SunSentinel.com
By David Hart
January 15, 2012
Florida avoided hurricane landfall for an unprecedented sixth consecutive year. While the state’s good luck won’t last indefinitely, 2012 brings the opportunity to reform Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund before the next storm causes a collapse of these government-run entities.
Floridians are still paying for the storms of 2004 and 2005. If a major storm or series of storms hits Florida this year, future “hurricane taxes” could amount to over 50 percent of insurance premiums each year for up to 30 years and will be financially devastating for the business community. Also, Citizens Insurance and the Cat Fund will not have the capacity to pay claims for future storms and will rely entirely on taxpayer-backed debt — further threatening Florida’s economy.
Cat Fund Chief Operating Officer Jack Nicholson and many of Florida’s elected leaders agree it’s important to reduce the size of Citizens and scale back the Cat Fund. From increasing the Citizens Insurance rate glide path to reducing the capacity of the Cat Fund, Florida must create an environment where insurance premiums reflect exposure to risk.
Rep. Bill Hager, R-Boca Raton, and Sen. J.D. Alexander, R-Lake Wales, have filed legislation, HB 833 and SB 1372, which is a balanced approach to reforming Florida’s exposure. A modest increase in current rates is far less risky than the devastating economic impact from a massive “hurricane tax” or potential insurer insolvencies that Florida will face in the wake of the next major storm.
The Florida Chamber of Commerce urges policymakers to consider this important legislation to fix Florida’s broken insurance system.
David Hart is the executive vice president of the Florida Chamber of Commerce.
