Who is talking national cat insurance now?

March 22nd, 2007

Posted by: admin

The Florida Senators, of course. The Palm Beach Post has a story up about a new bill package from Sens. Nelson and Martinez. The bills aren’t up yet in the Congressional tracking system so all we have is the PBP article, but there are some tantalizing clues in there:

But Sen. Bill Nelson, a Democrat, and Sen. Mel Martinez, a Republican, said their main legislative vehicle would be a bill Nelson filed in January that would create an advisory commission to recommend a federal catastrophic insurance program.

Among the bills introduced Tuesday is a proposal to create a national catastrophic insurance fund financed through insurance premiums.

Such a fund would operate as a national reinsurance program to backstop commercial reinsurance plans and state catastrophic insurance funds in the event of a major disaster.


This is a good start, but I hope they are planning on dealing with the underinsurance and adjustment problems in the other bills. The thinking might be that with federal backstop reinsurance, premiums offered by the direct insurers can be lower and the options greater, thus leading to higher rates of policyholding, but it’s not clear. If that’s not the thinking that I’m wondering what they are going for here, because I didn’t see much problem with the reinsurance world absorbing Katrina’s payouts.

The other measures include a Martinez bill, with Nelson co-sponsoring, to give a 25 percent tax credit to property owners for home improvements designed to help a the home withstand the impact of a natural disaster.

Nice to see somebody thinking about how to get individual homeowners to voluntarily undertake resilience upgrades. A point I’ve been making about the quake policy outlook is that it’s focused far too heavily on basic and applied research and not on implementation strategies. And by implementation, I’m talking about issues just like this – how to get homeowners, business owners and municipalities to build resilience into their infrastructure based on the hazards knowledge we’ve already developed.

Martinez also offered a bill to streamline insurance regulation and a plan to create a 10-year, $4.3 billion national hurricane research initiative through the National Science Foundation.

That sounds good, but maybe not so good in the context of the $7B Pres. Bush asked for avian flu and the $8B the Senate authorized for it in 2005? (It was in the Senate-passed H.R. 3010 in the 109th session but the $8B didn’t survive conference with the House.) Avian flu? Hurricanes? Hmmm…. You’re going to argue that we can do both. I’m arguing that the message sent is that avian flu is a bigger direct and potential threat than hurricanes. Is it?

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