Insurers receive relief repaying claims from SEC

Insurers are receiving aid from the US Securities Exchange Commission (SEC) in their efforts to pay off the extensive claims resulting from hurricanes Katrina and Rita.
Many insurers have been placed on credit watch and issued warnings because of extensive catastrophic loss claims. In an effort to help insurers raise money and avoid credit downgrades a temporary rule allows insurers speed up the process of selling securities.
Christopher Cox, SEC chairman, says he does not want SEC’s rules to impede the insurer’s process of raising money especially in light of hurricanes Katrina and Rita. The temporary rule changes will enable insurers that have already applied to sell securities to speed up the process.
The SEC is allowing insurers to both fax in their application and increase the number of shares they wished to sell. Cox says that this will help ensure that every victim’s insurer retains enough capital to back up claims and furthermore reduce any unwarranted delays in claim fulfillment due to lack of liquidity. He adds that disclosure rules will however be required but they will not interfere with market access.
“With insurance rating agencies issuing ratings warnings based on concerns that losses from Katrina and Rita may cause capital shortfalls and liquidity concerns,” the SEC states, “it is vital for the commission to take steps to eliminate delays in the process of insurers and reinsurers tapping the capital markets.”