The Federal Insurance Office (FIO) should have the “ability to immediately estimate exposures related to catastrophic events” and provide it to the Federal Government.
That’s according to the “vision” for the FIO spelled out in the proposed 2014 U.S. budget released today.
Such events include the Sept. 11 terrorist attacks or Hurricane Katrina.
The proposed budget noted that the FIO’s Federal Advisory Committee on Insurance (FACI) demonstrated its responsiveness to reacting to disasters by holding a public meeting soon after “Hurricane Sandy struck the East Coast of the U.S. to discuss the future of flood insurance.”
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The budget document calls Sandy a hurricane but insurers call it a superstorm.
It notes under the section Streamlined Insurance Sector Regulation that the FIO was established by the Wall Street Reform Act to “monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to” systemic risk.
Some in the industry, fresh from watching the claims aftermath of Superstorm Sandy unfold, say that this vision has a long way to go, as even with insurers now after a disaster, it takes a lot of time to amass data while in the thick of the assessment and disaster response process, and not every party is even doing it the same way.
“There are real world limitations to how fast real-world data can be obtained by anyone, and have the data requests be uniform and be at a time when insurers can actually provide it and not all of their resources are being spent paying claims and fulfilling consumer business,” said Dave Snyder, vice president of Property Casualty Insurers Association of America (PCI).
Snyder also noted there is the need for confidentiality to be maintained when filing all of this data.
“Insurers need realistic, confidential and uniform data collection after major events and we hope that FIO can play a helpful role, but we don’t see it substituting for the states,” Snyder said.
The budget also proposes some tax changes that could impact the very catastrophe coverage and response issues which FIO is interested in tracking.