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Uncle Sam, in effect, would become the financial backstop for claims that reach catastrophic proportions beyond a designated amount. If insurance companies knew their losses were capped, they would be able to charge lower premiums. Floridians would pay far more than homeowners in Iowa, but a limit on liabilities faced by insurance companies would keep consumer costs relatively low.
"But we must mandate that the cost savings are passed down to the consumer. This can't be a windfall for the insurance companies," said Rep. Robert Wexler, D-Boca Raton, who, along with Mahoney, D- Palm Beach Gardens, and Klein, is pushing for the national catastrophic fund.
Rep. Ginny Brown-Waite, R-Brooksville, has introduced a bill with similar elements. Her plan includes a tax-deferred catastrophe reserve fund, which insurers could tap in an emergency much like an Individual Retirement Account.
Florida Gov. Charlie Crist, a Republican, promoted the cause of a national catastrophic fund during meetings last month in the Capitol. "There is a momentum and an impetus that exists now that I think leaders in Washington are more sensitive to than they've been before," he said afterwards.
Wexler explained the fund as a commitment by the federal government to pay for damages beyond a set amount. Homeowners within participating states would pay a surcharge on future premiums to cover the amount.
Companies would have less pressure to raise rates, knowing their costs are limited, but Florida and other states would still need to regulate the industry so consumers could get coverage at reasonable premiums.
Property owners in South Florida, eager for any sign of relief, say they could use some help from the federal government by sharing their risk with the rest of the nation.
"It sounds like an excellent idea if they can make it work," said Nettie Ershowsky, a condominium owner in Coconut Creek, whose premium almost doubled after hurricanes in 2004 and 2005. A vast nationwide pool of homeowners "would alleviate the burden on just the few," she said.
Some Floridians acknowledge the need to pay more to live in risky areas but resent sending premiums to companies for years only to be dropped from coverage or face sudden high costs after being struck by a hurricane. "I don't feel sorry for people who build those big monstrosities right on the water. The insurance alone has got to eat them alive," said Blanche Delman, of Delray Beach, who is helping her neighbors negotiate the insurance market. "But there are people who cannot afford to live here anymore, and children can't afford to help their parents. We should have a nationwide type of thing."
The House Financial Services Committee will have public hearings on the proposal in cities across the country over the next few weeks, starting with one in South Florida. Dates and locations have yet to be determined.
"This is no longer a Florida problem," said Klein, D-Boca Raton. "People in California can't find earthquake insurance. It's getting expensive in other parts of the country that also have problems -- hurricanes, tornados, mass fires."
"We're all in this together," said Rep. Earl Pomeroy, a Democrat and former insurance commissioner from North Dakota. "We don't have hurricanes. But each of us is going to need help occasionally. We've had some real catastrophes in this country. The status quo on insurance matters is not acceptable."
"We do acknowledge the need for a public-private partnership to exist at the state and federal level to stabilize the market for certain types of risk," said Joseph Annotti, vice president of the Property Casualty Insurers Association of America. "We hope to work with the Florida delegation to craft a bill that doesn't go too far to create a re-insurance bureaucracy but makes the federal government a firm financial backstop."
Prodded by Florida Sens. Bill Nelson, a Democrat, and Mel Martinez, a Republican, the Senate Banking Committee has scheduled a hearing for April 11 on the high costs of homeowners' insurance in disaster-prone areas.
The South Floridians say they want to take their time to devise a workable plan likely to pass Congress. Along the way, they want to show their constituents they are making progress.
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