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Last resort: Katrina sparked insurance crisis

by The Oklahoman Editorial Board Modified: September 16, 2007 at 10:20 pm •  Published: September 16, 2007
SINCE the 1930s, the federal government has been the retirement savings plan of last resort (Social Security). Since the 1960s, Uncle Sam has been the health insurer of last resort for the poor (Medicaid) and seniors (Medicare). For workers' compensation, the state of Oklahoma is the insurer of last resort.

Will government ever become the insurer of last resort in covering property?

Trends are moving that way in the wake of Hurricane Katrina, which has made private insurance companies reluctant to underwrite property and casualty policies in vulnerable coastal areas. Reacting to political pressure, governors in hurricane-prone Louisiana, Alabama, Mississippi and Florida seek ways to secure property and casualty coverage.

Some want a national catastrophic disaster fund, an idea rejected by the White House on grounds that states regulate insurance and should solve their own problems in this area. Yet the federal government, through FEMA and other programs, is already heavily involved in disaster recovery. It's the sole provider of flood insurance. So why not extend the concept? reports that private insurers are raising rates or refusing to write policies in disaster-prone areas. Oklahomans may rest uneasy knowing how much has been spent to rebuild areas that Katrina destroyed and that a future hurricane could destroy again. Yet this state is one of the nation's riskiest because of tornadoes and other violent storms.

The debate over who should cover potential property and casualty losses in certain areas has devolved into an emotional firestorm.

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by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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