A Letter to the Honorable John A. Boehner and Minority Leader Nancy Pelosi

The Honorable John A. Boehner
Speaker of the House of Representatives
United States Capitol, H-232
Washington, DC 20515

The Honorable Nancy Pelosi
Minority Leader
U.S. House of Representatives
United States Capitol, H-204
Washington, DC 20515

Dear Speaker Boehner and Minority Leader Pelosi:

As the hurricane season in the United Stated begins, SmarterSafer, a diverse coalition of taxpayer advocates, environmental organizations, members of the insurance industry, and housing organizations, urges Congress to focus on policies that will better prepare this nation for future disasters and to steer clear of any acts that further incentivize Americans to live in harm’s way and in environmentally sensitive areas, significantly burden American taxpayers, and expand the federal deficit.

SmarterSafer urges Congress to take a number of actions to help protect people in harm’s way, the environment, and taxpayers. We urge you to pass comprehensive flood insurance reform, support mitigation, and reject expensive and unnecessary proposals to create federal insurance backstops or similar programs.

Pass Comprehensive Flood Insurance Reform

We are hopeful that Congress will soon come to agreement on and pass comprehensive reform of the National Flood Insurance Program (NFIP). NFIP, which is currently $18 billion in debt to American taxpayers, must be reformed so that people understand their risks, are not incentivized to live in environmentally sensitive and dangerous areas, and to better protect taxpayers. The House has passed a comprehensive reform bill overwhelmingly, and Senate Majority Leader Harry Reid has committed to bringing a similar bill to the Senate floor during the next work period. These bills would ensure flood maps are accurate and updated, would phase out expensive subsidies, and would allow the program to access private sources of financing—all of which will put the program on sounder financial footing. We urge the House and the Senate to quickly find common ground on flood insurance reform and send a meaningful reform bill to the President’s desk.

Focus on Mitigation

SmarterSafer urges Congress to focus on mitigation so that families, businesses, properties and communities can better withstand hurricanes and other disasters. Mitigation saves lives and reduces damage—and it is cost effective. For every dollar spent on risk-reducing measures, $4 is saved in clean up and rebuilding costs, in addition to lowering the costs of government and privately-provided insurance. Pre-disaster, preventative measures should be improved and included in any government disaster planning. While post-disaster recovery measures are important and must be better managed, the best way to help people is to protect their lives and property before disaster strikes. Current pre-disaster mitigation programs have focused almost exclusively on community-level projects. While these larger-scale projects are critical, there are smaller-scale measures that should be taken by individual homeowners and property owners that will have measurable benefits. Buildings can be outfitted with hurricane shutters and roof protection systems, water barriers can be installed, critical systems can be elevated, and wind resistant windows can be installed to better protect individual families. The scarce federal dollars that are spent on mitigation should be spent on those families and communities that cannot otherwise afford to protect themselves. This will help better prepare for what nature has in store and will save taxpayer assistance after disaster strikes.

Oppose Costly Federal Backstops

We urge Congress to oppose efforts to create a public insurance scheme that would move most insured losses—now covered by the private sector through insurance and reinsurance—onto the backs of taxpayers. This scheme has principally been suggested by some in Florida—a state that has created a highly subsidized public insurance system that has largely displaced the private insurance market in the state, and which may be ‘designed to fail’—at taxpayer expense. Many Florida officials have been working to fix the state problem where it should be fixed—in the state. These efforts should be encouraged. However, some have suggested that American taxpayers should pay for this subsidized insurance—which is not based on need.

According to a study done by economist Robert Shapiro in 2008, the cost to taxpayers of this new scheme could be greater than $200 billion by 2020 if other states chose to move to a public insurance system. If these ideas were enacted, the federal government would take on liabilities of the most disaster-prone properties through a government backstop akin to Fannie Mae and Freddie Mac, the two Government Sponsored Enterprises that have now cost American taxpayers $180 billion. The greatest risk posed by this kind of legislation is that it does nothing to prepare and protect our citizens in advance of natural disasters and provides a bail out that Americans cannot afford. The federal government currently covers immediate clean up and rescue, human services to disaster victims, and public infrastructure repairs while private insurance coverage is available to pay for most rebuilding of private homes. Under a federal backstop, guarantee programs, or similar scheme, American taxpayers would continue to pay for immediate needs and infrastructure and on top of that would pay billions of dollars in rebuilding costs now covered by the private sector.

Quite simply, this displaces a private market and replaces it with federal government insurance. Those who support such a move have said that such an act would decrease insurance premiums, but this will only be true if federal taxpayers pick up some of the tab. Subsidizing insurance coverage would not only add to the federal deficit and burden taxpayers, but it also provides incentives for people to live in environmentally sensitive and dangerous areas. As hurricane season begins, the federal government should help people protect themselves not encourage them to live in harm’s way through subsidized insurance.

We look forward to working with you to keep Americans safe and appreciate your attention to these matters.


Environmental Organizations

American Rivers
Defenders of Wildlife
Environmental Defense Fund
National Wildlife Federation
Republicans for Environmental Protection
Sierra Club

Consumer and Taxpayer Advocates

American Consumer Institute
American Conservative Union
R Street
Taxpayers for Common Sense

Insurer Interests

Allianz of America
Association of Bermuda Insurers and Reinsurers
Liberty Mutual Group
National Association of Mutual Insurance Companies
National Flood Determination Association
Reinsurance Association of America
Swiss Re


National Low Income Housing Coalition
National Leased Housing Association