Coalition of Free Market Groups Speaks out against Subsidized Wind Insurance

D.C., May 7, 2008—A coalition of
free market groups, including the Competitive Enterprise Institute, is urging
members of the Senate to oppose an expansion of federal insurance subsidies.
Please see the text of the letter below:

Dear Senator:

In the next few
days the Senate will consider proposals relating to national catastrophe
policy. If amendments are offered to the NFIP bill (S. 2284) adding windstorm
coverage to the National Flood Insurance Program, creating a federal
reinsurance backstop, or providing low interest loans to state catastrophe
funds we, free market groups who have joined the coalition Americans for Smart National Catastrophe
urge you to oppose them.

We all agree
that expanding that these sorts of expansions would do some or all of the

Overwhelm the NFIP. The program already has an $18 billion deficit and is
struggling to resolve flood claims, manage fraud arising from Hurricane Katrina
payouts, and prevent insolvency. Adding wind insurance will distract from the
program’s mission and substantially undermine efforts to stabilize the program.

Cost taxpayers billions. Experience with the NFIP shows and the AmericanAcademy of Actuaries confirms that
adding federally backed wind insurance will not be actuarially sound—despite
language to the contrary. Taxpayers nationwide will be left to pay the cost of
wind damage, which would more than triple the government’s exposure under NFIP.

Discourage the provision of wind insurance by the private sector.

Fail to reduce rates for homeowners.

We strongly
believe that adequate insurance rates—which may be quite high in some risky
areas—provide the best possible protection for Americans and their homes. We
urge you to reject any proposal that would enlarge the federal government’s
catastrophe insurance responsibilities.

Grover Norquist
Americans For Tax Reform

Tim Phillips
Americans For Prosperity

Eli Lehrer
Senior Fellow
The Competitive Enterprise Institute 

CEI is a non-profit, non-partisan
public policy group dedicated to the principles of free enterprise and limited
government.  For more information about
CEI, please visit our website at