The preservation of state regulation of insurance and a multi-pronged approach to disaster management was outlined by the National Conference of Insurance Legislators and approved as amended on Friday by the Property and Casualty Insurance Committee during the National Conference of Insurance Legislators in Weston, Fla.
PCIC Chairperson Senator Pam Redfield of Nebraska, accepted minor final amendments suggested by Sen. Steven Geller, Florida. The resolution was unanimously forwarded to NCOIL’s executive committee. The resolution supports the concept of a national mega-catastrophe program sponsored by Rep. George Keiser, North Dakota, and Sen. Geller.
NCOIL supports the preservation of state regulation over the business of insurance and pledges to work in concert with NAIC to investigate options for a national, natural disaster insurance program.
The resolution also supports a federal role in catastrophe legislation as expressed in the resolution, and welcomes dialogue between Congress, state legislators, NAIC, insurance companies and interested parties regarding the appropriate role of the federal government in ensuring that Americans are provide with the opportunity for adequate insurance protection for losses arising from catastrophic natural disasters.
NCOIL welcomes further dialogue regarding the appropriateness of merging natural and man-made disaster risks in a single mega-catastrophe system and will continue to work toward creation of tax-deferred catastrophe reserves.
NCOIL resolved that it does not at this time endorse or reject any particular approach, but believes that an overall investigation of the issue is required and that legislators, regulators, insurers and others must recognize the time sensitivity of these deliberations.
NCOIL will distribute this resolution to appropriate state and congressional leadership following the 2006 NCOIL Spring Meeting.
The resolution says NCOIL has “strong concerns with many details” of a proposal suggested by the NAIC proposing a multi-layered catastrophe program and a soon-to-be developed NAIC comprehensive mega-catastrophe policy. It says the NAIC proposal would rest primary responsibility on the private insurance market and consumers; followed by state/regional catastrophe funds and the federal government; and would incorporate proposals regarding federal reinsurance and tax-deferred reserves.
The resolution refers to the massive devastation wrought by hurricanes Katrina, Rita and Wilma in 2005, noting they demonstrated the far-reaching consequences of catastrophic events. It says a catastrophic natural disaster such as Hurricane Katrina can lead to economic devastation throughout the country; including in many states in which the event did not occur.
It points out that scientists warn that an even more damaging, $100 billion storm is inevitable and predict active hurricane seasons in years to come. The resolution says that other recent natural disasters, including wildfires in California and tornadoes and flooding throughout the Midwest, have caused millions of dollars in insured losses and the displacement of thousands of consumers. It also highlighted other natural hazards, such as volcanoes in the Pacific Northwest and Hawaii, earthquakes in the West and along the Midwest’s New Madrid fault line, continue to threaten insurance markets and consumers across the nation.
NCOIL has repeatedly encouraged congressional enactment of appropriate natural disaster insurance legislation, including consideration of a federal reinsurance program and allowance for tax-deferred catastrophe reserves for natural disaster exposures. It recommends additional options to be considered before natural disaster risks can effectively be mitigated.
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