The Federal Insurance Office should have the “ability to immediately estimate exposures related to catastrophic events” and provide it to the federal government.

That's according to the vision for the FIO spelled out in the proposed 2014 U.S. budget released by President Obama on April 10.

Examples of a catastrophic event would include the Sept. 11 terrorist attacks or Hurricane Katrina.

The proposed budget noted the FIO's Federal Advisory Committee on Insurance demonstrated its responsiveness to reacting to disasters by holding a public meeting soon after Hurricane Sandy struck the East Coast to discuss the future of flood insurance, which is a peril covered by the federal goverment via the National Floof Insurance Program.

The vision outlined in the budget proposal poses challenges, says the Property Casualty Insurers Association of America (PCI).

“There are some basic concerns and objections related to real-world limitations insurers face following these types of events,” Dave Snyder, vice president of PCI, tells PC360. Requested data also needs to be consistent and uniform for all states.

PCI's Don Griffin, vice president of personal lines, explains insurers have been reporting information following catastrophic events to state regulators, but uniformity is lacking. States used to dealing with catastrophic events–the Southeast, for example–have a solid plan in place and insurers know what to expect. That is, insurers here typically know when to begin reporting and what information to report. The same can not be said everywhere.

Additionally, some insurers have a greater ability to comply with these data requests than others. National insurers, simply due to the size and scope of its operations, may have more resources than a small, regional insurer.

However, insurers are comforted in knowing the data provided to state regulators is confidential. The same assurances have not been established at the federal level.

Snyder says PCI does not want to replace the insurer-to-state regulator reporting system. Nevertheless, the FIO could have a role in establishing a uniform data-collection system across all states, with an understanding of obstacles such as access to policyholders following a storm.

“There is an opportunity for a partnership here to establish a confidential, uniform approach,” he says.

States can then share the information they've gathered to the FIO if requested, and the FIO can dissementate the data to other federal agencies.

The FIO was established by the Dodd-Frank Act to “monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to systemic risk.”

Special Reports /

PCI: FIO Disaster-Loss Estimates Pose Challenges

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