Sen. Bill Nelson (D-FL) has promised to soon introduce a bill he calls the “Homeowners’ Defense Act,” which would create a national catastrophe fund that would spread the risk and cost of major disasters among all the states. Nelson has introduced similar bills for several years running, but the legislation has not gained much traction.
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“The Homeowners Defense Act, which rears its ugly head once again in Congress, is a bad idea that just refuses to go away. Government-backed reinsurance funds have not worked well at the state level; throwing more money at these programs through a federal backstop is the wrong approach to stabilizing coastal insurance markets.
“Under the proposed act, the brunt of the financial burden posed by a major storm would be borne by safer homeowners living in inland areas, transferring risk through the fund backed up by taxpayer dollars. The proposed federal backstop could cost taxpayers billions of dollars and do significant damage to the environment, all in support of a system that is unlikely to cover the losses incurred after a major storm.”
“It takes some doing to introduce a bill that is at once anti-environment, anti-taxpayer, and anti-free markets, but Sen. Bill Nelson of Florida says he’ll do it.
“He say’s he’ll reintroduce a bill to force Americans everywhere to pay for the bad decisions of lawmakers in his and a handful of other states. The bill would have the U.S. Treasury backstop the Florida Hurricane Catastrophe Fund and other state-run reinsurers. These state-run reinsurers undercut private insurance markets and put taxpayers on the hook for losses. And by undercutting private markets, they make insurance in high-risk areas cheaper than it should be, thus encouraging construction in environmentally sensitive coastal and wilderness areas, which not only harms them but adds to natural catastrophe damages by encouraging development where it is most likely to sustain damage.”
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