Unlike Florida’s Capitol in Tallahassee, where lawmakers have taken a number of actions to address the state’s insurance crisis with arguable results, solutions at the federal level have been hard to come by.
Not long after Hurricane Andrew smashed through South Florida in 1992, causing $16 billion in insured damage, Florida’s representatives in Congress began seeking a national catastrophe insurance fund. The idea has gone nowhere.
“Coming from Tallahassee, where you get so much done, to be in the fifth year of talking about this just is frustrating. Sometimes I swear that Congress holds hearings on watching the grass grow and important issues just kind of slide by,” said Rep. Ginny Brown-Waite, who has pushed for the fund since her election in 2002.
This year, though, there is hope the idea may be gaining support. The concept has evolved to the point that it may be more acceptable to states that aren’t disaster prone. And Hurricane Katrina’s devastation on Louisiana and Mississippi, combined with insurance problems in other coastal states, has made people realize disasters aren’t just a Florida problem.
“The devastation of the last couple of hurricanes has changed things,” said Rep. Barney Frank, D-Mass., who chairs the House Financial Services Committee. “The experience has changed a lot of people’s minds.”
The basic idea of a national catastrophe fund is simple. Policyholders around the country would pay into a pool that can help cover losses after a major disaster no matter where it occurs — an earthquake in California, a hurricane striking North Carolina, a tornado in Kansas and so on. A similar fund already covers floods.
Supporters argue that the federal government is already spending billions to help after major disasters, so people nationwide are already paying for catastrophes. The argument against the idea is that property owners in places like Nebraska shouldn’t have to pay more to help homeowners along Florida’s hurricane-prone coast.
Recognizing that some states won’t want to share the risk, Florida representatives working on the idea are crafting language that could exclude states that don’t want to take part.
Frank’s interest in a national catastrophe fund is one of the big reason’s Florida’s congressional delegation is hopeful. For it to go anywhere in the House, the idea needs his support.
Freshmen Florida Reps. Ron Klein and Tim Mahoney, both Democrats from Palm Beach County who serve on the Financial Services Committee, are putting together a catastrophe fund bill at Frank’s request.
“The leadership has given us a positive signal that they think the time has come. In Washington, unlike Tallahassee, when a chairman of a committee such as Financial Services gives you a green light, there’s really a good opportunity for that thing to happen. That hasn’t happened before,” Klein said. “There just hasn’t been any appetite for moving it along.”
But while the idea might get through the House, the Senate and President Bush are another matter. North Dakota and Nebraska have just as many votes as Florida and California in the Senate, and it may take 60 votes to get a measure through because of the filibuster threat.
Edward Lazear, chairman of the White House Council of Economic Advisers, testified before a Senate committee that the Bush administration opposes the idea because it would displace the private market and have unintended economic consequences.
Sen. Mel Martinez is among those who don’t believe Congress is going to be able to help any time soon.
“I think Florida needs to deal with this problem and that the answers from Washington are going to be scarce. There’s not a mood in the Congress to do a catastrophic fund because it’s viewed as too isolated a problem to be a national problem,” said Martinez, R-Fla.
Instead, he is pushing for more money to research, forecast and prepare for hurricanes. That’s among several other ideas being considered to help with insurance and hurricane issues.
Florida Reps. Tom Feeney, a Republican, and Debbie Wasserman Schultz, a Democrat, are proposing tax free savings accounts to help homeowners pay for disaster expenses, including insurance deductibles, uninsured losses and flood damage.
“It would encourage people to think about saving ahead of time. It’s rational. It would not cost the federal government much money at all in terms of lost tax receipts and I think there’s bipartisan support for it,” Feeney said.
There are also ideas to have the federal government create incentives for regional catastrophe funds if areas like the Gulf Coast states decided to work together; allow tax free accounts that insurance companies could tap into after catastrophes; and tax credits for property owners who take steps to protect buildings from storm damage.
Sen. Bill Nelson, though, thinks the idea of a national fund can be sold if people will listen. He has proposed setting up a study commission that would make recommendations on insurance issues within three months.
“The idea of this commission is to get all the ideas on the table, approach it in a comprehensive way and then see what you can build consensus on, since there is no consensus. A lot of the senators up here don’t feel like that hurricane is their problem,” said Nelson, D-Fla.
He said the commission could get senators elsewhere to wake up to the fact that everyone pays after a catastrophe.
“A hurricane is going to be their problem, because when the big one hits, at the end of the day, the federal government is going to fund a good portion of the catastrophic loss, just like it has in New Orleans,” Nelson said. “The total bill is something in excess of $200 billion and the federal government has already paid over $100 billion for Katrina.”
But Nelson acknowledges without Bush’s support, it could be more than two years before the fund is considered.
With Bush gone after the 2008 election, Gov. Charlie Crist is pressuring candidates campaigning in Florida to consider the idea. Three of the top Republicans in the race — former New York Mayor Rudy Giuliani, Arizona Sen. John McCain and former Massachusetts Gov. Mitt Romney — have all met with Crist and each was asked about the issue.
Now that Florida is set to move its presidential primary to Jan. 29, ahead of nearly every other state, candidates are starting to see the value of supporting the idea. In February, during his first visit to Florida as a candidate, Romney pushed the subject aside, saying “I can’t imagine taking a position of that nature until it’s been thoroughly studied and evaluated.”
But during an April visit to Tallahassee, he brought the subject up repeatedly, telling Crist, House members and senators in separate stops that the idea has merit.
That same political pressure makes Frank think that Bush could change his feelings, too, if he ever received a bill.
“I think the president will be very reluctant to veto a bill when that would just outrage almost all of Florida. It’s one thing to say you’re against it, but when the bill comes to his desk later this year, or next year, I think Florida’s electoral vote will be a very powerful argument,” Frank said.
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