Client News
Miami Herald: Scale back catastrophe fund
Tuesday, November 15, 2011
Re the Oct. 18 article Florida hurricane fund has $3.2B shortfall:
As we approach the start of the 2012 legislative session, it’s important that this headline remain top of mind for Florida’s elected leaders because of the financial impact the fund could potentially have on Floridians.
Because it cannot meet its overexposed obligations, the catastrophe fund needs to be addressed immediately. Both Citizens Property Insurance Corp., which continues to write policies with actuarially unsound rates, and private insurers are mandated to buy from a fund that admits it is unable to meet its financial obligations. This situation puts everyone including businesses, homeowners, renters, churches, charities and automobile policyholders at risk.
While news reports have suggested insurance premium rate hikes could be impossible for some to afford, the costs associated with insolvent insurers, unpaid claims and future hurricane taxes could total thousands of dollars per year per policy, for up to 30 years. It’s not enough that all South Florida residents currently subsidize Citizens policyholders living in multi-million dollar beachfront homes, but the current structure of the fund is likely to tax these same individuals on their insurance policies the next time a storm or series of storms pummels the state.
We would be wise to take the advice of Florida Hurricane Catastrophe Fund COO Jack Nicholson and scale back the size of the fund. Doing so will help Florida continue along a glide path to stability, lessen the risk and exposure associated with the state-run insurance entities, help reinvigorate the private market and, most importantly, better protect Floridians.
J. Robert McClure, III, president and CEO, The James Madison Institute, Tallahassee
As we approach the start of the 2012 legislative session, it’s important that this headline remain top of mind for Florida’s elected leaders because of the financial impact the fund could potentially have on Floridians.
Because it cannot meet its overexposed obligations, the catastrophe fund needs to be addressed immediately. Both Citizens Property Insurance Corp., which continues to write policies with actuarially unsound rates, and private insurers are mandated to buy from a fund that admits it is unable to meet its financial obligations. This situation puts everyone including businesses, homeowners, renters, churches, charities and automobile policyholders at risk.
While news reports have suggested insurance premium rate hikes could be impossible for some to afford, the costs associated with insolvent insurers, unpaid claims and future hurricane taxes could total thousands of dollars per year per policy, for up to 30 years. It’s not enough that all South Florida residents currently subsidize Citizens policyholders living in multi-million dollar beachfront homes, but the current structure of the fund is likely to tax these same individuals on their insurance policies the next time a storm or series of storms pummels the state.
We would be wise to take the advice of Florida Hurricane Catastrophe Fund COO Jack Nicholson and scale back the size of the fund. Doing so will help Florida continue along a glide path to stability, lessen the risk and exposure associated with the state-run insurance entities, help reinvigorate the private market and, most importantly, better protect Floridians.
J. Robert McClure, III, president and CEO, The James Madison Institute, Tallahassee