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Democrats outline reform plan for federal emergency response

WASHINGTON—Congressional Democrats, trying to draw a stark contrast to the Bush administration's response to Hurricane Katrina, laid out recommendations Thursday for a legislative agenda that would radically change the federal response to emergencies.

Rep. Gene Taylor of Mississippi, who chairs the Democratic leadership-created Katrina Task Force and who lost his home in the hurricane last year, presented the findings, hitting hard on what he described as a need to overhaul the insurance industry.

"Number one, we have to take the antitrust exemption of the insurance industry away," Taylor said at a news conference. "No one should be above the law."

Insurers can set prices under the exemption, which dates to the 1940s.

The second priority, Taylor said as he released the report, "Katrina and Beyond," is all-perils insurance.

With private insurers saying the hurricane damage was caused by water—which federal insurance covers—not wind—which the private insurers cover—most claims are being dismissed, Taylor said.

He said his third priority was to have some form of federal oversight. Insurers are regulated by the states. Taylor said one of his greatest frustrations as a congressman was constituents coming to him "with their policies and tears in their eyes and not be able to do anything."

The insurance companies maintain that they've paid what was owed under their polices. They say they can't be expected to cover damage for which no premiums were collected.

The task force, which Taylor chaired with Rep. Charlie Melancon, D-La., as the vice chairman, was formed to develop proposals that the Democrats hope will become a blueprint for action, especially if they take back control of the House of Representatives.

When Taylor started his remarks, he said he'd been asked to chair the task force by "Speaker Pelosi," then corrected himself to refer to "Minority Leader" Nancy Pelosi, D-Calif. He said later that a Democratic majority was something "I'd like to see happen."

"I know we'd have a better chance of passing these reforms with a Democratic majority," the Mississippi lawmaker said.

Asked how quickly legislation could move, Taylor said, "I'm a realist. On the insurance thing, we're planting the seed."

At the news conference, Taylor focused on insurance—a central issue to his constituency—but the recommendations propose radical changes in the federal response to emergencies. He stressed that they had far-reaching consequences: Fifty-three percent of Americans live in coastal communities.

The task force recommends diminishing the role of the Federal Emergency Management Agency by redirecting its responsibility for disaster recovery to agencies directly responsible for housing, transportation, education and economic development. Other recommendations include rebuilding levees to withstand a Category 5 hurricane—New Orleans' were built only for a Category 3—and re-equipping National Guard units, which have been strained by the war in Iraq.

The report's first recommendation is that the relationship between the insurance companies and the National Flood Insurance Program be investigated. The national-flood policies are sold by the insurance companies, which determine how to resolve claims—and, Taylor charged, invariably decide to make payments from the taxpayer-backed flood-insurance plan.

The result has been a "wind vs. water" debate, in which the insurance companies decide, in the absence of eyewitness accounts, that water—not wind—caused the damage.

"Insurance company adjusters have an obvious conflict of interest when deciding whether claims should be billed to the federal flood insurance program or to the insurance companies that employ them," the report said.

The insurance companies say they've handled claims fairly and investigated each one individually.

Sen. Trent Lott, R-Miss., inserted language into the homeland security appropriations legislation just signed by President Bush that calls on the inspector general of the Homeland Security Department to investigate the conduct of insurers in deciding Katrina claims and report to Congress by April 1. Taylor had a similar version of the amendment in a different bill and supports Lott's move.

Lott also lost his coastal home in the hurricane. He and Taylor are part of the same lawsuit against State Farm Insurance Co. brought by Lott's brother-in-law, well-known lawyer Richard Scruggs, whose home also was destroyed by Katrina.

Melancon later spoke to reporters in Taylor's office via conference call.

"This is a beginning," the Louisiana lawmaker said of the findings. Like Taylor, he's looking forward to the 110th Congress, which begins Jan. 3. "What we've got here is the beginning of a way America responds to disasters."

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(c) 2006, McClatchy-Tribune Information Services.

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