Rational ecology: a trade group talks sense.

Frank Nutter came up with a rational mix of ecology and fiscal pragmatism in his testimony before a congressional subcommittee in March.

The president of the Reinsurance Association of America, in remarks made before the U.S. House of Representatives Committee on Natural Resources Subcommittee on Insular Affairs, Oceans and Wildlife, said a devotion to strengthening natural storm barriers, not further government intrusion into the commercial insurance market, is one of the best hopes for the safety of our coastlines.

Nutter, like many in the insurance industry have done before, pleaded with our elected officials not to add wind coverage to the National Flood Insurance Program. The NFIP is almost hopelessly in the red, to the tune of some $18 billion, Nutter pointed out, and adding wind coverage to the program isn't going to help its financial condition.

"Adding wind insurance will distract from the program's mission and substantially undermine efforts to stabilize the program," Nutter told the subcommittee.

"Taxpayers nationwide will be left to pay the cost of wind damage, which would more than triple the government's exposure under NFIP," Nutter added. In its effort to defeat a wind provision being added to the NFIE the RAA is joined by some organizations one might not immediately associate with the insurance industry.

The RAA is a member of a group calling itself the Americans for Smart Natural Catastrophe Policy Coalition. Members of the coalition include the Environmental Defense Fund and Friends of the Earth, as well as groups one might more readily expect to associate with the RAA, such as the Association of Bermuda Insurers and Reinsurers and the National Association of Professional Insurance Agents.

Adding wind insurance to the NFIP, Nutter argued, is only going to encourage people who shouldn't be building in hazardous, environmentally sensitive areas to build there. If properties in sensitive coastal areas are going to be developed, the builders developing them should be held to the most modern building standards available, he said.

In addition, Nutter argued that the science of climate change should be incorporated into the planning processes for coastal communities. That data should be used to create flood, shoreline and inundation maps that will give governments and private-sector builders better risk assessment and mitigation tools.

Nutter's environmental allies would also smile on his insistence that strengthening ecosystems is an effective risk management tool.

"Coastal wetlands, barrier islands and natural coastal vegetation serve as buffers from ocean-driven extreme events," Nutter said. "Make them part of an adaption strategy."

Nutter and the coalition do believe government intervention of a different sort can improve the lot of coastal environments and populations. Earlier this year, the coalition supported an aspect of the economic stimulus package that would increase funding to Federal Emergency Management Agency Pre-Disaster Mitigation Program. The program gives states money to increase building elevations, flood-proofing and mitigation improvements to existing structures and the relocation of residents who agree to move inland.

riskandisinsurance.com

* Nutter's complete testimony

GLOBAL EXTREME WEATHER LOSSES

Global extreme weather damage
is growing exponentially every year.

1950-59   $53 billion
1960-69   $93 billion
i970-79  $162 billion
1980-89  $263 billion
1990-99  $778 billion
2000-08  $620 billion

SOURCE: MUNICH REINSURANCE COMPANY

Note: Table made from bar graph.