Illinois’ freshman regulator Michael McRaith may be the new kid on the block, but he isn’t shy about sharing his views on national and regional specific issues. In a recent interview with Insurance Journal’s Susan McKenna, he described the fallout from last year’s major catastrophes and the impact on the Midwest.
“Whether the taxpayers live in Chicago, Illinois or Pierre, South Dakota–we are all going to be paying for many years for the rebuilding of the Gulf region…and unfortunately given the lack of any comprehensive national approach to this problem, we all could be paying the bill for this year’s hurricanes too,” McRaith said.
The National Association of Insurance Commissioners passed a resolution during their summer meeting to establish a commission to examine the idea of a national catastrophe plan, including the creation of regional catastrophe funds. McRaith has been a key player in pushing for a solution through the NAIC, however, the proposal is still in its infancy.
“Nationally, at the NAIC level in terms of reforms, we worked to develop a framework for a national approach to natural catastrophes that would call for state or regional catastrophe funds and then add a third layer of privately funded monies, but managed at the federal level. Whether that framework itself is the framework that would ultimately solve the problem is open to question,” McRaith said.
In addition to the impact from Hurricane Katrina, McRaith said that in the Midwest thousands of policyholders living on or near a major fault line have been affected by the lack of availability to purchase earthquake insurance.
“Another major ramification of the catastrophes in 2005 is that one of our Illinois domestic companies, Allstate, has embarked on a plan to more conservatively underwrite in catastrophe prone areas and has announced publicly that it will not renew earthquake coverage anywhere in the country,” McRaith said. “That decision has had a direct impact on 28 to 30,000 Illinois policyholders as well as thousands of policyholders in Tennessee, Kentucky, Arkansas, and Missouri–all states with residents living along the New Madrid fault.”
For the complete interview with McRaith, including his perspective on broker compensation disclosures and more, go to the Insurance Journal, Midwest, June 19, 2006.
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