A.M. Best, the independent insurance rating service, has in recent years lowered the financial ratings of numerous major insurers, declaring a need for them to reduce exposure to natural disasters.
There is a lack of public understanding of the role of adequate premiums, carefully crafted coverages, and sufficient adequate deductibles in the providing of catastrophe insurance. Even regulators may wish to participate in further education on these issues. Commercial and residential owners may wish to participate in lowering their risk by undertaking efforts to mitigate possible damage.
There is general acceptance of the need to improve building codes and other mitigation efforts. Insurers will support these state legislative efforts.
It is possible that Federal legislative proposals may emerge to promote solvency in the event of a catastrophe. These ideas and proposals should be considered in the light of state experience and needs, and should be supported if they further the goal of a solvent industry.
A working group should be established to determine Missouri's needs for revision of the catastrophic insurance system. The members of the group should include the insurance industry, state regulators, professional engineers, commercial and residential property owners, and perhaps a representative from the Insurance Institute for Property Loss Reduction. This group would bring together all stakeholders for the discussion of owners' risk-reduction responsibilities, insurer solvency, and availability of catastrophic insurance.
Consider Federal legislative remedies as they develop. Support state legislative efforts related to mitigation. Seek regulatory support for properly rated catastrophic coverage with adequate deductibles.