Smartersafer Urges Congress To Oppose Natural Catastrophe Bailout Legislation

WASHINGTON, D.C., a national coalition of taxpayer advocates, environmental groups, insurance interests, housing organizations and mitigation advocates, today urged Congress to oppose H.R. 4947 introduced by Rep. David Jolly (R-FL), which would create a federal backstop or reinsurance scheme for state insurance funds, leaving taxpayers on the hook for billions of dollars in losses while encouraging risky development in regions most prone to natural disasters.

In a letter being sent to members of Congress today, the group wrote that the proposal would displace a working private insurance market; add billions of dollars to the federal deficit; mask risk, while providing no incentive to undertake life and property saving mitigation efforts; and encourage development in environmentally sensitive and risky areas. A copy of the letter addressed to Rep. Jeb Hensarling (R-TX), Chair of the House Committee on Financial Services is below, and separate copies were sent to individual committee members.

In a statement, said, “Proposals like these do nothing to help protect people in the event of a disaster. In fact, they incentivize people to live in harm’s way. Rather than taking steps to update our nation’s disaster policies, this bill would shift homeowner insurance from the private sector onto the backs of federal taxpayers. In an era of increasingly frequent severe storms, Congress cannot afford to bailout hurricane-prone properties by creating a federal backstop that would add significant new taxpayer obligations. Instead, the focus should be on implementing a national mitigation strategy that would protect properties and communities so they can better withstand the next storm.”

About is a national coalition that is made up of a diverse chorus of voices united in favor of environmentally responsible, fiscally sound approaches to natural catastrophe policy that promote public safety. The coalition believes that the Federal government has a role in encouraging and helping homeowners to undertake mitigation efforts to safeguard their homes against natural disasters.  At the same time, the coalition opposes measures that put people’s lives at risk at the expense of taxpayers.  Measures such as subsidizing artificially low rates for homeowners’ insurance policies help to encourage construction in environmentally sensitive and unsafe areas.  The coalition is working to ensure that Congress does not incentivize people to live in harm’s way in places prone to hurricanes and floods.





April 20, 2016


The Honorable Jeb Hensarling


House Committee on Financial Services

Washington, D.C. 20515


Dear Chairman Hensarling:

As a coalition of leading taxpayer advocates, environmental organizations, housing and mitigation groups, and insurance interests, we write to urge your opposition to a bill recently referred to your Committee—H.R. 4947, to establish a federal backstop or bailout fund for state- run insurance programs. H.R. 4947 would cost taxpayers billions of dollars, displace the private insurance and reinsurance market, and result in incentives to build in unsafe and environmentally fragile areas. An earlier version of this legislation was estimated to potentially cost the federal government over $200 billion.

The bill creates a federal bailout program that is costly, ill-advised and unnecessary. The proposal is principally designed to benefit one state-Florida-at the expense of taxpayers in all other states. While Florida has created a state-run insurance system to cover natural disasters based on artificially low rates, the state legislature and, indeed, the leadership of Florida’s unique state entities, have been taking steps to transition their insurance program back to where it belongs—in the private sector. Unfortunately, H.R. 4947 would discourage Florida from continuing to fix their insurance system, and would encourage other states to create flawed state- run insurance systems. These state systems would mimic the programs in Florida, which unlike private insurance and reinsurance, which maintain proper liquidity and reserves to pay claims, are severely under-capitalized and not able to pay claims in the event of a large hurricane without the imposition of new taxes, if at all.

There is no need to create a federal backstop for natural disaster insurance, supplanting a functioning private insurance and reinsurance market. Private reinsurance and capital markets are robustly assuming catastrophe risk, while federal insurance programs struggle to deliver on their commitments, such as the National Flood Insurance Program, which is more than $23 billion in debt in large part due to inadequate rates. Subsidized rates encourage development in risky and environmentally sensitive areas, creates moral hazard rather than mitigating risk, and inevitably results in huge taxpayer liabilities.

SmarterSafer urges Congress to reject the ideas in H.R. 4947 and to resist calls to create new bailout funds for state-run insurance and reinsurance programs for natural disasters. We look forward to working with you on these issues.





Environmental Organizations

American Rivers

Center for Climate and Energy Solutions (C2ES)


Defenders of Wildlife

Natural Resources Defense Council

National Wildlife Federation

Sierra Club


Consumer and Taxpayer Advocates

Coalition to Reduce Spending

R Street

National Taxpayers Union

Taxpayers for Common Sense

Taxpayers Protection Alliance


Insurer Interests

Allianz of America

Association of Bermuda Insurers and Reinsurers

Liberty Mutual Group

National Association of Mutual Insurance Companies (NAMIC)

National Flood Determination Association

Reinsurance Association of America




Mitigation Interests

Natural Hazard Mitigation Association

National Fire Protection Association



National Housing Conference

National Leased Housing Association



American Consumer Institute

Association of State Floodplain Managers

Center for Clean Air Policy

Friends of the Earth

Institute for Liberty

Property Casualty Insurers Association of America

Union of Concerned Scientists