Legislation that would create a state government-backed reinsurance program for natural catastrophes in the Nutmeg State is being tabled for now as the sponsor reviews possible alternatives.
The bill — S.B. 530 — is now being referred to Connecticut’s Legislative Review and Investigative Committee so that group can conduct a feasibility study on creating a nat cat fund.
The bill’s sponsor decided to table the issue after insurance industry representatives descended on Hartford to give testimony last month.
“It was bizarre,” says State Senator Joseph Crisco (D-17th District) regarding the insurance industry’s response to the proposal. “I have a a letter from Allstate complementing me on my work in this area while all the other companies lined up against it. It was just puzzling.”
During testimony before the Connecticut Senate’s Insurance and Real Estate Committee, representatives from the Reinsurance Association of America, Insurance Association of Connecticut, National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America organized in opposition to the bill.
Matthew Guilbault, director of government and industry affairs for the Professional Insurance Agents (PIA), says his organization opposed the bill on several fronts.
“While we recognize the merits of a cat fund, high intensity/low frequency events don’t necessarily correspond to artificial geographic boundaries.” Guilbault says. “If you get a hurricane that sweeps through and hits Connecticut, it will probably hit New Jersey and New York as well.”
The PIA — which represents property/casualty agents in Connecticut, New Jersey, New York and New Hampshire — argues that a national catastrophe backstop would be a better solution than state-based funds.
Representatives from Allstate and ProtectingAmerica.org argued in favor of the bill, and say the remain optimistic that eventually some type of legislation will be passed.
“We see a feasibility study as real progress,” says a spokesman for ProtectingAmerica.org. “The more you study [government cat backstops] the better it looks. Once you look at the numbers it works to our benefit.”
Sen. Crisco adds he will remain open to possible changes to the bill.
“We could come up with a different mechanism for addressing a natural catastrophe fund and amend the bill,” he says. “It’s in the embryonic stage and it’s my responsibility to look at all options.”
