The National Association of Insurance Commissions is aiming by 2015 to require insurance companies to complete a regular comprehenive review of the effects of natural disasters on their current and future solvency positions for state regulators. In order to help those public policy-makers and insurance consumers in the Bay State, the Division of Insurance held a free seminar last week entitled “Managing the Costs of Natural Disasters in Massachusetts.” The aim is to help all those affected “…to more accurately recognize the impact of natural disasters on insurance company solvency, and the potential effect on property insurance pricing.”
In particular, the new NAIC initiative will look to address an insurance company’s ability to pay its claims in the event of a natural disaster such as a hurricane or an earthquake. At the end of the review, regulators will then assess whether an insurance company’s capital strength should include a specific charge for exposure to a hurricane. Right now, the catastrophe models currently employed by many insurers can be used to estimate how much capital is need to cover a hurricane loss. The NAIC and the Division of Insurance believe changing the way insurers manage these costs will create a higher standard of accountability for insurers and their management team whose results in large part rely upon the property insurance prices determined by those same catastrophe models.
The event, moderated by Deputy Commissioner Karen L. Bromquist, attracted more than 50 individuals and featured the following speakers who spoke about both Loss Prevent and Loss Recovery:
- Debra Ballen, General Counsel, Insurance Institute for Business & Home Safety;
- Joseph B. Sieverling, Senior Vice President & Director Financial Services, Reinsurance Assn. of America;
- Parr Schoolman, Global Head of Risk & Capital Strategy, Aon Benfield Analytics;
- John P. Tierney, Senior Vice President & Chief Actuary, Quincy Mutual Fire Insurance Company;
- Heather L. Chalfant, Reinsurance Manager, State Farm Mutual Insurance Company.
The Division of Insurance said that it will be making the slides from these presentations available to those who did not attend. As soon as Agency Checklists gets word that they are available, we will provide them to you.