Print

Email story

Comment

Email editor

Legislators to examine U.S. catastrophe fund

By WES ALLISON
Published March 16, 2007

WASHINGTON - Flanked by members from Florida, Louisiana and other coastal states, a key committee chairman in the U.S. House pledged Thursday to find a way to steady the volatile market for property insurance.

U.S. Rep. Barney Frank, D-Mass., chairman of the Financial Services Committee, said that skyrocketing insurance rates in some states, as well as the decision by some insurance companies to abandon some states, demonstrate a "market failure," and that the federal government must step in. His committee oversees insurance.

He appointed two committee members from Florida, freshmen Reps. Ron Klein, D-Boca Raton, and Tim Mahoney, D-Venus, to help craft legislation that could establish a national catastrophe program. It could provide reserves for insurers facing massive losses from a natural disaster, such as an earthquake or Hurricane Katrina.

"We have a national problem and it requires a national solution," Klein said. "Property owners are finding it harder and harder to get and keep insurance policies."

Klein and Mahoney plan to work with a bipartisan group of lawmakers, including Reps. Ginny Brown-Waite, R-Brooksville, and Vern Buchanan, R-Sarasota, to develop a bill the committee could then consider. Brown-Waite has pushed for a national catastrophe program that would be funded by insurers and their policyholders.

Thursday's announcement came with no specifics, and many questions: How big a role would the federal government play? How would the mere existence of a catastrophe fund reduce policy rates? And would representatives from inland states and insurance companies support it?

Dennis Kelly, a spokesman for the American Insurance Association, said his members need to see specific legislation before making a judgment. "We would be concerned with any government program that displaced the private market," he said.

[Last modified March 16, 2007, 01:30:55]