Washington, D.C. - The American Insurance Association (AIA) is urging insurance regulators to go slow in considering a national catastrophe insurance program, affirming support for catastrophe modeling technology but discouraging federal and state governments from storming through private sector business practices.
"In the wake of destruction from the 2005 Gulf Coast hurricanes, a discussion about how the private insurance market prepares for, and handles, mega-catastrophes is certainly timely," acknowledged AIA vice president of State Affairs Tammy Velasquez following a summit of regulators in San Francisco. "In fact, insurance companies and other stakeholders have debated potential market-based solutions to some of the significant challenges presented by natural disasters for many years."
Still the AIA spokesperson urged regulators and other policymakers to be cautious about a potentially expanded role for the federal government or state governments, specifically with regard to whether catastrophe funds are necessary or appropriate. She observed that private sector insurance comprises many different, and often interconnected, parts that must function smoothly in order to work properly and create a robust market for personal and commercial property insurance consumers. Hastily imposed changes could cause the system to fall apart, she warned.
"Short of creating an extraordinarily complex new government remedies, AIA believes Congress and states should advance proactive solutions to reduce and manage catastrophe exposures from hurricanes, earthquakes, seasonal storms, and other natural catastrophes," said Velasaquez. "This agenda should include support for strong building codes, the use of computerized catastrophe modeling to measure risk, and support for insurance regulatory environments that foster competition among insurance companies. Over the long-term, these changes will maximize insurance capacity and minimize unnecessary government intervention."
Based in Washington, D.C., AIA represents more than 435 major insurance companies that provide all lines of property and casualty insurance and write more than $120 billion annually in premiums.
Source: The American Insurance Association
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