The Cohen Group: News: Op-Eds: Meeting Energy Supply Risks


	Archives
	Op-eds

Op-eds

Miami Herald

February 1, 2007, Thursday

Create national catastrophe fund
By James L. Loy

Gov. Charlie Crist and legislative leaders from Florida are right to call for the establishment of a national catastrophe fund; the time is now, the stars are aligned and the need is urgent.

A national catastrophe fund would serve as a financial backstop for the private insurance market in those states, like Florida and California, where governors and legislators have had the foresight and good sense to set up state catastrophe funds.

Several states are actively pursuing the creation of their own catastrophe funds. Policymakers in New Jersey and New York have been actively debating the issue and New Jersey's Legislature is expected to finalize action on a privately funded "cat" fund in the coming months. Massachusetts legislators recently held hearings on a Bay State version of a cat fund. Florida's neighbors along the Gulf are all discussing, drafting or debating the merits of state cat funds, as well.

Clearly, states from Texas to New England are concerned about the potential devastation that would follow the onslaught of a major hurricane on their highly developed and vulnerable shores. But, a national cat fund would not only address the damages that are associated with hurricanes. Earthquakes are every bit as potentially disastrous, not only for the western states, but for America's broad heartland, as well.

In fact, the most massive earthquakes to ever hit the lower 48 states didn't occur along the notorious fault lines of California in the 20th century. They occurred nearly 200 years ago, with an epicenter in New Madrid, Ark., and shook the ground from Mississippi to Michigan, from Pennsylvania to Nebraska. Because those earthquakes, which struck over the winter of 1811 and 1812, occurred at a time long before cities sprung up throughout mid-America, loss of life and property were minimal and the quakes are not nearly as famous as the Great San Francisco Earthquake of 1906.

But they were huge. So powerful that they changed the course of the Mississippi River, destroyed buildings in St. Louis, Little Rock and into the Ohio Valley, and, as legend has it, rang church bells as far away as Boston.

The heightened hurricane awareness throughout the country, coupled with the growing awareness of America's vast vulnerability to earthquakes, could play a key role in determining how quickly federal policymakers hear Crist's plea for a national cat fund.

Of the 70 members of the House Financial Services Committee, which has jurisdiction over the creation of a national cat fund, all but 5 members are from states that have experienced earthquakes or hurricanes. Every member of the committee recognizes that a multi-state catastrophe threatens the economy of the entire nation.

In addition to all these members being aware of America's vulnerability to natural catastrophe, there is a growing public awareness of the consequences of catastrophe.

In the post-Katrina world, all Americans have become aware of the enormous financial and human impacts of catastrophes. Hurricane modelers have done detailed analyses of what would happen if a serious storm were to make landfall near various American cities.

If a Category 3 hurricane were to make landfall, for example, mid-way along the New Jersey coast, damages to the Garden State are projected to exceed $100 billion. Equally frightening estimates have been made for other cites like New York, Miami and Galveston.

These sobering assessments should help Crist as he appeals to the members of the committees considering the creation of a national cat fund.

The likelihood of such devastation has become ever more apparent by recent projections by leading meteorologists. The verdict is nearly unanimous: Rising ocean temperatures and atmospheric conditions point to at least a decade of ever more frequent and furious hurricane activity.

Hopefully, our elected leaders in Washington will learn from history, listen to the experts and heed Crist's call for a national catastrophe fund.

Adm. James M. Loy is co-chairman of ProtectingAmerica.org. He is the former commandant of the Coast Guard and former deputy secretary of the Department of Homeland Security.

Top