FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2007 -- (House of Representatives - September 27, 2007)
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Mr. KINGSTON. Mr. Chairman, I thank the gentlewoman for yielding the time, and I want to talk a little bit about my own background.
I was in the insurance business for 13 years, worked strictly on commission. I was a broker, which meant I worked for the buyer, helping them find the best quality insurance in the insurance marketplace. I also represent the entire coast of the State of Georgia. I've been involved in flood insurance and wind storm insurance and fire insurance a great deal of my adult life. So I'm very familiar with this. In fact, I'm the only CPCU in Congress, which means Charter Property and Casualty Underwriter. That's a professional designation. I know this stuff is my point.
Now, what you have with the insurance business is you have two types of profits, one they make from underwriting. They don't want to insure a building if they know it's going to burn down because they won't make an underwrite profit. Fair game. They do everything they can to make sure the building does not burn down.
They also make a second kind of profit called investment profit. When they get the cash flow from premiums from underwriting, they invest it and they make a lot of money in that. But generally speaking, insurance companies are risk averse. They don't want to insure wind if you're on the coast. They don't want to insure flood if you're in a flood zone. It makes sense from a business standpoint.
But as they will gladly cede this to the Federal Government, then what happens is exactly what Mr. McHenry said: you have the private sector pulls out of it. They don't put in their ingenuity to it.
Now my friend Mr. Taylor, and I know having represented coastal areas, it is possible that there are a lot of buildings and homes that have been constructed that probably shouldn't be there or probably shouldn't use the construction standards that they should, I know as I go over the entire district of Georgia on the coast that people in Idaho and Iowa and Maine are subsidizing the flood policies for my homeowners out there.
It's hard to say this is politically unpopular, but it is the truth. I just want to say that the insurance companies need to own up to their social responsibility. They don't need to take a walk on this.
The Federal Government is already supplying health care, retirement benefits, transportation benefits, food, drugs, even school uniforms and babysitting. Yes, there are programs for that. I don't believe the Federal Government needs to get into the wind storm pool in a major way. We need to let the private sector continue to provide this service, and we need to look ourselves in the eye and say maybe not all these buildings should be built.
I urge a ``no'' vote on this.
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