NU Online News Service, Dec. 1, 10:08 a.m.EST

EAST BRUNSWICK, N.J.—In the aftermath of a catastrophe, recoverywill require the government and the private sector to work togetherwith one goal in mind—getting back to a normally functioningsociety as soon as possible, say experts.

State officials and private sector executives gathered hereWednesday for a panel discussion on the topic "From Catastrophes toReinsurance." It was one of five break-out panel sessions sponsoredby the New Jersey Department of Banking and Insurance during itsfirst Commissioner's Insurance Symposium sponsored by thedepartment and hosted by Commissioner Thomas B. Considine.

Lt. Col. Jerome Hatfield, deputy superintendent of homelandsecurity for the New Jersey State Police, says state and localofficials need to partner with the private sector and learn fromone another about how to address the needs of business and thestate's residents in the aftermath of a catastrophe.

Government has taken steps to prepare for a catastrophe, hesays, including an employee credential program for private sectorpersonal. The program issues credentials to employees deemedessential to recovery and need to get to their jobs during a stateof emergency.

However, Hatfield says officials know they do not have all theanswers and are seeking a dialogue with insurance companyexecutives to understand their needs and aid them during therecovery efforts.

Most importantly, he says, state officials are not thinking interms of a catastrophic crisis that will end in a few months, butone that requires individuals and municipalities to becomeself-reliant for an extended period of time.

"I believe we are at our infancy in how to entertain a truecrisis that others have had the experience to deal with for years,"says Hatfield.

Joe Picciano, deputy director of preparedness for the New JerseyOffice of Homeland Security and Preparedness, says officials havereached out to various businesses in the private sector tounderstand what is needed to get their business back in operationand the state back on the road to normalcy.

Realizing the tremendous role insurers play in getting capitalinto the hands of policyholders, Picciano says the department needsfurther dialogue with insurers to understand what they need to dotheir job.

Getting good, timely information between the government and theprivate sector will be essential to avoid making a catastrophicsituation even worse, says Lori Hennon-Bell, vice president andchief security officer at Prudential Financial, Inc. and chair ofthe Financial Services Sector Working Group.

A former New Jersey State Police lieutenant colonel in charge ofHomeland Security, Hennon-Bell notes she has a "very uniqueperspective" with both government and private sector experienceabout what needs to be done in the aftermath of a catastrophe.

Touching on how catastrophe exercises help prepare officials,she says the exercises have focused on the first 24 hours after theevent. She says what is needed is to go beyond that period andunderstand the long-term needs and consequences for both governmentand business to get back up and running.

Zeroing in on the preoccupation with catastrophe models todetermine the total extent of loss, Karen Clark, president andchief executive officer of the risk modeling firm Karen Clark andCo., says when it comes to anticipating loss, planners andunderwriters need to get away from just assessing risk from lossmodel calculations and become catastrophe risk managers. She saysthe examination of risk needs to involve more than probably maximumloss, and must consider other events not included in catastrophemodels such as flood and business interruption.

She emphasizes that catastrophe models need to be used as onepiece of an overall catastrophe risk management program and needsto include extensive scientific data and other tools that helpcompanies better prepare for recovery.

Touching on the need for reinsurance, John Mulhern, partner inthe law firm of Dewey & LeBoeuf, and Richard Schlesinger, chiefof reinsurance and surplus lines for DOBI, note the need for NewJersey insurers to spread catastrophe risk globally.

"If there is not global support this industry is not going tosurvive," says Mulhern.

As one example, he points to the devastation of Joplin, Mo.,where a significant amount of the insurance dollars ended up comingfrom reinsurers from around the globe.

Recognizing the need, Mulhern and Schlesinger say New Jersey isone of four states to lower the collateral requirements for highlyrated reinsurers to enter the state.

Mulhern says the state has also opened the door to workinginternationally with regulators in an effort to open the doorsfurther to reinsurers.

Schlesinger says the state is moving ahead quickly to finalizethe modernized requirements for reinsurers to do business in thestate.

Ultimately, however, the major challenge in any catastrophe isthe unexpected, says Hennon-Bell, pointing to the radiationfall-out from the Tohoku earthquake and tsunami in Japan earlierthis year as an example.

"The challenge for us is what we haven't seen before," sheobserves.