White House rejects calls for national catastrophic (hurricane) insurance

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http://www.realcities.com/mld/krwashington/news/nation/17062744.htm

White House rejects calls for national catastrophic insurance
By Lesley Clark
McClatchy Newspapers

WASHINGTON - The White House on Wednesday emphatically rejected calls for national catastrophe insurance as Florida Gov. Charlie Crist and the state's senators implored Congress for federal help to cap the spiraling cost of hurricane insurance.

Crist, a Republican and the lead witness at a Senate Banking Committee hearing that looked at ways to address rising insurance costs, said he and other Southern governors backed a national fund to spread the risk for recovering from catastrophic natural disasters across the country, "thus strengthening our insurance markets."

"Traditional insurance-market mechanisms are not adequately managing catastrophic risk, and the financial strain on customers can be felt from coast to coast," Crist said, noting that Hurricane Katrina showed widespread vulnerabilities.

Various factions of the insurance industry oppose a government-run plan, and one of President Bush's top economic advisers told lawmakers that the administration also is against it.

Echoing some congressional critics, Edward Lazear, the chairman of the Council of Economic Advisers, said a federal program would unfairly penalize taxpayers in areas that weren't prone to disasters and could lead to more development in hurricane-prone areas because homeowners wouldn't "bear the full expected costs of damages occurred."

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