| February 15, 2008 National Catastrophe Experts Testify before Joint Committee
Call for creation of Mass. catastrophe fund as reflected in Senate Bill 624 Boston: The nation’s leading coalition of catastrophe experts, first responders, businesses, insurers and others, today testified before the Joint Committee on Financial Services and voiced its support for a state catastrophe fund in Massachusetts. The fund would establish a backstop for homeowners hurt by catastrophes above their level of normal homeowners coverage. Such a measure, coupled with legislation that recently passed the US House of Representatives, could save homeowners in Massachusetts more than $220 million each year on their insurance premiums, according to a study by an independent actuary. 'ProtectingAmerica.org believes that legislators can help provide meaningful relief to consumers,' said Edward T. Collins, National Director of ProtectingAmerica.org. 'Senate Bill 624 is a key part of the solution. A privately financed state catastrophe fund would provide more protection at lower cost to consumers and provide more stability and predictability to the market.' added Collins. 'Our solution would rely upon privately financed state catastrophe funds, established by the legislatures in catastrophe-prone states, to provide more protection at lower cost to consumers.' 'A Massachusetts state catastrophe fund would minimize the current taxpayer subsidies which are at the heart of our existing after-the-fact response system,' said Collins. The Massachusetts Legislature’s Special Commission on Homeowners Insurance endorsed the creation of a national backstop for state catastrophe funds in its final report of November 30, 2007. 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,' said Collins, 'and the members of the Special Commission are to be commended for their work on behalf of Massachusetts consumers.' The establishment of a Massachusetts catastrophe fund has been promoted by State Senator Robert O’Leary who served on the Special Commission and who has sponsored legislation to create the Massachusetts state catastrophe fund. '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 potentially reduce the cost of homeowners insurance throughout the state,' said Senator Robert O’Leary, (D – Barnstable). 'An additional benefit,' stated Sen. O’Leary, 'will be the investment income from the fund which will be used to train first responders and to fund prevention and mitigation programs.' According to an analysis conducted by Milliman, Inc., an independent international actuarial firm, Massachusetts homeowners could save a total of $220 million per year (or approximately $112 per household each year), through the creation of the state and national catastrophe funds similar to that which was endorsed by the special commission. · 57% of Americans live in areas prone to catastrophes like major hurricanes, earthquakes or other natural disasters. While opponents of a comprehensive program to assure the safety of these American families glibly say that 'people shouldn’t move to those areas,' the fact is that better than half of the American public already lives in catastrophe-prone areas like New York, Miami, Galveston, Los Angeles and St. Louis.· Seven of the 10 most costly hurricanes in US history have occurred in the last 5 years.Every national and international forecasting agency has predicted that the worst of these storms is yet to come. Even Max Mayfield, the recently retired director of the National Hurricane Center has said that he wished that Katrina was the worst storm he would ever see. 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. |
