Florida Congressmen Introduce Two Bills Seeking 'Beach House Bailout'

The R Street Institute, a free-market think tank headquartered in Washington, D.C., today expressed strong opposition to the recent introduction of HR 240, the Homeowners Insurance Protection Act, and the pending reintroduction of the Homeowners Defense Act, both bills that it says would create a federal bailout fund for state catastrophe reinsurance programs.

HR 240 was introduced Jan. 14 by U.S. Rep. Dennis Ross, R-Fla. The Homeowners Defense Act is set to be reintroduced this week by U.S. Rep. Frederica Wilson, D-Fla., who sponsored similar legislation in the 112th Congress.

Similar to previous beach house bailout bills, HR 240 would establish a federal program to cover funding shortfalls for state catastrophe funds like the Florida Hurricane Catastrophe Fund in the event of a 1-in-200-year storm.

By suppressing insurance rates and offering coverage with premiums that are insufficient to cover expected claims, state property insurance programs encourage development in the most risk-prone and environmentally sensitive regions, R.J. Lehmann, R Street senior fellow, said in a press release. A new federal reinsurance program would exacerbate all of these programs, all while displacing the vibrant global reinsurance market in favor of concentrating risk on the backs of federal taxpayers.