Insurance group to help feds weather budget cuts
- By Nicole Lewis
- Sep 28, 1997
In response to congressional budget cuts for agencies conducting environmental research the insurance industry has invested in information technology so that the National Hurricane Center can continue to research violent storms.
The industry last month formed the nonprofit Insurance Friends of the National Hurricane Center and launched a fund-raising campaign that will invest hundreds of thousands of dollars in the federal government's National Hurricane Center (NHC) to boost its technical research and information capabilities. Federal law prohibits corporations from raising funds for federal agencies so the insurance group will funnel funds through the International Hurricane Center (IHC) which is operated by the Florida International University in Miami and which has an agreement with the NHC to conduct joint research projects and other academic exercises.
"We don't want any conflict and it's a way of avoiding the appearance of conflict " explained Jerry Jarrell the acting director of the NHC.
So far 15 insurance companies have joined the nonprofit friends group and have contributed more than $100 000. "We hope we'll get $250 000 on the first round and we hope this will be an annual thing " said Harold Talbot the general secretary for the friends group and the managing director of re-insurance broker Guy Carpenter & Co. Inc.
Stephen Leatherman IHC's director said the funds will buy equipment that will be shared by his center and the NHC both of which are located at Florida International University. According to Leatherman the money will purchase computer equipment upgrade server and mirror capabilities contribute to hurricane research and generally increase the speed at which hurricane information gets to the public.
"One of the things that we want to do is definitely jump on the computers " Leatherman said. "I'm going to push for a supercomputer to do our simulations on a real-time basis so we can input our data and hourly come up with new forecasts as we learn more about where a storm is going and its size."
The insurance industry of course will benefit from the IT upgrades which will offer hurricane watchers more insight into the powerful storms. "There's a severe deficit in knowledge about hurricane behavior particularly related to patterns that would indicate a hurricane's return and issues related to intensity " said Tom David IHC's executive director. "Both these aspects of a hurricane are used to actuarially develop sound insurance rates."
The NHC's fiscal 1997 budget is about $3.5 million up from $3.2 million in fiscal 1996. In fiscal 1997 the NHC's budget would have been lower except that Commerce Secretary William Daley reprogrammed $715 000 to be dispersed to the eight centers that make up the National Centers for Environmental Predictions which includes the NHC.
Kenneth Comba the executive officer of the NCEP predicted that the NHC's fiscal 1998 budget will be about the same as fiscal 1997's. But the NHC is funded through the National Weather Service and the House cut the service's fiscal 1998 operations and research budget by about $10 million to $450.8 million.
Possible cuts convinced the insurance industry to form a group to come up with the additional funds. "What started us off was the simple thought that if the hurricane centers' budget was cut by $250 000 that might mean laying off two people and that might mean a one-hour delay in forecasting the landfall of a given hurricane " Talbot said. "A one-hour delay in forecasting could be quite expensive to the public and to the insurance industry."
A cut in the NHC's budget would have been an indication of the government's lack of appreciation for the NHC's work David said. "The NHC is viewed by the government as a seasonal operation because the hurricane season is half the year so the government said `We don't need a whole complement of staff year-round ' " he said. "The problem is it's more complicated than that because in the off season the staff are preparing for the next season so they go from a duty station to a research station."
The NHC's Jarrell said the NHC still needs money and the collaboration between the friends group and the IHC will help fill the gap. "There are things that we would like to do which are good for the public and the insurance industry " Jarrell said. For example "we don't have a very good feel for how the climate of hurricanes changes and that has a lot to do with insurance policy rates."