Skip to main content

Is America’s Housing Market Prepared for the Next Natural Catastrophe?

August 3, 2009
Committee Remark
Rep. Maxine Waters [D-CA]: Good afternoon. Ladies and gentlemen. I want to thank the Chairman, of the Subcommittee on Housing and Community Opportunity for holding today's hearing, "Is America's Housing Market Prepared for the Next Natural Catastrophe?"

Some might conclude that this is an ominous title for a Congressional hearing. However, if any of you have visited the Gulf Region in the last year since Hurricanes Katrina and Rita, it is essential that we come to grips with reality and the potential for a major disaster. More than half the City of New Orleans pre-storm population of nearly 450,000 remains absent, while large areas of the City are still uninhabitable. There is consensus that we were not adequately prepared to deal with the aftermath of Katrina and Rita, and there are those who believe that we are still not ready for another major disaster.

One of the major elements to any recovery after a disaster is insurance, and many of us have heard the horror stories related to the damage incurred as a result of the hurricanes in the Gulf Region. Insurance is one aspect of recovery that we need to be able to rely on after a catastrophe to help make peoples lives whole again. Often the reverse is true, and insurance claims have gone unpaid, or the claims paid have not been commensurate with the damage to the property. In addition, there are many who are not able to afford insurance and are not covered, or there are those who had limited and inadequate insurance prior to a natural catastrophe. In many places like California, many homeowners decide not to carry insurance at all, precisely because they believe that the government will become involved if a natural catastrophe occurs.   

Insurance is the strongest medication after a disaster. It is the first thing that home-owners turn to when disaster strikes. In the Gulf Region, many insurance companies do not offer flood damage insurance. Many homeowners have the option to obtain a policy under a state program, which is unaffordable for most and is not carried by many for this reason. In New Orleans, only one-half of the households had flood insurance under the l government's National Flood Insurance program. Whether the cause of the damage is wind or water, it is not an important to the homeowner. Homeowners merely want to be able to get on with their lives and have the insurance companies pay their claims. We all know that when disaster strikes, the process of claims can be a real nightmare for the homeowner. Therefore, we need to begin discussing these issues. Yesterday, the House supported a Flood Insurance Reform bill, which will raise property value limits for coverage and take other important steps to making the National Flood Insurance program work. 

Today's hearing will begin the process in assisting us to address several questions. What role do insurance companies play in natural catastrophes or disasters? How do insurance companies assist in the process, or do they undermine the process? Do the efforts of insurance companies lend themselves to the regeneration of the housing in areas adversely affected by a natural disaster or catastrophe? Is there a role for the federal government and the states in partnership to provide insurance in major catastrophes? As such, I look forward to hearing from today's witnesses. Mr. Chairman. Thank you.

###