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The California fires that destroyed thousands of homes may end up providing some lower cost insurance against hurricanes for Florida homeowners. The fires have spurred new interest in the creation of a national fund to help cover losses from catastrophic events. As Mike Vasilinda tells us, the idea of a national cat fund has been on Florida’s front burner for some time.

Hear it here: National Cat Fund Gaining Momentum

The Florida Catastrophic Fund was created to keep private insurers writing coverage in Florida. It was created after Hurricane Andrew in 1992 and provides low cost back up wind insurance when there are big losses from a storm.

Insurers see movement toward a national fund in Washington, and for the first time concede there may be a need for a limited Federal role.

“If you’re going to put the federal government into this arena, you also need to make sure that the states are acting responsibly, that the states are not repressing rates,”  William Stander with Property and Casualty Insurance Association said.

Losses to Florida’s Cat fund from the busy 2004-2005 storm season are still being passed on to people who are buy insurance today through assessments on their renewals.

In an attempt to keep private insurers writing here, the state has assumed a whopping 28 billion dollars in risks. State CFO Alex Sink thinks that’s is too high. She is in London meeting with Lloyds, looking for alternatives.

A national fund to share the risk would minimize the costs to Florida homeowners in the event of a big storm season.

“We haven’t been able to spread the risk sufficiently enough in order for companies to be able to lower those rates,” Rep. Curtis Richardson said. “And if we can do that nationally, I think it would benefit all of us.”

But Richardson believes the insurance industry has been blocking real reform. He says it’s time for them to come up with solutions, not higher costs.

Several Presidential candidates have been supportive of a national fund to share large risks, or as an alternative, a consortium of states who would voluntarily promise to cover losses.