WASHINGTON (Feb. 28, 2007) – Federal lawmakers should reject calls to revamp or further regulate the insurance industry and instead allow the system to function as it’s currently designed, according to the National Association of Mutual Insurance Companies (NAMIC). Insurers, regulators, and policymakers need to collaborate to find ways to reduce property risks to homeowners in states vulnerable to catastrophic storms. The comments came as members of a congressional panel were set to question insurers’ actions after the 2005 hurricane season.
Members of the House Financial Services Subcommittee on Oversight and Investigations set a hearing for today to look into concerns by some members of Congress about alleged improprieties by the insurance industry.
But the facts show insurers have reason to be proud.
Figures from the Insurance Information Institute show that insurance companies have paid an estimated $40.6 billion on 1.7 million claims for damage to homes, businesses, and vehicles in six states. As of the first anniversary of Katrina in August 2006, more than 95 percent of the 1.1 million homeowners' claims in Mississippi and Louisiana had been settled, with insurers paying more than $15.5 billion. Fewer than 2 percent of Katrina claims in Louisiana and Mississippi are being contested, either through mediation or litigation.
The vast majority of homeowners in Louisiana and Mississippi said they are satisfied with their insurance companies, according to a poll conducted by IPSOS Public Affairs. It found that, of the people who filed hurricane-related claims, 80 percent in Mississippi and 82 percent in Louisiana are satisfied with the way they were managed by their insurers. While satisfaction indicators are slightly higher among inland residents, most in the hardest-hit coastal areas also describe themselves as satisfied.
“While we’re sympathetic to the small percentage of Gulf Coast homeowners whose claims are still in dispute, we believe the current regulations and laws are sufficient to protect policyholders’ rights,” said Justin Roth, NAMIC’s senior director of federal affairs. “The system is doing its job.”
Roth urged lawmakers to resist proposals to impose punitive actions on the industry such as repealing the McCarran-Ferguson antitrust exemption that allows for a competitive insurance marketplace.
Predictions for increasing numbers of severe storms during the next 15 to 20 years point toward the need for all parties to work together on ways to shield homeowners from future losses. “We’d like to work with Chairman Mel Watt and other leaders of the Financial Services Committee to find common sense solutions to the growing problem of risk, including increased mitigation, stronger building codes, and improved mapping to ensure that policyholders are better protected in the future,” Roth said.
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