Risks of disaster must be shared

By A TIMES EDITORIAL
Published October 8, 2007

Congress is finally listening to Florida's pleas for help in providing affordable hurricane insurance to property owners. One bill that would expand the federal flood insurance program to add wind coverage passed the full House. Another bill that would expand the financial pool for catastrophe insurance funds (such as Florida's) to other states survived a key House committee vote. Either bill would leave Floridians feeling a little less lonely as they face up to the risks of a natural disaster.

While neither piece of legislation is a sure thing - President Bush has threatened a veto of the flood insurance bill, and the powerful insurance lobby has criticized both bills - at least there is progress. For years, lawmakers from other states haven't wanted to share Florida's risk. Then Hurricane Katrina and the multiple threats from weather change made other states realize we're all in the leaky boat together. Particularly hopeful is the bipartisan effort to pass these bills, with Republicans from coastal states refusing to be swayed by their party.

The ambitious overhaul of the National Flood Insurance Program makes so much sense it's surprising Congress didn't think of it sooner. Under a bill that passed the House by a wide margin, federal wind insurance would be offered to homeowners along with flood coverage. It's no coincidence that provision was introduced by Rep. Gene Taylor of Mississippi, where insurance companies refused to pay wind claims after Katrina, saying that flooding caused the damage. If this measure passes the Senate and survives a threatened presidential veto, homeowners with federal flood and wind insurance could avoid such denials of claims in the future. However, this program wouldn't necessarily make hurricane insurance more affordable because the bill calls for rates to be actuarially sound.

The catastrophe fund bill - written by Florida Reps. Tim Mahoney and Ron Klein, both Democrats - offers more direct rate relief. The bill won support from two of Florida's Republican representatives on the Financial Services Committee in a 36-27 vote. The bill would allow states to voluntarily pool their resources to support catastrophe funds such as Florida's. Those states would also be eligible for low-interest federal loans in the event of liquidity problems or losses beyond the capability of their funds.

Florida is going it alone with its own expanded catastrophe fund, but that effort has been disappointing - private insurers didn't lower their rates as expected, and the state took on enormous financial risk. Presumably, by spreading out the risk among several states to build up catastrophe funds, private insurers would be enticed to write more homeowner policies at more reasonable rates.

We're not sure why the insurance industry, the Republican Party and the Bush administration continue to oppose such legislation. If the private insurance market could already respond adequately to the need, then state-operated Citizens Property Insurance Corp. wouldn't be the largest property insurer in Florida. Katrina proved that some threats are just too great for any one company, industry or state to handle. It is time Congress acknowledged that fact by passing these bills.

[Last modified October 7, 2007, 20:51:53]