AccuWeather's Ken Reeves gave a talk last week at the National Press Club, for the ProtectingAmerica.Org group. After reading over their brochure, I think what they are advocating makes a lot of sense. But I'm no economics expert, so check out their site yourself. Although the brochure was really clear on what they are trying to do, the website was not. The closest thing that I could find to an FAQ was this link, although the press release where Ken was quoted may help you understand.

As I grasp it, their main point is that the insurance industry is likely to collapse during the next major catastrophe (they discuss primarily about hurricanes and earthquakes, but Ken pointed to the Greensburg, Kansas tornado during his talk). When the industry falls, they won't be able to pay out to disaster victims.

(PREMIUM | PRO)

ProtectingAmerica.Org's solution is to create a tax-free national fund which is paid into by the insurance companies. The net result, because the entity could charge lower premiums when non-privatized, would be savings (as high as $550) on annual insurance premiums for people in disaster prone states. Those in states not likely to be affected would not have to pay additional premiums, but wouldn't save money either. Up to thirty-five percent of the fund would be used for prevention, mitigation and education.

They have two important names as Chairs of their organization: James Lee Witt, Former Director, Federal Emergency Management Agency, and James M. Loy, Former Deputy Secretary, Department of Homeland Security.

To me, this is an answer to the press release from former Hurricane Center director Max Mayfield and others last year which stated in part "State regulation of insurance is captive to political pressures that hold down premiums in risky coastal areas at the expense of higher premiums in less risky places," but also insinuated that people should stop living at the coast (not gonna happen). If any of them are on board with this group, I haven't heard.

Of course, there is always another side to every argument, and the other half of the insurance industry, including the American Insurance Institute, believes that this is not the solution, saying that prevention is the key but having their own, different but unspecified, economic solution to a national disaster fund, according to this article.

Ken's purpose at the engagement was to underscore the importance of this program after Katrina and the Greensburg tornado, and the portion of the PR that quotes him is included below.

However... they also concentrate a lot on warning that the next big earthquake is coming too... in fact they have an entire website dedicated to "Protecting New Madrid," which I, prior to today, had never even heard of. New Madrid is a seismic fault zone running from Illinois to Arkansas and Tennessee that caused three major earthquakes in as many months nearly 200 years ago, culminating in the largest earthquake in the continental United States, causing damage across more than a dozen Eastern states. To have it repeated today would be disastrous, to say the least.