Availability, Affordability and a Common Definition of ‘Natural Catastrophe’
Top RIMS’ List for Enhancing CAT Market
NEW YORK (June 27, 2013) – An official comment letter submitted by RIMS, the risk management society™, to and at the request of the U.S. Department of the Treasury provided the Society’s perspective on the current state of the market for natural catastrophe insurance in the United States. Composed, in part, from feedback from RIMS members, the letter addressed:
Ø The Volatility of the Marketplace
Ø Availability and Pricing
Ø Consensus Definition of “Natural Catastrophe”
Ø Land Use Policies & Building Codes
Ø Current Financial Condition of State Catastrophe Fund
Ø Current Approaches to Insurance Natural Catastrophe Risk in the U.S.
In the letter RIMS President John Phelps states, “For many of our members natural catastrophe insurance is a major component of their overall risk management portfolio. This holds especially true for those members located in high risk areas such as Florida, California, or those within tornado prone areas; however, as Hurricane Sandy in the northeast has shown, natural catastrophes can hit any region or any business…Readily available natural catastrophe coverage at affordable rates is critical to the financial stability of an organization, but also to the economy as a whole.”
The letter also suggests that a universally accepted definition of ‘’Natural Catastrophe” would be advantageous for consumers purchasing natural catastrophe coverage, as well as insurers.
Mr. Phelps continued, “Doing away with carve outs or exclusions for things such as "storm surge" would give the consumer a higher sense of security that they are fully covered regardless of whether flood damage is caused by wind or ‘rising flood.’ In turn, insurers may see a higher take-up rate from consumers who currently non-insure due to poor perception of the insurance industry or confusion over exactly what is, and is not, covered.”
RIMS letter was delivered to The Honorable Michael McRaith, director of the Federal Insurance Office (FIO). The solicitation for comment by Treasury is part of a study and report to be delivered to Congress on Natural Catastrophes and Insurance. The full comment letter can be viewed at: http://go.rims.org/IINLR04UPL.
For more information about RIMS External Affairs initiatives or about the RIMS International Committee, visit www.RIMS.org.
As the preeminent organization dedicated to advancing the practice of risk management, RIMS (the Risk and Insurance Management Society, Inc.) is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS brings networking, professional development and education opportunities to its membership of more than 11,000 risk management professionals who are located in more than 60 countries. For more information on RIMS, visit www.RIMS.org.
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