National Insurance Crisis Threatens the Economy of South Florida and America
Wasserman Schultz Introduces Legislation to Find Solution That Protects Consumers
Floridians need look no further than their own home or business to realize that the American insurance market is in crisis. The increased threat of huge losses from natural disasters has caused insurance companies to withdraw from many markets or increase premiums at alarming rates. If left unresolved, this growing crisis threatens to destabilize Florida's economy.
To address this problem, Rep. Debbie Wasserman Schultz introduced the "Catastrophic Disaster Risk and Insurance Commission Act" (H.R. 5891) to examine how to best structure and establish a national catastrophe fund.
"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. Wasserman Schultz. "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."
Many experts agree that a national catastrophe fund may be the only viable solution to spiraling costs and unmanageable risk; however, the structure and role of such a fund has often been a point of debate. Rep. Wasserman Schultz's legislation would create a comprehensive analysis of how a national catastrophe fund would interact with and protect the private market while protecting consumers.
Rep. Wasserman Schultz's bill establishes a national commission to examine and make recommendations that will retain and attract private insurers, thus fostering competition, in order to serve consumers and protect taxpayers.
The commission is tasked to help the federal government prepare for and manage disaster response, mitigate future costs, reduce the likelihood of fraud and abuse in the federal repayment program, and hedge any risk exposure assumed by the federal government in the adoption of a national catastrophe program.
The legislation builds upon and expands language introduced earlier this year in several important ways:
1. The scope of the Commission covers all natural disasters, including hurricanes.
2. It directs the Commission to ensure that the federal government's role is fiscally responsible: limiting risk to taxpayers; reducing the potential for fraud and abuse; and seeking mechanisms to hedge liabilities assumed by the federal government.
3. The Commission seeks to maximize private sector participation, in the development of a federal catastrophe fund. The goal is to ensure that consumers have access to private insurance coverage at fair and competitive prices.
4. It sets a timeline of six months, allowing for a comprehensive analysis while ensuring that the timeline reflects the severity of the problem.
5. It requires the Commission to analyze the appropriate role for States in stabilizing the property and casualty insurance and reinsurance markets; whether or not it is in the best interest to allow a state to set up a method to address such risks; and incorporates existing best practices from state programs. The bill would also require an analysis of how a federal disaster plan would affect existing state disaster initiatives.
6. The bill expands the membership of the Commission to ensure all stakeholders have a seat at the table, and requires Congress to appoint Commission Members within 30 days after being signed into law.
7. Finally, it requires the Commission to investigate the merits of all legislative proposals aimed at solving this market failure and pending in the 109th Congress.
"My legislation builds upon some of our best practices in Florida," said Rep. Wasserman Schultz. "It pulls together a number of bi-partisan individuals in the public and private sectors who have an understanding of natural disasters and the insurance market."
Rep. Wasserman Schultz introduced her legislation with strong bi-partisan support including Reps. Castle (R-DE), Melancon (D-LA), McHenry (R-NC), Hooley (D-OR), Ackerman (D-NY), Israel (D-NY), Bishop (D-NY), Crowley (D-NY). A similar bill has been introduced in the U.S. Senate by Senator Bill Nelson (D-FL).