mr. Sweeney, will provide over $100 million in grants to States and local governments for predisaster mitigation activities.

So clearly, the House has recognized the importance of mitigation efforts in preparing for natural disasters. And as is appropriate, it is an issue being dealt with by the Committees of relevant jurisdiction.

Our proposal creates an environment where the private market is encouraged to re-engage in the business of homeowners’ insurance across the country. In Subcommittee hearings this Congress, we have heard testimony that a more stable and confident private insurance market in vulnerable areas of the country would benefit all Americans. It is probably true that those living in North Dakota, Montana and other similar states would be less affected by our proposal. But that is no reason why my constituents in the state of New York, or the constituents in the districts of other Members of this Committee should be denied the opportunity to protect their families and homes.

Since 1983, taxpayers have spent more than $80 billion in Federal dollars for disaster relief. And it is true that population growth and coastal development play a part in the rising costs of natural disasters. But it is also true that within the next 10 years, according to the U.S. Census Bureau, almost 75% of our population will live within 100 miles of a United States coastline, regardless of anything we do here today. We cannot mandate where families live, and we cannot forcefully relocate families living in cities like Miami, New Orleans, Seattle, Los Angeles, St. Louis, Memphis, and New York City

Today, we may hear that there is no longer a lack of available and affordable homeowners’ insurance. We may also hear that there is an overabundance of reinsurance capacity. Tell that to Mrs. O’Shaughnessy. Tell that to the hundreds of thousands of families who are forced into insurance pools of last resort across the country, which in some areas have grown by more than 800% over the last six years.

Mr. Chairman, we could wait to take action until Congress is forced to act in the wake of some future earthquake or hurricane, or we could proceed deliberately and calmly without the environment of crisis that would accompany a major catastrophe. Mr. Chairman, one way is a responsible approach to public policy-making—the other is not.

I strongly urge the Committee to move forward with our proposal in a timely manner in the hope that the legislation can be considered on the House Floor in September.

Thank you.


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