The National Conference of Insurance Legislators is set to kick off its annual meeting in Santa Fe, N.M. this week, bringing together elected state representatives who focus on insurance legislation to craft model laws for use in the various states.
NCOIL has contributed many important pieces of legislation over the years, probably most notably the group’s model law on credit-based insurance scoring, which has been adopted in 26 states. But one of the group’s past models is now long overdue to be put out to pasture: the National Disaster Catastrophe Fund Model Act.
Originally adopted in November 1995, the cat fund model was readopted in July 2001, amended in July 2003 and readopted again in July 2005. It is among the old models on the agenda of the group’s Property-Casualty Insurance Committee, who must determine during this week’s meetings whether to recommend it be reauthorized, reauthorized with amendments or allowed to sunset.
At the time of the model’s original authorization, in the wake of Hurricane Andrew and the Northridge Earthquake, it was understandable that state lawmakers thought other states might follow Florida’s lead in creating a state-run catastrophe fund. Thankfully, they have not. The record of the Florida Hurricane Catastrophe Fund – exposing taxpayers to more than $30 billion in potential liabilities, displacing private reinsurance and enabling unsustainable rates that have the effect of subsidizing environmentally destructive development – is not a “model” any state should wish to follow.