Insurance Commissioners of several large states will convene at a summit to develop a National Catastrophe Insurance Program. The summit is being organized by California Insurance Commissioner John Garamendi, Florida’s Commissioner of the Office of Insurance Regulation Kevin M. McCarty and New York’s Superintendent of Insurance Howard Mills and will be held on Nov. 15 and 16 in San Francisco.
The national program would be designed to more effectively spread insurance risk and help survivors cope with the financial damage caused by natural catastrophes and acts of terrorism, according to Garamendi’s office.
The event, already being planned before Hurricane Katrina struck the Gulf Coast, will focus on devising a “single methodology for risk sharing” in the wake of natural disasters and terrorism. Support is being provided by the Director of the Illinois Division of Insurance, Michael McRaith, and the National Association of Insurance Commissioners’ (NAIC) Catastrophe Working Group. Several state Insurance Commissioners and representatives from the insurance industry, Congress, state legislatures and public policy groups are expected to join the effort.
“The ultimate toll of Hurricane Katrina will be unimaginable in both loss of human life and financial ruin,” Garamendi said. “This tragedy makes our work at the summit even more urgent. As insurers begin to sort through a deluge of claims, and as survivors confront the fact that some losses won’t be covered, it will become painfully clear that a single, national policy is the only answer.”
“Once again mother nature, through Hurricane Katrina, has taught us that catastrophes are not isolated geographic events,” said Florida’s Commissioner McCarty. “Hurricanes, earthquakes, tornadoes, typhoons, floods and wildfires, as well as terrorist events, are national problems that demand a national solution. The current insurance structure is a failed model. Citizens deserve a comprehensive insurance policy that covers all perils and a rational comprehensive national catastrophe plan that protects our citizens from economic ruin.”
New York State’s Superintendent of Insurance Mills agreed. “Hurricane Katrina vividly demonstrated that the time has come for the creation of a sound financial mechanism to respond to the monetary consequences of major catastrophes, with the ultimate goal being the protection of policyholders and taxpayers,” Superintendent Mills said.
The goal of the summit is to amass a critical core of support for a single methodology to govern risk-sharing for major catastrophes, including acts of terrorism. Currently, some states, such as California and Florida, have insurance pools to deal with catastrophes particular to their region – earthquakes and hurricanes. Those programs help make insurance for such events affordable for residents.
However, few states have such insurance programs, and as a result most Americans have no affordable way to protect themselves financially if catastrophe strikes. A national policy would help insure more people by lowering costs through greater risk sharing, Garamendi believes.
The tentative agenda for the discussion includes:
* Panel on catastrophe scenarios with responses by economists on their economic impacts
* Insurance industry CEO Panel on insurance industry challenges with questioning by insurance regulators
* State Catastrophe Fund Panel with questioning by consumer representatives and state legislators
* Panel of Congress members on federal legislation and strategy
* Break-out sessions on critical elements of a National Catastrophe Insurance Program
* Keynote on Climate Change and Mitigation.
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