Flood Insurance Reform and Modernization Act of 2006

FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2006

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Mrs. McCARTHY. Mr. Chairman, H.R. 4973 is necessary but not sufficient.

It is necessary because the hurricanes and flooding in 2004 and 2005 have shown that the present flood insurance programs must be reformed.

It is not sufficient because those same hurricanes, especially Hurricane Katrina, convinced me that flood insurance alone will not protect the millions of Americans who now live in harm's way along our Nation's coasts and rivers.

I had the privilege of visiting the Gulf Coast earlier this year. I saw the devastating impact of wind and water on homes, on businesses, and on lives. I also heard the horror stories from people who were told that the damage to their lives was caused by water and not wind. In these cases, neither flood insurance nor homeowner's insurance protected them. Others indicated that officials told them they didn't need flood insurance because they were not in a danger zone.

It is time for Congress to go beyond the traditional approach of distinguishing between flood and wind damage. We have to develop a comprehensive natural disaster program that will protect homes from hurricanes, earthquakes, volcanoes, and other natural disasters that one day will affect 49 of our 50 states.

Insurance companies know that a disaster can occur. Some companies already are refusing to insure homes on Long Island and in other communities where a ``big one'' is overdue. The hurricane of 1938--the so-called Long Island Express--killed 600 to 700 people, destroyed 75,000 buildings and caused $300 million in damage. At that time, Long Island was the home to 600,000 people. Today, 2.8 million live there. A category 4 hurricane could cause $100 billion in insured damage alone.

Earlier this year, the gentleman from New York (Mr. Israel) and I asked the Financial Services Committee to conduct hearings as soon as possible on the disaster insurance bills before the Committee. Our letter stated that ``We believe that Congress needs to pass a strong reinsurance program. Natural disasters can occur in any region at any time. Since the insurance industry appears unable or unwilling to provide protection for our constituents, then it is time for Congress to act swiftly and positively.''

The initial response indicated that we should wait until after the GAO completes its study of natural disaster insurance needs later this year. Fortunately, the real facts of Katrina, a number of extensive newspaper investigations, and the airing of several ``what if' programs on cable TV are opening eyes even here. The Housing Subcommittee is holding its second hearing tomorrow (June 28) on natural disaster insurance needs. This one will focus on ``The Housing Market and Natural Catastrophes.''

I am convinced that this country needs an insurance program that will cover all natural disaster risks. If properly crafted, this program, will reduce the amount of emergency funds that Congress will have to provide after the next emergency, whether it occurs in the Northeast, Midwest, West Coast, Southeast, or Gulf Coast regions.

I want to encourage the administration, all financial services companies, state and local officials, and this body to work together and to develop a comprehensive and responsible natural disaster insurance program. The policy should be priced according to the risks of that state; it should cover all major natural disasters. It must be mandatory and cover both homes and businesses. States need to update and enforce building codes and to require mitigation both before and after a natural disaster. Finally, the federal program would be a backup for private reinsurance. These are the goals that I will pursue.

The House should pass HR 4973 today. Then, we must turn our attention to the larger disaster insurance issue. The American people cannot afford to add another $20 billion or $50 billion or $100 billion natural disaster relief program to the deficit, not when a fiscally sound alternative may be within reach. Tomorrow may be too late.

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