Senate defeats federal wind coverage

May 8, 2008

Bradenton Herald–May 08, 2008

Herald Washington Bureau

A Gulf Coast-backed effort to add wind coverage to the National Flood Insurance Program was soundly defeated Wednesday in the Senate amid concerns it would be too costly.

The drive to add the amendment to the flood insurance bill failed 73-19. Opponents said they were leery of the cost and opposed federal intervention in private markets.

Sen. Chris Dodd, D-Conn., who chairs the Senate Banking Committee, urged a vote against the amendment, but said he was "determined to come up with some answers" on providing affordable insurance to homeowners in disaster-prone states.

"Wind is an issue we have to grapple with, but the last thing we want to do is destroy a flood program which we very well could by overwhelming it," Dodd said.

Gulf Coast lawmakers pleaded for relief, saying homeowners in their states were finding it increasingly difficult to afford, or even find, insurance.

"People who have paid every premium and have never filed a claim are simply locked out of the market," said Sen. Mel Martinez, R-Fla.

The White House has already said it would veto any bill that contained the provision.

Sen. Roger Wicker, R-Miss., who has pushed the measure in the Senate, noted that a review by the Congressional Budget Office estimated that the proposal would create no "significant budgetary impact."

"By covering wind and flood risks in one policy, the multiple peril option will allow coastal homeowners to buy insurance and know that hurricane damage would be covered," Wicker said. He called it a "commonsense proposal" that would prevent homeowners from having to go to court to determine whether a house was damaged by flood or wind.

"This might not be perfect, but it would send the signal that there needs to be a federal response to this situation," he said.

The House last fall passed legislation that would add wind coverage to the flood insurance program, but Dodd said the wind clause could carry unknown costs.

"It’s not that we disagree, it’s a legitimate issue," Dodd said. "But this amendment could end up costing us billions more than we anticipate. We don’t have any idea."

Dodd’s flood insurance bill would keep the national flood insurance program running through 2013 and forgive a $17 billion debt built up after Hurricane Katrina. The current program ends Oct. 1.

Dodd noted the bill may provide some relief. It calls for creating a commission to study the feasibility of creating a national catastrophe insurance fund, an idea Florida lawmakers have embraced. The commission would be required to report back to Congress within nine months.

The House passed a bill last November to create a voluntary risk pool among states prone to natural disasters, but there has been little appetite in the Senate, where many senators from states not prone to hurricanes say their constituents should not have to subsidize people who live in risky areas, such as near the beach.

The White House has threatened to veto the legislation, saying the bill would crowd out private insurers.