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Orlando Sentinel: My Word: True reform leverages private market

Tuesday, August 20, 2013

By Dominic M. Calabro

We were pleased to read Rep. David Santiago’s Aug. 4 My Word column (“Citizens’ reform a matter of fairness”). Florida TaxWatch has long supported reform of the state’s publicly-funded insurance entities in an effort to reduce the exposure of Florida’s consumers and businesses to increased assessments after a hurricane. Florida TaxWatch has researched the property and casualty insurance issues extensively and produced several reports, including Reducing the Concentration of Risk and Risk & Reform.

As Florida has not been directly hit by a hurricane in more than eight years, it is now believed that Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund have enough cash in reserves to cover one moderate storm hitting the state. However, reports suggest that a massive storm or a series of storms would trigger an additional “hurricane tax” on all Florida policy holders. Currently, Floridians who maintain some form of insurance in the state are paying “hurricane taxes” to compensate for damage caused by the 2005 hurricane season.

This legislative session our elected leaders made some incremental progress to reform the system. Nevertheless, we need to implement additional changes as swiftly as possible. As Santiago stated, Citizens “is far too reliant on post-event hurricane taxes and debt and has far too little actual reserves.” One important first step to resolving this ongoing problem, which Santiago supports, is to reduce the risk to Florida and its economy by moving toward market-oriented rates in a responsible manner. We cannot continue to mask the true cost of insurance, especially when a functioning market that encourages the return of private insurers to Florida and reduces taxpayer liability are both achievable and affordable.

True reform also requires the Florida Legislature to take advantage of private market opportunities when they become available. This session our leaders failed to support a proposal that would have shifted Cat Fund risk out of Florida and into the global private market, which is capable of handling hurricane risk.

We are hopeful lawmakers such as Santiago will be inclined to support additional reform legislation in 2014.

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