Introduction of the District of Columbia National Disaster Insurance Protection Act

Floor Speech

* Ms. NORTON. Mr. Speaker, I rise today to introduce the District of Columbia National Disaster Insurance Protection Act. The bill would exempt from federal income taxation catastrophic insurance reserves held by insurance companies in the District of Columbia. Under current federal law, catastrophic insurance reserves are subject to federal income taxation, which has led insurers to hold these funds in offshore jurisdictions, such as the Cayman Islands and Bermuda, where they are not subject to U.S. income taxation.

* The bill would serve important national purposes by protecting individuals and businesses across the country from unpaid insurance claims in the event of a natural catastrophe, as well as U.S. taxpayers. Today, if a natural catastrophe occurred in the U.S., and offshore insurance companies did not pay claims, the U.S. government might need to step in and taxpayers could be on the hook for the claims. Indeed, after the September 11, 2001, terrorist attacks, the U.S. government had to establish a federal backstop for losses due to terrorist attacks, the Terrorism Risk Insurance Act, which is still in place today. As the recent financial crisis showed, the U.S. government has a strong interest in preventing systemic financial risks. However, U.S. individuals and businesses now rely on offshore jurisdictions to preserve and protect catastrophic insurance reserves.

* Rather than leaving little alternative to locating these vital catastrophic insurance reserves offshore, it makes sense for the funds to be held in the nation's capital, the most protected and secure city in the U.S., to eliminate an existing but overlooked vulnerability in the financial system. My bill is particularly timely considering that the president issued a record number of Major Disaster Declarations in 2010 (81) and has issued 87 so far this year.

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