[StBernard] Melancon and Colleagues Announce Plans For Multi-Peril Catastrophic Insurance Legislation

[Westley Annis]

	MEDIA ADVISORY - U.S. Rep. Charlie Melancon joined Florida
Representatives Ron Klein, Tim Mahoney and Ginny Brown-Waite, along with
Financial Institutions Subcommittee Chair Carolyn Maloney (NY) and Financial
Services Committee Chairman Barney Frank (MA), and other Members in a press
conference today to announce their unified support toward reducing insurance
rates. During the press conference, the Members discussed developing
legislation that would create a national catastrophe program for property
insurance, with the ultimate goal of increasing coverage and reducing
multi-peril insurance rates. At the press conference, Chairman Frank
announced that hearings on the legislation will be held in the Subcommittee
on Housing and Community Opportunity.  
	 
	"The widespread devastation caused by Hurricanes Katrina and Rita
has caused an insurance crisis all along the Gulf Coast, from Texas to
Florida," said Rep. Charlie Melancon (LA-3).  "In south Louisiana, many
people who survived the storms are being forced to pay two and three times
as much for insurance to protect their homes -- if they can even get
insurance, which many can't anymore.  Congress must do something to help
these people gain access to affordable insurance so they can continue living
and working in our coastal communities.  I commend Chairman Frank,
Congressmen Klein and Congressman Mahoney for this leadership and look
forward to working with them on addressing this critical challenge."
	 
	Under a national catastrophe plan, a federal program would be
established to assist state insurance programs, private insurers, and
reinsurers, in covering losses relating to natural disasters that occur on a
scale of catastrophic proportions.  A national catastrophe fund would allow
natural disasters to be addressed through a comprehensive public-private
partnership, with private industry, and state, local and federal governments
each playing an appropriate role.  Such a system would allow the private
insurance market and state programs to operate with increased efficiency by
providing a high level of protection to deal with catastrophic events.
	 
	With the federal government currently in the position of being the
de facto insurer of last resort, the goal of a national catastrophic program
would be to establish a more efficient system to foster predictable coverage
at reasonable rates.
	 
	"I took 25 of my colleagues to the Gulf Coast a year after Hurricane
Katrina hit, and the thing that struck us most was the extent of destruction
that still remained. We quickly learned that one of the major obstacles to
rebuilding the region wasn't debris, it was insurance companies refusing to
honor contracts, no matter how long they held the contract or how broadly it
was written. Now we're finding insurance companies are pulling out of the
area altogether, leaving homeowners without critical coverage. That's why
I'm supporting the efforts of Reps. Klein and Mahoney to create a national
catastrophe fund to make insurance available to those impacted by a natural
disaster. This not only helps our fellow Americans in the gulf coast, it
benefits any American in the path of a hurricane, tornado, earthquake or
flood," said Democratic Whip James Clyburn (SC-6).
	 
	"A successful catastrophe program must help the insurance industry
manage risk, provide homeowners reliable and affordable insurance and create
incentives for builders and homeowners to mitigate losses by using state of
the art construction technology," said Rep. Tim Mahoney (FL).  "We aim to
provide an equitable means for all homeowners to benefit from this
legislation."
	 
	"Consumer protection will be a major component of our national
catastrophe program legislation.  The increased security and predictability
of a national backstop will help to stabilize markets following a
catastrophe, prevent insurance availability problems, and reduce insurance
costs for consumers," said Rep. Ron Klein.  "Cost savings realized under the
national catastrophe program will not be retained by insurers and state
programs, but rather will be passed on to consumers.  The ability for these
savings to be achieved at the retail level is at the core of this effort."  
	 
	Rep. Melancon added, "The bill we are working on will help make
catastrophic insurance more affordable and encourage the private sector to
cover all manner of disasters, including hurricanes, floods, and
earthquakes. As a fiscal conservative, I am pleased that this plan will
involve the private sector in a partnership to develop an effective solution
to the insurance problem.  I look forward to working with my colleagues in
passing this legislation so people along the Gulf Coast are protected by
affordable insurance when a disaster strikes."
	 
	 
	Quotes from Members of Congress Around the Country
	 
	"I commend Reps. Klein and Mahoney for their leadership in this
effort to ensure that property insurance is available for all qualified
homeowners throughout the nation.  A national catastrophe fund will provide
the necessary backstop for insurance companies to re-enter Florida and other
places where middle-class families have seen their rates skyrocket and their
coverage eliminated due to hurricanes and other natural catastrophes," said
Democratic Caucus Chair Rahm Emanuel (IL-5).
	 
	Rep. Carolyn Maloney (NY-14) said, "The victims of catastrophic
disasters need to know that the insurance system will be there to help them
when they need it most. This federal backstop will help ensure that
individuals and communities will recover as completely and quickly as
possible. Having worked on this issue in recent years, I understand the need
for action, and I am glad that Rep. Klein and the committee are working hard
to get it done."
	 
	"In the wake of a natural disaster, families have a hard enough time
pulling their lives back together without having to worry about the
out-of-pocket costs of rebuilding," said New Democratic Coalition Chair Rep.
Ellen Tauscher (CA-10). "This backstop will help millions of Americans
rebuild, and I'm honored to work with Congressmen Klein and Mahoney in their
leadership to help families get back on track."  
	 
	"After seeing the horrible destruction from Hurricane Katrina in the
Gulf Coast region first-hand, it's clear that Congress must address the need
for disaster recovery finance," said Rep. Dennis Moore (KS-3).  "As a
co-chair of the Congressional Hazards Caucus and a member of the Financial
Services Committee, I look forward to working with Chairman Frank,
Congressmen Klein and Mahoney, and other members of the committee to work
towards a bipartisan solution.  We must do all we can to protect and support
the victims of future disasters."
	 
	"We can't control Mother Nature, but we can control our response to
natural disasters," said Rep. Steve Israel (NY-2). "Even though it's been
almost 70 years since a major hurricane has hit my congressional district on
Long Island, meteorologists say we could see one again soon. As it stands,
Long Island homeowners are stuck with insurance industry decisions to stop
issuing policies in areas that are at high risk of a natural disaster.
That's why we need the federal government to create a nationwide federal
reinsurance fund for catastrophic insurance. This is a roof we need to fix
while the sun is shining."
	 
	"Sky-high insurance costs are draining the wallets of my
constituents and discouraging investment in our state," said Rep. Vern
Buchanan (FL-13). "I look forward to working with my colleagues on both
sides of the aisle to pass legislation to establish a national catastrophic
fund, which would help stabilize the market and provide much-needed relief."
	 
	"Florida's private market for insurance is literally collapsing
before our eyes, and not just for homeowners - but for commercial firms as
well," said Rep. Debbie Wasserman Schultz (FL-20).  "But this problem isn't
endemic to Florida alone, it's happening across the nation. Congress has
been too slow to respond. It's time we had a comprehensive solution to a
national problem."
	 
	"A successful catastrophe program must help the insurance industry
manage risk, provide homeowners reliable and affordable insurance and create
incentives for builders and homeowners to mitigate losses by using state of
the art construction technology," said Rep. Tim Mahoney (FL-16).  "We aim to
provide an equitable means for all homeowners to benefit from this
legislation."
	 
	Consumer protection will be a major component of our national
catastrophe program legislation.  The increased security and predictability
of a national backstop will help to stabilize markets following a
catastrophe, prevent insurance availability problems, and reduce insurance
costs for consumers," said Rep. Klein (FL-22)."Cost savings realized under
the national catastrophe program will not be retained by insurers and state
programs, but rather will be passed on to consumers.  The ability for these
savings to be achieved at the retail level is at the core of this effort."  
	 
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