Speaking on behalf of the National Association of Insurance Commissioners, Florida Insurance Commissioner Kevin McCarty testified before a key subcommittee of the U.S. House of Representatives on the role of insurance in preparing for large natural catastrophes.
McCarty commended the Subcommittee on Housing and Community Opportunity of the House Committee of Financial Services for holding the hearing and examining the issue of natural catastrophe preparation and response.
“Large natural catastrophes are a national economic problem, not simply a local insurance problem,” said McCarty, who chairs the NAIC’s Catastrophe Insurance Working Group. “Congress and the states need to work together to develop a comprehensive plan today to better manage and mitigate the natural catastrophic events of tomorrow.”
He said although insurance will always be the catalyst of economic recovery following natural catastrophes, much can and should be done prior to these events to minimize their impact.
Effective and enforced building codes, mitigation incentives and better land use policies are all steps to managing our national response to natural catastrophes, McCarty told the subcommittee.
His testimony outlined the challenges of insuring catastrophic risk and detailed some of the solutions under consideration by the states and Congress. Given the complexity of the problem and the variety of approaches to resolving it, McCarty also called on Congress to create a National Commission on Catastrophe Preparation to further study the issues, weigh the alternatives and focus the debate.
“Hurricane Katrina may have been the cause of the national attention on this issue, but as that tragic day moves further into history, we still have no comprehensive national approach to managing catastrophes of that magnitude,” McCarty said. “Thankfully, 2006 was a relatively calm year for property and casualty insurers. But this window of opportunity to act is merely the eye of the storm, and we need to take advantage of it.”
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