Several insurance industry organizations recently testifiedbefore a subcommittee of the House Financial Services Committeeregarding the government's role in preparing for natural disastersvia legislation.

Posed with the question, “Is America's Housing Market Preparedfor the Next Natural Catastrophe?” representatives from theNational Association of Insurance Commissioners (NAIC), PropertyCasualty Insurers Association of America (PCI), American InsuranceAssociation (AIA), National Association of Mutual InsuranceCompanies (NAMIC), and the Independent Insurance Agents and Brokersof America (IIABA) prepared statements for the Subcommittee onHousing and Community Opportunity.

Alex Soto represented the IIABA before the Subcommittee onHousing and Community Opportunity and made the case that insuringagainst natural disasters is a national problem, that there is afederal role in natural disaster preparation, and thatCongressional attention is needed for several pieces of legislationthat have been introduced to deal with this issue (seesidebar).

“[IIABA] believes that both the states and the federalgovernment have roles to play, but that there is a need for afederal solution to be in place before the events happen — to havea clear, well-structured mechanism that encourages the privatesector to handle as much of the risk as possible, and only considera federal role as a last resort upon private marketplacefailure.”

Florida Insurance Commissioner Kevin McCarty testified on behalfof the NAIC and posed another scenario for the committee toponder.

“While much has been made of the reported estimate of $50 to $80billion in insured losses, the much more disturbing number is anestimate of total property damage of around $260 billion,” saidMcCarty. “How will the majority of the damage be rebuilt withoutinsurance? Without houses for people to live in and businesses forpeople to work at, how will the economy recover?

“I do not think we can truly prepare the housing market for amega-catastrophe without a comprehensive national strategy,” hecontinued. “Insurance is only one of the critical components neededto truly provide a level of economic security in the face ofcatastrophic natural disasters for all Americans.”