WASHINGTON, D.C.: Federal legislators are taking another dubious shot at a national insurance plan to protect homeowners' greatest asset against a variety of natural disasters including earthquakes, hurricanes, tornadoes, fires and floods.

Home owners would be better off not expecting Washington to protect them and their homes from the ravages of Mother Nature.

In theory, umbrella disaster insurance is a good idea: ensure homeowners that they can purchase natural disaster insurance at an affordable cost while reducing the circumstances in which insurance companies would cancel the policies because insurers deem their disaster benefits exposure to high.

The job is certainly too big for the states. California, Florida and Hawaii are among the handful of states with limited natural disaster insurance protection. Unfortunately, previous federal attempts at broader federal coverage have ended with an insurance industry split over the matter and other detractors who continue to make such legislation a hard sell on Capital Hill.

The latest effort, U.S. House of Representatives, Bill 21 (H.R. 21), "Homeowners' Insurance Availability Act of 1999," introduced in January, would authorize the establishment of a federal reinsurance program to back up state disaster programs.

It's the kind of legislation supporters beat their chests over especially when it's in the pipeline as nearly 60 tornadoes, some of them approaching the deadly F-5 classification, shred Oklahoma and Kansas communities killing dozens, injuring hundreds and destroying thousands of homes to the tune of billions of dollars.

Unfortunately, legislators have made such law making attempts in vain since the 1970s.

Once on the heels of Hurricanes Andrew in Florida and Iniki in Hawaii and again after the Northridge earthquake in California, all in the early to mid-1990s, similar legislation emanated from San Jose, California's now retired U.S. Representative Norman Mineta, among other efforts to insure America against unforgiving acts of nature. Both Mineta's bills languished and died in committee for various reasons, despite bipartisan support and backing from dozens of consumer advocacy groups.

The latest, H.R. 21, is a but a resurrection of similar legislation that failed last year. "The insurance industry itself can't agree on a solution," said Jordon Clark, president of the United Homeowners Association, a Washington, D.C.-based lobbying group for homeowners.

Mark Leonard, spokesman for the California Earthquake Authority (CEA), which offers bare-bones, but guaranteed quake insurance coverage for the state's homeowners, said some insurers applaud the latest incarnation that calls for reinsurance to kick in for state programs, but only after those programs reached certain benefit limits. Some insurers preferred Mineta's flood insurance program-like policy, which created a federal entity to insure against disaster. Still others want a tax-exempt investment reserve to be used to pay for catastrophic losses, much as California's CEA does for quake victims.

But it's not just the industry that can't decide how to insure America against disaster. Washington has been a little thick about it too.

"The administration has not been tuned into the issue, but we've been working closer with the Treasury Department and FEMA (Federal Emergency Management Agency) and they have become more educated on the need for a better national policy," said Chuck Fritzel, assistant vice president of government relations for the National Association of Independent Insurers in Washington, D.C.

President Clinton's recent appointment of Lawrence Summers to succeed Robert Rubin as Treasury Secretary, is viewed as a positive sign for the legislation because Summers, who helped defeat past natural disaster insurance bills, is at least up to speed, says Fritzel.

Beyond the infighting, there's fallout from the expected competition for America's money, especially when there's a budget surplus. "There's always more than one idea to bust the budget and it's a matter of priorities," said Bruce Hahn, president of the Arlington, VA-based American Homeowner's Foundation.

Hahn says there's also some concern about subsidizing questionable lifestyles. "The argument is often raised about those of us with common sense subsidizing those fools who built homes on the San Andreas fault and to a lesser extent those to live in Tornado Alley. Insurers will and can insure anything for a profit, but they don't like to add high risk things they can't make a suitable mark up on," said Hahn.

So what's a homeowner in harm's way to do? Where applicable, assess your home's vulnerabilities and mitigate them by retrofitting to better withstand the earth's outbursts, get with disaster preparedness programs, learn about and buy the insurance you need, when it's available, or consider changing your lifestyle by relocating to a less disaster-prone area until Washington gets its act together.

In the end, it's up to homeowners to protect what's likely their most valuable asset.

It's just not smart to fool around with Mother Nature ...or Capital Hill.

Published: May 14, 1999

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