Environmental Groups Oppose Homeowners Defense Act

NU Online News Service, June 1, 10:20 a.m. EDT

WASHINGTON–Several environmental groups have asked House members to oppose passage of legislation that would provide a federal backup to state catastrophe insurance programs.

The legislation, H.R. 2555, the Homeowners Defense Act, is expected to be taken up by the House when it returns from the Memorial Day recess June 8.

It is primarily sponsored by Rep. Ron Klein, D-Fla., who represents the Palm Beach area.

The environmental groups expressed concern that the bill would encourage further development in catastrophe-prone areas.

A letter signed by nine group states, "We have no doubt that Rep. Klein's efforts to ease Floridians' insurance rates are well intended, but we are extremely concerned that providing a federal insurance subsidy will create incentives for more development in environmentally sensitive coastal areas and increase exposure to hurricane-related risk."

It adds, "This could leave people more exposed to harm and at the same time increase, rather than decrease, adverse impacts to the environment."

The letter was signed by American Rivers, the Audubon Society, CERES, the Defenders of Wildlife, the League of Conservation Voters, the National Wildlife Federation, the Natural Resources Defense Council, Republicans for Environmental Protection and the Sierra Club.

The bill has been around in various forms for several years, and has split the insurance industry, with some companies and trade groups supporting it, and others opposing it.

The environmental groups said this year's version goes further than prior bills introduced by Rep. Klein.

The groups argued that the legislation provides more incentives than earlier bills to develop in environmentally sensitive areas and increases the burden on the taxpayer.

The bill states as its justification, "Making available federal guarantees to enhance the capability of eligible state programs to issue debt will minimize the exposure of state and federal taxpayers who otherwise may bear the consequences of underfunded programs or underinsured communities following catastrophic events, especially during today's historic market turmoil."

It adds that "it is the proper role of the federal government to prepare for and protect its citizens from catastrophes and to facilitate consumer protection, victim assistance and recovery, including financial recovery.

Critics, such as Eli Lehrer of the Chicago-based think tank The Heartland Institute–which states that it promotes "free-market solutions to social and economic problems"–have derisively labeled the bill the "Beach House Bailout," claiming its primary purpose is to subsidize insurance rates for second homes in Florida.