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Committee on Financial Services

United States House of Representatives

Archive Press Releases

June 24, 1997


OPENING STATEMENT (as prepared)
Rick Lazio, Chairman, House Subcommittee
on Housing and Community Opportunity
Hearing on "Homeowners' Insurance Availability in Disaster Prone Areas"

This hearing will come to order.

Today we begin the first in a series of hearings to examine the availability of homeowners' insurance in disaster-prone areas.

All too frequently, we hear stories of homeowners unable to obtain insurance in areas subject to hurricanes and earthquakes. In the worst of cases, the high cost of homeowners' insurance in these areas effectively prohibits the purchase of insurance, leaving homeowners at risk of homelessness in the event of a catastrophic loss.

More and more evidence indicates that the rising toll from natural disasters is placing a significant strain on homeowners' insurance markets in many parts of the country. Most recently, 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 homeowners 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 that may last up to two decades. 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. Between 1988 and 1994, the Federal government spent more than $45 billion on natural disaster assistance. Experts note that it may only be a matter of time before a single storm exacts $50 billion in damages.

To address the issue of homeowners' insurance in vulnerable areas, I have introduced H.R. 219 - The Homeowners' Insurance Availability Act of 1997. Members of Congress from both sides of the aisle will be working in partnership with the Administration, the industry, and state insurance program administrators to arrive at the most appropriate Federal solution to this growing problem. In these efforts, I must acknowledge my great respect for the late Congressman Emerson and his valiant efforts over the last several years to bring this issue to light. It is my great pleasure to have Congresswoman Emerson before us today.

I intend to hold a number of field hearings on possible legislative solutions during the next few months, and conclude with a final hearing here in Washington, D.C. It is my hope that legislation will be ready for mark up in the Full Committee by early Fall.



 

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