Matheson Seeks Backstop For Utah Homeowners In Event Of Natural Disaster
Congressman Jim Matheson amended a bill designed to ease the growing homeowners insurance crunch and help states prepare financially for future disasters. Matheson amended the bipartisan Homeowners Defense Act of 2008 (HR 3355) which passed the House Thursday.
The measure is a response to the recent pullout by some private insurers from areas of the country that have experienced major property losses from storms, floods and other natural disasters. The bill creates a national catastrophic program to stabilize the catastrophe insurance market by expanding private industries' capacity to cover a natural disaster and help states to better manage risk. It was introduced by two Florida representatives.
Matheson said his amendment would provide a cost-benefit analysis that could help Utah's planning efforts.
"Many Utah homes are vulnerable should a major earthquake hit the Wasatch Front," said Matheson. "The Utah Department of Insurance is looking into the possibility of creating a state-sponsored earthquake plan since some private companies have limited what's offered to Utah homeowners. My amendment requires the National Catastrophe Consortium to assess the costs associated with risks for states such as Utah."
Matheson said the Utah Department of Insurance estimates the only between 14-18% of Utah homeowners currently have earthquake insurance.
The bill provides a venue for state-sponsored insurance funds to voluntarily bundle their catastrophe risk with one another, and then transfer that risk to the private markets through the use of catastrophe bonds and reinsurance contracts.