Prepared Remarks from Admiral James Loy for ProtectingCalifornia.org Launch Event

San Francisco, California
December 12, 2005

ProtectingCalifornia.org is part of a national coalition focused on better preparing and protecting America from the consequences of natural catastrophes such as earthquakes, hurricanes, volcanic activity and cyclones. James Lee (Witt) and I co-chair the national effort. California is a critical component of our national strategy. The largest state in the union, home to the fifth largest economy on the planet, America can’t be better protected and prepared unless California is better protected and prepared.

For me, this is a bit of a homecoming.  My family and I lived in the Bay Area in the mid-80’s when I commanded one of the Coast Guard’s major cutters, then based in Alameda.  I remember even then discussing with my family our intentions in the event of a major earthquake.  We had our 'survival' kit assembled and we had most importantly a plan with transportation alternatives keyed to what might be occurring.  My Coast Guard, of course, has a long history of service to the people of California.

ProtectingCalifornia.org is assembling a coalition of allies to help us educate the public about the risk we are facing, and to help urge Congress to take steps to better protect the nation.  Here is what ProtectingCalifornia.org is working for:

• We are urging Congress to pass federal legislation to create a national catastrophe program that will improve catastrophe preparedness, prevention and mitigation programs, relief, recovery and rebuilding processes, and consumer and public education programs so that Americans are better prepared for and protected from the ravages of natural catastrophes.  This national program will serve as a critical financial backstop to states like California, which have already instituted a catastrophe fund – the California Earthquake Authority.
• Our effort is an integrated private, state and federal government approach funded with private dollars.  The private marketplace will continue to have primary responsibility for paying claims.  Under our proposal, insurers would pay losses up to a predetermined amount set by the state.  Insurers will also make premium payments to the state catastrophe fund.  Over time, those funds will grow and accumulate and will be held for the future payment of disaster claims.  When a catastrophe hits, and insurers have paid out claims to the limits required by law, the state fund will pay remaining losses up to its funding capacity.  Only after the private market and state catastrophe fund have reached their payment capacity will federal funds, in the form of reinsurance, be needed. 
• An important component of our proposal is intended to improve the process of relief, recovery and rebuilding by developing new processes to stage and deploy essential relief materials and to make sure there are adequate building materials, supplies and licensed contractors available in the aftermath of a catastrophe.  The federal and state catastrophe funds would establish new programs and processes that aid in relief, recovery and rebuilding, which might include better coordination among FEMA, state and local government, private relief agencies, insurance companies and policyholders.
• Another key aspect of our proposal would strengthen prevention and mitigation programs through stronger building codes and better enforcement to require new construction to better meet the challenges of catastrophic events.  Prevention and mitigation programs save lives and protect property.  Under our proposal, state legislatures could appropriate from the investment income of the fund to provide funding for first responders, local governments, state agencies, public and private educational institutions, and nonprofit organizations and charities to develop and/or support catastrophe preparedness and mitigation programs.
• It is important to emphasize that while this is a federal program, it will be funded by private dollars. Insurers will collect premiums as they do now, and make payments to fund the state catastrophe funds. The state funds, in turn, use some of those insurer payments to purchase reinsurance from the federal program. If a catastrophe does not hit, the federal fund would retain the reinsurance payments it received, letting them grow. Meanwhile, state CAT Funds would continue purchasing reinsurance through the federal program, allowing the fund to grown and accumulate surplus over time. Eventually, the fund will grow to the point where it will be able to kick in and help states pay claims, especially in the event of mega catastrophes such as Katrina. 
• The bottom line for me is this:  Allow me to read a short piece from the San Francisco Chronicle:  'A better system of control is slowly being evolved out of the confusion of overlapping officials and conflicting commands.  The regular Army, the National Guard, other federal agencies and the police are achieving results on their efforts toward intelligent cooperation.'  That appeared in the Chronicle on April 26, 1906, five days after the 1906 Earthquake.
• I would imagine the people of Mississippi would challenge that assessment today.  Our coalition is an effort to insist that adequate dialogue take place and that real reforms get put in place that will protect our citizenry.  Those five days of confusion cost lives in 1906, and again in 2005.  We can and must do better and we ask for your support of the ProtectingAmerica coalition as we take on our work.