Time for a national insurance program to cope with natural disasters?
Advocates of legislation to create a national insurance program say it's better to plan ahead than do a bailout after a natural disaster. Critics say it would amount to a subsidy for owners of coastal mansions and encourage people to live in places they shouldn't.
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Pete McDonough, spokesman for ProtectingAmerica.org, the nonprofit group that Witt co-chairs, says homeowners would save between $20 and $500 a year. That's not enough of an incentive, he says, for people to move “by large numbers into environmentally sensitive areas along the coasts.”Skip to next paragraph
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He adds, “Fifty-seven percent of the American population already lives in areas that are prone to earthquakes and hurricanes.”
The bill's supporters include American Red Cross, the International Association of Fire Chiefs, other emergency responders, Allstate, and State Farm Insurance.
ProtectingAmerica.org also supports the bill. Its members include emergency management officials, first responders, disaster relief experts, insurers, and more than 300 other organizations and businesses.
The New Madrid Fault Zone is of particular concern to disaster experts. The largest earthquake in the United States occurred in this zone in 1811, affecting an area stretching from Mississippi to Michigan and from Pennsylvania to Nebraska. The area contains major telecommunications and energy grids and natural-gas lines.
The bill would also establish and enforce stronger building codes and better education training and equipment for first responders.
Two-hundred bridges cross the Mississippi River in the New Madrid Fault Zone, says McDonough. Few meet seismic standards. Consequently, if another “Long Island Express” hurricane, which was the most powerful, costliest, and deadliest hurricane to ever strike New England, were to occur again, damages would be $100 billion, he says. Hurricane Katrina cost an estimated $81 billion, and discussions about disaster-related insurance arose then, too.
Witt, who oversaw more than 300 disasters during his time at the Federal Emergency Management Agency, insists that it is better to use private insurer dollars to pre-fund coverage rather than government bailout dolloars on the back end of a disaster.
"The American public has lost its appetite for bailouts,” Witt says.