New York--Rather than lobby for a national catastrophereinsurance fund, insurers should better manage their own exposureconcentration while pushing for the right to maintain disasterreserves and charge appropriate premiums in storm-prone areas, oneleading carrier contends.

Fireman's Fund has "somewhere north of 6,000 claims, andcounting" from Hurricane Katrina, noted its recently electedpresident, Joseph Beneducci. "But because we took a disciplinedapproach to diversifying our portfolio, Katrina itself was notcatastrophic in terms of our exposure."

For that reason, Fireman's Fund does not back calls by Allstatefor a federal catastrophe reinsurance fund to help spread futurelosses from natural disasters.

"We oppose it," Mr. Beneducci said during an exclusive interviewwith National Underwriter for a cover story in NU's March 6edition. "To spread this exposure to others not in the storm pathis not the best solution for the vast majority of customers.Instead, each company has to look at their exposure in each ofthese cat-prone areas and make sure they can handle the capacity atrisk."

A more effective approach to ease the burden on individualcarriers would be to alter accounting rules to allow for long-termcatastrophe reserves, Fireman's Fund believes, along withdiscouraging state governments from artificially suppressing ratesin disaster hot spots.

"The repair and restoration people we hire raise their pricesafter a disaster--not to price-gouge, but to reflect the higherdemand and increased cost for labor and materials," noted thecarrier's chief executive officer, Charles Kavitsky. "If they canraise prices appropriately, why can't insurers?"

Terrorism is a different story, however, "at least if you'retalking about nuclear, chemical, biological and radiologicalattacks--events the industry just cannot handle," Mr. Beneduccisaid. "As bad as 9/11 was, insurers did absorb those losses and canstill function, but an NCBR event could cripple the wholeindustry."

Speaking with NU from his company's New York office--two blocksfrom "Ground Zero," the World Trade Center site--he noted that "adirty bomb" set off in New York might not only "make the areauninhabitable, but could also bring the financial markets down,undermining the ability to pay claims."

He said he hopes the industry focuses its lobbying efforts onreplacing the federal reinsurance backstop in the Terrorism RiskInsurance Act--expiring at the end of 2007--with a long-termsolution to relieve insurers of NCBR exposure.

"We have to have protection against those events that couldliterally cripple the whole industry," he said. "We need to respondbefore something happens that causes the industry's surplus toevaporate."