The insurance industry is hoping that a federal case will be made out of disaster preparedness and response following the devastation of Hurricane Katrina.
As their claims adjusters and agents scurried to handle the record number of claims along the storm-ravaged Gulf coast, insurance company chief executive officers speaking on the anniversary of 9/11 expressed the hope that the public and private sectors will come together to find solutions on how to protect people living in high risk areas.
The CEOs appeared in New York at the annual Big “I” convention of the Independent Insurance Agents & Brokers.
Safeco Chairman and CEO Mike McGavick said that even though his company does not write a lot of business on the Gulf Coast, Katrina’s impact is “so large everyone is caught up in it” and that how the private sector responds should be a concern in Washington.
“It’s a fact that people like to live in geographically interesting places. But guess what? That’s where things happen; that’s why they’re geographically interesting,” noted McGavick, who is expected to run for the U.S. Senate from the state of Washington.
“The country needs to have a discussion about how we are going to handle these events. It’s not just an insurance issue,” agreed William J. Mullaney, president, MetLife Auto & Home.
McGavick said government can’t shoulder the entire burden of large catastrophes, making it all the more important that the policymakers in high risk states be more hospitable to the insurance industry. “We should want the private sector to be the lead responders,” said, McGavick.
Comparing Katrina to other catastrophes, Allmerica President and CEO Frederick H. Eppinger cited how Katrina differs from other recent storms in its impact. “The magnitude of the uninsured is different with Katrina,” Eppinger said. “One thing I hope comes out of this is that we can collaborate better on how to solve the issue of protecting people who live along the coasts.”
Asked to ponder what would happen if a major hurricane hit New York’s Long Island or a giant earthquake hit the West Coast, the executives said they doubted the industry or the country were currently prepared. Charles Kavitsky, Fireman’s Fund president and CEO, noted that only 14 percent of homeowners in California have earthquake coverage.
“Are we ready for the next big one?” he asked, noting that the anniversary of the 1906 earthquake that shook San Francisco is just around the corner.
The CEOs also expressed concern over the nation’s readiness to respond to another terrorism attack. Kavitsky expressed concern over the failure of Congress to thus far renew the federal terrorism backstop, the Terrorism Risk Insurance Act.
“You would think that there would have been a reaction after the bombing in London,” he commented. But given the lack of response he said his company and others have to plan as if there will be no federal backstop.
Rudy Giuliano, former mayor of New York City, is scheduled to address the agents today.
Topics Trends Catastrophe Natural Disasters New York Agencies
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