State insurance regulators, industry representatives, catastrophe experts and consumer representatives are convening in San Francisco on Tuesday for a two-day summit in to help devise a national catastrophe insurance program to reduce the need for federal emergency aid and make disaster insurance more available and affordable.
The summit will examine potential catastrophes and their financial impact. Regulators noted that past efforts to devise a single catastrophe policy have failed for various reasons, but the recent spate of catastrophes should draw additional support for proposed legislation that would stem from the summit.
California Insurance Commissioner John Garamendi, a co-host of the summit, will be joined in the effort by co-hosts Kevin McCarty, commissioner of Florida’s Office of Insurance Regulation, Howard Mills, New York State superintendent of insurance, and Michael T. McRaith, director of the Illinois Division of Insurance. The National Association of Insurance Commissioners also will play a vital role, as will several other state insurance regulators and insurance companies such as All State Insurance and State Farm Insurance.
Summit participants also include risk modeling firms AIR Worldwide, RMS and Eqecat; the Brookings Institution, which specializes in providing research, policy recommendations and analysis of public policy issues; the Florida Hurricane Catastrophe Fund; and the California Earthquake Authority, among others.
Although the meeting was in the planning stages before Hurricane Katrina struck in August, the damage from recent hurricanes other recent catastrophes added urgency to the summit’s mission.
“We have repeatedly seen evidence that the financial consequences of these catastrophes cannot effectively be dealt with by existing insurance policies or federal emergency aid,” Garamendi said. “One policy, national in scope, will be a more effective and affordable way to provide for those financially harmed by disasters and acts of terrorism.”
Garamendi pointed out that only 13 percent of homes in California are covered by earthquake insurance — a low figure considering the likelihood of a major temblor in the future. It is hoped that a new national insurance program would extend the benefits of coverage to more Californians, he said.
“The current system of financing catastrophe losses after the fact is not working,” said Florida Insurance Commissioner McCarty. “We need a comprehensive federal solution that pre-funds catastrophic losses, not funding after the event using the federal deficit.”
Illinois’ McRaith said the summit talks are key to devising a rational strategy to pay for the aftermath of catastrophes. New York’s Mills agreed. “It is imperative that we plan ahead in order to be in a position to respond nationally to the financial consequences of major catastrophes, accumulating funds in both the private and public sectors to pay for extraordinary losses,” he said. “This summit gives insurance regulators, the industry, and legislators an opportunity to begin a dialogue that will move us closer to that public policy goal.”
The participants hope to have the framework of a program developed by the close of the meeting on Wednesday.
Other state regulators participating in the summit include: Commissioner Walter A. Bell, Alabama Department of Insurance; Acting Commissioner Thomas Hampton, District of Columbia’s Department of Insurance and Securities Regulation; Commissioner Diane Koken, Pennsylvania Insurance Department; Commissioner Mike Kreidler, Washington State Office of the Insurance Commissioner; Commissioner Kent Michie, Utah Insurance Department; and Commissioner Jim Poolman, North Dakota Insurance Department. States sending key regulatory representatives include Virginia, Arkansas, New Jersey, Maryland, Massachusetts and Nevada.
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