That's a much bigger problem than 'paint flaking'... I see fiberglass in that pic. What year Catalina 30? Had any work been done before to the keel? Did they try to fix a Catalina smile?
I wasn't aware that the keel on a 30 was sheathed in fiberglass. My best guess is that a blister formed (polyester resin is prone to osmotic blistering) and caused the fiberglass to delaminate from the keel. I'd be worried that there is more blistering elsewhere on the keel and hull below the water-line. Inspect the entire hull closely.
Good thing you are hauled out. I would suggest sanding all of the bottom paint off including any barrier coat down to the original gelcoat. Get a Surveyor or a friend who is familiar with identifying osmotic blistering, particularly someone with a moisture meter. Measuring moisture in the hull laminate is the best way to know if you are safe or not.
I've got my fingers crossed that you don't find any more than the one that is in the picture. If the moisture readings are low enough you should be fine. If they are too high, after you have sanded all the paint off let her sit for at least two months on the hard to 'dry out', occasionally rinsing the hull down with fresh water. Sounds crazy, but this helps dry out the hull so don't worry if it gets rained on.
The fix for that spot and any others like it on the keel is to sand it back, feathering out gradually. Then you can add patches of fiberglass tape with epoxy. Once your hull is confirmed dry you'll want to use 3 gallons of epoxy based barrier coat, that will cover your size hull and rudder, should give you three nice coats using a 1/4" nap roller. I like Interlux Interprotect 2000, but Petit makes a good epoxy barrier coat too... Then your bottom paint of choice.