The National Association of Insurance Commissioners took the first steps toward creation of a multistate catastrophe fund at a recent regional meeting.
The Catastrophe Insurance Working Group agreed to evaluate modeling for such a mechanism to cover hurricane or earthquake risk on a regional basis.
Working Group Chair Kevin McCarty, who also serves as Florida insurance commissioner, said the Atlanta meeting last week resulted in "significant inroads in identifying the many facets of this complex issue, and we are proceeding forward in developing the scope and structure of a multistate fund."
Mr. McCarty remains the staunchest NAIC advocate of a catastrophe funding mechanism consisting of federal and state funds to shore up the private industry in the event of a catastrophe on the scale of Hurricane Katrina in 2005.
The multistate vehicle could serve those states unwilling to bear the expense alone in joining such a system.
The property-casualty industry remains divided with both Allstate and State Farm supporting the concept with varying degrees of enthusiasm and other companies and groups actively opposing.
John Lobert, senior vice president for the Property Casualty Insurers Association of America, said the regional catastrophe fund concept could unfairly shift the cost of paying for future catastrophe losses to consumers in lower risk states.
Mr. Lobert said market conditions in Florida are unique and that regulators and lawmakers should proceed cautiously before embracing proposals modeled on laws recently approved there.
The legislature earlier this year approved an expansion of the Florida Hurricane Catastrophe Fund that many critics claim will drive reinsurance capacity out of the state.
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