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The New Madrid fault line, the Atlantic hurricane season and tornado alley are just a few factors that weigh heavily on the minds – and regulatory decisions – of insurance regulators in the southeastern United States.
If insurance commissioners in states with coastal exposure have anything to say about it, the entire nation – even landlocked states – would share the skyrocketing costs of insuring against tropical wind and storm damage.
For southeastern commissioners, many of whom deal with exposed coastal areas, a national disaster mitigation program is on the front burner.
The top regulatory officials of six southeastern states participating in a round table at the recent Southeast Regulators Association (SERA) annual conference in Charleston, S.C. were clearly centered on the need for a national catastrophe insurance plan – a sharing of responsibility by all states, not only those directly affected by catastrophic natural occurrences.
More than a year after Hurricane Katrina wreaked havoc on his sate, battle weary Mississippi Insurance Commissioner George Dale maintains his resolve and his sense of humor throughout a very trying time. Mississippi was to host the 2005 SERA conference in Biloxi – on Aug. 29.
“I’d like to welcome you all to Biloxi,” Dale said to the Charleston audience as he was introduced by panel moderator Michael Maloney. “I hope you’ll enjoy your stay at our hotel’s new location across highway 90.”
Dale said 400,000 claims were turned in after Hurricane Katrina hit, and $10.8 billion has been paid out. He said the entire state was affected, noting that Hinds County alone, some 150 miles inland, incurred $127 million in damages.
“We never had anything like this lady,” Dale said. “The populations of our coastal counties will be altered for years to come. We are dealing with municipal governments that have no money – and no tax base. Many of the churches are relocating across the Interstate (I-10).”
In what may have been a prototype of a fledgling approach to regional catastrophe mitigation, Dale said Florida Insurance Commissioner Kevin McCarty phoned him shortly after the hurricane hit and offered help.
“Kevin said he was coming up and said he would bring some senior staff members with him,” Dale said.
Eight people from the Florida Department of Insurance arrived in Jackson to offer support and expertise. Dale said the Mississippi Consumer Assistance Division was open from 7 a.m.-7 p.m. six days a week.
“Emotion ran high – people lost everything; they didn’t know where to turn,” Dale said. “We received call after call after call – we were not dealing with rational people. We became counselors, advisors and ministers.”
There was a consensus among the attending commissioners from Alabama, Arkansas, Virginia, Georgia, Mississippi and South Carolina in favor of a catastrophe mitigation plan on a national scale. Each state had its specific reasons.
Arkansas Insurance Commissioner Julie Benafield Bowman expressed concern for her state’s proximity to the New Madrid Fault Line, saying that an imminent major quake would decimate the eastern half of her state.
“I am convinced that we have a need for earthquake insurance,” Bowman said. “I believe that an earthquake in this region could be more destructive than an earthquake of equal magnitude on the West Coast. The West Coast has the Pacific Ocean to absorb some of the impact.”
While in agreement that some type of regional or national regulated catastrophic fund should be established to “spread the risk,” Bowman said she is also in favor of establishing statutory authority for insurance companies to “have additional earthquake coverage in effect.”