Washington—Senators Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.) today urged the Senate Banking, Housing and Urban Affairs Committee to hold a hearing on the Earthquake Insurance Affordability Act, in response to the recent Napa earthquake.

“We are deeply disturbed that less than five percent of homeowners and businesses affected by this disaster have earthquake insurance. The California Department of Insurance believes that the high cost of premiums is the reason for such low levels of insurance coverage,” the lawmakers wrote. “The Earthquake Insurance Affordability Act would make earthquake insurance more affordable and increase homeowner earthquake hazard mitigation. The bill would accomplish this by creating a federal guarantee of limited borrowing for actuarially sound, state-run earthquake insurance programs.”

Full text of the letter follows:

September 11, 2014

The Honorable Tim Johnson
Chairman
Committee on Banking, Housing
and Urban Development
136 Hart Senate Office Building
Washington, D.C., 20510

The Honorable Mike Crapo
Ranking Member
Committee on Banking, Housing
and Urban Development
239 Dirksen Senate Office
Washington, D.C., 20510

Dear Chairman Johnson and Ranking Member Crapo:

The recent 6.0 magnitude earthquake that struck Napa County, California and caused damages that may surpass $1 billion is a stark reminder that millions of residents on the West Coast face the imminent risk of damaging temblors. We are deeply disturbed that less than five percent of homeowners and businesses affected by this disaster have earthquake insurance. The California Department of Insurance believes that the high cost of premiums is the reason for such low levels of insurance coverage.

Therefore, we ask your Committee to hold a hearing on and mark-up the “Earthquake Insurance Affordability Act (EIAA)” (S. 1813) before the end of the Congress. The U.S. Geological Survey forecasts a 99.7 percent chance that a magnitude 6.7 or larger earthquake will occur in California within the next 30 years. Uninsured losses from earthquake damage create serious economic hardship for families already coping with the aftermath of a major disaster. We believe that affordable earthquake insurance would improve the resiliency of communities located in earthquake hazard zones.

The “EIAA” would make earthquake insurance more affordable and increase homeowner earthquake hazard mitigation. The bill would accomplish this by creating a federal guarantee of limited borrowing for actuarially sound, state-run earthquake insurance programs. Thus, it allows homeowners to take earthquake risk management into their hands. Currently, taxpayers cover their losses in the event of a federal disaster declaration. The benefits of the “EIAA” would not be limited to California; it would allow other states to create affordable earthquake insurance programs. The Congressional Budget Office has informally indicated that the “EIAA” does not score.

We believe the South Napa earthquake presents an opportunity to reassess the importance of affordable earthquake insurance. We look forward your response.

Sincerely,
Dianne Feinstein
United States Senator

Barbara Boxer
United States Senator

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