October 25, 2004

Warning that the cost of rebuilding after natural disasters is making insurance more costly and less available for many Californians, Insurance Commissioner John Garamendi outlined his ideas to back the creation of a national “natural disaster insurance program.” Speaking to a gathering of Bay Area government officials convened to commemorate the anniversary of the Loma Prieta earthquake, the commissioner said that recent wildfires in California and a flurry of hurricanes in Florida have made it clear that the entire country must be involved in a solution. The commissioner advocates the creation of an insurance policy to cover all natural disasters in the United States. The risk would be spread across a much larger pool of potential claimants, making it more affordable and cost effective. The cost of premiums would vary depending on area and structure risks. In California, a small number of homes are covered by earthquake insurance. Just 13.34 percent of homes with residential insurance carry earthquake coverage insurance. “That means that premiums for these policyholders will be extraordinarily high because the pool of risk is so small,” Garamendi said. “A national policy would help spread the cost of rebuilding our lives.”

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Insurance Journal West October 25, 2004
October 25, 2004
Insurance Journal West Magazine

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