Proposal In Congress Puts Feds In Middle Of Catastrophe Claims

The federal government, in its efforts to take over health care, auto companies, Wall Street interests, student loans and talk about plans for imposing new mandates on talk radio, the Internet and oil companies, isn't ignoring the insurance industry.

There's now an advancing new plan to put more taxpayer dollars into claims coming out of catastrophes like Hurricane Katrina. And a wide-ranging coalition of interest groups from the National Association of Mutual Insurance Companies to the Reinsurance Association of America are in league with the Environmental Defense Fund and the Sierra Club to oppose it.

The plan, H.R. 2555 by Rep. Ron Klein, D-Fla., has been reported out of the House Committee on Financial Services. It is expected to be up for its next vote soon.

But a letter to members of Congress by members of SmarterSafer.org, dispatched just days ago, said the plan would "displace the private insurance market, and require American taxpayers to pay billions of dollars to support beach front homes and development in environmentally sensitive areas."

"The 'Homeowners' Defense Act,' H.R. 2555, dubbed the 'Beach House Bailout,' requires taxpayers across the country, and in your district, to subsidize insurance for wealthy homeowners along the Florida coastline," the letter to members of Congress said. "The bill is structured to assist the state of Florida (and to a much smaller extent, California) through federal assistance."

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