Hurricane Sandy certainly earned the "Superstorm" moniker. Thecombination hurricane/nor'easter spawned high winds and high water,flooding lower Manhattan, erasing landmarks from the Jersey Shore,and dumping three feet of snow in West Virginia. 

East Coast cities and towns from North Carolina to Connecticutfelt Sandy's power, and in the coming weeks and months, residentsin affected areas will likely face another impact of the storm:less availability of homeowners' insurance and higher premiums. Anational catastrophe fund could soften future blows by spreadingrisk across state lines and pooling capital, allowing for the"pre-funding" of all natural disasters in theU.S.  

It certainly sounds like a great idea if you live in Florida orother coastal states, but imagine how such a plan sounds totaxpayers in states that aren't affected by hurricanes. The truthis, however, that people in those states end up paying fordisasters anyway, in the form of the Federal Emergency ManagementAgency and state government post-disaster assistance. 

Sandy is just the most recent example of how hurricanes don'talways pick favorites. The total cost of property damage and lostbusiness ranges from, depending on the forecaster, $15 billion to$30 billion, which will make it among the top three most expensivenatural disasters on record. And who says "the big one" has to be ahurricane? In 2011 alone, wildfires burned 370,000 acres and caused$6.9 billion in damage in Texas, New Mexico, and Arizona. UpperMidwest and Mississippi River flooding combined totaled more than$5 billion in damage, and deadly tornadoes ripped through theMidwest and Southeast causing $10.3 billion in insureddamage. 

What about tsunamis, earthquakes, and drought? No state isimmune from natural disasters.  If multiple states pooledtheir catastrophic risk, they would achieve an economy of scale andrisk diversity that would effectively lower their cost ofreinsurance in a way that states cannot achieve on theirown. 

Here in Florida, we struggle mightily with the availability andaffordability of home insurance, something our friends along theGulf and Atlantic coasts are already beginning to know too well. States that pool resources under a national cat-fundmodel would, in essence, provide a backstop for private insurers intheir state. That, in turn, would make the private market morestable, heat up competition among insurers for non-catastrophicperils, and help prevent company insolvencies and marketplacedisruption in the future. 

Many scientists believe that climate change will increase thenumber and severity of natural disasters in North America. There'sno way to know with absolute certainty if that's the case, butworldwide insurance risk experts such as Munich Re and others arefactoring climate change into their risk models. Indeed, theinsurance industry is betting on larger and more costlycatastrophes in the future and is managing business accordingly.Will our nation be proactive, or will we continue to deal thepredictable consequences in an unsustainable way? 

Spreading risk is a proven economic principle that makesinsurance more affordable and plentiful. While the definition ofwhat constitutes a natural disaster is somewhat controversial,there is no question that some natural disasters will exceed thefinancial capacity of state funds. Only a program that is nationalin scope can generate enough capacity to cover the most costlydisasters. A national cat fund is long overdue, and Congress shouldact now to put it into place.