Florida calling for catastrophe fund

Frustrated by inaction in Washington, Florida officials this week are asking other states to join them in setting up an insurance catastrophe fund.

If established, a multi-state fund would bail out regions hit by cataclysmic disasters such as hurricanes, earthquakes, flooding and even terrorism.

But unlike a national fund, which Congress has balked at creating, it wouldn’t rely on the financial backing of the federal government. Only interested states would participate.

“We hear so much about the hurricanes in Florida, but we know there’s potential for a $400-billion loss in California due to an earthquake, and a $250billion massacre if an earthquake strikes along the New Madrid fault [in the Midwest],” Florida Insurance Commissioner Kevin M. McCarty said Tuesday.

McCarty and Florida Chief Financial Officer Alex Sink head to Atlanta this week to host a meeting on multi-state catastrophe funds at a National Assn. of Insurance Commissioners’ conference.

Sink said she favored creating a regional fund that would help coastal states.

“Hurricanes will not wait for the federal government to get a national catastrophe fund up and running,” said Sink, a Democrat. “It’s up to the coastal states to work together to ensure citizens have access to affordable hurricane insurance.”

Aides to McCarty say the effort to start up multi-state funds is not a sign they are giving up on a national catastrophe fund. They say both are desirable.

“If another state gets hit with a Katrina-like hurricane, there’s a limit to what the [insurance] industry can pay, a limit to what any state can handle, and [federal] taxpayers are going to pay the rest,” said Bob Lotane, a spokesman for McCarty’s office. “We believe pre-funding for a storm is going to be cheaper for everyone.”

The lobbying effort comes as Gov. Charlie Crist and legislative leaders begin pushing for a federal response to the catastrophe risk. Crist, a Republican, plans to lobby his peers on a national catastrophe fund during the National Governors Assn. meeting in Washington this month. A federal/state summit with the catastrophe fund issue at the top of the agenda also is planned.