Florida Senator Blames RAA for Failure of State Cat Fund Resolution
Jul 11, 2008
A.M. Best--Jul 10, 2008
NEW YORK, (A. M. Best via COMTEX)
In his last meeting with the National Conference of Insurance Legislators, Florida State Sen. Steven Geller failed to get a catastrophe fund and federal disaster assistance resolution passed ? a resolution in which the senator said he invested 10 years. And he blames the Reinsurance Association of America for the resolution’s failure.
?I?m extremely angry and upset about it,? said Geller just after the Subcommittee on Natural Disaster Insurance Legislation rejected his latest try at establishing a national system of disaster preparedness. Geller co-chairs the subcommittee.
The state catastrophe fund resolution states that after a natural disaster in which insured losses exceed a designated threshold, the federal government would provide states that chose to be in the fund the amount of money necessary to cover insured losses above the threshold.
Geller, a former NCOIL president, sponsored the resolution, which endorsed a system in which states could establish their own cat funds and receive interest-free 20-year loans into the fund from the federal government in the event of a mega-disaster that exceeds direct written premiums. The plan would reaffirm NCOIL’s support for strong building codes and land-use policies and IRS allowance of tax-deferred catastrophic reserves (BestWire, Feb. 27, 2008).
Dennis Burke, the Reinsurance Association of America vice president, said the proposal was a ?thinly veiled request for the other states, through the federal government, to subsidize Florida?s failed system of state insurance and reinsurance.? Florida has "artificially suppressed rates and intentionally competes with the private market," he said, noting the RAA believes the private market can insure natural disaster risk without a federal backstop.
Geller said he believes the RAA "has such sway over this organization that Jesus Christ could come in and offer the resolution and not get it passed.? Geller, D-Cooper City, expressed disappointment in fellow committee members he considers friends.
Though Geller attempted to make the issue a national one by showing a 15-minute video of potential natural disasters that could happen, many of those against the resolution looked specifically at the senator?s home state ? the only one with a state cat fund, the RAA pointed out.
Though it was singled out by Geller as the association with the biggest influence, the RAA was just one to voice its opposition. After lengthy debate among the subcommittee members left the NCOIL summer meeting schedule in New York City crunched for time, the National Wildlife Federation, American Insurance Association and the Property Casualty Insurers Association of America briefly spoke against it. The National Association of Mutual Insurance Companies said its members were split.
The resolution included amendments that were to address recommendations made at NCOIL?s spring meeting. Geller said the resolution was deliberately ?silent on details? ? like the definition of the threshold ? to make it less controversial. Congress, he said, would have the final say.
Geller admitted the amendments were not what he wanted but ?something I would be happy to live with.? He made a personal plea for committee members to support the resolution as a ?going away present.? However, the resolution?s lack of detail appeared to turn off the half of the subcommittee.
?I would not want your last bill to be a lousy one,? said New York Assemblyman Ivan Lafayette, D-Queens, right before voting no. ?They can?t spell ?insurance? in Washington. I don?t know what will happen if we give them a resolution that doesn?t have a great deal more detail."
[To listen to interviews with Geller and Burke in their entirety, go to www.bestdayaudio.com]