[Congressional Record Volume 159, Number 175 (Wednesday, December 11, 2013)]
[Senate]
[Pages S8774-S8775]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MANCHIN (for himself, Mr. Rockefeller, Mr. Schumer, Ms. 
        Klobuchar, Mrs. McCaskill, and Mr. Coons):
  S. 1814. A bill to encourage, enhance, and integrate Silver Alert 
plans throughout the United States and for other purposes; to the 
Committee on the Judiciary.
  Mrs. FEINSTEIN. Mr. President, I rise today to reintroduce the 
Earthquake Insurance Affordability Act.
  This bill will help families and communities quickly recover after 
major earthquakes by encouraging local investment in mitigation and 
insurance coverage.
  You see, in California, the State with the greatest exposure to 
earthquake damage, only about 1 in 10 homeowners has insurance to pay 
for earthquake damage. Other States, including Washington, Oregon, 
Alaska, Tennessee, Missouri and Arkansas, also have significant 
earthquake risks and low rates of earthquake insurance.
  Insurance coverage rates are so low that many believe it has now 
become a national crisis.
  Because when homes aren't structurally sound, and insurance is 
lacking, local earthquake recovery costs quickly become America's 
costs.
  The math is simple: less insurance means more Federal spending after 
a disaster.
  For example, the August 2011 Virginia earthquake was devastating to

[[Page S8775]]

homeowners in and around Spotsylvania County. Most of those homeowners 
did not have an insurance policy that covered earthquake damage.
  Mr. Cantor, the House Majority Leader, summed it up: ``Obviously the 
problem is most people in Virginia don't have earthquake insurance. 
That is going to be a hardship. If there needs to be money from the 
Federal Government, we'll find the money.''
  Congress did ultimately find that money. A Federal disaster 
declaration was made, and homeowners received more than $16 million to 
cover uninsured losses.
  But with bigger disasters come bigger uninsured losses.
  Consider the costs of Hurricanes Katrina and Sandy.
  The GAO estimates that the federal government provided about $26 
billion to homeowners who lacked adequate insurance in response to 
Hurricanes Katrina, Rita, and Wilma.
  Congress provided $16 billion housing recovery for Sandy victims.
  The bottom line is this: Uninsured homeowners drive up federal 
disaster spending. So if we can find a way to convert uninsured 
homeowners into insured homeowners, we will lower federal disaster 
spending and save American taxpayers millions each year.
  The Earthquake Insurance Affordability Act will do just that. It will 
make earthquake insurance more affordable and expand access to 
coverage. It will dedicate non-federal funding to earthquake loss-
mitigation programs to make houses and communities more resilient.
  At its core, this legislation would authorize a private-market debt-
guarantee program. The U.S. Treasury would guarantee certain debt 
issued by eligible state earthquake insurance programs following a 
catastrophic earthquake.
  The debt would be limited in amount, and pre-arranged, and the 
eligible State programs would be highly creditworthy.
  By definition, this legislation is designed to promote the use of 
private capital to finance earthquake risk. So this means that private 
capital, not Congressional appropriations, will support rebuilding 
homes and restoring communities.
  The Federal guarantee will assure that qualified insurance programs 
can sell debt at reasonable rates, even during difficult post-disaster 
market conditions.
  By lowering interest rates, insurance programs can spend less on 
interest and reinsurance, and instead invest that money on rate 
reductions and mitigation.
  Rate reduction is the key goal; because uninsured homeowners 
overwhelmingly attribute their lack of insurance to the high price of 
these policies.
  The California Earthquake Authority, the largest earthquake-insurance 
provider in the state, estimates the Earthquake Insurance Affordability 
Act will allow them to lower premiums and direct millions of dollars 
into mitigating homes.
  That means the bill will not only lower insurance rates, but 
thousands more homes would become more earthquake-resistant.
  Every homeowner who benefits from this legislation is one less 
homeowner who will rely on Federal disaster benefits after a 
catastrophic earthquake--that's millions of taxpayer dollars saved.
  I know some of my colleagues will be concerned about putting the full 
faith and credit of our Federal Government behind insurance programs 
that are working to pay off catastrophic damages. I shared these 
concerns; and that is why the bill mandates strict criteria for 
determining how and when an insurance program can access a Federal 
guarantee.
  First, the program must be an independent, State-run program.
  Second, the program must be not for profit. The benefits of a Federal 
guarantee must go to policyholders, not shareholders.
  Third, and most importantly, only financially sound programs are 
eligible. Before any Federal guarantee is offered, the Treasury 
Department must carefully confirm, then certify, that the program can 
repay the debt it incurs.
  What is more: as a condition getting approved by the Department, the 
program must cover all actual and expected costs of conducting these 
credit reviews and administering the program.
  Because of these key features, initial estimates from Congressional 
Budget Office staff affirm that this legislation brings no budgetary 
impact.
  An independent assessment by the RAND Corporation also found that a 
program such as this would likely save tens of millions of dollars 
during a major disaster.
  The bill brings other benefits to the taxpayer as well. Under a new 
provision added to the bill this year, participating State insurance 
programs must dedicate 2 percent of their Federal guarantee toward 
mitigating vulnerable properties and providing earthquake-hazard 
education.
  Again, these mitigation funds will bring real benefits to homeowners, 
without appropriating Federal funds.
  According to the United States Geological Survey, there is a 99.7 
percent chance that a magnitude 6.7 earthquake will strike California 
within the next 30 years.
  Even more concerning--the USGS forecasts a 46 percent chance that a 
much more devastating magnitude 7.5 or higher earthquake will occur in 
California during the same period.
  The question is what are we doing to prepare?
  Will we stick with the status quo; a system where the Federal 
Government comes in after the fact and spends billions to try to clean 
up the mess but leaves the community just as vulnerable to the next 
disaster?
  Or will we apply the lessons from disasters like the 1994 Northridge 
earthquake where we spent the equivalent of more than $10 billion, and 
transition to a system where homeowners are encouraged to share the 
financial burden by purchasing earthquake insurance and making their 
homes stronger?
  In the current budget environment, the choice cannot be simpler. We 
cannot continue to spend billions on disaster relief when reliable, 
cheaper options are available.
  With a few simple steps, the Earthquake Insurance Affordability will 
create an affordable mechanism to help our country prepare for, and 
recover more quickly from, the major earthquakes that we all know are 
just around the corner. I urge my colleagues to quickly adopt this 
critical legislation.
                                 ______