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Bush Should Become Leader, Not Anchor, On Insurance Fund

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The Tampa Tribune

Published: November 16, 2007

The U.S. House has passed legislation authorizing the creation of a national catastrophe fund that would help ensure American families are able to rebuild and recover in the aftermath of massive natural disasters.

A Senate companion bill, sponsored by Florida Sen. Bill Nelson, also received a big boost recently when Sen. Hillary Clinton signed on, signaling that Florida's issues could yet become part of the presidential campaign.

This important legislation would offer residents of disaster-prone states the chance to find affordable property insurance.

Theoretically, by limiting catastrophic losses for private insurers, the marketplace would grow and competition would create some savings for property owners.

It's important to note that the legislation does not depend solely on the federal government for a bailout; rather, it encourages states with catastrophic funds such as Florida's to pool their resources and spread the risk. The House sponsors, Florida Reps. Ron Klein and Tim Mahoney, say government backing would be needed only after the worst disasters.

Unfortunately, President Bush says he will veto the legislation if it reaches his desk.

The president and other opponents say they don't want to interfere with the private insurance market by creating a government backstop. They're right to want safeguards that discourage states from allowing development in regions at high risk for storms, fires and earthquakes.

But the insurance market is broken in many states and a national solution is needed.

Increasingly, big insurers are refusing to offer coverage to residents of the Eastern Seaboard. They're also dropping properties in the Gulf states, including Texas, where the president plans to live after leaving office a little more than a year from now.

In the absence of affordable, reliable insurance coverage, a disaster fund of some sort becomes a necessity.

Just look at what happened to Florida after the 2004 and 2005 storm seasons. Some insurance companies fled the state. Some canceled policies in coastal communities. And some went belly up. Today, the state-run insurer of last resort, Citizens Property Insurance Corp., is the largest insurer in the Sunshine State.

Besides, the federal government is already the backstop, as witnessed by the more than $100 billion authorized to help the Gulf states after Hurricane Katrina.

A natural catastrophe fund that draws money from the federal treasury and participating states through the sale of bonds makes sense.

No part of the country is immune from disasters. The availability and affordability of property insurance is a national issue that needs a national solution. Congress should pass the bill, and the president should prove he knows when to change his mind.

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