Experts at The Heartland Institute today strongly urged the National Conference of Insurance Legislators (NCOIL) to allow its Natural Disaster Catastrophe Fund Model Act to sunset during its meeting next week.
The NCOIL model law sets up procedures for developing state natural disaster catastrophe funds. Heartland experts have long opposed such funds. The Florida Hurricane Catastrophe Fund, the only entity of its type in the country, displaces private reinsurance, encourages development in environmentally sensitive areas, and has imposed potential liabilities on Florida taxpayers in excess of $30 billion.
The following statements from insurance policy experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below.
“The NCOIL Catastrophe Fund Model has no redeeming virtues. Setting up natural disaster catastrophe funds is an example of something that government should not do at all. NCOIL made a mistake putting its stamp of approval on this lousy idea to begin with. By letting the act sunset now, it can right a serious wrong. This model law should be ceremonially burnt and forever exiled from the memory of man.”
“Management of an insurance fund by elected officials without any required background in risk management is not a sound approach. Recent Florida history leaves no doubt that economic risk is a subsidiary to political risk often enough to produce a bizarre state where taxpayers are forced to insure insurance companies.
“The insurance industry has had a number of helpful experiences that should provide cautionary inclinations regarding state-run funds, such as New York’s pre-assessment guaranty fund and Pennsylvania’s ill-fated fund created to compensate catastrophic injuries arising from auto accidents in the 1980s.
“In order to be a model, a proposed statute does not have to represent the best public policy of the era, or be widely emulated by sister jurisdictions, or offer a comprehensive approach. But if it doesn’t do any of these, it is in no important sense a model and ought to be abandoned.”
The Heartland Institute is a 27-year-old national nonprofit organization with offices in Chicago, Illinois; Washington, DC; Austin, Texas; Tallahassee, Florida; and Columbus, Ohio. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.