Dec. 3 2007

Coastal Commission's Report Supports the Establishment of a Massachusetts Catastrophe Fund
Savings to Massachusetts Residents to exceed $158 Million Annually

Today the Massachusetts Legislature's Special Commission on Homeowners Insurance endorsed the creation of a national backstop for state catastrophe funds. Most importantly, the Commission agreed to support the establishment of a Massachusetts catastrophe fund to reduce insurance costs and pass savings on to consumers. These recommendations are a major step forward in providing adequate and affordable homeowners insurance to Bay State residents who are vulnerable to massive hurricanes or other natural catastrophes

"Massachusetts residents will benefit tremendously from the integrated approach endorsed by the special commission. The creation of an insurer funded state catastrophe fund coupled with the backing of a national program will reduce the cost of homeowners insurance in the state, will minimize damage and probably save lives," said Senator Robert O'Leary, (D – Barnstable). O'Leary served on the special commission and who has sponsored legislation to create the state catastrophic fund.

According to an analysis conducted by Milliman, Inc., an independent international actuarial firm, Massachusetts homeowners could save a total of $158 million, per year, through the creation of the state and national catastrophe funds similar to that which was endorsed by the special commission.

"Senator O'Leary's bill is essential to homeowners in Massachusetts where the shortage of affordable insurance has become a critical and pressing issue especially for young families and for senior citizens," said James Lee Witt, former director of the Federal Emergency Management Agency (FEMA) and co-chair of ProtectingAmerica.org.

"The safety and security of Massachusetts families depends on having adequate resources to repair, rebuild and recover in the event of massive destruction. The Legislature would be well-served by heeding the advice of the special commission and creating this privately funded program as quickly as possible," he added.

"Among the appeals of privately funded catastrophe funds is that while they require insurers to annually make tax-free deposits as backstops for the day when a massive hurricane hit Massachusetts, at the same time, a portion of the earnings on the fund will be dedicated to providing a steady and reliable stream of funding for first responders, rescue teams and for improved mitigation and homeowner preparedness," said Admiral James M. Loy, former deputy secretary of the US Department of Homeland Security, and a co-chair of ProtectingAmerica.org.

Along with embracing the creation of a Massachusetts catastrophe fund, the special commission also endorsed the federal "Homeowners' Defense Act of 2007," legislation that would create a national backstop that would be available to states that establish their own catastrophe funds. That legislation, HR 3355, was championed by Massachusetts Rep. Barney Frank (D-MA-4), passed the House of Representatives by a vote of 258-135 earlier on November 8th and is now pending before the US Senate. The bill was supported by all 10 members of the Massachusetts congressional delegation.

ProtectingAmerica.org is a non-profit organization consisting of emergency management officials, first responders, disaster relief experts, insurers and others. Its members include the American Red Cross, more than 300 other organizations and businesses and 15,000 individual members from across the nation. More than 1,000 Massachusetts residents joined ProtectingAmerica.org during a membership drive in October.

At the core of ProtectingAmerica.org's mission is the establishment of a comprehensive, integrated national catastrophe management solution that will better prepare and protect American families, communities, consumers and the American economy from catastrophe. ProtectingAmerica.org is working to increase public awareness and enhance consumer education; advocate for better coordination with local, state and federal mitigation and recovery efforts, and strengthen emergency response and financial mechanisms to rebuild after a major catastrophe.