Efforts to win regulator support for a controversial national catastrophe insurance program for big disasters were put on hold after the proposal drew objections. The National Association of Insurance Commissioners decided to delay preliminary approval of the natural mega-catastrophe concept for a few weeks while weighing new objections to the controversial plan.
Still, Florida Insurance Commissioner Kevin McCarty–chair of the NAIC Natural Catastrophe Working Group and prime author of the plan–said he was pleased with its progress.
However, he took exception to those who started calling it a "white paper," with the implication that it is something to be read and then put on the shelf for future reference, rather than presented in detail to Congress in the near future for enactment.
Since the program was first announced last December, the most controversial component of it–the mandated all-perils property owners policy that would for the first time have private carriers cover flood risk–has been removed.
Mr. McCarty said the program would try to make consumers more knowledgeable about what their standard homeowners insurance provides in terms of coverage for flooding, which is normally exempted.
He noted that opinion was divided last week here at the NAIC's quarterly meeting as to just how big a club the government should wield in ensuring homeowners have flood coverage.
The latest draft includes a checklist agents would have to run down with applicants to ensure they understand what flood coverage they are buying, and to have a comprehensive policy available for them to purchase.
However, he declined to term it a "mandated offer," as did Rey Becker, a Property Casualty Insurers Association of America representative, who expressed his concerns about that aspect of the program.
He felt such a checklist could make agents and carriers liable for errors and omissions, as well as placing a new records retention burden on them.
The plan also includes creation of state and federal catastrophe funds to back up mega-catastrophe losses, which all insurer associations have either opposed or voiced no position on, reflecting the division among the giant players in the sector.
At last week's hearing here, Florida State Sen. Steve Geller, D-Hallandale Beach–former president of the National Conference of Insurance Legislators–said he was concerned about whether there should be one attachment point throughout the country for state fund coverage, or whether it should vary to garner support from smaller and less disaster-prone states.
Mr. Geller also expressed concern that the proposed national advisory committee that would set premiums companies would pay to take part in any national fund had no involvement from any state legislators.
Mr. McCarty said he hoped to have a vote of the working group within the next month after consideration of the new objections, after which the program would be sent to the parent Property-Casualty Committee at the NAIC's next quarterly meeting in Washington, D.C., June 10-13.
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