The top insurance regulators from California, New York, Illinois and Florida met in San Francisco today to map a proposal for a federal insurance program for manmade and natural catastrophes.
Details were few as they commenced talks, but California Insurance Commissioner John Garamend said concepts that the four have been working on are for a national program that involves sharing the risk among states and employing state and federal insurance pools.
"Stand by. Tomorrow we'll have an answer to your questions," Mr. Garamendi told a press conference in San Francisco that was made available to national press via telephone.
Kevin McCarty, director of Florida's Office of Insurance Regulation, said the current federal catastrophe program "is called the federal deficit."
New York Insurance Superintendent Howard Mills said the group was meeting not on behalf of the insurance industry, but on behalf of the consumer.
"The typical consumer will suffer when the next catastrophe strikes," he said, noting that New York, while known more for terrorist catastrophes, had suffered a massive hurricane in 1938 that devastated Long Island.
"We're hopeful we will kick off dialogue on a national plan that will spread the risk all over this country," Mr. Mills said, adding that a national plan is needed for mega-catastrophes and "the core issue is how to build capacity, expand the capacity of the insurance industry."
Michael McRaith, Illinois Insurance Division director, said that currently Illinois resident taxpayers wind up funding reconstruction efforts outside of Illinois.
He said he was participating in a dialogue to create the best result for Illinois taxpayers with a catastrophe plan that "must integrate the concerns of all the regions, particularly the Midwest."
Mr. Garamendi said under the current system, only 14 percent of California homeowners can afford earthquake insurance. A big quake, he said, could lead to a "wipeout of the community, and without insurance the homeowners have lost their value and the community has lost its wealth.
California, with exposures to forest fire, flood, earthquake and tsunami catastrophes, "is on the edge," he said.
Regulators said they wanted to emphasize mitigation steps to avoid catastrophe damage, and Mr. McRaith said the concern was not to protect insurers' profit levels, rather "our concern is with solvency of insurance companies."
"We have some ideas, but we need to come up with a consensus program that makes sense" and can get support from the Congress, Mr. Garamendi said.
Of the four participants in what Mr. Garamendi has dubbed an insurance "summit," the California commissioner is the only elected official.
Mr. Garamendi is a Democrat and Mr. McRaith is the appointee of a Democratic governor. Mr. Mills and Mr. McCarty are Republican appointees.
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