Property-casualty insurers can handle up to $40 billion ofannual catastrophe losses, and $65 billion over a two-year period,the American Academy of Actuaries said today.

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In preliminary findings prior to the release of a reportsometime in the next several weeks, the Academy said any program offederal supports should be based on those capacity projections.

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Shawna Ackerman, co-chair of the Academy's Natural CatastropheSubcommittee, outlined plans for the group's involvement with thejoint National Association of Insurance Commissioners-NationalConference of Insurance Legislators effort to develop a plan todeal with natural catastrophe risk.

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In a letter to Florida Sen. Steve Geller, D-Hallandale Beach,who chairs NCOIL's natural catastrophe panel, the Academy pledgedits aid in work on the model.

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Ms. Ackerman said gauging market capacity is critical todeveloping a final plan.

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"Private market capital is leveraged to support multiple linesof insurance, and if exhausted, would impede the ability of theinsurance industry to continue writing all lines of insurance," shewrote.

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Thus, the threshold for public involvement must be at a levelbelow that which would exhaust private market capacity, and yet notcompete with private industry, she wrote.

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Loss mitigation measures must also play a role in any newstate-federal catastrophe risk plan. "Engineering studies, as wellas recent experience in Florida, illustrate the ability of strongbuilding codes to significantly reduce losses over what wouldotherwise occur," Ms. Ackerman wrote.

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