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Cliston Brown
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Phone:
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847-553-3671
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cliston.brown@pciaa.net
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House Pulls Multiple Peril Bill From Consideration Again
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WASHINGTON—The Property Casualty Insurers Association of America (PCI) is
pleased that the House of Representatives has once again pulled H.R. 1264, the
Multiple Peril Insurance Act, from consideration. The Obama Administration, environmental
interests, consumer advocates, taxpayer watchdogs, the business community and
insurers all oppose this short-sighted bill.
"The proposed Multiple Peril Insurance Act is not
only unnecessary, but also harmful to consumers and the marketplace, at a time
when our economy is still struggling," said Tom Litjen, PCI’s vice
president, federal government relations. “This misguided legislation would harm
the U.S. jobs market and potentially add billions of dollars to the federal
deficit.”
Home, auto and business insurers are strongly opposed to
this proposal to expand the National Flood Insurance Program (NFIP) to include
windstorm insurance coverage. Replacing portions of
the private marketplace with government insurance is likely to impose tens of
billions of dollars in additional taxpayer losses while causing thousands of
private sector job losses that would be forced out through competition with an
untaxed, unregulated government competitor. PCI has determined that over
$25 billion in private capital from homeowners insurance premium is allocated
to the wind peril every year. A government takeover of this private homeowners
insurance market is estimated to have the following effects:
Crushing Impact on U.S. Jobs Market
·
PCI estimates that up to 41,775 private sector jobs could be lost
or moved to Washington, D.C. This is the equivalent of $2.6 billion in lost
wages that would be removed from the economy or shifted from local communities
to federal government jobs.
Billions Added to Federal Deficit; Obama
Administration Opposes
·
The Obama Administration opposes the
bill and has issued an official Statement of Administration Policy that “expanding NFIP to cover windstorm insurance would
unnecessarily duplicate available insurance products and could ‘crowd out’ such
products where they are offered, while offering little to no savings to the
American public [at] a time when the NFIP is already facing serious challenges ...
.”
·
State and federal governments could lose approximately $22.1
billion in premium taxes as well as income taxes and municipal bond investments
from private insurance companies.
·
The National Flood Insurance Program (NFIP) is already struggling
with $18.2 billion of debt (without windstorm coverage), which is a significant
burden on the program. The interest alone on this debt costs the NFIP more than
$900 million a year, none of which goes to pay back any of the principal.
·
The Federal Emergency Management Agency (FEMA) does not support
adding windstorm coverage to the NFIP, citing concerns that this would threaten
the long-term viability of the program. Secretary of Homeland Security Janet
Napolitano has also expressed opposition to the multiperil proposal.
Environmental, Consumer, Taxpayer and Business
Groups Object
·
Environmental groups have expressed major concerns that this
legislation would create incentives for more development in environmentally
sensitive coastal areas, leading to increased damage to wildlife habitat,
wetlands and coastlines.
·
In a July 20, 2010, letter to the U.S. House of Representatives,
groups including the Environmental Defense Fund, National Wildlife Federation
and Sierra Club all urged lawmakers to reject this proposal to add windstorm
coverage to the NFIP.
·
The Consumer Federation of America opposes the Multiple Peril
Insurance Act as it would hurt consumers by forcing greater taxpayer subsidies
and providing developers with more incentives to build unsafe structures.
·
Taxpayer advocate groups such as Americans for Prosperity and
Americans for Tax Reform continue to sound the alarm by pointing to the
billions of taxpayer dollars needed to add windstorm coverage to the NFIP.
·
The U.S. Chamber of Commerce also opposes H.R. 1264 as the
proposal threatens the jobs market and the availability of windstorm insurance
coverage in the private market.
PCI fully expects the bill’s sponsor, Rep. Gene Taylor
(D-Miss.) to continue pushing for this bill when Congress returns from recess,
and urges Congress to reject it.
“The fact that the Obama administration and so many
consumer, taxpayer and business groups are united in opposition to this bill
speaks volumes,” Litjen said. “We are glad to see that the support was not
there for the bill at this time, and we hope that remains the case after the
August recess.”
PCI is composed of more than 1,000 member
companies, representing the broadest cross-section of insurers of any national
trade association. PCI members write over $180 billion in annual premium, 37.4
percent of the nation’s property casualty insurance. Member companies write 44
percent of the U.S. automobile insurance market, 30.7 percent of the
homeowners market, 35.1 percent of the commercial property and liability
market, and 41.7 percent of the private workers compensation market.
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