Proposal for federal protection from catastrophe divides insurers

WASHINGTON -- Oct. 31, 2006 -- Allstate and State Farm, the nation's two biggest insurance firms, are pushing for legislation that would offer the same kind of program for natural disasters such as hurricanes that the government currently is promising to provide to commercial insurers in the event of another act of terrorism.

The insurers and their Capitol Hill supporters are proposing that state and federal support kick in after the industry has paid the first $4.5 billion in damage, compared to the first $25 billion in a terrorist attack.

Meanwhile, a trio of Florida legislators from both parties have taken the wraps off federal legislation aimed at significantly reducing the risk for home insurers and making coverage on residences in the areas most vulnerable to storms more available and less costly.

Opponents, though, contend that the U.S. government should not be tasked with bailing out insurers for their losses and that any such program would benefit homeowners in the most hurricane-vulnerable locales at the expense of homeowners in other parts of the nation.

Source: New York Times (10/31/06) P. C1; Treaster, Joseph B.

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