Financial group makes mega-catastrophe recommendations
Panel of banks and insurancce companies recommends stricter building codes and a government plan for WMD coverage
The Financial Services Roundtable Blue Ribbon Commission on Mega-Catastrophes has finally released its report, and it is clear that the banks and insurance companies that formed the panel have their work cut out for them if they are going to satisfy its concerns. Formed to develop a comprehensive report and to make recommendations to reduce the impact of mega-catastrophes on human life and the economy, pay for the costs of rebuilding and reconstruction, and improve disaster response capabilities, the blue ribbon commission made a total of twenty-five suggestions for the public and private sector. “We urge policymakers at all levels of government to take prompt action to implement the recommendations,” said Edward Rust, CEO of State Farm Insurance Companies and chairman of the Blue Ribbon Commission. “We must learn lessons from previous disasters. We must apply those lessons to minimize the consequences of future mega-catastrophes.” The commission’s recommendations include:
Mitigating losses by requiring state-of-the-art building codes, cost-effective retrofitting measures when residences are modified substantially, and the enforcement of existing building codes supported by federal grants for additional state inspectors
Broaden the role of capital markets in financing catastrophic risks by encouraging congress to pass legislation establishing national standards for the issuance of catastrophe-linked securities, with regulation assigned to an appropriate federal agency (most likely the Securities and Exchange Commission)
Congress should establish a separate, more comprehensive and permanent program for covering losses due to an attack using chemical, biological, nuclear or radiological (CBNR) means by any party or government. The program should support the offering of forbearance on mortgage loans that is commensurate with the severity of damage in given areas.