Washington, D.C., July 9, 2009—Analysts at the Competitive
Enterprise Institute, a free market think tank, criticized
protectingamerica.org’s continued advocacy for a federal insurance backstop.
"If legislators really want to protect American homeowners and tax payers they
will focus on freeing the market, not tying it up even more,” says Michelle Minton, the Deputy
Director of CEI’s Center for Risk,
Regulation and Markets. “Private reinsurance is available and provides real protection for insured homes.
State-run programs are already charging far less than they should creating the
set-up for a major financial disaster. The creation of a government backstop for state-run insurance pools will only let
allow them to continue offering
insurance at a discount rate, pushing out private insurers that are unable to compete with government subsidized rates, luring
more consumers into the state-run
insurer, and putting the rest of the
country on the hook to bail them out
when the big one hits,” said Minton.
“Admiral Loy and
Administrator Witt have their hearts
in the right place but the recommendations they endorse won’t help the country.
It doesn’t matter what type of analysis you do,” says Eli Lehrer, the Director of CEI’s Center for Risk, Regulation, and
Markets. “A government-run reinsurer can’t manage risk as effectively as the
private sector. At most, a national
catastrophe fund or similar arrangement will pool risk nationally. Private
markets pool risk internationally.”
a non-profit, non-partisan free-market public policy group dedicated to the principles of free enterprise and limited
government. For more information about CEI, please visit our website at www.cei.org.