Insurance: Coastal customers need a solution

Clarion-Ledger Opinion
August 15, 2007
File photo/The Associated Press
U.S. Rep. Gene Taylor, D-Bay St. Louis,
speaks at a town meeting Monday.

Residential and commercial property owners on the Mississippi Gulf Coast continue to struggle with one of Hurricane Katrina's most enduring legacies - the insurance crisis.

The question of a national disaster insurance reform brought U.S. House Speaker Nancy Pelosi and other Democrats to the Coast on Monday to tour the still recovering region and to tout insurance reform legislation authored by 4th District U.S. Rep. Gene Taylor, D-Bay St. Louis.

Taylor and his Gulf Coast neighbors were left homeless by the 2005 storm and are continuing to battle insurance companies over so-called "wind versus water" claims - in which the companies contend that Katrina's flood waters were to blame for the damage and that many impacted homeowners simply did not have coverage for water damage.

Taylor's proposal is part of an effort by House members to reauthorize and reform the National Flood Insurance Program, which provides homeowners with flood coverage. Taylor wants to add wind coverage to the federal flood insurance program - which was created in 1968 to help homeowners living in flood-prone areas get flood insurance to complement private policies.

Insurance companies have stopped writing new policies on the Gulf Coast, and homeowners who do have insurance are paying premiums that have skyrocketed since Katrina.

Pelosi said passage would not be easy, but the House is expected to vote on the bill in September.

The American Insurance Association and other opponents in the business community have argued that if the government displaces the private insurance market by providing wind coverage, taxpayers may have to bail out the plan at an estimated cost of $100 billion to $200 billion.

Taylor said he did not know the cost of providing wind coverage.

For residential and commercial property owners on all American shores that are subject to major storms, the lack of available and reasonably affordable private insurance brought the federal government into the equation almost 40 years ago.

The question now is just how deep the federal government should get into the reinsurance business. Hurricane victims on the Gulf Coast cannot begin their lives anew in the existing insurance market climate.

And the suggestion that market forces will decide the matter is short-sighted in the extreme. Even with billions in new development under way on the Mississippi coastline from condos to casinos, small businesses and affordable residential property is a necessity. The market isn't working on the Mississippi Gulf Coast right now.

Congress and the White House know the stakes and they also know that the solutions found for Mississippi and Louisiana this year will impact Florida and the Carolinas the next time they are in the path of a major storm.

As Taylor said, disaster insurance is a national problem that demands a reasonable national solution.


Original Clarion-Ledger piece published on August 15, 2007.

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