SAN ANTONIO, TEXAS--The head of a national regulators' unitworking on a catastrophe insurance plan voiced enthusiasm here forthe new focus the incoming Democratic leadership in Congress hassaid it will give to the issue.

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"It is a new day," said Florida Insurance Commissioner KevinMcCarty following a meeting of the Catastrophe Insurance WorkingGroup of the National Association of Insurance Commissioners.

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His comments at the NAIC winter meeting came after getting wordthat the Democratic leadership in the House has put creation of afederal commission on catastrophe insurance issues on the first 100days agenda.

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The commissioner, who chairs the Working Group, said thepanelists had to complete the NAIC's plan by March in order for itto play an important role in the new federal commission's reportnow expected some time in the summer.

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U.S. Rep. Debbie Wasserman Schulz, D-Fla., will head thecommission that will work beside one in the Senate under theleadership of Bill Nelson, the former Florida insurancecommissioner who won a second term in the Senate last November.

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For more than a year Mr. McCarty has spearheaded creation of anew NAIC catastrophe plan, the most controversial elements of whichdeal with the creation of a federal backstop fund and an all-perilspolicy that would have insurers cover flood risk for the first timein decades.

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The plan also calls for new incentives such as low interestloans and tax credits for mitigation measures that strengthenstructures in catastrophe-prone areas.

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Since most of the plan requires federal action, the NAIC has notspecifically endorsed it but instead urged Congress to lookseriously at the issues.

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In the aftermath of Hurricane Katrina, many prominent members ofCongress have questioned the industry's claims-paying practicesthat exclude floods. Disputes have arisen over whether so-calledstorm surge-related water damage should be classified as wind orflood.

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In addition, it is estimated that about half of residents inflood-prone areas have not purchased National Flood InsuranceProgram coverage.

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The incoming new chair of the main House subcommittee dealingwith insurance, U.S. Rep. Paul Kanjorski, D-Penn., has spokenfavorably of the all-perils policy, which could affect thecommission's report.

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Meanwhile, Mr. McCarty said that plans are underway for thecreation of a multistate compact of Southeast wind-prone statesthat could serve as a model for any federal fund and a substitutefor the state funds envisioned in the second layer of the newcatastrophe fund.

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The NAIC has set a President's Conference in Miami for Jan 17-18to discuss catastrophe issues where such a proposal could befleshed out.

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In a related development, the National Conference of InsuranceLegislators has decided against working with the NAIC on a jointcatastrophe plan to be approved in March, and instead will offercomments on what the regulators come up with.

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In a letter to Mr. McCarty, Mississippi State Sen. Dean Kirby,R-Pearl, who chairs the NCOIL Subcommittee on Natural DisasterInsurance Legislation, said the group maintains strong reservationsabout a required mandatory offer of an all-perils insurance policyfor which the National Flood Insurance Program would serve as areinsurer.

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NCOIL Executive Director Susan Nolan said the logistics ofworking out a jointly sponsored document remained too dauntingwithin the short period of time now envisioned.

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