Americans for Smart Natural Catastrophe Policy applauds extension of national flood program without irresponsible expansion

MarketWatch reports on something that sounds like an astroturf group, but maybe it’s not…: Americans for Smart Natural Catastrophe Policy, a national coalition of environmental, consumer, taxpayer, free market, and insurance organizations, today applauded Congress for voting to extend the National Flood Insurance Program (NFIP) through March 9, 2009, without irresponsibly expanding the program to include wind coverage. Allowing the NFIP to expire precipitously in the midst of hurricane season would have left many Americans dangerously exposed. At the same time, Congress resisted turning natural catastrophes into financial disasters by adding wind coverage to the NFIP, providing state reinsurance loans or creating a federal bailout fund to cover state losses. When the new Congress convenes next year, legislators will have to again consider further extending and reforming the NFIP. Lawmakers should work to reform the program in an environmentally-responsible and fiscally-sensible manner.

With the federal government already confronting a $700 billion bailout of the financial industry, and the NFIP program already nearly $18 billion in debt, American taxpayers should not be forced to also pay for hurricane damages already covered by private insurance and reinsurance companies. If wind damage is added to the NFIP, hardworking families across the country will shoulder the cost of building and rebuilding coastal homes in the Gulf repeatedly in harm's way. A recent study by a Clinton Administration economist, Dr. Robert Shapiro, estimates that there could be as much as $161 billion in 2009 in unfair new taxpayer liabilities if Congress expands the NFIP to cover wind damage and the U.S. Gulf Coast suffers a hurricane season comparable to that of 2005. According to Towers Perrin, a global actuarial firm, the potential cost to the federal government could be as much as $200 billion if wind coverage is added to the NFIP.

"I really don't see any rational logic behind adding wind coverage. By doing this, you're essentially inviting residents to build in unsafe and environmentally-sensitive areas," said David Conrad, Senior Water Resources Specialist at the National Wildlife Federation, a member organization of Americans for Smart Natural Catastrophe Policy. "With global warming expected to create more severe and frequent storms, tacking on wind coverage is a recipe for environmental and financial disaster. It would perpetuate the damage-repair-damage cycle we're stuck in."….

Hurricane Katrina in the Gulf of Mexico