July 2006 NEWSLETTER

Protecting America

PROTECTINGAMERICA.ORG E-NEWS

ProtectingAmerica.org Co-Chair Testifies in Washington, DC on the Need to Create a National Catastrophe Fund to Better Prepare and Protect America

Testifying at a hearing by the Housing and Community Opportunity Subcommittee of the U.S. House of Representatives Financial Services committee, co-chair of ProtectingAmerica.org Admiral James M. Loy (testifying at left) called for the creation of a national catastrophe preparedness program that would keep homeowners insurance available and affordable for consumers. The committee is considering solutions to improve the nation’s preparedness in the event of future natural catastrophes.

Admiral Loy’s testimony was part of an expert panel that included renowned hurricane forecaster Dr. William Gray of Colorado State University and Kevin McCarty, Florida Insurance Commissioner and Chairman of the National Association of Insurance Commissioners’ Catastrophe Insurance Working Group. Read more

Read Admiral Loy's full testimony

ProtectingAmerica.org Co-Chair James Lee Witt Visits New Jersey to Lend Support for Legislative Catastrophe Management Solution

James Lee Witt, co-chair of ProtectingAmerica.org, was in New Jersey to voice his support for A-3236, a measure sponsored by Assemblyman Mike Panter (D-Monmouth/Mercer) that would proactively prepare and protect residents in advance of the next catastrophic storm.

Assemblyman Mike Panter (left) greets ProtectingAmerica.org co-chair James Lee Witt (right). Assemblyman Panter is sponsoring legislation to proactively prepare and protect New Jersey residents in advance of catastrophe

Panter's bill, the New Jersey Consumer Catastrophe Preparedness and Protection Act, would establish the New Jersey Catastrophe Fund which would be financed by private insurance company premium revenue. The bill would also protect consumers against post-catastrophe price gouging and set aside catastrophe fund investment income for improved mitigation efforts and for emergency planning and response by counties and municipalities.

A.M. Best, of Oldwick, N.J., estimates recovery costs of more than $100 billion if a hurricane of similar or greater force to the Great Atlantic Hurricane of 1944 were to make landfall in New Jersey today. That hurricane hovered within 30 miles of New Jersey’s shoreline, resulting in 390 deaths and over $100 million in damages. $33 million of those damages occurred on the then sparsely-populated New Jersey shore.

ProtectingAmerica.org Co-Chairs Admiral James Loy and James Lee Witt in the Wall Street Journal

ProtectingAmerica.org co-chairs james Lee Witt and Admiral James Loy wrote a letter to the editor to the Wall Street Journal in response to an op-ed by Liberty Mutual CEO Edmund Kelly. Following is the letter, as it appeared in the Wall Street Journal.

In his May 31 editorial-page commentary 'When the Next Storm Strikes,' Edmund F. Kelly mischaracterized the goals and objectives of our organization, Protecting-America.org; our purpose is to better prepare and protect American families from the ravages of natural disasters. We are composed of first responders, building code officials, emergency managers, businesses, realtors, insurers and others who agree that prevention and mitigation efforts are critical to reducing the human and financial costs of catastrophe before it strikes. Our solution includes measures such as enforcement of stronger building codes, affordable retrofits for existing housing stock, re-examination of land use policies, strengthening of first responder programs, and educating the public to better protect themselves.
We also agree that state and national catastrophe funds are essential to keep high-quality homeowners insurance available and affordable before catastrophe strikes and to stand behind the private market in the event of a Katrina-like tragedy. Privately funded catastrophe funds would rely on actuarially sound payments that would be deposited into the fund and grow free of taxes, and the principal could only be used to pay claims in the aftermath of catastrophe.
A limited portion of the investment income of the fund could be used to improve public education, prevention and mitigation programs and help support first responder programs. The national catastrophe fund would stand behind state catastrophe funds. States that are prone to catastrophe would be encouraged, but not mandated, to establish such funds. The funds would provide more protection with more capacity at a lower cost to consumers and would be actuarially certified as adequate for the risk. Accordingly, the contention that a national catastrophe fund would lead to a subsidy of high-risk homeowners by taxpayers who live in locations that are not exposed to catastrophe is baseless. In fact, they would reverse the trend of increasing taxpayer subsidy and continued deficit spending when it comes to financing for catastrophe.

- ProtectingAmerica.org co-chairs James Lee Witt and Admiral James M. Loy

Momentum Building to Improve the Way America Prepares for Catastrophe

Illinois' Insurance Director Michael McRaith says that all Americans, regardless of where they live, will be footing the bill for past, present, and future natural catastrophes unless there is a comprehensive national approach in place. Read more
U.S. Senator Trent Lott believes the federal government needs to be a part of making insurance available and affordable for Americans who live with the threat of catastrophe. Lott has signed on to be a sponsor of a bill charged with creating a bipartisan commission on insurance reform. Read more
U.S. Senator Bill Nelson (D-Florida) also says the government must get involved and help a troubled insurance industry keep coverage available in disaster-prone states. Read more

Catastrophe Losses Will Double About Every 10 Years, Says Leading Catastrophe Modeling Expert at PCS Conference

With last year’s record catastrophe losses of $58 billion still fresh in listeners’ minds, a leading catastrophe modeling executive warned property/casualty claims professionals they face 'a 5 percent chance we’ll have losses greater than Hurricane Katrina in 2006.'

In her keynote remarks at the 2006 Property Claim Services (PCS) Catastrophe Conference, Karen Clark, president and CEO of AIR Worldwide Corp., a leading catastrophe modeling company, also predicted catastrophe losses 'will double about every 10 years due to increases in the numbers and values of properties at risk.' Read more

National Association of Insurance Commissioners (NAIC) Adopt Resolution Proposing Federal Natural Catastrophe Preparedness Commission

In an effort to shore up an insurance industry shaken by several seasons of destructive hurricanes and such mega-catastrophes as Katrina, the NAIC Executive Committee has adopted a resolution calling on Congress to create a Natural Catastrophe Commission during its summer 2006 meeting in Washington, D.C. The commission is charged with investigating ways to help states, insurers and homeowners to better deal with disasters

Consistent with the mission of ProtectingAmerica.org, the resolution encourages the creation of a national commission that addresses, among other items, the establishment of a privately funded national catastrophe fund, urges the strengthening and enforcement of building codes, and provides post-event community support. Read more

For more information on the NAIC’s resolution, read USA Today’s ' Insurance Regulators Get Busy.'

Large-Scale Southern California Earthquake Could Come at Any Moment

Study Says Southern San Andreas Fault Primed For Next Big Earthquake

We may be exclusively in the midst of the Atlantic hurricane season, but we are always in earthquake season. There is no better example of this than the latest study from Scripps Institute of Oceanography in Southern California. A researcher there is saying that the southern section of the San Andreas Fault, which snakes below the highly-populated greater Los Angeles area, is overdue for the 'big one' and that the fault could rupture at any moment.