Flood Insurance Reform and Modernization Act of 2007

FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2007 -- (House of Representatives - September 27, 2007)

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Ms. CASTOR. Mr. Chairman, I offer an amendment.

The CHAIRMAN. The Clerk will designate the amendment.

The text of the amendment is as follows:

Amendment No. 3 offered by Ms. Castor:

At the end of the bill add the following new section:

SEC. __. GAO STUDY OF FACTORS AFFECTING ENROLLMENT IN MULTIPERIL INSURANCE PROGRAM.

(a) In General.--The Comptroller General of the United States shall conduct a study to identify and analyze factors affecting enrollment in the multiperil insurance program. Such study shall include a study of the effects of the multiperil insurance program on enrollment and pricing of State residual property and casualty markets or plans and State catastrophe plans.

(b) Report.--Not later than 270 days after the date of the enactment of this Act, the Comptroller General shall submit to Congress a report containing the conclusions of the study conducted under subsection (a).

The CHAIRMAN. Pursuant to House Resolution 683, the gentlewoman from Florida (Ms. Castor) and a Member opposed each will control 5 minutes.

The Chair recognizes the gentlewoman from Florida.

Ms. CASTOR. Mr. Chairman, I yield myself as much time as I might consume.

This amendment commissions a GAO study to examine the effect of the new multi-peril coverage option which is established as an option in this bill on State insurers and catastrophe funds like those in my State of Florida. This amendment works very well with the initiative of Chairman Frank and my colleague from Florida, Ms. Brown-Waite, and their very thoughtful initiatives. But it builds upon it.

And the particular problem in my State of Florida is that the State insurance company, Citizens, now holds 1.3 million policies. Citizens is supposed to be an insurer of last resort; but because private insurance companies have left the State, they've withdrawn from the market, Citizens has ballooned to over 40 percent of the property wind insurance market. Citizens, however, does not have the reserves, the sufficient financial reserves, we believe, to pay the level of claims that would result from a catastrophic hurricane. In the event of a serious storm, Citizens may be forced to turn to public funds again.

The new multi-peril option, I know it's in dispute now, but however you feel about it, we need to get to the bottom of the effect it will have on our

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State insurers and catastrophic funds. It could offer new fiscally sound choices for those in high-risk areas. It has the potential to help address wind insurance availability so that the public is not on the hook for claims when the next storm hits.

If the new option is successful in making insurance available to areas where private insurers refuse to go, multi-peril and this wind storm option could relieve the pressure on State insurers like Citizens in Florida. But serious questions remain to be answered about how these State and Federal programs will interact.

Will State insurers leave room in the market for an actuarially based Federal program to achieve high enough enrollment to make a difference?

Will State policies change to help their citizens take advantage of the Federal multi-peril program?

How will enrollment rates of State plans change to reflect the new Federal entrant into the market?

These are important questions for both Congress and States to ask. There will also undoubtedly be interaction between State and Federal programs that will affect enrollment in ways that we cannot anticipate.

So, Mr. Chairman, the study commissioned in this bill will provide vital information to help officials at all levels of government work together to better understand and administer the new multi-peril and wind storm option.

Mr. Chairman, I reserve the balance of my time.

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