California Catastrophe Coalition Formed as

December 13, 2005

James Lee Witt, former FEMA Director and co-chair of, and Admiral James Loy, former Deputy Secretary of the U.S. Department of Homeland Security, have announced the formation of the group’s California affiliate, and its California affiliate have been organized to support efforts to better prepare and protect Americans for the consequences of a catastrophic earthquake, storm or other event.

Witt also introduced Loy as the national co- chair of Witt and Loy were in San Francisco and Los Angeles, two California cities prone to disastrous earthquakes, to announce — a coalition working to improve financial recovery systems to provide recovery and rebuilding funds in case of a major catastrophe, support efforts to improve building codes, augment homeowner education programs and strengthen first responders by enhancing existing emergency response protocols.

“Our financial recovery mechanisms, which rely primarily on the private insurance market, federal assistance in the form of low-interest loans and a small handful of state catastrophe funds, need to be re-tooled so that they are capable of meeting the immeasurable costs of a true catastrophe,” Loy warned.

“ and its national counterpart will be working to help improve preparedness, mitigate potential damage and forge solutions that will help save lives and make sure that adequate financial resources are available to better recover from the destruction of earthquakes, hurricanes or other natural catastrophes,” Witt said.

In 1994, the Northridge earthquake in Southern California’s San Fernando Valley caused 60 deaths, 7,000 injuries and caused $43 billion in property damage with $16.6 billion in insured losses. The 1989 Bay Area quake killed 63 people, injured 3,800 and caused $8 billion in property damage.

Experts warn that a large earthquake on the Puente Hills fault under Los Angeles could kill 18,000 people and cause $250 billion in property damage. If the 1906 San Francisco Earthquake occurred today, it would cause economic damages of $400 billion, according to some estimates.

Currently, California homeowners rely on the California Earthquake Authority (CEA) to protect themselves from the financial consequences of an earthquake. Only one in six Californians though have an earthquake policy that the CEA would pay claims for. As large as the CEA is, it still would not be large enough for “The Big One” experts expect.

The announcement comes on the heels of a summit to develop a National Catastrophe Insurance Program, where several of the nation’s top insurance regulators called for a privately-funded national catastrophe insurance program with a financial backstop to provide additional protection to consumers.

The two-day summit, held outside of San Francisco, was co-hosted by California Insurance Commissioner John Garamendi; Commissioner of Florida’s Office of Insurance Regulation Kevin McCarty; New York State Superintendent of Insurance Howard Mills and Director of the Illinois Division of Insurance Michael T. McRaith. The National Association of Insurance Commissioners adopted a resolution at its recent meeting earlier in December supporting this concept.

The growing currently consists of first responders, emergency management professionals, building code experts and others.

The coalition will be working to:

* Raise awareness of present-day catastrophic risk exposures, and elevate the public policy debate over the abilities and needs of the public and private sectors to respond quickly and adequately to catastrophe.

* Strengthen consumer protection by creating a financial backstop with special “catastrophe funds” at the state and federal level. A portion of property insurance premiums that corresponds with the catastrophic risk to be covered would be deposited into the catastrophe funds, where they would grow tax-free. No tax dollars would be used to support the funds, and insurance companies could not use these funds for any purpose other than to pay claims from catastrophes that exceed a certain threshold.

* Strengthen prevention and mitigation programs through stronger building codes and better enforcement, and promote effective coordination amongst all first responders — all of which can save lives and better protect property.

* Better prepare America before catastrophe strikes and improve the process of relief, recovery and rebuilding by strengthening first responders and developing new processes to stage and deploy essential relief materials and to make sure there are adequate building materials, supplies and licensed contractors available in the aftermath of a catastrophe.

* Improve consumer education and consumer protections to make sure people are better prepared for catastrophes before they strike and to empower them to guard against scam artists who too often rush to the scene of disaster and take advantage of families at their deepest time of need.

* Create a rigorous process of continuous improvement by establishing a commission of local, state and federal officials along with the private sector to review and assess recovery efforts after every disaster to identify ways to continually improve our ability to recover from catastrophes.

* Assure the viability of the private market and its ability to provide coverage to families, businesses and communities.

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