Federal insurance considered for US climate change disasters

Dipka Bhambhani in Cleanskies: As world climate negotiators hammer out details of funding global climate change adaptation, U.S. lawmakers are considering to what extent taxpayers should be held responsible for the effects of climate change. Two House subcommittees looked at whether the federal government should insure or guarantee state disaster insurance in high-risk states.

The issue pits some lawmakers, who say they want to spread risk so certain states aren't overburdened, and environmentalists and taxpayer groups that say the idea is just another potential government bailout of the insurance industry that does nothing to alleviate the effects of climate change.

New York Democrat Carolyn McCarthy, citing earthquakes in the middle of the country in the early 1800s, said every state is at risk so the federal government should help even out that risk. "I think this is a debate, but a debate we need to have," McCarthy said. At issue is the Homeowners' Defense Act, introduced by Florida Democrat Ron Klein last fall.

The bill creates a federally-controlled consortium of states that would pool together disaster risks. It provides federal reinsurance for state catastrophe funds and would provide federal guarantees of bonds issued by state catastrophe funds. Democratic Senator Bill Nelson has introduced the same language in the Senate.

During a hearing of the House Subcommittees on Capital Markets, Insurance, and Government Sponsored Enterprises, and Housing and Community Opportunity, Klein said his bill encourages more than a federal backstop. He said he wants states to invest in mitigation measures that would ultimately reduce the amount of money it costs states and the federal government to rebuild after a natural disaster….

Tornado in Alfalfa, Oklahoma in 1981, from NOAA