Earthquake Insurance

In your editorial of June 14, you called upon the insurance industry and those in Sacramento who are charged with safeguarding the interests of homeowners to act effectively to assure that all homeowners who want earthquake coverage are able to find it.

This is a task to which the California Legislature is committed, and we are satisfied it remains a major concern of the insurance commissioner. At the same time, as you have previously written, “the cost of disaster insurance is too onerous to be left to individuals or even to individual states, but must be in the form of mandatory federal disaster insurance” (editorial, April 27).

As a point of historic perspective, the Legislature enacted an earthquake insurance program in 1990. The program was repealed due to expensive administrative overhead and concern that the fund was inadequate to cover expected losses.

The Natural Disaster Protection Act has been introduced by Sen. Dan Inouye (D-Hawaii), and Rep. Norm Mineta (D-San Jose). The Clinton Administration’s task force will issue its evaluation of the legislation later this month. As a principal co-author of a resolution by state Sen. Art Torres (D-Los Angeles), who chairs the Senate Insurance Committee, we call upon Congress to enact that federal legislation.

Your concern that the unavailability of homeowners and earthquake insurance affects the housing market, and in turn California’s economic recovery, is well-taken. At the same time, it is essential that in a rush to enact a natural disaster bill, we not allow insurers to take low-risk clients and merely turn those with higher risks over to the federal government. Thus, swift, effective action is essential. But it is critical that we evaluate the package carefully, lest we adopt a blueprint which leaves the American taxpayer paying a disproportionate share of the burden.

JUANITA M. McDONALD, Chairwoman

Assembly Insurance Committee

D-Carson