(a) The threat of or the actual occurrence of a major earthquake poses serious consequences for the State of Arkansas and its citizens. Of particular concern is the magnitude of damage to residential homeowner and farmowner dwellings and whether or not these structures are adequately insured.
(b) The market for residential earthquake insurance within the State of Arkansas is currently characterized by the following:
(1) Potential for unavailability of earthquake insurance coverage or inadequate coverage;
(2) Potential lack of capacity and desire of insurers to write residential earthquake coverage due to pressure from rating agencies;
(3) Low percentage of Arkansans with earthquake insurance;
(4) Lack of awareness on the part of residential homeowners and farmowners regarding the consequences of a major earthquake; and
(5) Lack of awareness on the part of residential homeowners and farmowners that earthquake is not a covered peril under a basic homeowner or farmowner policy unless affirmatively added by endorsement.
(c) The General Assembly declares there is a compelling state interest in maintaining a viable and orderly private sector market for residential earthquake insurance in this state. To the extent that private sector insurers are unable to maintain a viable and orderly market for residential earthquake insurance in this state, state actions to maintain such a viable and orderly market are appropriate.
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