Washington Report: Property Insurance, Health Plan Legislation

Insurance on the agenda

Cynthia Shelton, CCIM, CRE, a commercial practitioner in Orlando, Fla., and NAR’s Commercial Alliance liaison, says that one client saw his annual property insurance premiums rise over the past few years from $40,000 to $390,000, even though he had no claims during that time.

And he considers himself lucky. For many property owners, commercial and residential alike, property insurance simply isn’t available—at least at a price that isn’t prohibitive.

“The affordability crisis isn’t just an insurance problem; it’s an economic problem,” says Kevin McCarty, insurance commissioner for Florida and one of a dozen speakers NAR hosted in late September at a symposium to help explore insurance affordability.

The issue is at a crisis point in Florida, where home sales are struggling to come back after the 2004 and 2005 hurricane seasons. But the problem is national in scope for two reasons. First, all U.S. taxpayers end up paying for mega-catastrophes like Hurricane Katrina, which will cost some $100 billion for recovery, a good part of that coming from the federal government. Second, with about 70 percent of the U.S. population within 50 miles of the coasts, and many others in the tornado-prone Midwest, few people are safe from huge storms.

Experts at the symposium said natural disasters would become more manageable financially for everyone if Congress would pass legislation that authorized the federal government to backstop insurers in a catastrophe, allow insurers and reinsurers to set aside large capital reserves tax-free to pay for catastrophes, and let households maintain tax-exempt disaster recovery accounts to help pay for rebuilding that’s not covered by their insurance.

A number of bills are in Congress that would do one or more of those things, but they’re stymied because many members of Congress view natural disasters as mainly a problem of a few states, according to congressional aides at the symposium. The aides said REALTORS® could help change that thinking through their grassroots strength.

NAR has begun an effort to work with other organizations to move debate on the issue into the forefront of the congressional agenda next year.

Health plan push continues

U.S. Senate lawmakers continue to work behind the scenes to build support for small-business health plan legislation. Sen. Majority Leader Bill Frist (R-Tenn.) has made passage a priority and has been working with Sen. Mike Enzi (R-Wyo.) and others on bill provisions that would enable small businesses to band together to negotiate affordable insurance.

Since NAR President Thomas M. Stevens issued a Call for Action this fall, REALTORS® have sent more than 82,000 letters to members of Congress in support of passage this year. NAR has also been running high-profile ads (pictured) in Capitol Hill newspapers showing the extent of consumer support for the legislation, called the Health Insurance Marketplace Modernization and Affordability Act of 2006 (S. 1955).