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NAMIC Testifies Before House Subcommittee on Natural Catastrophes and the Housing Market

WASHINGTON (June 28, 2006)—Congress can play a constructive role in assisting the private market to ensure that the nation’s homeowners are prepared for the next major natural catastrophe said a National Association of Mutual Insurance Companies (NAMIC) witness in testimony before a House Financial Services Subcommittee here today.

Tim Russell, president of Baldwin Mutual Insurance Company and Mayor of Foley, Alabama testified before Subcommittee on Housing and Community Opportunity hearings on “America’s Housing Market: Prepared for the Next Natural Catastrophe?”

Russell discussed his unique perspective on the devastation caused by natural disasters such as Hurricanes Katrina and Ivan, which are the worst natural disasters in Alabama history, and the challenges that face insurers and government policymakers in preparing for and managing large-scale natural disasters.

“I wish I could sit here before this Committee and say that the worst is behind us,” Russell said. “However, according to hurricane forecasters, the increases we have seen in hurricane frequency and severity are expected to continue for at least another decade.”

“NAMIC is pleased that the members of this Committee are making a serious effort to understand the nature of catastrophic risk, and the role that insurance can and should play to better prepare for and manage future large-scale natural disasters,” said Russell.

The havoc wreaked by the 2005 Gulf Coast hurricanes has raised important questions about how Americans should prepare for and respond to natural disasters in the future. The likelihood of more frequent and severe natural disasters in the near term, combined with the continuing population growth and development in areas vulnerable to natural disasters, pose significant challenges for government policymakers, insurers, realtors, home builders, mortgage lenders and property owners.

Russell cited a special task force formed by NAMIC in December 2005, which identified and analyzed the critical issues that NAMIC believes policymakers should consider as they move forward. After months of deliberations, the task force formulated four overarching principles that will serve to guide NAMIC members and staff as the natural disaster debate evolves.

The principles are:

  • Market freedom and competitive pricing will lead to innovation in developing solutions to problems relating to disaster insurance and mitigation.
  • Competitive pricing and risk-based underwriting are essential to developing and maintaining a viable disaster insurance market.
  • Mitigation must be an indispensable aspect of any disaster risk management and insurance initiatives.
  • The National Flood Insurance Program (NFIP) should be maintained, but must be reformed.

Russell ended his testimony by stating, “NAMIC stands ready to lend its assistance to ensure that the nation’s homeowners are prepared for the next major catastrophe.”

Russell’s testimony can be accessed at NAMIC Online.

For further information, contact
Georgiann Howell
(202) 628-1558 Tel
(202) 628-1601 Fax

Justin Roth
(202) 628-1558 Tel
(202) 628-1601 Fax

Posted: Wednesday, June 28, 2006 12:00:00 AM. Modified: Friday, September 22, 2006 10:24:05 AM.

317.875.5250 - Indianapolis  |  202.628.1558 - Washington, D.C.

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