1. Large Scale Catastrophes National Association of Insurance Commissioners NAIC President Walter A. Bell Commissioner, Alabama Department of Insurance XVIII ASSAL ANNUAL MEETING May 9, 2007

2. Topics of Discussion What is the NAIC doing? What is Alabama doing?

3. Relative Size of the U.S. Insurance Market The United States market is, at $1.2 trillion, the largest in the world California, New York, Florida, Texas, and Pennsylvania are all larger markets than the 10th largest market, Spain 7 other states are larger than the 16th largest market, South Africa.

4. NAIC activities Catastrophe study commission recommendation to U.S. Congress Testimony to congressional committees National problem requires national solution All perils policy? Reinsurance Task Force efforts

5. At NAIC Summer Meeting in June 2006, the membership voted unanimously to recommend Congress form a national study commission on catastrophic strategies related to insurance Study Commission

6. Last month, several commissioners testified before two congressional committees -- Need for federal strategy -- TRIA-type approach -- Federal backstop to marketplace Congressional testimony

7. All-Perils Policy? Wind insurance private market/flood insurance federal government Exponential growth of state-sponsored wind programs Failure of flood program Wind vs. Water disputes Fewer earthquake policies in force Erases consumer doubt

8. NAIC Reinsurance Task Force Movement toward risk-based evaluation of reinsurers Understanding that insurance is an international market concern Reinsurance is the key component in market stabilization in the U.S. and the world

9. September 2004 – Ivan August 2005 – Katrina 2006 season – peaceful (El Nino) 2007 season – heavy activity predicted Alabama & Hurricanes

10. Hurricane Insurance Issues Task Force The Hurricane Insurance Issues Task Force issued a final report August 2005 that examined the department’s experiences with Hurricane Ivan and proposed new regulations to improve management of hurricane-related issues In response, legislators approved a Captives law in the Spring of 2006 in order to provide underserved commercial markets a new option for insurance

11. Mediation program Provides a mediation process for pending disputed claims from hurricanes Ivan and Katrina as well as future claims related to disaster damage. ●Mediation is non-adversarial, non-binding, alternative dispute resolution procedure designed to facilitate the resolution of disputed claims as quickly and as fairly as possible. Alabama activities

12. Alabama ●93 percent success rate Florida ●92 percent success rate Mississippi ●83 percent success rate Louisiana ●75 percent success rate Regional Mediation Programs

13. -- NAIC headquarters sets up call center in Kansas City, Mo., for Katrina-related inquiries -- NAIC issued data call from insurers regarding claims -- Alabama, Mississippi, Louisiana and Texas issued identical bulletins regarding non-cancellation due to non-payment of premium and out-of-network services for health care -- Other states sent consumer specialists to Louisiana and Mississippi -- Alabama put together outreach to Mississippi and Louisiana evacuees temporarily housed in Alabama National/Regional Cooperation

14. Coordination is crucial -- Continued dialogue and planning are best paths to success -- Claim full partnership in global insurance marketplace Latin American nations

15. Committee Activities Thank you! Questions?