Say when

By ROBERT TRIGAUX, Times Business Editor
Published October 28, 2007

Wildfires. Hurricanes. Earthquakes.As fires raged across Southern California, the disaster made clear a harsh reality: Three of the four largest states - Florida, California and, surprisingly, New York - have trillions of dollars in insured property exposed to natural catastrophe. (While a hurricane in New York is less likely than here, the Empire State's exposure is $1.9-trillion, nearly matching Florida's $2-trillion.) Homeowners are finding property insurance increasingly expensive and difficult to obtain. Private insurers are bailing out. Could or should powerful politicians in these big states now push for a federal catastrophic fund or a similar broad solution? What would it take?

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For Floridians, the now-common threats of wind and water are as familiar as nasty relations. They come knocking at the worst of times, inflict their pain and promise they'll be back soon.

This hurricane season is nearly over, though my fingers remain crossed. For now, the catastrophic lens is focused not here but on the frightening wildfires of Southern California. The fires, still not out by any means, had by late last week turned close to 2,000 houses to ashes, burned 400,000-plus acres, forced mass evacuations and caused estimates of damage in excess of $1-billion.

The crisis has been hyperreported. Wildfires in mediacentric and wealthy parts of California, with daily televised briefings of Gov. Arnold Schwarzenegger and Thursday's purposely high-profile visit and federal promises of help from President Bush, are a vivid reminder how politics, money, Hollywood cachet and gripping video are great ingredients to ensure 24/7 attention in a time of need.

Which brings us to a key question: Are these terrible wildfires terrible enough to rekindle serious debate about creating a national catastrophe fund?

At first glance, the answer is no. After all, as bad as the wildfires are, they are really no more destructive than a minor hurricane, at least so far. But hold on. There is common calamity here. The very same climate changes producing extreme drought in California and much of the Sun Belt are part of the same weather patterns, say experts, fueling this era of stronger hurricanes.

Florida's long been perceived as the state most desperate to convince the feds that a national cat fund - a federal backstop to help pay for what can amount to extraordinary costs of rebuilding after hurricanes and other natural disasters - is critical to stabilize its property insurance market and moderate the now-typical 20-, 30- and 40-percent rate hike requests sought by many of the state's dwindling private insurers.

While the potential for trouble in Florida is huge, we have not been the ground-zero state for actual big disasters by any means. Adjusted to 2006 dollars, the five most expensive disasters for the insurance industry are: Hurricane Katrina (Gulf Coast, $42.4-billion), Hurricane Andrew (South Florida, $22.3-billion); the Sept. 11 attacks (New York, Virginia, Pennsylvania, $21.4-billion); the Northridge earthquake (California, $17-billion), and Hurricane Wilma (South Florida, $10.6-billion).

For the Sunshine State, the issue is more than just calming the insurance market. Florida's economic future is deeply tied to growth, especially now when the first wave of the immense baby boom generation is starting to retire and looking with fresh eyes at where to spend their senior years. Right now, Florida remains popular but may yet suffer a backlash from the perception of rougher hurricanes, troubled housing (though declining home prices here may prove attractive) and, of course, a state Legislature struggling to fix both property insurance and property taxes.

So far, several versions of a federal catastrophe backup have been resisted. This month, a Senate committee considered adding windstorm coverage to the National Flood Insurance Program. Sen. Mel Martinez, R-Fla., pitched the windstorm provision as "tremendously important" to coastal states vulnerable to hurricanes, but was forced to withdraw the measure for lack of support.

But Florida is no longer alone, and it's not just Katrina-wracked states and California that might be cottoning to the Sunshine State's sensibilities. Homeowners in New York and the greater Northeast are facing many of the insurance problems all too familiar to Floridians as insurance companies worry about what would happen if a hurricane shot up the East Coast. Not likely, but it takes only one.

Martinez suggested Floridians "don't realize it's very difficult to get senators who are not from coastal areas to support" the addition of windstorm coverage.

On the contrary. More than most Americans, Florida residents understand quite well the uphill battle to sell a national catastrophe fund to a cash-strapped federal government and insurance-lobbied politicians who see little upside for burdening voters far from Florida.

Nor are Floridians blind to the irony. No one is about to kill the National Flood Insurance Program, a longstanding federal service that sells low-priced insurance to people who choose to own homes in flood-prone areas of the country, which is - call it what it is - a federally subsidized program. Yet those same politicians seem aghast at pondering such a plan for wind coverage.

Recent editorials in the Wall Street Journal have taken special pleasure in portraying Florida Gov. Charlie Crist as a Don Quixote for his misguided demands for affordable insurance rates from the private insurers.

In a well-argued letter this month, Crist responded to the Journal: "While individuals must do all they can to provide for themselves, in the end, rebuilding and repairing lives and property in the wake of a major natural disaster or terrorist strike is and should be a collective American effort, not simply a local, regional or state matter," he wrote. "A national catastrophe fund would establish a disciplined, structured plan for what, as a simple matter of reality, will be substantial federal assistance following a major natural disaster."

Even the $110-billion price tag that followed Hurricane Katrina might have been lower, Crist pointed out, had a national catastrophe fund been in place, because of better federal organization and prudent planning. "And that price," Crist stated, "was paid not only by residents of the Gulf Coast states. The Great Lakes and Plains states will likely contribute $26-billion to Katrina initiatives."

In short, this country routinely commits billions in federal tax dollars to support disasters. Three days ago, President Bush promised federal help in California. Who knows? Real winds may be changing the political ones.

Looks like we have, after all, a national catastrophe fund in the making. Perhaps it's time to give it a proper name.

[Last modified October 27, 2007, 20:17:34]