Noting that the lack of capacity for catastrophe risk resembles the market for terrorism coverage after the Sept. 11 attacks, House Financial Services Committee Chairman Barney Frank, D-Mass., expressed support for a national disaster insurance system.
"It is clear that the government has to step in," Rep. Frank said at a press conference on Capitol Hill. Although the private market is the preferred option for lawmakers, he said the circumstances of the market for catastrophe coverage had led to a "market failure" in which private insurers simply cannot afford the exposure.
Just as with the market conditions that led to the creation of the federal backstop in the Terrorism Risk Insurance Act, "we have reached a similar point with regards to floods and hurricanes," he said.
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