Several insurance industry organizations recently testified before a subcommittee of the House Financial Services Committee regarding the government's role in preparing for natural disasters via legislation.
Posed with the question, “Is America's Housing Market Prepared for the Next Natural Catastrophe?” representatives from the National Association of Insurance Commissioners (NAIC), Property Casualty Insurers Association of America (PCI), American Insurance Association (AIA), National Association of Mutual Insurance Companies (NAMIC), and the Independent Insurance Agents and Brokers of America (IIABA) prepared statements for the Subcommittee on Housing and Community Opportunity.
Alex Soto represented the IIABA before the Subcommittee on Housing and Community Opportunity and made the case that insuring against natural disasters is a national problem, that there is a federal role in natural disaster preparation, and that Congressional attention is needed for several pieces of legislation that have been introduced to deal with this issue (see sidebar).
“[IIABA] believes that both the states and the federal government have roles to play, but that there is a need for a federal solution to be in place before the events happen — to have a clear, well-structured mechanism that encourages the private sector to handle as much of the risk as possible, and only consider a federal role as a last resort upon private marketplace failure.”
Florida Insurance Commissioner Kevin McCarty testified on behalf of the NAIC and posed another scenario for the committee to ponder.
“While much has been made of the reported estimate of $50 to $80 billion in insured losses, the much more disturbing number is an estimate of total property damage of around $260 billion,” said McCarty. “How will the majority of the damage be rebuilt without insurance? Without houses for people to live in and businesses for people to work at, how will the economy recover?
“I do not think we can truly prepare the housing market for a mega-catastrophe without a comprehensive national strategy,” he continued. “Insurance is only one of the critical components needed to truly provide a level of economic security in the face of catastrophic natural disasters for all Americans.”
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