Group Says Survey Points To Cat Fund Need

A New Jersey group, promoting the idea of a state backstop fund to support insurers hit by mega-catastrophes, said results of a homeowners' preparedness survey underscore the need for the legislation they are promoting.

Pete McDonough, a spokesman for ProtectingNewJersey.org and the parent group ProtectingAmerica.org, said the survey released last week by the Insurance Information Institute Inc. reveals the inattentiveness of many homeowners to the need for preparing for disaster.

“They don't think it is going to happen to them,” said Mr. McDonough.

He was specifically referring to the survey results which showed that among homeowners in coastal states New Jerseyans are poorly prepared. Connecticut residents are the least prepared for a disaster, closely followed by the homeowners in New York's metropolitan area and Maryland.

In an effort to combat some of that inattention, he said the organization is seeking to expand into other states, but cautioned that it would depend on the individual state's receptiveness to supporting the organization's aim to establish state catastrophe backstop programs and raising the profile of disaster preparedness.

New Jersey, where ProtectingNewJersey.org recently began operations as an affiliate of ProtectingAmerica.org, was singled out by the I.I.I. for falling closely behind Connecticut in the scoring.

I.I.I. noted that in the state's history it has suffered significant hurricanes on a number of occasions, for example in 1944 when Long Beach Island was obliterated, and 1821 when a storm hit the state that is believed to have been a Category 4 on a five-point scale.

“These results are particularly unsettling given the AccuWeather prediction that a major hurricane will strike New Jersey during the coming hurricane season,” said David Smith, director of ProtectingAmerica.org and resident of New Jersey, in a statement.

The situation has gotten the attention of some legislators, significantly Assemblyman Michael Panter, D-Monmouth, who has introduced a bill (A-3236) to create a catastrophe fund to serve as a backstop to private insurers to assure adequate funding for homeowners should a major hurricane strike the state.

Mr. McDonough said Mr. Panter is still obtaining co-sponsors, and the bill should come up for a hearing in the fall. He said a Senate companion bill could be introduced shortly.

Richard Stokes, regional manager and counsel for Property Casualty Insurers Association of America in Trenton, N.J., said this is a time for discussion among insurers about the bill, but as an association, no position has been taken.

Insurers have a variety of concerns, with some believing that it is the carriers' business to assume risk and the government should not be involved, he said. The other concern insurers have is making certain the monies collected for the fund remain dedicated to the fund and are not used to fill state budget deficits, he added.

“It's too early to tell where the bill will go, but a natural disaster would certainly bring it more focus,” Mr. Stokes noted.

“We expect to see a good public debate over this,” he said, adding that PCI would have a better sense of its position by the fall.