Yesterday, I wrote about Hillary attempting to earn brownie points among Floridians by sponsoring the Senate version of the Homeowners Defense Act.
Well, I notice that the House has passed its version. From Business Insurance:
The House of Representatives has approved a bill that create a federal backstop for state catastrophe insurance pools.
The Homeowners’ Defense Act of 2007, which passed on a 258-to-155 vote Thursday, would create a National Catastrophe Risk Consortium. The entity would, among other things, issue securities and other financial instruments linked to the catastrophe risk in the capital markets.
As one might expect, there’s some criticism blossoming from within the industry. Still quoting BI:
“This legislation falls short in trying to address the problems in coastal insurance markets,” said Marc Racicot, president of the American Insurance Assn. in Washington in a statement issued after the vote. “It will not generate new private-sector insurance, reinsurance or capital market capacity, and is likely to encourage states to create thinly financed, state-run reinsurance facilities that will displace the private market and require a federal government bailout in the event of a catastrophe.”
“Government is not the right solution,” said Frank Nutter, president of the Washington-based Reinsurance Assn. of America, in a statement issued Friday. “The capital markets and the insurance/reinsurance industry have demonstrated their ability to meet natural catastrophe risk transfer needs of insurers and consumers when market dynamics are allowed to work. This legislation will do nothing more than disrupt the marketplace.”
Maybe it’s just a bit of pro-consumerism that’s briefly blossomed in me after my, um, chat with the health insurance folks earlier today, but there are times that I think industry reps are critical of consumer advocates and anti-insurance legislators out of pure habit more than anything else.
True, I have faith in the private sector doing, over the long term, a better job than government at many things, insurance included. However, the bits and pieces I’ve heard about the proposals seem like cause for very cautious optimism…and that, in turn, causes industry criticism to sound a little like folks resisting change because change is hard (and potentially disrupts market share).
You’d think that an entrepreneur or two would find ways to take insurer/reinsurer expertise and craft new products or solutions to take advantage of the potential new market.
Ours is an industry for which progress is achieved by being dragged forward, kicking and screaming.