Florida Congressmen Ron Klein (D) and Tim Mahoney (D) recently introduced a bill that calls for a comprehensive catastrophe loan program for states that accrue damages from natural disasters. The legislation proposes that state-sponsored funds be transferred to private markets by way of catastrophe bonds and reinsurance contracts.

President of the American Insurance Association, Marc Racicot, commented on the legislation introduced by the Florida representatives in a release saying, “We share the sponsors' goal of expanding capital markets and spreading catastrophic risk, but have genuine reservations about the need to add an additional layer of government involvement in the private property protection system of this country and the individual states given the private capital markets' increasing appetite for spreading natural catastrophe risk.”

Property Casualty Insurers Association of America interim CEO, June Holmes also stated in a release, “We are pleased that Congressmen Klein and Mahoney have introduced this important legislation, and we believe it contains several items that merit careful consideration. However, the key to setting up such a program is in the details and we will need further time to examine the merits of such a program and discuss it with our members. We will carefully analyze all of this bill's provisions, and we look forward to working closely with its sponsors.”