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IIABA Applauds Introduction of Natural Disaster Bill

Senate Bill Would Increase Homeowners Insurance Offerings in Disaster Areas

WASHINGTON, D.C., September 12 - The Independent Insurance Agents & Brokers of America (IIABA) says a just-introduced Senate bill would make homeowners insurance more available and affordable in disaster-prone communities around the country, says the group’s Senior Vice President of Federal Government Affairs Maria L. Berthoud.


IIABA is endorsing the legislation—the Homeowners Insurance Availability Act (S.1607)—introduced yesterday by South Carolina Sen. Lindsey Graham (R), says Berthoud. A companion bill (H.R. 1552) was introduced earlier this year in the House by Rep. Dave Weldon (R-Fla.) and co-sponsored by Rep. Chris John (D-La.).


Similar to legislation offered previously in other Congresses, Graham’s bill proposes to establish a federal program that will increase access to reinsurance for the underwriters of homeowners insurance. The federal backstop would increase the availability of homeowners insurance in coastal communities endangered by hurricanes and regions threatened by earthquakes. These are areas where many insurers currently do not offer or limit the number of policies they are underwriting for fear of overexposure if there is a natural catastrophe.


“For many homeowners and agents, too often there is a choice of just one or two insurance companies that are willing to write home protection in disaster-prone areas, and that coverage is incredibly expensive,” says Berthoud. “Sen. Graham’s bill and its reinsurance mechanism will help to mitigate this trend by encouraging more companies to return to disaster-prone communities by establishing a program that will provide peace of mind to resume writing homeowners coverage in these areas.”


Under the measure, the Treasury Department would establish a natural disaster reinsurance program and sell the reinsurance contracts to insurance companies and reinsurers via an auction process. The Graham bill would cover tropical cyclones, including hurricanes and typhoons; earthquakes and perils resulting from earthquakes, such as fire and tsunamis. The auction program would be conducted on a regional basis, with Treasury required to establish six regions.


The reinsurance protection would be tripped infrequently, covering only one-in-100 year events. Any event that does not meet this threshold would be covered by private insurers. Similar legislation introduced in previous Congress was graded as revenue neutral, meaning it will not cost the federal government money, and could possibly be a revenue-raiser.


“IIABA likes S. 1607 because it will make homeowners coverage more accessible and affordable for millions of homeowners in coastal areas and earthquake-susceptible communities. This is welcome news to homeowners who currently cannot find coverage outside state residual markets, and independent agents and brokers who would be able to provide coverage to their many clients,” stresses Berthoud.


IIABA Director of Federal Government Affairs Justin M. Roth believes the bill will stabilize the homeowners markets in areas prone to natural disasters and spawn self-reliance by insurance companies and reinsurers.


“We believe the approach advocated by S. 1607 will encourage more insurance companies to write in disaster-prone areas,” he says. “The bill offers a measured federal role. But its long-term legacy will be the creation of new private-sector initiatives that will resolve the homeowners insurance crisis plaguing certain regions once and for all.


“IIABA strongly supports Sen. Graham’s proposal. We will work with him, other lawmakers and other interested groups to help S. 1607 through the legislative process,” says Roth.


Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address:



​127 South Peyton Street
Alexandria VA 22314
​phone: 800.221.7917
fax: 703.683.7556

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