The Hartford Financial Services Group Inc. has proposed a far-reaching new plan – one that includes mandatory flood insurance, IRA-like catastrophe accounts, subsidized premiums for homeowners and a federal reinsurance program – that it says would better protect coastal homeowners and their insurers against major weather catastrophes.
CEO Ramani Ayer unveiled the program yesterday. It is the latest in a number of proposals by the industry’s largest insurers – including The Travelers Cos., Nationwide Mutual Insurance Co. and Allstate – that try to address how best to insure the rapidly growing number coastal homeowners.
The Hartford’s plan, known as the “Coastal Catastrophe Partnership Plan,” calls for cooperation between federal and state governments, homeowners and insurers in an effort to ensure access to the coastal market will be profitable for insurers.
To help right that maket, The Hartford’s proposal would:
— Mandate flood insurance for all coastal homeowners
— Create a federal and state-level reinsurance programs to backstop losses by private insurers
— Establish untaxed savings accounts (“supplemental catastrophic security accounts”) to pay for property insurance
— Create state subsidies for some coastal homeowners
Since major hurricanes in 2004 and 2005, there has been an exodus of insurers from the coastal homeowners market, sending regulators in states along the East and Gulf coasts scrambling to find ways to ensure access to coverage. Private insurers that continue to insure coastal properties have raised their premiums drastically in some states.
In a release detailing the program, The Hartford said that coastal coverage is a political problem that can’t be relegated to a few regions to solve and “an honest national conversation about the threat a major disaster poses and the burden we all must bear is long overdue.”
The company said that natural catastrophes should concern all Americans “regardless of where they live because the losses are felt by everyone.”
Source: The Hartford Financial Services Group Inc.
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