by: Eli Lehrer and Christian Cámara

Washington, D.C., Florida Insurance Commissioner Kevin McCarty is in Washington, D.C. today lobbying Congress to grant Florida an unlimited line of credit to bail out its Hurricane Catastrophe Fund. The ''Cat Fund'' as it is popularly called, provides subsidized reinsurance – insurance for insurance companies – to primary insurers covering homes and condominiums in Florida.

The fund, which imposes a potential $32 billion liability on the state of Florida, has only $2.8 billion in hard assets and plans to issue bonds to cover other liabilities. Given that no state has ever sold more than $11 billion in bonds all at the same time, however, it appears unlikely that Florida could even come close to paying the Cat Fund's debts.

''Reliance on a Federal bailout as official state policy is reckless at best,'' said Competitive Enterprise Institute Florida Office Director Christian Cámara. ''Instead of lobbying Washington politicians for money, Commissioner McCarty and Governor Charlie Crist should return to Tallahassee and work together with the legislature to restore a healthy, competitive insurance environment to ensure that Florida is able to weather the aftermath of a storm. Taxpayers should not be forced to bailout neither Florida nor the politicians that have placed the state one storm away from economic meltdown.''

''This is a really, really bad idea,'' says CEI Senior Fellow Eli Lehrer who directs' CEI's Washington-based Insurance Project. ''We've already done far too many bailouts of private companies. State governments – particularly ones that make bad decisions – don't need bailouts as well. Congress should say 'No' to Kevin McCarty.''

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government. For more information about CEI, please visit our website at www.cei.org.

Contacts:
Eli Lehrer, 202-615-0586
Christian Cámara, 305-608-4300