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NCOIL Committee Discusses Cat Financing Proposal

On November 19, the National Conference of Insurance Legislators' (NCOIL) Natural Disaster Subcommittee considered a proposal regarding public-private catastrophe financing, sponsored by Rep. George Keiser...
November 24, 2009

On November 19, the National Conference of Insurance Legislators' (NCOIL) Natural Disaster Subcommittee considered a proposal regarding public-private catastrophe financing, sponsored by Rep. George Keiser (ND).  The proposal - which builds on long-standing NCOIL efforts to enact comprehensive catastrophe reform - attempts to establish a framework in which a state develops a long-term financing strategy based on an optional state catastrophe pool and on adherence to NCOIL-endorsed statewide building codes and land-use strategies. 

The proposed system, among other things, would offer insurer premium tax credits to encourage participation in the pool and would tie participation to an insurer's market share. PIA National's Natural Catastrophe Working Group has been following this issue at NCOIL for several years.  We provided written comments to the Subcommittee emphasizing the need for the insurance industry to be part of a comprehensive plan to prepare for natural catastrophes.  The legislators and industry representatives agreed that any plan must be actuarially sound and not interfere with the private market.  These are two fundamental principles of PIA.  There was also widespread agreement that assistance for those who may not be able to afford risk-based premiums should be a separate public policy discussion.  The legislators said that they will continue this dialogue over the next few meetings. 

During the State-Federal Relations Committee meeting, chaired by Rep. Greg Wren (AL), PIA National Assistant Vice President of Regulatory Affairs David Eppstein provided the legislators with an update on NARAB II, stating our support for the legislation because it preserves state regulators' authority and would provide relief to many of our members. Eppstein went on to say that PIA's preferred method of achieving national producer licensing reciprocity is for the states to achieve this goal without the need for federal legislation by adopting the Producer Licensing Model Act (PLMA) and utilizing the National Insurance Producer Registry (NIPR).