WASHINGTON — The Financial Services Roundtable branched beyond just the financial services spectrum to make recommendations regarding the overall recovery from last year's Hurricane Katrina.
The Oct. 25 report, Accelerating the Katrina Recovery: An Interim Report By The Blue Ribbon Commission on Mega-Catastrophes of The Financial Services Roundtable, covers several lessons learned and makes several recommendations to move the recovery process along. The lessons for the financial services sector included:
1. Emergency liquidity should be distributed through debit cards as opposed to cash and a better means of identifying recipients should be developed.
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2. The private insurance industry, delivered over $38 billion in settlements in response to Katrina-related damages. Fewer than 2% of all claims led to formal complaints. Given the importance of resolving insurance coverage disputes quickly (especially for individuals), the affected Gulf states should continue to encourage the current mediation process and explore other methods for expedited claims resolution, including mandatory, non-binding mediation.
3. The increased cost and possible decrease in the availability of insurance in the private market for Gulf Coast residential and commercial customers may require a series of policy measures at both the state and federal levels.
4. Regulators, lenders, Government-Sponsored Enterprises, and other secondary market participants should develop default rules and guidelines for triggering them that would allow 90 days forbearance, subject to a tiered system based on the circumstances.
5. Following a disaster, the housing GSEs and relevant regulatory agencies must be brought into any discussions involving the functioning of secondary markets and regulatory requirements as soon as possible.
6. Financial institutions should work with consumer organizations, regulators and state and local officials, to clearly communicate any forbearance plans to affected individuals and stakeholders.
The FSR concluded, "More than a year has passed since Katrina devastated the Gulf Coast. Whatever one's views may be as to the pace of the recovery so far–and those views are likely to vary depending on the specific areas affected–there should be little difficulty in agreeing that if there are steps that could speed the recovery in a sensible fashion, they ought to be taken promptly." –[email protected]
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