Washington, Sep 14 -  

Consider this – Hurricanes Katrina, Rita, and Wilma cost America $45.2 billion in losses last year. Yet if the San Francisco Earthquake of 1906 occurred today, it alone would cause almost $400 billion in losses. That’s ten times the amount of last year’s hurricane damage. And if a Category 5 hurricane like Andrew hit a city like Fort Lauderdale, West Palm Beach or Tampa dead-on, $50 billion in losses would occur. Either of these events alone would devastate the insurance industry.

These statistics are America’s reality, not just Florida’s, and we believe our nation must be better prepared for natural disasters. We cannot continue to hold our breath, hoping that the “big one” will not hit, or assume that we have experienced the worst – because we cannot predict where the next natural disaster is going to strike. Too many of our neighbors are still living with blue tarps on their roofs to believe that these storms will not cross our shores in the future.

The insurance situation for businesses and homeowners has reached a critical point. We receive countless phone calls, letters and emails from our constituents in Florida who are unable to afford the high premiums that are continuously increasing for wind, flood and hurricane insurance. Insurance premiums for a $250,000 home averages more than $5,000 a year. Sadly, often the hardest hit by these skyrocketing premiums are the millions of retirees who live on fixed incomes.

When a natural disaster occurs, the homeowners’ insurance industry should be the first to cover these costs; and they are. But the industry continues to absorb huge losses year after year, which means a steep increase in rates for Florida families. Even worse, in many areas of Florida, the industry has stopped writing policies for homeowners entirely. This is exactly what happened after Hurricane Andrew hit Florida in 1992, which led to the creation of the Florida Catastrophe (Cat) Fund and Citizen’s Insurance. After Hurricane Andrew, many homeowner’s insurance companies considered Florida too risky to do business here.

The Florida Cat Fund takes the next step in ensuring a repeat of 1992 does not happen. To do business in Florida today, insurance companies pay a monthly premium to the Fund. In return, the Cat Fund provides coverage to insurance companies once they meet their deductible to help defray the costs of insuring homes in Florida. Because of the Cat Fund, businesses began returning to Florida and the market became more affordable.

Unfortunately, the last two hurricane seasons have once again shaken Florida’s homeowner’s insurance market. That is why in November of last year, we introduced the Homeowners Insurance Protection Act in the U.S. House of Representatives. Our legislation is one step towards solving the current crisis because it would create a National Catastrophe Fund, which is a Federal backstop to State Catastrophe Funds. By creating this backstop and spreading the risk of these disasters across the country, we can reduce the pressure that is currently driving up homeowners’ insurance rates.

Additionally, by establishing the National Catastrophe Fund, we can ensure that future reconstruction projects of family homes and businesses are funded by insurance premiums and not taxpayer dollars.

We are working hard to educate other Members that every state is at risk, whether it be from an earthquake, flood, ice storm, tornado, or volcanic eruption, not just Florida. That is why other states along the coast are considering catastrophe funds. If all states established these catastrophe funds, the taxpayer would never pay for catastrophic losses and homeowners’ insurance rates would be affordable.

The State of Florida is an excellent place to live, work and raise our families. But right now, we are faced with a scenario of Florida families having to sell their homes and leave the state because they can no longer afford to live here. It is imperative that Congress focus on the national issue of catastrophe insurance. We must pass comprehensive federal legislation that will solve this current crisis.

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