National insurance pool gains favor after Superstorm Sandy
WASHINGTON — Several members of the Louisiana congressional delegation say they are open to supporting proposals to create a national disaster insurance fund, which has received renewed interest since Hurricane Sandy struck the eastern seaboard.
Such an insurance fund could benefit Louisiana, Florida and other Gulf Coast states susceptible to hurricanes. Proponents are hoping to gain more allies from states like New York and New Jersey that were ravaged by Sandy, which has been called the Superstorm.
U.S. Sen. David Vitter, R-La., who helped lead the reauthorization of the National Flood Insurance Program earlier this year, said he would strongly consider any such proposals if they are properly packaged.
“I’m going to look at all those proposals,” Vitter said. “I would certainly be open to supporting it.”
Vitter said any bills gaining his backing would have to benefit insurance ratepayers in Louisiana and also be built in a financially viable way.
“It would have to be fiscally sound, so it’s actually sustainable,” Vitter said, arguing that he would not support any fund that could end up bankrupt and require “government bailouts.”
The argument by proponents is that a national insurance pool could help homeowners and potentially save the federal government money in the long run, instead of the current system of doling out huge chunks of recovery funds every time a disaster strikes. U.S. taxpayers have spent $250 billion throughout two decades, according to The Associated Press, to help states recover from natural disasters, a big burden for a nation deep in debt.
U.S. Sen. Mary Landrieu, D-La., said she supports creating a national insurance pool that would work as a “kind of super policy” to cover catastrophic events.
“Whether it’s a tornado, an earthquake, a mudslide, a fire or a hurricane, homeowners across the country would have access to a voluntary pool – lowering costs for everybody,” Landrieu said.
“It’s highly unlikely that you would have a hurricane hit every coast in the same year, but the year it hits the East Coast, the funds are there,” she added. “And the year it hits the Gulf Coast, the funds are there. That’s what an insurance pool is for.”
The national disaster insurance issue last made significant progress five years ago when Landrieu cosponsored the Senate companion bill to the Homeowners’ Defense Act of 2007.
At the time, the U.S. House passed the bill sponsored by then-Florida Democratic Reps. Ron Klein and Tim Mahoney to create a national catastrophe insurance fund. But the bill quietly died for lack of action in the Senate when opposed by then-President George W. Bush. Many in the insurance industry had feared government intrusion in the private marketplace.
Now, inspired by Sandy, some members want to make another attempt, including Florida Democrats Ted Deutch and newly elected Alan Grayson, according to the AP.
One of the latest bills — called The Taxpayer Protection Act, sponsored by U.S. Rep. Albio Sires, D-N.J. — would set up a national catastrophe fund. Homeowners would buy policies from private insurers, who would contribute a portion of the premiums to a national fund. And the national fund would provide re-insurance to back up state disaster programs — like the Florida Hurricane Catastrophe Fund — for massive losses above a specified amount.
U.S. Rep. Bill Cassidy, R-Baton Rouge, was serving in the Louisiana Legislature in 2007, but he said he paid close attention to the national debate on the issue.
“It would probably be a good deal for us,” Cassidy said, adding that he would have to analyze and support the details of any such bills.
However, Cassidy said just having the National Flood Insurance Program is already difficult to deem worthy for many states’ delegations, such as those in the Midwest.
“If we can make a business case for the rest of the country, it can pass,” Cassidy said.
Despite the potential for such an insurance program, Cassidy said he is putting a greater personal emphasis on fast-tracking levee and other flood protection projects in Louisiana that are stalled. Levee projects for Terrebonne Parish were recently delayed again by the U.S. Army Corps of Engineers.
The upgraded hurricane protection system for New Orleans was justifiably accelerated after Hurricane Katrina in 2005, Cassidy said, and that same effort to get everyone at the table to push projects forward without as much “federal bureaucracy” must be more widespread.
“That, I think, we can get bipartisan support from the rest of the country,” Cassidy said.
He said he is hoping the devastation caused by Hurricane Isaac this year in Louisiana will not soon be forgotten.
“It takes tragedy to sharpen the government’s mind,” he said.
Short of new executive orders to accelerate projects, Cassidy said he may draft legislation to help remedy the situation.
“We’ve already started pursuing that,” Cassidy said, “the ‘How do we do that?’”