April 2, 2007

Texas House Insurance Committee Takes Leadership Role
in Protecting Families from Natural Catastrophes

ProtectingAmerica.org, a coalition of the nation’s leading catastrophe experts, praises action by the Texas House Insurance Committee to consider legislation that would create the "Texas Natural Disaster Catastrophe Fund."  The coalition calls the committee’s action ‘a signal that state legislature is taking needed, proactive steps to protect Texans from the potential devastation of a massive natural catastrophe.’

"The U.S. Congress and state legislatures across the country are recognizing the harsh reality that massive natural catastrophes have struck before and will strike again.  The House Insurance Committee’s action today is putting Texas at the forefront of resolving a pressing national priority," said Robert W. Porter, executive director of ProtectingAmerica.org, a national non-profit organization dedicated to finding better ways to prepare and protect American families from natural catastrophes.

Between the years 1980 - 2004, at least sixteen weather-related events cost Texans over $1 billion in damages each.  Nearly every inch of the state is susceptible to some form of catastrophe, be it hurricanes, tornadoes, hailstorms or otherwise.  In fact, the state is so heavily laden with risks that property owners are left with few - if any - private market options for insuring their homes. 

"Today, legislature is positioned to implement meaningful solutions to ensure that adequate coverage is available and affordable for every resident.  Many policymakers are working hard to address issues related to the Texas Windstorm Insurance Association (TWIA).  A catastrophe fund would be a key way to strengthen TWIA and provide a backstop and stronger infrastructure for the entire market and all consumers.  In many ways, TWIA and its growth is a symptom of the bigger problem that a well-structured catastrophe fund can effectively address for consumers," said Porter.

"By holding hearings on the Texas Natural Disaster Catastrophe Fund, the committee is moving one step closer to establishing necessary physical and financial protection for families and sending a message to Washington that a comprehensive national catastrophe management solution needed," he added.

The House Insurance Committee considered HB 3272, sponsored by Representative Craig Eiland (D-Galveston).  The Senate component, SB 1551, was recently introduced in the Business and Commerce Committee by Senator Kyle Janek (R-Houston).  The identical bills would establish the Texas Natural Disaster Catastrophe Fund to help pay covered residential property damage insurance claims in the aftermath of a true catastrophe that affects Texas homeowners.  The fund will grow tax free, and the principal in the Fund can only be used to help pay claims for a catastrophe with damages of $2 billion or more.  Interest earnings of the fund will be used to improve consumer protection and education programs to make sure Texans are better prepared for natural disasters.  These funds could also be used to strengthen first responders – which will save lives and better protect property.

"With Texas’ experience of just the last few years in both weather and insurance matters, one would expect a statewide embracing of a program to mitigate the difficulties that go along with both.  I am glad that we will have the opportunity to discuss this on Monday and get other elected officials informed about this important proposal," said Eiland.

"We have improved significantly in terms of getting our citizens out of harm’s way when disaster strikes.  We now need a more innovative approach to recovery and restoration of property damage in the wake of these events to reduce the negative economic effects -- in magnitude, and in time lost," added Janek.

Momentum is building for federal and state catastrophe funds.  The Financial Services Committee of the US House of Representatives recently heard testimony on federal catastrophe protection legislation that would create a national backstop to the state plan proposed in SB 518.  Earlier this month, Senators Mel Martinez and Bill Nelson of Florida also introduced legislation.   Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee, joined by Members of Congress from states throughout the country, expressed an urgency to enact solutions to improve America’s catastrophe preparedness.  State legislation has been introduced in Missouri, New Jersey, Hawaii, Louisiana and Massachusetts. Cavalier

About ProtectingAmerica.org

ProtectingAmerica.org is a non-profit organization that is co-chaired by James Lee Witt, the former director of the Federal Emergency Management Agency (FEMA), and Admiral James M. Loy, former deputy secretary of the US Department of Homeland Security and former commandant of the US Coast Guard.  The organization’s membership includes the American Red Cross and other first responders, emergency management officials, disaster relief experts, insurers and others.  Its members include more than 200 other organizations and businesses.

At the core of ProtectingAmerica.org’s mission is the establishment of a comprehensive, integrated national catastrophe management solution that will better prepare and protect American families, communities, consumers and the American economy from catastrophe.   ProtectingAmerica.org is working to increase public awareness and enhance consumer education; advocate for better coordination with local, state and federal mitigation and recovery efforts, and strengthen emergency response and financial mechanisms to rebuild after a major catastrophe.

The organization supports comprehensive federal legislation that would establish a privately financed national catastrophe fund that would serve as a backstop to state catastrophe funds.  The funds’ private deposits and the majority of its earnings could only be used to cover replacement and rebuilding costs following major catastrophic events.  A portion of the funds’ earnings would be dedicated to increase public and consumer education, strengthen first responders, and enhance building codes and their enforcement.

ProtectingAmerica.org was formed in 2005 to lead a concentrated effort to improve the way America prepares for and protects its families, communities, consumers and economy from catastrophe.

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