Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) Property and Casualty Insurance (C) Committee's Catastrophe Insurance Working Group will evaluate modeling for multi-state funding of catastrophes such as hurricanes or earthquakes, reports NAIC. The agreement came out of a meeting to discuss catastrophe preparedness and the potential development of a multi-state catastrophe fund.
During the two-day meeting held last week in Atlanta, the members heard from catastrophe modelers and catastrophe fund managers on modeling issues, including coverage for a wide range of perils within the scope of the catastrophe fund. Representatives from the University of Florida and the Federal Alliance for Safe Homes briefed the working group on the research efforts and grass roots education, respectively, to strengthen building codes and improve residential structures to better withstand hurricane and other storm-related effects. NAIC members saw a demonstration of a wind tower used to gather thousands of discrete readings during hurricanes and other storms.
Following the testimony, members and interested parties held interactive, facilitated discussions on what perils to include in the multi-state fund, as well as what type of governance structure is appropriate for such a fund. The group agreed to evaluate the modeling of a multi-state fund for a single peril such as a hurricane or earthquake in order to capture the geographic and temporal advantages of pooling multi-state risk. The group also agreed to explore the use of an interstate compact as a vehicle for a multi-state catastrophe funding mechanism. "A multi-state catastrophe fund will allow states to pool their risks and resources in a tax-advantaged fund to help ensure for consumers the availability, accessibility and affordability of insurance involving a range of natural catastrophes," said Florida Insurance Commissioner Kevin McCarty, chair of the committee and working group. "We made significant inroads in identifying the many facets of this complex issue, and are proceeding forward in developing the scope and structure of a multi-state fund." Source: NAIC
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