The National Association of Mutual Insurance Companies (NAMIC) says a bill intended to buoy the insurance market in coastal areas may instead crowd out private insurers and encourage risky development.

Testifying at a field hearing in West Palm Beach, Fla. held by the House Subcommittee on Oversight and Investigations, NAMIC VP of public policy Robert Detlefsen voiced concern over H.R. 2555, the Homeowners Defense Act. Detlefsen said to properly address coastal insurance issues there must be a balance between the private and public sector and that any new policy should avoid encouraging risky behavior in disaster-prone areas by artificially suppressing insurance rates.

“The federal government should be careful not to subsidize states that enact disaster insurance ‘reforms’ by transferring the cost of such measures to federal taxpayers,” he said. “NAMIC realizes that anyone who lives or does business in coastal areas faces serious challenges from natural disasters. We believe that the most effective mechanism for addressing these challenges is a private insurance market that is free to appropriately match rate to risk.”

Detlefsen, suggested other ways to augment storm coverage including reforming the National Flood Insurance Program, strengthening building codes, and providing grants to low-income property owners to help pay property insurance premiums.

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