Insurers give Katrina victims grace period

Mississippi Insurance Commissioner George Dale issued a voluntary directive last week to insurers doing business in Mississippi to grant a 60-day grace period for collection of premiums owed on all types of insurance policies by residents impacted by Hurricane Katrina.
“This voluntary directive does not mean that insurance companies will forgive owed premiums,” Dale said. “It gives policyholders who have been impacted by the hurricane an additional 60 days to pay their premiums without being non-renewed for not paying their premium.”
Premium bills will continue to be issued, but no one in the affected areas will have their insurance cancelled for nonpayment.
Alabama Insurance Commissioner Walter A. Bell said several insurers in his state have also implemented grace periods and he encouraged other companies to do the same.
In the meantime, an emergency summit called in Atlanta, led by the National Association of Insurance Commissioners, discussed a number of long-range options for coping with natural disasters on the order of $100 million or more.
A.M. Best reports the group met to discuss ways to deal with the damage inflicted by Hurricane Katrina. In the course of the discussion, several models for a general form of Federal Disaster Insurance were proposed. Possible scenarios include:
– creating an entity such as the National Flood Insurance Program for major natural disasters;
– expanding the Terrorism Risk Insurance Act (TRIA) or creating a TRIA-like program that uses federal money and insurance company surcharges to pay for losses above a certain threshold; and
– allowing insurance companies to build up tax-free catastrophe reserves as outlined in H.R. 2668, now pending before the U.S. House Ways and Means Committee.