[Congressional Record Volume 153, Number 177 (Thursday, November 15, 2007)]
[Extensions of Remarks]
[Page E2450]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    HOMEOWNERS' DEFENSE ACT OF 2007

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                               speech of

                           HON. MAXINE WATERS

                             of california

                    in the house of representatives

                       Thursday, November 8, 2007

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 3355) to 
     ensure the availability and affordability of homeowners' 
     insurance coverage for catastrophic events:

  Ms. WATERS. Mr. Chairman, I would also like to thank Mr. Klein and 
Mr. Mahoney for their leadership in authoring this bill.
  Too well, we all remember the aftermath of Hurricane Katrina and the 
resulting confusion families encountered about their insurance coverage 
or lack thereof. Well, imagine if a hurricane were to go through a 
state and only 1 in 8 homeowners were covered by an insurance policy. 
Unfortunately, this is exactly the situation that exists in California 
today--only 1 in 8 (or 12 percent) of Californians possess earthquake 
insurance. At the time of the Northridge earthquake in 1994 almost 
three times as many people were covered. After the Northridge 
earthquake, the cost of the coverage doubled and the amount of coverage 
provided was cut in half.
  The California Earthquake Authority (CEA)--created after the 
Northridge earthquake when insurers restricted homeowners' insurance 
policies in order to avoid earthquake exposure--currently provides 
about two-thirds of the residential insurance coverage in California. 
Since its inception 11 years ago, CEA has been unable to accumulate the 
amount of capital it projects it will need in the event of a 
catastrophic earthquake. This year approximately 40 percent of the 
premium that CEA collects from policyholders will be paid to re-
insurers rather than towards capital accumulation or more coverage 
under the policy.
  Including the CEA in the benefits provided under H.R. 3355 will allow 
it to reduce its claims-paying financing costs while still being able 
to pay the cost of its losses and repay any reinsurance or loans from 
the Federal government. By reducing its claims paying costs CEA will be 
able to accumulate capital faster and encourage more people to buy 
earthquake insurance.
  Inclusion of the CEA in H.R. 3355 makes good economic sense, good 
actuarial sense, and good common sense. I urge my colleagues to support 
the Manager's Amendment and the underlying bill before us today.

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