GLOBAL INSURANCE

8940 BROOKVILLE ROAD SILVER SPRING, MARYLAND 20910

301-588-2870

STATEMENT ON HR 1

by

BARRY L. MERSKY

March 11, 1985

Dear Mr. Chairman:

Thank you very much for this opportunity to comment

for the record on HR 1, with particular focus on the
Federal Crime Insurance Program. I previously testified
before the subcommittee on April 1, 1982 and that testimony
should follow the conclusion of today's comments.**

By 1982, I was an established insurance agent who was
vocal, ardent and consistant in the support of the FCIP. At
that time I believed that the program served a real function
to an underserved (underclassed?) constituancy. I believed
that the only way inner-city businesses and residents could
obtain affordable crime insurance, was through the Federal
Government. For two reasons, I no longer hold that belief.

First, I believe that the crime insurance now offered
by the Federal Insurance Administration (FIA) is not affordable
for those whom it was originally intended. Historically, the
FCIP arose out of the urban ashes of national civil disturbances
of the 1960's. It is not for me to herein argue that those
social problems which caused the riots have been fundamentally
altered. It is, nonetheless, quite clear that even if the
fundamentals have not significantly changed from the 1960's,
their manifestations have. Crime, or the threat of crime,
does not keep businesses from opening, operating, or closing in
today's urban environments.

In my 1982 testimony, I gave many examples of stores which
could not operate without the protection of crime insurance or
which closed following a crime. In retrospect, I now believe
That is, upon closer examination

I may have overstated my case.
of those situations, it may be that those businesses that closed

Recovery

For the April 1, 1982, testimony, see the "Housing and Urban-Pural
Act of 1982," Hearings before the Subcommittee on Housing and Community
Development, of the Committee on Banking, Finance and Urban Affairs,
House of Representatives, PART 4, Serial No. 97-55, page 2969.

were marginal or under capitalized or collapsed for reasons beyond the fact that they were victims of crime. For those examples where I said that they could not operate without insurance, the key word is affordable insurance. By 1985, the current and proposed FCIP premiums will not help retain any businesses in urban, underserved areas. Finally, I do not believe that the FCIP can currently attract businesses or help keep businesses in high crime areas. I heard nothing statistical at the March 11, 1985 hearings, to make me believe that businesses (or residents) would leave or not settle in an area because of the non-availability of crime insurance. I therefore conclude that since the FCIP is no longer meeting its mandate to provide affordable insurance so that high crime areas will not be deserted by business or residents, the FCIP not be renewed.

The second reason the FCIP has outlived its usefulness is because I believe that the private sector can better serve this underserved (or underclassed?) market. By "better serve", I mean be more responsive to the real needs of businesses and residents in the urban areas. In my remarks of 1982, I was quite candid about the administrative problems of the existing FCIP. I have concluded that these problems are inherent to the Program and can never be corrected. Claims adjustment by

Federal standards, can never be fair to all small businessman; some small businesses will always suffer as a result of the It is possible that fewer businesses will be

bureaucracy.

harmed by slow claims adjustment or billing errors or protective

device requirements, if they promulgated by a financially interested party (private industry) instead of a well-intended but ultimately unresponsive bureaucrat. For many years I

have waited for the administrative burdens of the FCIP to be shaken down or eliminated. Since the problems I outlined in 1982 seemingly cannot be ameliorated, I urge you not to renew the FCIP.

In conclusion, I ask both Democrats and Republicans to look closely at the FCIP. As an insurance agent who has been intimately involved and interested in this Program since its inception, I believe that the reasons for its existance are no longer valid. Since it is neither truly affordable nor compassionately administered, it has no usefulness or national constituency. In light of other national problems, such as budget deficits, the Federal Crime Insurance Program does not merit Congressional funding or approval.

WRITTEN TESTIMONY OF

SHELDON L. SCHREIBERG

COUNSEL TO

THE NATIONAL ADVISORY COUNCIL

OF HUD MANAGEMENT AGENTS

March 14, 1985

FOR THE HEARING RECORD ON H.R. 1

HEARINGS BEFORE THE COMMITTEE ON BANKING,

FINANCE AND URBAN AFFAIRS,

SUBCOMMITTEE ON HOUSING AND COMMUNITY

DEVELOPMENT, U.S. HOUSE OF REPRESENTATIVES