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Jessica
Hanson
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Phone:
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202-286-5446
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Jessica.Hanson@pciaa.net
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PCI Testimony Offers Natural Catastrophe Solutions
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WASHINGTON—The Property Casualty Insurers Association of
America (PCI) today submitted testimony to the U.S. House of Representatives
voicing concerns over a bill that could displace the private market for natural
catastrophe insurance and create added costs for taxpayers across America.
The House Financial Services Subcommittee on Housing and
Community Opportunity and Subcommittee on Capital Markets, Insurance, and
Government Sponsored Enterprises heard testimony on H.R. 2555, the Homeowners
Insurance Defense Act of 2009, sponsored by Representative Ron Klein (D-Fla.).
“PCI shares the concerns expressed by taxpayer,
environmental, and other groups,” said David A. Sampson, PCI’s president and
CEO. “This bill would broadly shift taxpayer resources from the entire country
to benefit specific catastrophe-prone areas through the proposed federally
subsidized bond guarantees and the reinsurance catastrophe fund provisions.
That approach is costly to all taxpayers and threatens to displace the private
market. By providing government subsidies to artificially suppress costs for
coastal properties, the bill would encourage development in high-risk and
environmentally sensitive areas.”
In 2009, PCI unveiled its Natural Catastrophe Guidebook
that discusses long-term solutions to help reduce losses, ensure a competitive
marketplace and limit additional federal exposure to disasters. The Guidebook
identifies mitigation as one of the most effective solutions for reducing loss
costs following a natural catastrophe.
“We cannot control the frequency or severity of a
natural disaster, but we can control how our homes are built,” said Sampson.
“The strengthening of homes and businesses through mitigation is one of the
most effective ways to bring greater stability to and reduce the costs in the
property insurance marketplace.”
A landmark Federal Emergency Management Agency (FEMA)
study demonstrated that for every $1 spent on mitigation, $4 or more is saved
in clean up, recovery and rebuilding costs. The results of the recent
earthquake in Chile, which had strong and well-enforced building codes in place,
compared to greater devastation in Haiti, which did not, demonstrates that
mitigation saves lives. Approximately 700 deaths occurred in Chile as compared
to nearly 220,000 in Haiti, although the Chilean earthquake was more than 500
times stronger.
“We look forward to working with lawmakers to make
buildings stronger, families safer, and the property insurance market more
stable over the long-term,” said Sampson.
PCI’s full testimony and the Natural Catastrophe
Guidebook can be found at: www.pciaa.net.
PCI is composed of more than 1,000 member companies,
representing the broadest cross-section of insurers of any national trade
association. PCI members write over $180 billion in annual premium, 37.4
percent of the nation’s property casualty insurance. Member companies write 44
percent of the U.S. automobile insurance market, 30.7 percent of the homeowners
market, 35.1 percent of the commercial property and liability market, and 41.7
percent of the private workers compensation market.
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