Panel Urges Better Cat Preparedness

A Washington-based business advisory group's blue-ribbon panel has urged new steps by the government and private sector to better prepare for the next mega-catastrophe.

Among the recommendations of the Financial Services Roundtable Blue Ribbon Commission on Mega-Catastrophes were stronger building codes and reauthorization of the Terrorism Risk Insurance Act.

The commission drew three overarching conclusions:

o The United States could be substantially better prepared to minimize losses from any of the kinds of mega-catastrophes that could strike the United States.

o The costs of natural catastrophes, in particular, should be borne more through private insurance than is now the case.

o Governments at all levels, together with the private sector, can and must do a better job of attending to the human and economic needs of victims immediately after mega-catastrophes.

June Holmes, chief executive officer for the Property Casualty Insurers Association of America, endorsed the panel's conclusions.

“These actions will reduce losses and reduce the time it takes to recover from a mega-event,” she said.

The commission also issued recommendations it said could help to minimize the costs and impacts of future mega-catastrophes, help pay the costs of these events in a fairer and more efficient manner, and improve the nation's response to and recovery from future mega-catastrophes.

Ms. Holmes also noted the report stressed the role of the federal and state governments to supplement the role of the capital markets in the event of a mega-event.

“Some mega-catastrophes are beyond the scope of both the private market and state catastrophe funds,” she said. “A federal facility aimed at these exposures should be created to offer high-level liquidity protection.”