NU Online News Service, March 27, 2:30 p.m. EDT
WASHINGTON—In a case of politics making strange bedfellows, J. Robert Hunter of the Consumer Federation of America and the Reinsurance Association of America have joined to oppose legislation expanding the National Flood Insurance Program.
Mr. Hunter, CFA’s insurance director, is a frequent critic of the industry. In this case his organization and the RAA are part of a consortium that urged the Senate Banking Committee today to oppose the Flood Insurance Reform and Modernization Act of 2007 (HR 3121).
The bill, already approved in the House, combined a bill introduced by Rep. Gene Taylor, D-Miss., adding windstorm coverage to the program, with previously introduced flood reforms designed to increase the number of consumers in the program and reduce subsidies for some properties.
Mr. Hunter acknowledged that it is a case of “man bites dog” to see himself and the industry working together.
“I don’t usually align myself with them unless it’s something I feel is important,” he said. “The insurance industry is strong enough. They don’t need me.”
The consortium also includes among its members taxpayer advocacy groups such as the Council for Citizens Against Government Waste and Taxpayers for Common Sense along with environmental organizations like the National Wildlife Federation and Friends of the Earth.
Franklin Nutter, president of the RAA, said the diversity of the consortium’s membership demonstrates that the NFIP bill “is much more than an insurance issue.”
The basis for his opposition to plans to expand the NFIP, Mr. Hunter said, is that while it may sound like something that could help consumers, he believed it would instead likely only aid developers looking to build along the coast.
“I don’t think it’s wise to subsidize” coverage in high risk areas,” he said, adding that proposals such as windstorm coverage expansion “encourages unwise construction” in high wind risk, high flood risk areas.
Mr. Hunter said he was not opposed to the idea of a flood insurance subsidy, but he said it should be something targeted to help consumers and be focused on scaling down the number of people living in flood-prone areas. Such a system, he said, could be based on the policyholder’s income, and should only be applied to existing structures.
The consortium is also opposed to other federal proposals that would establish new federal programs to provide loans to state disaster funds or provide federal government backing for a state’s property and casualty insurance guarantee fund.