The U.S. Government Accountability Office (GAO) released a report in February 2005 that underscores the nation’s lack of preparedness for a major catastrophe and warns that 'a major event or series of events surpassing the over $20 billion in losses in Florida resulting from the 2004 hurricane season could severely disrupt insurance markets and impose substantial recovery costs on governments, businesses, and individuals.'

To reduce the risk of insolvency, insurance companies in Florida have been forced to limit their exposure to catastrophic hurricane losses. The state of Florida manages both the Citizens Property Insurance Corporation, which offers homeowners insurance to those who can’t find insurance from a private company, and the Florida Hurricane Catastrophe Fund, which acts as a backstop to help private insurers manage their exposure to hurricanes.

While the actions taken by Florida since 1993 and in the wake of Hurricane Andrew have done much to stabilize the insurance market in the state, much more needs to be done to make it possible for Florida to sustain a recovery in the event of one of America’s worst natural disasters.

Rather than waiting for another crisis, Protecting Florida believes lawmakers should make it a top priority to establish a comprehensive, integrated solution which includes a national catastrophe fund in order to provide greater economic protection at a lower cost to the people who are at the greatest risk.   Such a solution would establish needed financial protections before catastrophe strikes, while also mitigating the damage of a future catastrophe by improving building codes, strengthening first responders, improving land use planning, enhancing public education and incorporating a process of continuous improvement.

Elected officials from both political parties at the state and federal level in Florida have expressed their support for a national catastrophe fund.  A national catastrophe fund – financed by private insurance dollars – provide a necessary backstop for the private insurance market to help families, businesses and communities in the case of extraordinary events.

The Final Report of the Florida Governor’s Property Casualty Insurance Reform Committee is one of many entities that have recognized the need for a national catastrophe fund.

Learn more details regarding a comprehensive, integrated solution, including strengthening first responders, preventing and mitigating problems through stronger building codes and consumer education, and advocating for a financial backstop.