Insurers Push Action To Prepare For Hurricane Risk

NU Online News Service, July 20, 2:05 p.m. EDT

As peak hurricane season approaches, both insurers and government officials are outlining their strategies and plans to protect against what is expected to be an increasing number of catastrophic storms.

Many weather forecasters agree that due to warming ocean temperatures, the intensity and frequency of hurricanes is going to increase in the coming years.

With this in mind, the Travelers Institute, created by the St. Paul, Minn.-based The Travelers Companies Inc. to address public policy in relation to insurance, has released the "Travelers Coastal Wind Zone Plan," designed to tackle the problem of affordable and available hurricane insurance along the Atlantic and Gulf of Mexico coasts.

The company said after gathering input from government and insurance officials, Travelers has proposed the creation of a free-market-based hurricane insurance system without federal subsidies for insurers.

Under the company's proposal, insurers would set rates using standards and risk models approved by an independent federal commission.

The Travelers Institute said "the comprehensive plan would provide the needed framework to assist America's coastal families in preparing to rebuild, repair and recover from the aftermath of named storm catastrophes."

The Des Plaines, Ill.-based Property Casualty Insurers Association of America also took steps toward addressing the importance of protection and preparation for catastrophic storms, by urging U.S. governors at the recent annual meeting of the National Governors Association to take action.

PCI recommended that states reduce exposure to catastrophe loss through stronger building codes and by improving outdated and inconsistent building codes and the way in which they are enforced.

They have also suggested that the National Flood Insurance Program be reintroduced to better prepare coastal regions for storm damage.

In a statement, David Sampson, president and chief executive officer of PCI, stressed the need for collaboration between insurers and government, saying, "PCI believes there is a role, properly structured, for government and insurers to work together to protect consumers."

PCI promoted the idea of government officials reducing the size of coastal residual insurance markets in order to spread risk into the private market to better protect homeowners.

PCI, along with American Insurance Association, the Association of Bermuda Insurers and Reinsurers, the Reinsurance Association of America, and the National Association of Professional Insurance Agents, applauded Rep. Bennie Thompson, D-Miss., for his three proposed pieces of legislation designed to protect homes against hurricane damage.

The bills (HR 3026, 3027, 3028) would provide states with grants to help encourage residents to better protect their houses against storms, along with providing incentives for retrofitting low-income public housing. The proposals would also help fund programs to better equip first responders to help those with unique needs, such as children and the elderly.