[Congressional Record Volume 152, Number 124 (Thursday, September 28, 2006)]
[Extensions of Remarks]
[Page E1888]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             NONADMITTED AND REINSURANCE REFORM ACT OF 2006

                                 ______
                                 

                               speech of

                           HON. MAXINE WATERS

                             of california

                    in the house of representatives

                     Wednesday, September 27, 2006

  Ms. WATERS. Mr. Speaker, I rise in support of the Non-admitted and 
Reinsurance Reform Act of 2006, reported by the Committee on Financial 
Services. I want to thank the Gentlelady from Florida, Ms. Brown-Waite, 
for sponsoring this bill and the distinguished Chairman of the 
Committee on Financial Services, Mr. Oxley for reporting this 
legislation out of the Committee.
  If any of you have visited the Gulf Region in the last year since 
Hurricanes Katrina and Rita, you know how essential it is that we come 
to grips with reality and the potential for a major disaster by 
reforming nonadmitted and reinsurance in this nation. More than half 
the City of New Orleans' pre-storm population of 450,000 has not 
returned to the City, while large areas of the City remain 
uninhabitable. We were not adequately insured to deal with the 
aftermath of Katrina and Rita--no more than we are today to address 
another disaster somewhere else in this country.
  We all know that one of the major elements to any recovery after a 
disaster is insurance, and many of us have heard the horror stories 
related to the damage incurred as a result of the hurricanes in the 
Gulf Region. Insurance is one aspect of recovery that we need to be 
able to rely on after a catastrophe to help make victims whole again. 
However, on many occasions the reverse has been true, and insurance 
claims have gone unpaid, or the claims paid have not been commensurate 
with the damage to the property. In addition, there are many who have 
not been able to afford insurance and have not been covered, or there 
are those who had limited and inadequate insurance prior to a natural 
catastrophe. In many places like California, many homeowners decide not 
to carry disaster insurance at all, precisely because they believe that 
the government will become involved if a natural catastrophe occurs.
  In the Gulf Region, many insurance companies did not offer flood 
damage insurance. Although homeowners have the option to obtain a 
policy under various state programs, it is unaffordable for most. Most 
people do not carry any insurance for protection from disasters for 
this reason. In New Orleans, only one-half of the households had flood 
insurance under the government's National Flood Insurance program.
  This bill will create more uniformity among the different state 
insurance programs by streamlining the regulation of nonadmitted and 
reinsurance activities. This would be accomplished primarily through 
preempting various state laws. While these state laws would not be 
replaced with federal law, laws from other states or model laws of the 
National Association of Insurance Commissioners (NAIC). Further, the 
bill requires a GAO study of the nonadmitted insurance market. 
Currently, rather than requiring consumers who may be unable to find 
insurance from a licensed insurer to go without insurance, states have 
allowed consumers to purchase insurance from non-licensed insurers. 
These nonadmitted or surplus line insurers provide insurance for 
natural disasters. Disaster insurance is regulated and taxed by the 
state by placing requirements on the brokers who initiate the 
transactions. Because non-admitted and reinsurance policies are 
different from state to state, this bill will allow for 
``harmonization'' of state laws. It will bring some sanity to the 
insurance marketplace, particularly where disasters are concerned. Many 
states have seen a dramatic increase in the cost of non-admitted and 
reinsurance forcing some businesses to relocate, resulting in 
unemployment and lost revenue. Therefore, I urge my colleagues to 
support this bill.

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