Republican Party Hops On Bandwagon, Promising National Disaster Policy

"Americans hit by disaster must never again feel abandoned by their government," the Republican platform reads. "The Katrina disaster taught a painful lesson: The federal government's system for responding to a natural calamity needs a radical overhaul."

The party added that "we recognize the need for a natural disaster insurance policy."

The Democrats threw down the gauntlet in the debate over federal involvement by approving a plank in their own platform a week before the Republicans calling for creation of a federally backed disaster fund.

"We will develop a National Catastrophic Insurance Fund to offer an affordable insurance mechanism for high-risk catastrophes that no single private insurer can cover by itself for fear of bankruptcy," the Democrats said. "This will allow states and territories to deal comprehensively with the economic dislocation of natural disasters."

The Democrats' move was greeted with elation by officials of ProtectingAmerica.org, a group backed by Allstate that is a strong advocate for such a program. "This is the first time that a national political party has even addressed America's preparedness for and protection from catastrophe," according to a director of the group, David A. Smith.

In Mr. Smith's view, "there is a growing consensus that America needs a comprehensive and integrated private-public partnership to increase mitigation and education before catastrophe strikes."

He said the country also must "enhance responsiveness during a catastrophe and assure that the resources are available so homeowners can repair, rebuild and recover in the aftermath of massive natural events like devastating hurricanes and enormous earthquakes."

Meanwhile, Sen. McCain, a week before the Democratic convention, voiced opposition to a bill proposing a national risk pool for natural catastrophes, which prompted rebukes from Florida's Democratic members of Congress.

"John McCain needs to explain why he is saying one thing and his party is saying something else. It's clearly not in sync with his position," Rep. Ron Klein, D-Fla., was quoted as stating in the Miami Herald. "Florida voters will not be satisfied with a mere nod to catastrophe insurance."

Rep. Klein is co-author of a bill–H.R. 3355, the Homeowners' Defense Act of 2007–to create a national cat fund. It passed the House by a 258-155 margin last November but is stalled in the Senate amid opposition from Republicans and the reinsurance industry, as well as a presidential veto threat.

The Democrats' nominee, Sen. Barack Obama of Illinois, has spoken out frequently in support of a national cat fund. Sen. Hillary Clinton, D-N.Y., introduced the Senate companion bill to H.R. 3355.

ProtectingAmerica.org is a supporter of H.R. 3355, which would allow states to pool catastrophic risks and then transfer them to the private market through the sale of cat bonds or the purchase of reinsurance. The plan would be backed by the federal government. The bill would also establish a National Homeowners Insurance Stabilization Program to provide low-interest federal loans to states impacted by severe natural disasters.

The reinsurance industry is part of a newly created advocacy group formed to oppose a national cat fund–Americans for Smart Natural Catastrophe Policy.

ProtectingAmerica.org and the new group went head-to-head on the issue, with Americans for Smart Natural Catastrophe Policy releasing a report estimating there would be an enormous cost to taxpayers for a disaster insurance program.

ProtectingAmerica.org officials said the report was based on flawed assumptions and dismissed it as "special interest double-talk."

Sen. McCain–who won the Florida Republican primary despite vociferously opposing a national cat fund–stood his ground during another trip to the hurricane-prone state. While traveling on his campaign bus in Florida before the start of the Democrats' convention, he said that while he sympathizes with homeowners battered by soaring insurance costs, he was not prepared to endorse a national risk pool as a way to bring those prices down.

Instead, Sen. McCain said, states threatened by the storms should form regional alliances to protect themselves. He also called support for the bill by Sen. Obama "either misleading or misinformed."

That brought an immediate response from Rep. Tim Mahoney, D-Fla., the other co-author of the "Homeowners Defense Act of 2007." He said Sen. McCain "appears to be misinformed about this issue that is so critical for Floridians" and asked him to meet with a broad coalition that supports it.

He said his bill would make homeowners insurance affordable by expanding the private market for reinsurance.

According to Rep. Mahoney, the measure would "significantly lower homeowners insurance premiums and ensure that those states that voluntarily participate will have the money to get families back in their homes helping our communities."

An alternative to the measure–adding wind coverage to the National Flood Insurance Program–also passed the House last November as H.R. 3121. But efforts to add it to the Senate version in May failed decisively, 73-19.

Congress is now seeking to reconcile the two versions of the bill reauthorizing and reforming the NFIP. The current authorization expires Sept. 30.