The house bill is known as HR 3355, the Homeowner’s Defense Act of 2007 and is even supported by insurers such as State Farm. John McCain, George Bush and the GOP are against helping coastal homeowners deal with a dysfunctional insurance market just as they were against protecting West Coast electricity consumers from price gouging by ENRON back in 2001.
Arthur Postal has the story for the National Underwriter:
The Democratic Party has approved a plank in its platform for the coming election that calls for creation of a national catastrophe fund. An advocate for such legislation said the move was a first for a major political party.
The platform was adopted by acclamation Monday, the first day of the Democratic political convention.
The decision was greeted with elation by officials of ProtectingAmerica.org, a strong advocate for such a program.
“This is the first time that a national political party has even addressed America’s preparedness for and protection from catastrophe,” said David A. Smith, a director of ProtectingAmerica.org.
In Mr. Smith’s view, “There is a growing consensus that America needs a comprehensive and integrated private-public partnership to increase mitigation and education before catastrophe strikes; enhance responsiveness during a catastrophe; and assure that the resources are available so homeowners can repair, rebuild and recover in the aftermath of massive natural events like devastating hurricanes and enormous earthquakes.”
ProtectingAmerica.org is a supporter of the Homeowners’ Defense Act of 2007, H.R. 3355, which passed the House by a 258-155 margin last November.
That bill would allow states to pool catastrophic risks, and then transfer them to the private market through the sale of catastrophe bonds or purchase of reinsurance. The plan would be backed by the federal government.
Similar legislation was introduced last year in the Senate by Sen. Hillary Clinton, D-N.Y.
But, it faces a presidential veto threat and strong opposition from the reinsurance industry.
The reinsurance industry is part of a newly created advocacy group to oppose it, Americans for Smart Natural Catastrophe Policy.
ProtectingAmerica.org and the new group went head-to-head on the issue just last week, with Americans for Smart Natural Catastrophe Policy releasing a report estimating there would be an enormous cost to taxpayers for a catastrophe insurance program. ProtectingAmerica.org officials said the report was based on flawed assumptions and is “special interest double-talk.”
In any event, the plank in the Democratic platform says the party “will also work to prevent future catastrophic response failures, whether the emergency comes from hurricanes, earthquakes, floods, tornadoes, wild fires, drought, bridge collapses, or any other natural or man-made disaster…”
It adds that Democrats will develop “a National Catastrophic Insurance Fund to offer an affordable insurance mechanism for high-risk catastrophes that no single private insurer can cover by itself for fear of bankruptcy. This will allow states to deal comprehensively with the economic dislocation of natural disasters.”
Hope Brian will stop by and explain how this differs from HR3121.
HR 3355 would let the state wind pools tap the Cat Bond market themselves and let them band together more in addtion to providing a federal backstop against right tail cats.
This bill provides taxpayer subsidy to insurers, not policyholders. Gene’s bill would elminiate insurers from the multi peril equation.
It is a compromise and appears to be the concept the Dems have rallied around Nowdy. It’s better than nothing but I prefer Gene’s bill myself.
sop