Needham, Mass. - Carriers need to step up their technology preparedness to get ready for industry-altering regulatory issues poised to have major impact on the U.S. insurance industry in 2007, according to new research from TowerGroup. These issues include a national catastrophe fund, an extension of the Terrorist Risk Insurance Act, and an optional federal charter.
TowerGroup's research finds that, depending on their resolution, this trio of issues is likely to significantly transform the insurance industry. For example, an optional federal charter will materially change the historical regulatory basis for carriers, opening the way for globalization of the U.S. insurance market place.
On the controversial topic of catastrophe management, the Needham, Mass.-based research and advisory firm says U.S. insurance regulators and carriers must not fall into complacency, despite record-low loss results from natural disasters in 2006. All involved parties must maintain focused attention on the potential for severe economic disruption in the United States if meaningful solutions to catastrophic loss from either a natural or terrorist event are not in place if / when another incident occurs.
Catastrophe management and response, terrorism, and insurance industry governance all require carriers to step up their technology preparedness. As complicated as these issues are for regulators to deal with, carriers are in no less demanding circumstances. TowerGroup expects that carriers who do not meet the corporate imperative of adopting new enterprise technology solutions - for example, predictive analytics - will find themselves at an enormous operational disadvantage.
Although the insurance industry was able to pick up the pieces after the September 11th terrorist attacks and Hurricane Katrina, TowerGroup believes the situation may not be as workable the next time around - particularly given the potential for exponentially more severe occurrences some experts believe may impact the United States, such as a serious hurricane hit to Miami, Fla., or a large-scale biological attack on an urban area. Therefore, legislative solutions, coupled with carrier enterprise preparedness, must be put in place as soon as possible.
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