National Catastrophe Fund

Florida lawmakers are trying to make sure you're protected if Mother Nature hits with a catastrophic disaster. It's a bill that might even save you some money. Tom Johnson explains

17 years ago hurricane Andrew flattened south Florida causing more than $26-billion in damage and putting a lot of Florida insurance companies out of business.

Five years ago hurricanes charley, Frances, Ivan, and Jeanne slammed into Florida causing $43 billion in damage and once again insurance companies dug deep.

But it did not put nearly as many of them out of business. Florida had a Catastrophe Fund by then to back those companies up. It's called re-insurance. But with the state's economic problems... another blow like 2004's summer of storms could mean more financial disaster. So now there's a push for a Federal Catastrophe fund.

Tom Cotton has been in the insurance industry more than 25-years and helped create Florida's state owned citizens property insurance. "It encourages the federal government to act as a backstop to the state catastrophe funds."

Cotton also lobbied for a federal catastrophe fund for more than a decade. Any state with its own fund could pay in and then dip in if disaster hits.

"You get buying power. Because if Florida goes to negotiate a wind reinsurance and it's Florida only... they don't get as good a buy as if they go in lock step... with Alabama... Mississippi... Georgia... North and South Carolina going 'We are here to buy some reinsurance,” said Cotton.

Supporters say it will lower your premiums because insurance companies risk would be spread out.

Florida's congressional delegation supports the act.

"It gives us a practical way to get the insurance that we need... particularly insurance covering hurricanes," said Rep. Alan Grayson, (D) Orlando.

"The cost of insurance is... is a problem for almost every resident. And I think anything that we can do to lighten that burden on the homeowners in Florida... we should do,” said Rep. Bill Posey, (R) Melbourne,

Opponents say the bill only protects Florida and other hurricane prone states. Congressman Grayson disagrees. "If you look historically at the losses that have been a billion dollars and over it's not simply hurricanes alone."

Of the five worst weather related US disasters two are hurricanes: Andrew in 1992, Katrina in 2005, but three are Midwest floods in 1980, 1988, and 2008. There are also earthquakes in California and tornadoes in the Midwest.

Still the opposition is out there and the chances this bill passes pretty good in the house but uncertain in the senate. "It passed last time. I think now ah... with the Senate being composed the way it is... it's very likely to pass the Senate," said Grayson.

Overview of proposed act - http://www.govtrack.us/congress/bill.xpd?bill=h111-2555

Full text of proposed act - http://www.govtrack.us/congress/billtext.xpd?bill=h111-2555