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2007 Hurricane Season Should Prompt Integrated Approach to Coastal Issues, NAMIC Suggests

WASHINGTON (May 25, 2007) - With the start of the 2007 hurricane season just days away, the National Association of Mutual Insurance Companies (NAMIC) urges lawmakers, public policymakers, insurers, and consumers to collaborate on steps to minimize human suffering and property damage from future storms while promoting and preserving a strong private insurance market.

"The devastation of the 2004 and 2005 storm seasons should serve as a catalyst to work toward prevention, loss reduction, and efforts to enact good public policy," said Charles M. Chamness, NAMIC's president and CEO. "With meteorological experts predicting an increase in the number and severity of storms along the coastal U.S. in the next decade, it's incumbent upon us as a nation to work together to avoid devastation where possible."

While there have been some worthwhile discussions in Congress and several state legislatures on ways to address weather-related issues in coastal areas, some lawmakers have focused on legislation aimed squarely at the insurance industry and the way it's regulated. "It's a shortsighted and counterproductive tack," Chamness said. "Instead, members of Congress, state legislatures, and regulators should be working in conjunction with insurers and others to develop strategies to reduce hardships posed by severe storms."

NAMIC outlined the following steps Congress and the states could take to better prepare coastal regions for severe weather:

• Create incentives to encourage states to adopt and enforce strong, statewide building codes, which along with responsible land-use planning have been shown to greatly reduce the level of property damage and human suffering from disasters. In the aftermath of Hurricane Katrina, Louisiana lawmakers enacted a statewide building code. Mississippi lawmakers followed suit in 2006 with a building code covering its six most southerly counties. In both instances, implementation of the codes was delayed, due in part to a lack of funding. Thanks to the persistence of Gov. Haley Barbour in Mississippi and Gov. Kathleen Babineaux Blanco in Louisiana, both states eventually obtained federal funding to help counties hire and train building inspectors.
• Design government initiatives to create mitigation grant programs to allow homeowners in high-risk areas to invest in risk-mitigation measures.
• Amend the federal tax code to allow insurers to set aside a portion of premium income in tax-exempt policyholder disaster protection funds. South Carolina Gov. Mark Sanford recently proposed a similar amendment to his state's tax code.
• Allow homeowners to create tax-free catastrophic savings accounts similar to health savings accounts which could be used to pay hurricane deductibles and costs associated with retrofitting properties. This idea has been incorporated into the South Carolina legislation as well.
• Adequately fund and reform the National Flood Insurance Program and end the taxpayer subsidies for commercial properties and second homes. Also, enact stiffer penalties on financial institutions that fail to enforce continued flood insurance coverage for mortgages on properties in flood-prone areas or allow the policies to lapse.
• Update flood maps nationwide to more accurately identify those properties in flood zones. Ensure that people who live in flood zones secure insurance through the NFIP.
• Allow insurers to set actuarially sound rates to ensure premiums are adequate to pay claims when severe storms occur.

"While we can't control the weather, we can make sure that people and property are properly protected - both physically and financially," Chamness said. "We can take steps now to avoid tragedy from future storms and to make sure we're prepared."

For comprehensive hurricane information, visit NAMIC's Hurricane Resource Center.

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For further information, contact
Nancy Grover
(202) 628-1558 Tel
(202) 628-1601 Fax
ngrover@namic.org