National catastrophe reinurance facility called for

The U.S. Department of the Treasury was recently called upon to develop a national catastrophe reinsurance facility. Florida congresswoman Ginny Brown-Waite, R-Fla., is trying to gain support for H.R. 846, the Homeowners’ Insurance Availability Act of 2005. The proposal will establish a natural disaster reinsurance program to, via auction at actuarial rates, cover carriers and other reinsurers who would than have the option of breaking up pieces of coverage and reselling them to smaller companies. “Under the bill’s provisions, the United States would be broken up into six regions based on their relative risk of such catastrophic events as earthquakes, tsunamis, hurricanes or fire following earthquakes and would give the Treasury Department latitude to establish minimum appropriate premiums, deductibles and retention levels,” according to A.M. Best. “The secretary of the treasury would establish a five-member National Commission on Catastrophe Risks and Insurance Loss Costs, charged with advising the secretary on estimated loss costs.” Brown-Waite itroduced the bill, which has 18 bipartisan cosponsors, in February but it currently has not garnered significant support from the House leadership. “As we all remember, Florida in 2004 saw the effects of four major hurricanes, one after the other, crossing her shores,” Brown-Waite’s statement says. “Today all of America is seeing the devastation of hurricane Katrina. It is estimated that total insurance costs throughout the Gulf region may rise to nearly $26 billion, making it one of the most expensive natural disasters in our nation’s history…Hurricane Katrina has unfortunately shown us that passage of my legislation is needed more than ever. We cannot afford to wait for the next storm to reach our shores.” Reinsurance would cover only disasters considered “100 year” events, Brown-Waite’s office reports, and the overall costs of U.S. natural hazards averaged $54 billion for the past five years, or roughly $1 billion each week.