State regulators discuss national insurance issues
Say changes needed in order to protect nation from future catastrophes
Donelon and his fellow commissioners heard from insurance company and reinsurance representatives, along with members of Congress who discussed their ideas to improve the availability and affordability of insurance on the Gulf Coast.
"We are open to all solutions," Donelon said. "We hope these will come from the private sector, but we will need a federal solution as well."
One of the major topics discussed at the forum was the Homeowners Defense Act. This act would allow states to responsibly plan for disasters ahead of time, while providing emergency relief for states located in lower-risk regions. The act would also support the expansion of private capital markets for affordable catastrophe insurance and limit the liability of the insurance industry to manage "normal" risk, while providing enough money to cover all claims in a worst case disaster.
As of now, the act has support from the National Association of Realtors, the National Association of Mortgage Brokers, along with the Florida Association of Realtors. U.S. Rep. Tim Mahoney, R-Fla., who is co-sponsoring the bill with U.S. Rep. Ron Klein, D-Fla., says the bill will appear on the house floor in October.
Along with the Homeowners Defense Act, Travelers also announced a proposal that would join states from Maine to Texas in a regional catastrophe plan. The program would continue state regulation for certain matters, while maintaining a market of last resort as a safety net. The Travelers scenario would change the CAT reserve accounting approach to "accrued over time" rather than when incurred, according to Miletti, and people living in coastal and flood zones would be required to participate in the National Flood Insurance Program. The federal government would provide economic incentives for states based on their adoption and enforcement of federal building standards and other mitigation/loss reduction programs.
Edward Collins, the national director of ProtectingAmerica.org, introduced some sobering statistics that would seem to highlight the need for a new way of providing insurance to those who suffer from a catastrophe.
Collins said that there are currently 20 states that face the direct threat of hurricanes every year and that there is a 62 percent chance of a major earthquake in the San Francisco Bay Area before 2032. If either of those two catastrophes took place, the entire nation would be effected by the cost of destruction.
"The 2004 and 2005 hurricane season provided a sobering illustration of the human toll and suffering, property devastation, and financial burdens that Mother Nature can impose on our society," said Dave Hill, vice president and regulatory general counsel of State Farm. "The challenges that surfaced during those storms, and subsequently, have provided an opportunity for all of us to learn from experience and be better prepared for future events."
Hill says that State Farm received over 600,000 claims during that hurricane season in addition to more than 100,000 flood claims.
"The time to address preparation for mega catastrophes is now, before the unthinkable, but inevitable, occurs," Hill said. "We need a coherent, comprehensive, and coordinated approach involving the American citizenry, private insurers, and local state and federal governments."
Hill says that approach includes the adoption of modern and effectively enforced statewide building codes, modernization of the federal flood program, the establishment of state catastrophe funds and a federal backstop for those funds, and the recognition by those that live in harms way that they need to take steps to prepare for natural disasters rather than relying totally on private insurance and the government.
Congressmen Jo Bonner, of Alabama, and Mahoney said lawmakers on Capitol Hill are working on possible solutions through legislation that would include voluntary federal and state partnership where states would pool their catastrophic risk and be eligible for low interest federal loans if disaster losses exceeded private insurance or state cat fund capacity.
Donelon said he will continue his push for a federal catastrophe fund and would urge his fellow commissioners to hold future public meetings to carry on with the discussion of ideas and solutions for the insurance issues affecting the coastal states.
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Neighbors take stand against crime at ‘Night Out’ - 611 views
The St. Charles Parish Sheriff’s Office encourages people in the community to join together Tuesday in recognition of the National Night Out Against Crime.