Homeowners' Defense Act Raises Hackles

Washington – The Homeowners' Defense Act of 2007, introduced into the upper chamber by Senators Hillary Clinton, D-N.Y., and Bill Nelson, D-Fla., aims to address availability and affordability of natural disaster insurance.

The legislation complements H.R. 3355, which was authored by Reps. Ron Klein, D-Fla., and Tim Mahoney, D-Fla. and introduced into the House earlier this year. The Act seeks to create a National Catastrophe Risk Consortium that would allow states to pool catastrophic risks, and a National Homeowners Insurance Stabilization Program, which will guarantee that disaster funds retain their liquidity via loans from the Treasury Department.

However, some see the proposed legislation as promulgating government programs at the expense of market-oriented solutions."  

“This legislation raises serious concerns for AIA and its more than 350 member companies who do not want to see Congress go down the road of creating mechanisms that would impair, rather than improve, insurers' ability to serve the public by providing catastrophe insurance,” says Marc Racicot, president of the American Insurance Association (AIA). “While we appreciate the efforts of Senators Clinton and Nelson to address homeowners’ insurance issues, the private insurance system continues to be well-positioned to manage natural catastrophe risk, and we believe the best course is to improve, not displace, the private sector’s ability to serve homeowners and businesses that could face losses from natural catastrophes.”

Source: AIA, INN Archives