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Homeowners’ Defense Act
Overview The Homeowners’ Defense Act is a bill proposed in the House and Senate in the 111th United States Congress. The bill was proposed by Representative Ron Klein of Florida. The purpose of the bill is to ensure availability of homeowners’ insurance for catastrophic events. The legislation would create a National Catastrophe Risk Consortium to monitor and regulate state insurance entities. The Consortium would also be able to issue securities and loans from the U.S. Treasury to provide capital to state-run insurers for catastrophe related risks. Previous forms of the bill have been introduced in the House and Senate, including H.R. 3355 (which passed in the House in 2007), but have never been passed in both the House and Senate.

Support There has been much bi-partisan support for the Homeowners’ Defense Act, including names on both sides including President Barrack Obama and former New York Mayor and Republican Rudy Giuliani. The main supporters of the legislation claim that the bill would reduce insurance costs for consumers by helping create a national fund to help pool the risk associated with catastrophes. Many supporters, including Representative Ron Klein (D-FL), cite rising insurance costs and private insurance companies leaving the area as a sign that the private market for property insurance is not working, and thus the federal intervention and regulation is necessary. Private insurers, like State Farm, have also joined in support of the legislation saying that the private market alone has insufficient capacity to handle large catastrophic disaster coverage for homeowners.

Opposition Opposition to the Homeowners’ Defense Act has come from very different sides including the national coalition Smartersafer.org, made up of environmentalist and tax payer groups. Many environmentalist groups like the National Wildlife Federation are opposed to the bill because they believe it will encourage home construction in environmentally sensitive areas. Free-market and tax payer advocacy groups like the Competitive Enterprise Institute are also in opposition to the legislation on grounds that it crowds out the private insurance market and incentivizes building homes in risky hurricane prone areas.