In a case of politics making strange bedfellows, opposition to legislation expanding the National Flood Insurance Program to include wind coverage has brought insurer watchdog J. Robert Hunter of the Consumer Federation of America together with the Reinsurance Association of America.
The two are part of a consortium that called on the Senate Banking Committee not to pass HR 3121–the Flood Insurance Reform and Modernization Act of 2007.
HR 3121–which has already won approval in the House–combined previously introduced flood reforms designed to increase the number of consumers in the program and reduce subsidies for some properties, with a bill introduced by Rep. Gene Taylor, D-Miss., to add a wind coverage option.
Mr. Hunter–CFA's insurance director and a frequent critic of the industry–acknowledged that it is a case of "man bites dog" to see he and the industry working together. "I don't usually align myself with them unless it's something I feel is important. The insurance industry is strong enough. They don't need me."
The consortium also includes taxpayer advocacy groups such as the Council for Citizens Against Government Waste and Taxpayers for Common Sense, along with environmental organizations like the National Wildlife Federation and Friends of the Earth.
RAA President Franklin Nutter said the "diversity of the consortium's membership demonstrates that NFIP is much more than an insurance issue."
The basis for his opposition to plans to expand the NFIP, Mr. Hunter explained, is that while it may sound like something that could help consumers, he believes it would instead likely only aid developers looking to build along the already overexposed coast.
"I don't think it's wise to subsidize coverage in high-risk areas," he said, adding that proposals such as windstorm coverage expansion "encourages unwise construction" in high-wind risk, high-flood risk regions.
Mr. Hunter said he was not opposed to the idea of a flood insurance subsidy, but he said it should be targeted to help consumers and be focused on scaling down the number of people living in flood-prone areas. Such a system, he said, could be based on the policyholder's income, and should only be applied to existing structures.
The consortium is also opposed to other federal proposals that would establish new federal programs to provide loans to state disaster funds, or provide federal government backing for a state's property insurance guaranty fund.
The bill to establish such programs–HR 3355, the "Homeowners Defense Act"–was introduced last year by Florida Democrats Ron Klein and Tim Mahoney. Like HR 3121, it was passed by the House and is awaiting action by the Senate Banking, Housing and Urban Affairs Committee.
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