At the top of the United States House of Representatives agenda when it reconvenes in September is a review of the “Homeowners’ Defense Act of 2007” (H.R. 3355 or the “Act”), a bill introduced on August 3, 2007 by Reps. Robert Klein and Tim Mahoney of Florida.
The Act would establish a national catastrophe fund that states with catastrophe funds could access after the state catastrophe fund has been depleted. It is anticipated that states would not need to access the national fund unless a “100-year” or “once-in-a-century” disaster occurred. The national fund would be financed primarily through private investors who would be entitled to receive their original investment plus interest after the contracted period ends, likely two to four years, should no major catastrophes occur. H.R. 3355 also allows states to invest in the fund, but such involvement would be strictly on a voluntary basis. The sponsors of the Act believe that the fund would help stabilize the property insurance market in high-risk areas, such as Florida or California, and lower premiums by allowing insurance companies to reduce the amount of reinsurance they purchase. The Act also has the support of the Independent Insurance Agents & Brokers of America.
