Andrew Valdivia, a Big “I” board director from California and the president of White and Company Insurance Inc. in Santa Monica, CA, represented the Subcommittee on Housing and Community Opportunity of the House Financial Services Committee.
Valdivia emphasized that natural disaster were not only a threat to coastal regions of the United States. Over the last few years independent agents and brokers have seen natural disasters diminish the insurance industry’s ability and desire to insure catastrophe. Not only is it hard to afford natural disaster coverage in some areas, it is becoming impossible.
“Any discussion concerning the solution to insuring against future natural disasters starts with admitting there is a problem,” Valdivia stated. “The Big “I” believes it is no longer enough to say that the private market can handle catastrophic risks, when coverage is not sufficiently available at affordable rates. In fact, it is our experience that private market coverage is scarcely available at any rate in some areas. This is fast becoming an availability problem rather than an affordability problem.”
The Big “I” recently joined the Natural Catastrophe Policyholders Coalition as an ex-officio member. The objective: to create a forum, sharing information and promoting policies to emphasize affordable businesses and home insurance for catastrophes.
The Insurance Information Institute released data that said tornadoes, earthquakes, mudslides, blizzards and other catastrophic events have accounted for over half of the U.S. natural disaster losses in the last 20 years. This is a clear indication that hurricanes, while a major concern, are not the only thing to worry about.
The third most costly natural disaster on record was the Northridge Earthquake in 1994, with $16.5 billion in losses. “Whether it’s tornadoes in the Midwest, earthquakes in California, or ice storms in the Northeast,” Valdivia went on emphasize. “It often takes only one or two events in a particular area for the homeowners’ insurance market to be dramatically affected”.
He expressed the association’s support for H.R. 330, the Homeowner’s Insurance Availability Act, sponsored by Rep. Ginny Brown-Waite (R-FL), along with its willingness to consider other approaches. The legislation would allow private insurers to purchase, at auction, reinsurance contracts directly from the U.S. Treasury to cover natural disasters that are equal to or greater to a one-in-100 year event. “Despite our longstanding position that the insurance market is best served by limited federal involvement, we believe that a federal solution to the issue of natural catastrophe insurance is necessary to help provide capacity and fill a void that the private market cannot and will not service,” Valdivia said. “We believe there is a very limited an appropriate role for the federal government, and we are open to supporting proposals that increase insurance availability and affordability in catastrophe-prone areas.”
The Big “I” is the nation’s largest national association of independent insurance agents and brokers, representing over 300,000 agents, brokers and their employee throughout the U.S. They offer many types of insurance, including property insurance, casualty insurance, life insurance and much more.