Could a ‘catastrophe fund’ help in wake of natural disasters?

Updated
'Editorial Use Only : Mandatory credit 'NASA GOES Project/RexNOAA's GOES-13 satellite captured this visible image of the massive Hurricane Sandy on Oct. 28...
'Editorial Use Only : Mandatory credit 'NASA GOES Project/RexNOAA's GOES-13 satellite captured this visible image of the massive Hurricane Sandy on Oct. 28...
Rex Features via AP Images

The impact of natural disasters isn’t just measured in the numbers of those killed or injured. Many recent catastrophic events take a toll through the millions of dollars needed to rebuild, repair and restart.

The National Hurricane Center reports that recovery from Hurricane Katrina cost nearly $106 billion. In January, Congress approved $50.7 billion in aid to states affected by Hurricane Sandy only after months of impassioned political debate and outrage over the delay from governors of the impacted states. And early estimates show it will cost billions of dollars to recover from the tornadoes which hit Moore, Okla., earlier this month.

James Lee Witt, former FEMA director co-founder of ProtectingAmerica.org, said on Thursday’s The Daily Rundown that the development of a national catastrophe funds could go a long way to alleviate increasing costs of recovering from these horrific weather events.

“This catastrophe fund would be set up at the national level and state levels, particularly in those high risk states that want to participate, and it would be funded out of the premiums that the insurance industry collects,” said Witt.

The catastrophe funds aim to increase accessibility and affordability of insurance to residents in high risk areas. On March 12, 2013, Rep. Albio Sires, D-N.J., introduced the Homeowners and Taxpayers Protection Act and urged quick enactment of the bill. The legislation has been sent to committee but there is no formal schedule to move it forward. The bill has been criticized by some who say that it creates a fund which will be used primarily to insure second beachfront homes owned by the wealthy.

“The ideal goal is to make insurance more available in high risk areas and make the deductible lower so that more people will be insured so the burden won’t be on the taxpayers to continue to bail out these catastrophic events,” he said.

NOAA predicts with a 70% likelihood that there will be 13 to 20 named storms this year, three to six of them being major hurricanes.

“The timing right now is critical,” Witt added. “Hurricane season is upon us.”

Could a 'catastrophe fund' help in wake of natural disasters?

Updated