The Property and Casualty Insurers Association of America is voicing support for a proposed federal grant program to help those living outside flood zones rebuild homes they lost in this year's hurricanes.
In a letter to House Speaker Dennis Hastert, R-Ill., PCI president and chief executive officer Ernie Csiszar called for congressional support for the proposal, which was originally crafted by Mississippi Governor Haley Barbour.
"Rebuilding the lives, businesses and communities along the hurricane-ravaged Gulf Coast is a priority for both Congress and the insurance industry," Mr. Csiszar wrote.
Mr. Csiszar's letter said, "Insurance companies will cover more than $46 billion of the damage for 1.8 million policyholders hit by Hurricanes Katrina and Rita" and, "only the federal government will play a greater role in the economic recovery in this vitally important region of the United States."
The proposal would provide grants of up to $150,000 to homeowners who lived outside flood zones, occupied the home when the storms hit and had a homeowners insurance policy in place at the time.
"These criteria assure that only responsible property owners who protected their largest financial investment by purchasing a homeowners insurance policy receive federal government assistance," Mr. Csiszar said in the letter.
He added that the criteria eliminate "the possibility of assistance to irresponsible property owners who lived within a known flood area and yet did not maintain flood insurance."
Mr. Csiszar also argued that Gov. Barbour's proposal would be far better than that of Mississippi's Attorney General Jim Hood, which would allow for homeowners to retroactively purchase flood insurance coverage. This proposal has been considered in Congress but has not been included in any legislation.
"Offering the retroactive purchase of flood insurance would create a moral hazard that would destroy the solvency and effectiveness of the federal flood insurance program," Mr. Csiszar said.
He called Gov. Barbour's plan, "an investment of federal funds, not a bailout. It would effectively produce the same desired results but would do so by establishing commonsense incentives that will promote a stronger and more resilient infrastructure along the Gulf Coast."
In the wake of this year's hurricane season, insurance regulators have begun looking at how to deal with catastrophic losses at a broader level, including a proposal for a layered national catastrophe fund.
The top insurance regulators of four major states, California's John Garamendi, Florida's Kevin McCarty, New York's Howard Mills and Michael McRaith of Illinois, co-hosted a summit in San Francisco last month to discuss elements needed for a national catastrophe fund program.
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