Mr. President, I am pleased to be joined by my colleague Senator Mel Martinez as we introduce a package of bills aimed at providing a comprehensive solution to strengthen our Nation's property and…
Mr. President, I am pleased to be joined by my colleague Senator Mel Martinez as we introduce a package of bills aimed at providing a comprehensive solution to strengthen our Nation's property and casualty insurance market. Without serious reform, the Federal Government will be forced to continue to spend billions of dollars of taxpayer money to cover the costs of natural disasters in the United States. Worse, without Federal action, property insurance soon will become more expensive and hard to find, preventing some consumers from insuring their homes and businesses.
As we know all too well, the last few years have brought a devastating cycle of natural catastrophes in the United States. In 2004 and 2005, we witnessed a series of powerful hurricanes that caused unthinkable human tragedy and property loss. Hurricanes Katrina and Rita alone caused over $200 billion in total economic losses, including insured and uninsured losses.
In my own home State of Florida, eight catastrophic storms in fifteen months caused more than $31 billion in insured damages. Now Florida is witnessing skyrocketing insurance rates, insurance companies are canceling hundreds of thousands of policies, and Florida's State catastrophe fund is depleted.
In short, the inability of our private markets to fully handle the fallout from natural disasters has made our Nation's property and casualty insurance marketplace unstable. This market instability repeatedly has forced the Federal Government to absorb billions of dollars in uninsured losses. This is a waste of taxpayer money, especially when we know there are ways to design the system to anticipate and plan for the financial impacts of catastrophes.
As insurance companies struggle to maintain their businesses, costs are passed on to homeowners and small businesses in Florida and in other States. In essence, the people who can least afford it are being forced to bear the disproportionate share of the billions of dollars of losses caused by natural catastrophes.
Many Floridians have seen their insurance bills double in the last few years. As I travel around Florida, I hear repeatedly from my constituents that they may soon be unable to afford property and casualty insurance. That is a frightening proposition for people living in a State where increasingly vicious hurricane seasons are predicted. I am sure we all agree--consumers never should be put in the untenable position of having to choose between purchasing insurance and purchasing other necessities.
While our Nation's property and casualty insurance system is not yet broken, it's clear that Congress needs to act now to shore up the system. Private sector insurance is currently available to spread some catastrophe-related losses throughout the Nation and internationally, but most experts believe that there will be significant insurance and reinsurance shortages. These shortages could result in future dramatic rate increases for consumers and businesses and the unavailability of catastrophe insurance.
Let me be clear: these issues will not just affect Florida or the coastal States. Natural catastrophes can strike anywhere in the country. For example, a major earthquake fault line runs through several of our Midwestern States. We also saw firsthand the devastating effects of a volcano eruption at Mount Saint Helens in Washington State.
In the past few decades, major disasters have been declared in almost every State. As I mentioned earlier, the Federal Government has provided and will continue to provide billions of dollars and resources to pay for these catastrophic losses, at huge costs to all American taxpayers.
Congress has struggled with these issues for decades. Although we have talked about these issues time and time again, nothing much has gotten accomplished. The most notable step Congress did take was to create a National Flood Insurance Program. But Congress needs to do much more. It's time for a comprehensive approach to solving our Nation's property and casualty insurance issues.
These matters are usually within the purview of the States, and I cannot understate the importance of State-based solutions to these insurance issues. Nonetheless, the Federal Government also has a critical interest in ensuring appropriate and fiscally responsible risk management of catastrophes.
For example, mortgages require reliable property insurance, and the unavailability of reliable property insurance would make most real estate transactions impossible. Moreover, the public health, safety, and welfare demand that structures damaged or destroyed in catastrophes be reconstructed as soon as possible.
In order to help protect consumers and small businesses, today I join Senator Martinez to introduce this package of bills as part of a comprehensive approach to fixing our troubled insurance system. Let me summarize each of the bills and tell you how this integrated approach makes good policy sense.
The first piece of legislation Senator Martinez and I are introducing today is the Homeowners Protection Act of 2007. This bill is a companion bill to legislation introduced by Florida Representatives Brown-Waite, Buchanan, and others.
This bill would establish a Fund within the U.S. Department of Treasury, which would sell Federal catastrophe insurance to State catastrophe funds; like the fund I helped to set up in Florida. State catastrophe funds essentially act as reinsurance mechanisms for insurance companies who lack resources to compensate homeowners for their losses.
Under this bill, State catastrophe funds would be eligible to purchase reinsurance from the Federal fund at sound rates. However, a State catastrophe fund would be prohibited from gaining access to the Federal fund until private insurance companies and the State catastrophe fund met their financial obligations.
Why is this good for homeowners? Because this back-up mechanism will improve the solvency and capacity of homeowners' insurance markets, which will reduce the chance that consumers will lose their insurance coverage or be hit by huge premium increases.
Importantly, the Homeowners Protection Act of 2007 also recognizes that part of the problem with our broken property and casualty insurance system lies with outdated building codes and mitigation techniques. Noted insurance experts and consumer groups have been pointing out this problem for many years. So, under the bill, the Secretary of the Treasury would establish an expert commission to assist States in developing mitigation, prevention, recovery, and rebuilding programs that would reduce the types of enormous damage we have seen caused by past hurricanes.
I note that this bill covers not just hurricanes, but catastrophes such as tornados, earthquakes, cyclones, catastrophic winter storms, and volcanic eruptions. These are disasters that can--and do--occur in many different States. Again, every State and every taxpayer is affected by this problem, not just Florida.
This bill has widespread support from a broad range of stakeholders, including ProtectingAmerica.org, a national coalition of first responders, businesses, and emergency managers. This organization is co-chaired by former FEMA director James Lee Witt, one of the most respected names in disaster prevention and preparedness.
The second bill that Senator Martinez and I are introducing today is the Catastrophic Savings Accounts Act of 2007. This bill proposes changing the Federal tax code to allow homeowners to put money aside-- on a tax-free basis--to grow over time. If and when a catastrophe hits, a homeowner could take the accumulated savings out of the account to cover uninsured losses, deductible expenses, and building upgrades to mitigate damage that could be caused in future disasters. Homeowners could even reduce their insurance premiums because their tax-free savings would allow them to choose higher deductibles.
The benefits of this approach are pretty straightforward and very consumer friendly. Homeowners would be encouraged to plan in advance for future disasters, and they wouldn't be taxed to do it. Moreover, homeowners wouldn't be as dependent on insurance companies to help them out immediately after a disaster. As one expert has noted, why should a consumer continue to give insurance companies thousands of dollars each year when the consumer could deposit the same amount of money annually in a tax-free, interest-bearing savings account controlled by the consumer?
The third bill that Senator Martinez and I are introducing today is the Policyholder Disaster Protection Act of 2007. Under this bill, insurance companies would be permitted to accumulate tax-deferred catastrophic reserves, much like the way that homeowners would be permitted under the bill I just discussed. Depending on their size, insurance companies could save up to a certain capped amount, which would grow over time.
Our current Federal tax code actually provides a disincentive for insurance companies to accumulate reserve funds for catastrophes. Under the current system, insurance companies can only reserve against losses that have already occurred, instead of future losses. The United States is the only industrialized nation that actually taxes reserves in this way. It's time for reform, so that consumers are better protected.
Make no mistake, though--this bill is not a give-away to the insurance companies. Instead, the Policyholder Disaster Protection Act of 2007 would strictly regulate when and how insurance companies could access their reserves, to make sure the money is used only for its intended purposes.
If implemented correctly, this bill could result in approximately $15 billion worth of reserves being saved up by insurance companies, which later could be spent to pay for policyholder claims and to keep insurance policies available and affordable. Consumers could feel more protected knowing that their insurance company would have the money saved to help them out after a major disaster. Moreover, this approach should help make the insurance market more stable and less prone to insurers going bankrupt.
The fourth bill that Senator Martinez and I are introducing is the Hurricane and Tornado Mitigation Investment Act of 2007. A similar bill was introduced in the House of Representatives by Gus Bilirakis and has eight cosponsors.
We have learned through experience that steps taken to fortify and strengthen homes and businesses can prevent damage in the event of a catastrophe. This bill would allow a tax credit of 25 percent not to exceed $5,000 for the costs of building upgrades to mitigate damage caused by hurricanes or tornados.
Updates and improvements to roofs, exterior doors and garages would be covered under this bill. To ensure that these measures are adequately constructed, a state-certified inspector must examine the home or business. The benefits of this approach are straightforward-- home and business owners would be encouraged to plan in advance for future disasters and take steps to mitigate damage caused by catastrophic events.
The fifth bill that Senator Martinez and I are introducing is the Nonadmitted and Reinsurance Reform Act of 2007. Last year, a similar bill, introduced by Ginny Brown-Waite passed unanimously in the House of Representatives.
Currently, a small percentage of consumers may be unable to find insurance from a licensed insurer, and may be able to purchase insurance from non-licensed insurers, called nonadmitted or surplus lines insurers. These surplus lines insurers often function as a ``safety valve'' for the insurance market. Florida has more individuals in the surplus lines market than any other State.
Virtually every sector--insurers, producers, consumers--has voiced concern with the inefficient patchwork of different laws and regulations that characterize the surplus lines regulatory system. This bill aims to streamline regulations in the surplus lines marketplace through a mix of national standards with State enforcement and uniformity achieved through both incentives and preemption of certain State laws. This bill would create a more efficient and streamlined regulatory system and promote competition in the nonadmitted marketplace.
The sixth bill that Senator Martinez and I are introducing is the National Hurricane Research Initiative Act of 2007. From the storms of 2004 and 2005 we learned the importance of accurate hurricane tracking and prediction. Accurate prediction provides residents of coastal communities more time to find safe and sound shelter.
The objective of this bill is to enhance and improve knowledge of hurricanes by harnessing the expertise of the Federal Government's science professionals to better understand hurricane prediction, intensity, and mitigation on coastal populations and infrastructure.
Let me emphasize again what we need to accomplish to reform our current insurance system and to effectively plan for catastrophic losses.
We need a comprehensive approach that will make sure the United States is truly prepared for the financial fallout from natural disasters. We need a property and casualty insurance system that is not forced to spread valuable taxpayer dollars after a catastrophe strikes. We need a system that protects consumers and small businesses from losing their insurance policies or being forced to pay exorbitant insurance rates. We need ways to encourage responsible construction and mitigation techniques. And we need a
system that helps insurance companies use their resources in cost- effective ways so that they will not go insolvent after major disasters.
Our American economy depends on a health property and casualty insurance system. By enacting meaningful reforms, we can ensure that our economy remains protected and remains the most resilient economy in the world. I know this complicated process won't be easy for us--but let's roll up our shirtsleeves and get it done.
I request that the text of the Homeowners Protection Act of 2007, the Catastrophe Savings Accounts Act and the Policyholder Disaster Protection Act of 2007 be printed in the Record.
Mr. President, I rise today to introduce legislation that helps the U.S. Forest Service to protect sensitive and precious forest by selling developed land in Leon County, FL, in order to purchase at-risk land in the heart of our national forests.
Specifically, this bill allows for the sale of tract W-1979, which is 114 acres in Tallahassee, the proceeds of which are specifically designated to purchase private inholdings in the Apalachicola National Forest. The Forest Service believes that W-1979 has lost its national forest character and is unmanageable; the land will be sold to Leon County, where it will help the continued advancement of Blueprint 2000, a series of community initiatives to improve Tallahassee and Leon County. By selling this land on the outskirt of the Apalachicola National Forest, the Forest Service can acquire precious land in the heart of the forest that could be lost to development.
This legislation also gives the U.S. Forest Service in Florida the same flexibility to manage lands and capital that many other states have. Previously, whenever National Forest land was sold, the funds could only be used to purchase more land, while many important infrastructure projects went undone. With passage of this bill, proceeds only from the sale of ``non-green'' lands can go towards capitol improvements, such as administrative facilities that help the Forest Service manage the Ocala, Apalachicola, and Osceola National Forests. These non-green lands have already been developed with urban improvements, and no longer align with the goals of the U.S. Forest Service.
Congressman Crenshaw and Boyd have introduced similar legislation in the House of Representatives. I hope that we can quickly pass these bills and help Leon County and the Forest Service.
I ask unanimous consent that the text of the bill be printed in the Record.
Mr. President, on behalf of myself and Senators Hagel, Bingaman, Kerry, Mikulski, Lincoln, Biden, Vitter, Domenici, Martinez, Salazar, Snowe, Brown, Feinstein, Murray, and Clinton, I am honored to introduce legislation today that we are convinced is necessary to fix a long-standing problem in our military survivors benefits system.
President Lincoln's words are as relevant and moving today as they were during the Civil War: ``as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation's wounds; to care for him who shall have borne the battle, and for his widow, and his orphan.''
Our Nation continues to be engaged in a violent struggle against brutal and vicious enemies around the world. Sadly, Americans are lost every day. We must never forget that the families left behind by our courageous men and women in uniform bear the greatest pain. Their survivors face a life forever altered, and a future left unclear. They suffer the greatest cost of the ultimate sacrifice, and the nation that asked for that sacrifice must honor it.
Back in 1972, Congress established the military survivors' benefits plan--
or SBP--to provide retirees' survivors an annuity to protect their income. This benefit plan is a voluntary program purchased by the retiree or issued automatically in the case of servicemembers who die while on active duty. Retired servicemembers pay for this benefit from their retired pay. Upon their death, their spouse or dependent children can receive up to 55 percent of their retired pay as an annuity.
For over five years, I've been talking about the unfair and painful offset between SBP and the Department of Veterans Affairs' Dependency and Indemnity Compensation, or DIC, which is received by the surviving spouse of an active duty or retired military member who dies from a service-connected cause. Under current law, even if the surviving spouse of such a servicemember is eligible for SBP, that purchased annuity is reduced by the amount of DIC received. Another inequity in the current system is the delayed effective date for ``paid-up status'' under SBP. We should act to correct these injustices this year.
We have made progress, but even with the important changes made over the last few years, the offset still fails to take care of our military widows and surviving children the way it should. We have considered and adopted increased death gratuity benefits for the survivors of our troops lost in this war, and we have changed the law to enable these survivors to automatically enroll in SBP. However, now we see the pain caused when at the same moment a widow is enrolled in SBP she is hit with the DIC offset.
The SBP offset is no less painful for the survivors of our 100 percent disabled military retirees. SBP is a purchased annuity plan. Before coming to the U.S. Senate, I served as Insurance Commissioner for the State of Florida, and I know of no other purchased annuity program that can then turn around and refuse to pay you the benefits you purchased on the grounds that you are getting a different benefit from somewhere else.
Our Federal civil servants receive both their purchased survivor income protection annuity and any disability compensation for which they may be entitled--without offset. Why on earth would we treat our 100 percent disabled military retirees any differently, especially after they have given the best years of their lives and their health in service to the Nation?
Let me be clear about this: survivors of servicemembers are entitled in law to automatic enrollment in SBP; 100 percent disabled military retirees purchase SBP. Survivors stand to lose most or even all of the benefits under SBP only because they are also entitled to DIC.
This legislation also accelerates an improvement we made earlier to the SBP program. We have already agreed that military retirees who have reached the age of 70 and paid their SBP premiums for thirty years should stop paying a premium, but we delayed the effective date for this relief until 2008. We should not delay their relief any further.
The United States owes its very existence to generations of soldiers, sailors, airmen, and marines who have sacrificed throughout our history to keep us free. The sacrifices of today are no less important to American liberty or tragic when a life is lost in the defense of liberty everywhere.
We owe them and their surviving family members a great debt.
Unfortunately, it is too often that we fall short on this care. We must meet this obligation with the same sense of honor as was the service they and their families have rendered.
We will continue to work to do right by those who have given this Nation their all, and especially for the loved ones they may leave to our care.
I appreciate the co-sponsorship of my colleagues--Senators Hagel, Bingaman, Kerry, Mikulski, Lincoln, Biden, Vitter, Domenici, Martinez, Salazar, Snowe, Brown, Feinstein, Murray, and Clinton--and look forward to working with my colleagues in the days ahead.
I ask unanimous consent that the text of the bill be printed in the Record.