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Tallahassee Democrat: Hidden hurricane tax is a burden on Floridians

Tuesday, September 04, 2012

It’s hard to believe, but it’s been 20 years since Hurricane Andrew made landfall in Florida.

After Andrew, residents rebuilt their homes, the South Florida economy grew, and Florida adopted stronger building codes. However, the Florida Wildlife Federation and other members of Florida’s broader conservation community believe we have yet to fully absorb the land-use lessons Hurricane Andrew should have taught us, a challenge complicated by our government-dominated property-insurance market.

Florida, a low-lying peninsula, represents one of the world’s most hurricane-prone areas. This exposure, in conjunction with the structure of today’s property-insurance market, which relies heavily on the state-run Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund, represents an ongoing financial burden on all Floridians, including the substantial majority of Floridians not insured by Citizens.

No longer the insurer of last resort, Citizens is now the largest single property-insurance provider in the state, with more than 1.4 million policies, or roughly 1 out of every 4 policies written in the state.

Still, the majority of Floridians don’t rely on the state or fellow Floridians to cover their risk or pay their claims. These Florida homeowners join the businesses, charities, churches, renters and automobile policyholders throughout Florida who are taxed to subsidize Citizens policyholders.

Moreover, private-market policyholders pay something closer to a risk-based rate that recognizes safety hazards and flood risks associated with land-use decisions. In contrast, the government subsidies to a minority of our homeowners — many of them among our state’s most affluent — are unfair, and economically and environmentally counterproductive. It says that it must be OK to live on this barrier island or that flood-prone area, no matter the risk, because affordable insurance is available through state-subsidized insurance.

The Florida Wildlife Federation supports common-sense reforms of Citizens and the Cat Fund that discourage subsidies in such areas.

Florida’s coastal landscapes are greatly affected by our property-insurance market. The “hidden hurricane taxes” most Floridians are subject to transfer funds from employers and working families to subsidize beachfront vacation homeowners. Under Citizens and the Cat Fund, all Floridians are providing support for reckless development in the most hazardous and environmentally significant areas.

Subsidizing development on Florida’s coast not only threatens our beaches, coastal environments and barrier islands that are central to Florida’s tourism and economic prosperity, but also promotes loss of undeveloped coastal habitats that help reduce inland storm damage.

Actuarially sound insurance rates would better reflect the true costs and risks of new construction in vulnerable areas.

The Florida Wildlife Federation applauds the reform efforts of the Citizens Board of Directors. We hope our elected leaders will consider the importance of reforming both Citizens and the Cat Fund, reducing the fiscal and environmental risks each poses. We hope both direct and indirect subsidies for structures in areas seaward of Florida’s coastal construction control line and within units of the Coastal Barrier System can be eliminated.

During the 2013 session, legislators should diminish the burden of hurricane taxes, implement wiser land-use policies, reinvigorate our private-insurance market and return Citizens to its original mission of providing insurance as a last resort.

Doing so also will help protect our coastal fish and wildlife habitats.

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