An unlikely coalition of environmental and libertarian taxpayer groups are joining forces to fight legislation that would create a national disaster insurance pool to protect homeowners in hurricane-prone areas.
The group — SmarterSafer.org — is getting behind legislation sponsored by Rep. Bennie Thompson (D-Miss.) that would provide $100 million annually over four years to states to strengthen homes, apartment buildings and small businesses against heavy-hitting storms.
Thompson’s package of three bills, expected to be introduced Wednesday, would provide grants for mitigation activities such as building new water barriers to prevent flooding, securing roofs and garage doors, and putting storm shutters on windows. It would also authorize an additional $100 million over five years to bolster emergency response during storms by upgrading communications, creating mobile nurse units and improving evacuation of the elderly from their residences.
Last month, Rep. Ron Klein (D-Fla.) introduced a bill that would pool state resources to provide national disaster insurance for homeowners in Hurricane Alley. Supporters argue that the bill would make the insurance cheaper and more available for homeowners living near coastal areas by spreading the cost.
Klein’s bill would mandate a much smaller amount — $15 million per year for five years — to strengthen homes.
Some private insurers fled Florida and other storm-prone areas of the Southeast after Hurricane Katrina hit in 2005. Since then, the issue has come up every summer as the country heads into hurricane season.
“Whether it is a hurricane in Florida, an earthquake in California, a wildfire in Arizona or a tornado in Kansas, there is no reason why we can’t spread the risk across states and natural disasters in order to bring down prices for homeowners,” Klein said in a news release. “At its heart, this bill is designed to make sure insurance is doing what it is supposed to do: spread the risk.”
Sen. Bill Nelson (D-Fla.) has introduced a corresponding bill in the Senate. Similar legislation that Klein sponsored with then-Rep. Tim Mahoney (D-Fla.) passed the House last Congress but died in the Senate under a veto threat from the Bush administration.
But SmarterSafer.org — formerly Americans for Smart Natural Catastrophe Policy, which also includes insurers and emergency preparedness groups such as the National Fire Protection Association and the National Flood Determination Association — argues Klein’s plan amounts to a bailout for wealthy owners of beachside vacation homes.
Fiscal conservatives in the organization — including the Taxpayers for Common Sense and the Competitive Enterprise Institute, among other groups — also contend that Klein’s proposal would burden taxpayers with new costs and undercut the private insurance market.
“This encourages development exactly where it shouldn’t happen, and it stops the free market from working and displaces productive private industry,” said Eli Lehrer, a senior fellow at the Competitive Enterprise Institute.
Environmental advocates argue, as well, that it would encourage coastal development by lowering costs, a poor policy decision when climate change may make those developments more vulnerable to stronger storms and increasingly severe flooding.
“We’re concerned that efforts in effect to subsidize insurance will lead to more of what we’ve always had in Florida, which is poor land-use decisions,” said Ed Hopkins, director of the Environmental Quality Program at the Sierra Club.
A better solution, the environmentalists suggest, would be to protect vulnerable barrier islands that provide natural storm buffers for onshore communities.
“The wisest role [for the government] is to actually focus attention on managing risk. The best way to lower insurance rates, at least in the long run, is to lower the risk,” said David Conrad, a senior water resources specialist at the National Wildlife Federation.
While the Competitive Enterprise Institute and other fiscally conservative groups shy away from acknowledging global warming as a problem, they say it’s a risk that must at least be considered by insurers.
“It is very relevant to say that insurance policy should take into account the possibility, and even probability, of global climate change,” Lehrer said. “There’s no reason the government should subsidize people to build in really dumb places.”