Insurance CEOs put it like this: Unless the country changes theway it handles catastrophes, the next hurricane or earthquake couldinflict more economic devastation than last year's Katrina.

According to the Insurance Information Institute, insuranceindustry leaders at its 10th annual Joint Industry Forum concludedthat rigid restrictions are keeping rates artificially low andpromoting development in high-risk areas such as Florida, whichforces homeowners and taxpayers to subsidize waterfront propertyowners.

Hanover Insurance Group CEO Frederick H. Eppinger says insurersare pulling back from writing insurance in high-risk locations dueto decades of profits drained by Hurricane Katrina claims.

Edward M. Liddy, Allstate chairman, president, and CEO,addressed the need for forward thinking. According to him, theideal preparation plan for mega catastrophes is to fund the cost ofreconstruction before a disaster strikes. He called for a federalprogram to generate pools funded by entities such as banks and realestate firms, which would provide a back-stop in early years untiladequate funds can be accumulated.

State Farm CEO Edward B. Rust, Jr., noted that new technology,such as satellite imaging, helped his company better servepolicyholders because it enabled the company to identify damagedproperties and issue claim checks before a home had even beenexamined.

Other factors, such as educating the public on the importance ofproper coverage, play a part in mitigating the effects of acatastrophe. Ronald R. Pressman, GE Insurance Solutions' CEO,chairman, and president, considers this educational effort a“long-term investment.”