LETTERS: QUAKE UNDERWRITING POINT CLARIFIED

To the editor: I would like to congratulate Business Insurance magazine and its co-sponsors on the highly successful New Madrid Earthquake Conference held in New York Oct. 30.

As a presenter at the conference and co-publisher with James Baldwin of a paper on "Underwriting Earthquake Property Risks in the New Madrid Seismic Zone," I agree that the seminar provided a valuable forum to discuss this important, and until now mostly ignored, potential natural disaster.

I would like to clarify an important item covered in Douglas McLeod's Nov. 10 article, "Quake Losses Forecast in Detail," with regard to my statements about earthquake underwriting expertise.

Unfortunately Mr. McLeod used only a portion of my statement, taking it out of context, and making it the basis for what looks like a criticism of underwriters.

The complexity of New Madrid seismicity would leave underwriters feeling uncomfortable with their own skill levels if the issues of tools and training were not addressed. As I said in my remarks at the conference, the Arkwright approach to seismic peril in the New Madrid area goes beyond restriction of capacity. We have implemented extensive training for field underwriters in the areas of probabilistic risk assessment of natural disaster exposure. In fact, every field underwriter at Arkwright who makes decisions on earthquake or hurricane capacity participates in the process of natural disaster modeling.

My comments about industry skill levels were the motivation for the actions taken at Arkwright to manage the issue of this risk, not a recognition and acceptance that the situation must be accepted as is.

Thank you for helping clarify this important point to your readers. Open forums such as the New Madrid Earthquake Conference are important to the sharing of valuable information to prepare the public against such potential natural disasters. I appreciate the opportunity to participate in that exchange of information.

Peter J. Kelly

Vp/Manager

Underwriting Research & Development

Arkwright Mutual Insurance Co.

Waltham, Mass.