Americans for Smart Natural Catastrophe Policy Applauds Congress's Extension of National Flood Program Without Irresponsible Expansion

Commends Lawmakers For Not Including Wind Damage

WASHINGTON, Sept. 29 /PRNewswire-USNewswire/ -- Americans for Smart Natural Catastrophe Policy, a national coalition of environmental, consumer, taxpayer, free market, and insurance organizations, today applauded Congress for voting to extend the National Flood Insurance Program (NFIP) through March 9, 2009, without irresponsibly expanding the program to include wind coverage. Allowing the NFIP to expire precipitously in the midst of hurricane season would have left many Americans dangerously exposed. At the same time, Congress resisted turning natural catastrophes into financial disasters by adding wind coverage to the NFIP, providing state reinsurance loans or creating a federal bailout fund to cover state losses. When the new Congress convenes next year, legislators will have to again consider further extending and reforming the NFIP. Lawmakers should work to reform the program in an environmentally-responsible and fiscally-sensible manner.

With the federal government already confronting a $700 billion bailout of the financial industry, and the NFIP program already nearly $18 billion in debt, American taxpayers should not be forced to also pay for hurricane damages already covered by private insurance and reinsurance companies. If wind damage is added to the NFIP, hardworking families across the country will shoulder the cost of building and rebuilding coastal homes in the Gulf repeatedly in harm's way. A recent study by a Clinton Administration economist, Dr. Robert Shapiro, estimates that there could be as much as $161 billion in 2009 in unfair new taxpayer liabilities if Congress expands the NFIP to cover wind damage and the U.S. Gulf Coast suffers a hurricane season comparable to that of 2005. According to Towers Perrin, a global actuarial firm, the potential cost to the federal government could be as much as $200 billion if wind coverage is added to the NFIP.

"I really don't see any rational logic behind adding wind coverage. By doing this, you're essentially inviting residents to build in unsafe and environmentally-sensitive areas," said David Conrad, Senior Water Resources Specialist at the National Wildlife Federation, a member organization of Americans for Smart Natural Catastrophe Policy. "With global warming expected to create more severe and frequent storms, tacking on wind coverage is a recipe for environmental and financial disaster. It would perpetuate the damage-repair-damage cycle we're stuck in."

Although the House-passed bill expanded the program to cover wind damage and included other provisions imposing taxpayer liabilities in the event of hurricanes, the Senate decisively rejected adding wind damage to the program by a vote of 74-19 before passing its version of the bill 92-6. The Coalition does support the provision in the Senate-passed bill calling for a bipartisan Commission to examine various proposals and include experts in areas such as risk mitigation and prevention, climate change science, public finance, flood mapping, building standards, emergency management, environmental issues, insurance and reinsurance.

"Congress should be looking for reforms that will help homeowners help themselves and reduce the damage from natural catastrophes," said Eli Lehrer, Senior Fellow with the Competitive Enterprise Institute, another member organization of Americans for Smart Natural Catastrophe Policy. "The National Flood Insurance Program is over $17 billion in debt and it certainly doesn't need expansion right now."

Americans for Smart Natural Catastrophe Policy will continue to educate policymakers and the public about the importance and value of mitigation and urge Congress to implement working solutions to incentivize property owners to lessen risk. To best protect coastal residents, the environment and the financial security of the government and American taxpayers, Congress should be seeking smart, effective and safety-oriented reform solutions that will help homeowners better prepare for storms and reduce destruction caused by natural catastrophes, such as legislation proposed by Senate Banking Committee Chairman Chris Dodd (D-CT), Chairman of U.S. House of Representatives Committee on Homeland Security Bennie Thompson (D-MS) and Senator Roger Wicker (R-MS). Providing means tested tax credits and other financial support to help Americans take personal responsibility to invest in home improvements that make them stronger and more able to withstand storm damage in hurricane-prone areas is a responsible approach to catastrophic insurance policy.

About Americans for Smart Natural Catastrophe Policy

American for Smart Natural Catastrophe Policy is a national coalition made up of a diverse set of voices united to support environmentally-responsible, fiscally-sound approaches that promote public safety. The Coalition strongly opposes legislative proposals that encourage people to build homes in hurricane-prone, environmentally-sensitive areas by creating new programs that directly or indirectly subsidize their homeowner's insurance.

To learn more about the Coalition and its members, or to access information and research studies about the legislation, visit www.smartnatcat.org.