Spread Risk with National Disaster Fund
In times of great tragedy, Americans look out for one another. It's that core value that says, 'I am my brother's keeper; I am my sister's keeper.' We saw it last week in the aftermath of Hurricane Gustav. And because future hurricanes and other natural disasters will challenge us again, it's time to come together as Americans and create a common-sense national catastrophe insurance system, so that no family, neighborhood, city or state is left to bear the full burden of these events alone.
Floridians know as well as anyone that the current property insurance market isn't working. In some cases, property insurance rates have spiked by as much as 600 percent. As gas prices skyrocket and the economy weakens, that's more than working families in Florida can bear.
The Florida Hurricane Catastrophe Fund, which provides reinsurance to insurance companies in the case of a natural disaster, is dangerously overexposed. To shore it up, Floridians — already facing a budget shortfall — are paying Warren Buffett a quarter of a billion dollars just for the option to borrow money if disaster strikes. And even then, the Cat Fund wouldn't have enough to cover its estimated $28-billion in exposure should a major hurricane hit.
But disaster insurance isn't just an issue facing Floridians: It's an issue facing Americans across the country. This time, it was Hurricane Gustav hitting Louisiana. Next time, it could be a wildfire raging in Colorado or tornadoes tearing across Missouri. California residents saw the same type of premium increases after the Northridge earthquake of 1994 that Floridians saw in the wake of Hurricane Andrew and the brutal 2004 and 2005 hurricane seasons. Hurricane Katrina recovery cost each American taxpayer more than $800 in part because we lacked an efficient national solution. Natural disasters are a national problem.
That's why I strongly support the Homeowners' Defense Act. It would stabilize skyrocketing insurance rates and provide a common-sense federal backstop in the event of a major natural disaster. I've long been a supporter of a National Catastrophic Insurance plan, and the time to act is now, before another disaster strikes. Earlier this year, the House passed a version of this bill which was supported by all 25 members of Florida's congressional delegation — Democrats and Republicans alike. Yet John McCain and President Bush still oppose it.
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