Jeb Bush sought federal solution to reinsurance dependence
Oct 25, 2010
This article was published in the Herald Tribune on October 25, 2010:
In the fall of 2005, Florida Gov. Jeb Bush called for a national catastrophe fund to help deal with disaster such as hurricanes, earthquakes or wildfire.
A year later, frustrated that the insurance industry was fleeing Florida rather than writing policies, he took it upon himself to find an alternative to reinsurance.
Correspondence obtained under Florida’s public records law shows Bush privately urged his brother, President George W. Bush, in 2006 to consider a federal catastrophe program that would replace private reinsurance for the most extreme disasters. He succeeded in getting White House economic adviser Al Hubbard assigned to explore the possibility.
He also reached out to the governors of California, Texas and New York to create a regional catastrophe pool to backstop property insurers.
“We have been dealing with the global reinsurance crisis and have proposed an outline that does not require waiting for D.C.,” Bush wrote to New York Gov. George Pataki.
California Gov. Arnold Schwarzenegger responded to Bush’s personal e-mail through an aide, who promised to follow up, and apologized for the governor’s own silence, explaining “Arnold’s fingers are too fat” to operate a BlackBerry.
Eventually the Bush White House declared a national catastrophe plan unsound. And the other high-risk states considered Florida’s hurricane gamble too great, even against their own sizeable earthquake and hurricane risks. “Florida’s risk is toxic,” said Deputy Florida Insurance Commissioner Belinda Miller.
In the end, e-mails show, Bush proposed a modest expansion of the amount of reinsurance sold by the state.
In an interview just before he left office in 2006, Bush lamented that the state’s insurance woes would redefine who could afford to live in Florida and where. “The ultimate solution is a change in demographics,” he said.