WASHINGTON — As hurricane season begins, Democrats in Congress want to nationalize a chunk of the insurance business that covers major storm-damage claims.The proposal — backed by giant insurers Allstate Corp. and State Farm Mutual Automobile Insurance Co., as well as Florida lawmakers — focuses on “reinsurance,” the policies bought by insurers themselves to protect against catastrophic losses. The proposal envisions a taxpayer-financed reinsurance program covering all 50 states, which would essentially backstop the giant insurers in case of disaster.

The program could save homeowners roughly $500 apiece in annual premiums in Florida, according to an advocacy group backed by Allstate and State Farm, the largest writers of property insurance in the U.S.

The Wall Street Journal

The program could save homeowners $500 a year by pushing the cost on to the rest of us who don’t live in hurricane prone areas. This another example of government involving itself and making the situation worse. Read on.

The proposed plan is roughly analogous to the National Flood Insurance Program, which has been criticized for encouraging construction in risky floodplains. Nevertheless, in recent weeks the Senate voted to renew the flood-insurance program, and also to forgive $17 billion in debt incurred after Hurricane Katrina.

Critics cite that debt forgiveness as an example of how states with little or no hurricane risk can end up footing the bill for damage in flood-prone areas. “For years, federal flood-insurance backers told us the program was financially sound, but the storms of 2005 left it $17 billion in the hole,” said Steve Ellis of nonpartisan budget watchdog Taxpayers for Common Sense.

Even some analysts hired by lobbyists for the federal program acknowledge it has its risks. “If you charge something less than the private-market cost for homeowners’ insurance, that creates a potential incentive to increase exposure on the coast” — in other words, to build in risky or flood-prone areas — said David Chernick of Milliman Inc., an actuarial firm hired by ProtectingAmerica.

Naturally. One of the reasons it’s so expensive to live on the Florida coast, other than being prime real estate, is the cost of insuring a building. Hurricanes hit Florida every year. It’s not a matter of if a hurricane will hit. It’s going to happen. So, if the costs of having a home or hotel or some kind of resort goes down and everyone knows that if a big disaster hits the Federal government will be there ready to bail them out with our tax money, of course it will encourage more risky development! This is just common sense.

Florida lawmakers and Republican Gov. Charlie Crist are pushing hard for the federal program. Florida is currently the only state with its own reinsurance fund. That fund, created in 1992 after Hurricane Andrew, has lowered insurance costs for state residents, but would be stretched by a big hurricane this year. The federal program would assist the state’s fund while also providing political cover for state politicians, some of whom say claims from a major storm this year could trigger the largest tax increase in state history.

“I’m calling on the voters in both parties to demand that the nominee of their party publicly support a national disaster fund,” said Florida state Sen. Steven Geller, an uncommitted Democratic superdelegate. “If they won’t, vote for the other party.”

So Charlie is right out there front and center demanding that we all pay for the natural disasters, which are a foregone conclusion, that hit his state every year. Will a Federal earthquake insurance program be next for Californians?

If you buy a house in Florida, or along any coast line in the southeast, you know the risk factors of what can happen. That’s a chance you’re taking and you need to be responsible for it on your own. Expecting others to pick up the costs of your chosen lifestyle is unconscionable.

And as for these pathetically pandering politicians like Charlie Crist and this State Senator Steven Geller, maybe next time a hail stone hits your car or a tornado blows through and busts a window or two, just send your bills down to those two clowns requesting they send you a check to cover your costs.