He noted Allstate's support of ProtectingAmerica.org, a bi-partisan, broad-based coalition backing a system that would layer state and federal backstops on top of private insurance. His comments came during a panel discussion on catastrophe management, which followed a keynote address by Liberty Mutual CEO Edmund Kelly, during which Mr. Kelly said he adamantly opposed federal government involvement in insuring natural catastrophes. (See related story, page 7.)

Mr. Wilson said that “some people think TRIA is the most important problem. We don't think that's the case,” noting that the U.S. Department of Homeland Security ranks terrorism risk not much higher than hurricanes.

Bottom line, he said, Allstate isn't saying the issue is critical because it is important to Allstate. “We're going to fix our problem,” he said, noting that insurers such as Allstate are “getting smaller everywhere around the country”–by offering less coverage, raising deductibles, lowering limits and not renewing customers in cat-prone areas.

Still, at least one-third of Americans have their fortunes tied to their homes, representing their largest assets–which they are counting on to fund their childrens' educations and their own retirement.

That makes insuring catastrophe risks a political issue, he said. When Americans lose this asset in a disaster because of lack of insurance, they will look to the government or private carriers, “whether or not we have extended coverage,” he added.

“The government is in the risk assumption business,” he said, noting that the government paid out $100 billion in the aftermath of Hurricane Katrina, and that there is no fairness or economic rationale involved in how government doles out such relief funds.

So, not just insurance industry solvency is at risk, he said, explaining that the issues of consumer net worth and the fair and equitable manner of government support make this everyone's problem.

After Mr. Wilson described the national problem, Terry Lisotta, CEO of Louisiana Citizens Property Insurance Corp., gave attendees a vivid picture of the local problems experienced by those who work for the residual market.

First he described how the company's disaster plan went immediately into effect exactly as intended a few days before Katrina hit. The workers left New Orleans and relocated to Baton Rogue. “Our problem was that we thought we were on a three-hour cruise,” he said, noting that the relocation actually lasted until May of this year.

That office, which was set up for six people, had to accommodate 48, he said, adding that five divisions of the company worked out of that single office.

Beyond that, he reported, “we had bomb threats. We had folks threatening to kidnap my employees until I paid [their claims].”

In addition, there were problems encountered in getting claim checks out to people. For example, he described an effort to carve a system just from claims out of an existing policy management system.

“Our original intent was to manage one database. We wound up managing 10,” he said, noting that these involved information from UPS, Federal Express and DHL, which helped in sending checks all over the country.

This process was complicated by the fact that while “policyholders were very diligent” in telling Citizens where they moved “the first time” after Katrina, when they later relocated a second time, they didn't notify the company, he said.