Tuesday, October 21st, 2014

The Obameter

Create a national catastrophe insurance reserve


"Will create a National Catastrophe Insurance Reserve that would be funded by private insurers contributing a portion of the premiums they collect from policyholders. Such a framework would neither distort the insurance market nor discourage risk avoidance and risk mitigation investments because insurers would not be forced out of high-risk markets for fear of bankruptcy in the event of a disaster. With this program in place, disaster victims would no longer have to depend solely on taxpayerfunded federal disaster aid loans."


Updates

No action on catastrophe fund

We last updated this promise in 2009, and back then, we saw no action toward the creation of a national disaster insurance reserve. Since then, Hurricane Sandy wreaked havoc in the northeast, and that has kicked off a new round of discussion about the need for such a fund.

U.S. Rep. Albio Sires, D-N.J., introduced the Taxpayer Protection Act in September 2012 to set up a fund fed by homeowners' private policy premiums. That fund would provide reinsurance to back up state disaster programs for massive losses.

A national fund "would make hurricane insurance affordable for Floridians and other people in exposed areas like Louisiana and Alabama and, surprisingly, even in New York City," Alan Grayson, another Florida congressman, told the Orlando Sentinel. "Who would have guessed that? Now it's an issue that clearly affects the entire Eastern Seaboard and literally over a hundred million people."

But the fund is still just an idea, not a pot of money.

"There continues to be chatter on this topic, which generally increases following a natural catastrophe. However, it remains unlikely that Congress will have the time to address this complex issue during an already busy lame-duck session,” said Tom Santos, vice president of federal affairs for the American Insurance Association.

We contacted the White House about this promise and did not receive a response. A spokesman for FEMA -- which three years ago was studying the idea closely, according to the White House -- said he hadn't heard of the National Catastrophe Insurance Reserve.

In short, there is no reserve. We rate this a Promise Broken.

Sources:

Orlando Sentinel, "Sandy spurs new push to create fund for disasters,” Nov. 28, 2012, via Nexis

THOMAS, Taxpayer Protection Act of 2012, introduced Sept. 20, 2012

Interview with Carter Langston, FEMA spokesman, Nov. 28, 2012

Email interview with Willem Rijksen, American Insurance Institute, Nov. 28, 2012

Still being studied

We scoured the wires and FEMA Web site archives but couldn't find any mention that a National Catastrophe Insurance Reserve is on anyone's radar. Nor could we find that President Obama has mentioned it since being elected.

So we contacted White House officials, who said FEMA continues to discuss the creation of such a program and study the issue closely.

That doesn't sound too promising. But neither can we say it's dead yet.

We rate this promise Stalled.

Sources:

Various checks and searches that revealed no results.