INSURERS CHEER SENATE BILL TO OFFER CATASTROPHE REINSURANCE PROTECTION

INSURERS CHEER SENATE BILL TO OFFER CATASTROPHE REINSURANCE PROTECTION

A federal disaster bill that provides insurance companies with catastrophe reinsurance protection was introduced in the Senate.

The measure, S. 1043, sponsored by Sen. Ted Stevens, R-Alaska, and Sen. Daniel Inouye, D-Hawaii, is the companion bill to the Natural Disaster Protection Partnership Act, H.R. 1856, introduced in the House a month ago, Jack Weber, executive director of the Natural Disaster Coalition in Washington, said Tuesday.The coalition, representing insurance companies, emergency management officials and firefighter groups, supports the measure, which was introduced Monday.

Natural disaster legislation ranks with Superfund reform as a priority for the property/casualty insurance industry. Insurers have been battered by huge catastrophe losses since 1989, as well as rising prices for reinsurance coverage, when they can find it, to cover potential claims to be paid in catastrophe-prone areas such as Florida and California.

However, neither bill is likely to be discussed soon. Staffers at the Senate Commerce Committee and the House Transportation and Infrastructure Committees, where the bills were sent, said hearings were unlikely to be scheduled until September, after the summer recess.

The House bill, sponsored by Rep. Bill Emerson, R-Mo., Rep. Norman Mineta, D-Calif., and 148 co-sponsors would create a privately funded Natural Disaster Insurance Corp., which would provide reinsurance to insurers of businesses and multifamily residential structures, and catastrophic-insurance coverage to homeowners.

Under the bill, NDIC insurance and reinsurance rates would be set by an independent group of federally appointed private actuaries. The bill would also encourage states to adopt and improve enforcement of model building codes and encourage privately funded grants to help state and local governments prepare and implement loss-reduction plans.

Mr. Weber said the bills enjoy broad bipartisan support.

Not everyone is happy with the bill. The National Taxpayers Union in Washington said last month the federal disaster bill would leave taxpayers liable for millions to bail out insurers if a catastrophe such as Hurricane Andrew creates insolvencies. The hurricane swept through southern Florida and Louisiana in 1992, creating about $17 billion in insured damage.

Mr. Weber said he was hopeful the bills would be marked up and approved by the end of this year.