Catastrophe Experts Urge Congress to Move Forward with Comprehensive Disaster Plan

WASHINGTON, Aug. 24 /PRNewswire/ -- The nation's largest coalition of first responders and catastrophe experts said today that America remains unprepared for and unprotected from a financial calamity if a Katrina-like natural catastrophe strikes the United States.  The solution, according to ProtectingAmerica.org, lies in the enactment of a comprehensive catastrophe protection plan like that envisioned in the Homeowners Defense Act of 2010.

"When it comes to shoring up the financial system that stands behind homeowners, communities and insurers, we are no better off than we were when Katrina struck. Indeed, given the global economic conditions, we may even be worse off than we were five years ago," according to James Lee Witt, former Director of the Federal Emergency Management Agency (FEMA), and the current co-chair of ProtectingAmerica.org.  

"The fact is that the nation is exposed and vulnerable to enormous economic consequences unless we take steps now to prepare for the next major natural catastrophe," Witt said.

ProtectingAmerica.org is a nationwide coalition of first responders, catastrophe experts, insurers, businesses and private individuals who believe that America needs a comprehensive catastrophe preparation of protection program.  The organization, which was formed in 2005, believes that the essential elements of such a program would improve mitigation and public education, would augment first responder training and equipment and would create a financial backstop to assure that consumers have the funds to repair, rebuild and recover in the aftermath of a massive natural catastrophe.

"A massive hurricane making landfall near any of our great urban centers from New York to Houston would result in tremendous loss of life and enormous damage to homes and businesses.  The economic devastation would quickly dwarf the damages caused by Hurricane Katrina," said Admiral James M. Loy (USCG, retired), who co-chairs ProtectingAmerica.org, along with Mr. Witt.

"Clearly, the $26 billion taxpayer bailout that followed Hurricane Katrina would be quickly eclipsed by such a catastrophe," Loy said.

According to Witt and Loy, the current financial model for catastrophe recovery is a retrospective, after-the-fact, model that relies initially on insurers and reinsurers to cover the first level of losses following a massive event, but ultimately relies on federal taxpayers to cover the rest.

"This is an unfair system that rewards risky behavior, does nothing to encourage prevention and mitigation efforts and ultimately drains the federal treasury of hard earned tax dollars paid by working men and women in every state in the nation," Witt said.

ProtectingAmerica.org has been calling for enactment of the Homeowners' Defense Act of 2010 (HR 2555), a bill that would create a privately funded public partnership that helps to pre-fund the financial costs of a large-scale natural catastrophe.  The program would facilitate the risk participation of the private sector, expand the availability and sustainability of the catastrophic insurance system, and provide potent incentives for residential property owners to undertake catastrophe loss mitigation efforts.  This approach should add capacity, increase stability, and lower consumer costs.  From an economic perspective, such an alliance of public and private resources is the optimal manner to address the inefficiencies that plague the present system of federal disaster relief.

The Homeowners' Defense Act was approved by the House Financial Services Committee on April 27, 2010 with bipartisan support.  The bill is awaiting action by the full House of Representatives.

"Five years is a long time to wait for a comprehensive program to address the national need for a program to prepare on protect our homeowners, our communities and our tax[payers," Loy said.

"Hopefully, Congress to reflect on the fifth anniversary of Hurricane Katrina and act quickly, before the next catastrophe strikes," Witt added

About ProtectingAmerica.org – ProtectingAmerica.org is a national, non-profit organization whose members include the American Red Cross, numerous municipalities, insurers like Allstate and State Farm, first responder organizations, small businesses, Fortune 500 companies and more than 20,000 individual members from across the country. The primary goals of ProtectingAmerica.org are to improve the financial protection for consumers by establishing catastrophe backstops at the state and national level to provide recovery and rebuilding funds in the case of a major natural catastrophe and to augment first responder funding, improve homeowner education and strengthen mitigation programs.

ProtectingAmerica.org has been advocating for the creation of state and national catastrophe protection and preparation programs since the summer of 2005.

The programs supported by ProtectingAmerica.org rely on private insurance company deposits to create a mechanism to serve as a financial backstop that would stand behind, but not replace, the traditional insurance and reinsurance industries. These state funds would accept deposits that would grow on a tax-exempt basis and could only be tapped in the event of a massive catastrophe. A designated portion of the investment income of the state funds would be required to be set aside on an annual basis to help fund first responder programs, mitigation efforts and homeowner education programs that are all designed to reduce the loss of life and property resulting from catastrophes.

SOURCE ProtectingAmerica.org