Obama Release on His National Catastrophe Fund Position

Folks – Thanks for joining us on the call today. I wanted to follow up on a couple of questions on Senator Obama's position on a fund. Senator Obama cosponsored a measure that would have created a national catastrophe fund, expressed strong support the Homeowners' Defense Act, and as President will work to create a National Catastrophe Insurance Reserve that would be funded by private insurers and help families save billions in annual insurance premiums:

Obama Co-Sponsored a Measure to Establish a National Catastrophe Risks Consortium and a National Homeowners' Insurance Stabilization Program. Obama was a co-sponsor of a measure to establish a National Catastrophe Risks Consortium and a National Homeowners' Insurance Stabilization Program. [S.AMDT. 4709, 5/7/08]

Obama Supported the Homeowners' Defense Act and Committed to Supporting the Bill as President. In a letter to Rep. Klein, Obama said, “I believe it is time for the federal government to take action, and I enthusiastically support the Homeowners' Defense Act. The bill would create a national program to stabilize the catastrophe insurance market by expanding the capacity of the private insurance market to cover a natural disaster. Such a program would help states better manage risk and would stabilize premiums for homeowners. If this bill is not enacted into law this year, I will commit to supporting this legislation as president.” [Obama letter, 1/17/08]

Obama Praised Passage of the Homeowners' Defense Act, Saying a National Catastrophe Fund Could Help States Across the Nation. Obama said about the House passage of a national catastrophe fund, “I think it's a good start. I think that we need a national catastrophe fund. The key is to make sure that it's run efficiently, that its adequately funded and that we build in smart incentives to assure that developers are mitigating risk when they're making decisions on where to locate homes or businesses. If we do that, then I think it will help not only Florida but states across the country where the problem of getting homeowners insurance has become increasingly difficult.” [Palm Beach Post, 5/23/08 <http://www.palmbeachpost.com/politics/content/state/epaper/2008/05/23/0523barackobamainterview.html> ]

As President, Obama Will Provide an Insurance Backstop and Create a National Catastrophe Insurance Reserve: The damage caused by catastrophic hurricanes and other natural disasters over the past few years makes clear that we need a paradigm shift in how the Federal government responds to major emergencies. Rather than only stepping in after the fact with expensive clean-ups and financial bailouts, the Federal government should work with the insurance industry before the next major disaster to set up an efficient catastrophe insurance "backstop" that protects both homeowners and business owners against catastrophic loss. Barack Obama will create a National Catastrophe Insurance Reserve that would be funded by private insurers contributing a portion of the premiums they collect from policyholders. Such a framework would neither distort the insurance market nor discourage risk avoidance and risk mitigation investments because insurers would not be forced out of high-risk markets for fear of bankruptcy in the event of a disaster. With this program in place, disaster victims would no longer have to depend solely on taxpayer-funded federal disaster aid loans. It has been estimated that a properly managed fund could save homeowners $11.6 billion on annual insurance premiums.