A Senate Banking committee is scheduled to mark-up a bill today to establish a natural catastrophe commission to examine how best to mitigate disaster risks and deal with the after-effects of these events.
The Senate Committee on Banking, Housing, and Urban Affairs
is taking up the nmeasure.
According to the Property Casualty Insurers Association of America,
the commission would look at various aspects of natural disasters and insurance, along with evaluating whether there may be catastrophe exposures that are beyond the capability of the private market and individual state catastrophe funds to address.
June Holmes, PCI’s interim CEO, said insurers think the issues covered by the commission are important.
“Experts agree that the nation faces the prospect of more frequent and severe natural disasters in the coming decade. Moreover, significant property development, population growth, and rapidly rising real estate prices in areas prone to natural disasters exacerbates the potential for increasingly larger human and economic losses as a result of such disasters, requiring stronger mitigation as well as greater financial resources to fund future recovery and repair efforts,” she noted.
Holmes encouraged lawmakers to consider relaxing regulation to help encourage new capital to enter property insurance markets and come up with innovative ways to cover difficult risks.
The commission would also address enforcement of tougher standards for building codes, property development and other loss prevention and mitigation requirements.
Holmes said that it may be necessary for the federal government to offer liquidity protection to state catastrophe funds at the highest level consistent with the maintenance of stable markets and avoidance of widespread insurer insolvencies.
She also suggested that any federal program include measures to promote freedom for markets to respond to these exposures, including meaningful limitations on the ability of participating states to control property insurance rates.
PCI further believes that insurers should also have the ability to establish voluntary, tax-deferred pre-event catastrophe reserves for purposes of funding all or part of their exposure to catastrophe risks.
Holmes said policymakers should consider ways in which further development of the private catastrophe bond market can be encouraged by removing regulatory or accounting impediments to the use of such vehicles and by other steps which may foster development in this market.
“The commission bill, as currently drafted, includes a thorough examination of these issues that are very important to consumers, PCI and our property and casualty insurer members, and the nation, and we support legislation that will fairly evaluate these issues,” Holmes said.
Was this article valuable?
Here are more articles you may enjoy.