Alex Sink On Insurance

The Miami Herald has an interesting interview with Alex Sink about the current insurance problem. She hints that Congress may have to create national catastrophe fund. That is going to be an expensive and tough sell. There has also been talk that such a proposal would encourage home building in high risk hurricane areas.

With Katrina, we could see just how bad a bad storm could be. It has people very skittish about investing in markets that are subjected to that kind of devastation and have no federal backstop.

We have to continue to explore the federal and regional catastrophe fund as a backstop. [At the NAIC meeting,] I talked to most of the insurance commissioners from Texas around the Gulf Coast, and up the East Coast through the Carolinas and Massachusetts. They're all having problems in their insurance markets, and they're all very interested in exploring the possibility of a regional, if not a federal, catastrophe fund.

We definitely have the environment where we can make it happen. I was very encouraged to hear that people are ready to talk.

Sink also says that insurance commissioner Kevin McCarty needs "to hold the feet of the insurance companies to the fire." California insurance commissioner John Garamendi pushed for lower insurance rates and was successful. McCarthy has no history of that kind of aggressiveness.