September 13, 2023
13 September 2023
We wholeheartedly champion the idea of public/private partnerships and private market participation as means to effectively manage the risks associated with natural disasters while ensuring the financial stability of communities and protecting the environment. [...] A federal reinsurance program ignores the underlying issues of overbuilding in high-risk areas, inflation, forward looking climate change impacts on severity and frequency of extreme weather and can encourage new development in environmentally sensitive and high-risk areas, putting both the environment and the safety of our communities at risk. [...] Displacing private insurance and reinsurance with a federal reinsurance program will supersede state-based insurance regulation, providing dual regulation, by adding the federal government as a regulator of property insurance markets across the country and encouraging additional, state- government programs to assume property risk. [...] SmarterSafer has strong concerns that efforts to establish a federal reinsurance program for natural disaster risks fail to effectively address the challenges posed by such disasters and could incentivize risky behavior, as noted, in addition to shifting financial burdens from the private sector to federal taxpayers, and ultimately hinder the pursuit of more responsib. [...] However, reinsurers are still offering ample cover for severe catastrophes.1 While global reinsurance capital in 2022 contracted by $87 billion, by the first quarter of 2023, global reinsurer capital increased by five percent ($30 billion) to $605 billion.2 Additionally, by the end of the first half of this year, reinsurance capital grew 13% to $709 billion (close to the $725 billion peak in 2021).