Clinton vs. Obama on Catastropic Insurance Reform

A comment by bayoustjohndavid in the comment thread in one of my previous postings made me want to highlight and compare both the Clinton plan and the Obama plan for Gulf Coast Recovery, especially regarding catastrophic insurance reform.

As you will see from both plans, they are very similar in many respects. But this is how each plan approaches the subject of catastrophic insurance reform.

The Clinton plan says this about insurance in a section on affordable housing:

In addition to addressing Road Home, Senator Clinton would pursue two specific policy initiatives. First, she would address the skyrocketing cost of insurance by: investigating insurance pricing and claims adjustment practices in the Gulf region; reforming the National Flood Insurance Program; reviewing the insurance industry’s antitrust exemption; and working with states to support their insurance programs.

Investigating, reforming, reviewing, and working with. Sounds nice, but falls short on specifics.

The Obama plan says the following:

Provide an Insurance Backstop: The damage caused by catastrophic hurricanes and other natural disasters over the past few years makes clear that we need a paradigm shift in how the Federal government responds to major emergencies. Rather than only stepping in after the fact with expensive clean-ups and financial bailouts, the Federal government should work with the insurance industry before the next major disaster to set up an efficient catastrophe insurance "backstop" that protects both homeowners and business owners against catastrophic loss. Barack Obama will create a National Catastrophe Insurance Reserve that would be funded by private insurers contributing a portion of the premiums they collect from policyholders. Such a framework would neither distort the insurance market nor discourage risk avoidance and risk mitigation investments because insurers would not be forced out of high-risk markets for fear of bankruptcy in the event of a disaster. With this program in place, disaster victims would no longer have to depend solely on taxpayer-funded federal disaster aid loans. It has been estimated that a properly managed fund could save homeowners $11.6 billion on annual insurance premiums.

Perhaps not perfect, but much more specific and detailed than Hillary Clinton's vague statements. If catastrophic insurance reform was a concern of mine, I'd pick Obama's plan over Clinton's plan any day of the week, every time. Its not only more specific and clearer, but I think it's also a more progressive and innovative solution.