Friday, July 30, 2010
| Make Florida More Hurricane-Resistant
published: Sep 28, 2009
by: Eli Lehrer and John Hallman
As hurricane-ridden September passes by, much of the news in Florida appears good: Hurricanes, so far, have stayed away from U.S. coastlines, the Legislature has passed a few common-sense reforms to the state's property insurance system and state CFO Alex Sink says that the state's troubled Hurricane Catastrophe Fund (Cat Fund) has gained a firmer fiscal footing. more... |
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| A catastrophe waiting to happen
published: Sep 15, 2009
by: Jonathan Orszag
This month marks the fourth anniversary of Hurricane Katrina. That raises a simple question: Are we prepared as a Nation for the next mega-catastrophe (one, perhaps, worse than Katrina) that will inevitably strike our country? more... |
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| The Meltdown Next Time: The financial danger nobody knows about.
published: Sep 12, 2009
by: Eli Lehrer
When the insurance giant American International Group was threatened with collapse in late 2008, its credit default swap business and other international operations were cited as the heart of its troubles. But the largest consequence of AIG's uncontrolled failure on consumers' pocketbooks could have come from the domino-like collapse of its businesses writing insurance on boats, cars, homes, lives, and just about everything else. If these businesses fell apart as a result of AIG's overall collapse, the argument went, the contagion could have brought a collapse of everything from retirement savings plans to auto insurance claims payments from companies unconnected to AIG. (In theory, the operations were firewalled from AIG's other operations, but the extremely slow rate at which they've found buyers indicates that many had significant exposure to the company's other woes.) more... |
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Insurance plan won't work (Letter to the Editor) |
by: Christian R, Camara, Barney Bishop, John Hallman
published: May 26, 2009
James Lee Witt and James Loy are, quite simply, wrong to suggest that a ''national catastrophe backstop'' would help reduce homeowners' insurance rates for Floridians. (Why we need a federal plan for insurance, May 18 Other Views). In fact, as Florida's own experience with the Hurricane Catastrophe Fund has shown, such arrangements just don't work. The Legislature has already voted to scale back the Cat Fund because it has no chance of paying out its liabilities.
The reason is simple: Private reinsurance markets spread risk all over the world, while government-run backstops, even national backstops, concentrate risk in the same place. This violates sound insurance practice. To break even, such backstops have to charge more than the private sector.
For all of their talk of ''private insurance dollars,'' any federal backstop would rely on a taxpayer bailout to keep its costs lower than those of the private sector.
To make matters worse, such a backstop would encourage lots of development in environmentally sensitive places where it simply shouldn't happen. The results will be simple: bigger liabilities for taxpayers, destruction of the environment and a Florida that isn't as safe as it could be. A national backstop is a bad idea.
CHRISTIAN R. CAMARA, director, Florida Insurance Project, Competitive Enterprise Institute
BARNEY BISHOP, president and CEO, Associated Industries of Florida
JOHN HALLMAN, president and CEO, Florida Taxpayers Union, Tallahassee
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