Tuesday, March 19, 2013

Is a National Catastrophe Fund Possible?

Among the ideas to address disasters and their aftermath is the creation of a national catastrophe fund.  Catastrophe funds have been around on a state basis for a reasonable period of time.  Florida has one.  Texas has one.  There are some others.  A regional or national catastrophe fund is a much bigger idea with much greater benefits and issues than the existing local catastrophe funds.

That brings us to HR 1101, a bill to create a national catastrophe fund using private insurance on a pre-funded basis to protect against national catastrophes.  As with everything, the devil is in the details and the details are not fully clear.  Certain insurer groups back the concept of a pre-funded catastrophe fund, but other insurer groups oppose the bill claiming that it would put an unnecessary burden on the taxpayers.  Considering that elements of the insurance industry are on both sides of this controversy, it will be interesting to see if a compromise can be reached. 

Addressing disasters with a pre-funded catastrophe fund with some federal backup is an idea that has been floating around for some time.  With a true disaster that overwhelms local resources, a multi-level approach to recovery and response is necessary.  Disasters are coming with much more frequency so those debating the various ways of addressing disasters need to find a common ground and come up with a comprehensive plan to address catastrophes before the next one strikes leaving us all unprepared.

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