It’s Back: SmarterSafer Leads Effort To Oppose New Federal Beach House Bailout Proposal

For Immediate Release

(Washington, DC) — – a coalition of leading taxpayer advocates, environmental groups, insurers, reinsurers and others – today urged Congress to oppose a new proposal (H.R. 6477) being sponsored by Rep. Albio Sires (D-NJ) that would leave taxpayers throughout the country on the hook for billions of dollars in losses and encourage risky development regions most prone to natural disasters.

In a letter being sent to Members of Congress today, the group wrote that the proposal, “does nothing to protect people in the event of a disaster. In fact,  it actually incentivizes people to live in harm’s way.”

Currently, the federal government pays for immediate needs, clean up, and infrastructure after a disaster through disaster assistance. Most property rebuilding, however, is paid for by private insurance. Under H.R. 6477, taxpayers would continue to pay for immediate needs and infrastructure reconstruction and on top of that would potentially pay for tens of billions of dollars in property rebuilding costs – costs now covered by private insurance. said such a program is ill advised and unnecessary: (1) it would add billions of dollars to the federal deficit; (2) it masks risk, providing no incentive to undertake life and property saving mitigation efforts; and (3) it encourages development in environmentally sensitive and risky areas.

In its letter, wrote that, “Asking the taxpayers to pick up this tab when the private market place is already insuring the risk would be ill-advised at any time but it is even more egregious during this difficult fiscal environment. Under this bill, homeowner insurance in risky areas would be nationalized through a government backstop akin to Fannie Mae and Freddie Mac. Fannie and Freddie have now cost American taxpayers $180 billion and are not a model the federal government should consider replicating in this way.”

According to a study by economist Robert Schapiro of a similar backstop, such a scheme could cost $200 billion. noted that this approach contradicts Congressional efforts to cut the deficit and federal spending while replacing a robust private market with federal government insurance.

HR 6477 would provide a federal backstop for a handful of state programs (like the one in Florida) and would incentivize other coastal states to create such programs. Florida’s system is under-capitalized and cannot pay claims in the event of a large hurricane. The program provides state-backed insurance at highly subsidized rates, regardless of need. wrote, “Subsidizing insurance coverage not only burdens taxpayers, but incentivizes people to live in dangerous areas and discourages life-saving mitigation. Underpriced insurance does not provide accurate information about risk, creating a subsidy to develop in risky areas—areas that also provide natural protection from storms.
This development directly harms this nation’s residents and communities by eroding our natural barriers to storms and their impact.”

Mr. Sires’ proposal “unnecessarily shifts resources from taxpayers in all 50 states to pay for the mistakes made in one state like Florida. Florida officials are already working to shift policies to the private sector, and to slowly phase-in actuarial sound rates,” added. is a national coalition made up of a diverse set of voices united to support environmentally responsible, fiscally sound approaches that promote public safety. The Coalition strongly opposes legislative proposals that encourage people to build homes in hurricane-prone, environmentally sensitive areas by creating new programs that directly or indirectly subsidize their homeowner’s insurance.

A full copy of the letter is attached.


Contact: Matt Englehart
(202) 415-5313