Florida Chamber of Commerce
Important Update
March 5, 2012
Florida’s property insurance system is broken. Florida is financially unprepared for a major hurricane and our current financing model could be the single biggest threat to our economy.
A Florida Chamber of Commerce-backed bill that will improve Florida’s broken property insurance system passed the Senate Budget Committee on Saturday morning. SB 1346 by Sen. Steve Oelrich will take important steps to right-size Citizens by giving Citizens the tools to appropriately assess policyholders should assessments be necessary as a result of a future storm.
A Florida Chamber-backed amendment by Sen. JD Alexander addressing reforms to the Florida Hurricane Catastrophe Fund (CAT Fund) also passed and was added to this legislation. Had Florida been hit this year by a category 4 or 5 hurricane, the CAT Fund may have been short as much as $3.2 billion to cover obligations. Sen. Alexander’s amendment appropriately reduces the exposure of the CAT Fund.
The Florida Chamber thanks Sen. Oelrich and Sen. Alexander for their commitment and support of a more free market-oriented and stable insurance market for Florida. SB 1346 now heads to the Senate floor.
“The Florida Chamber of Commerce has a rich history of engaging in insurance reform efforts that create a more competitive and stable insurance market,” said David Hart, Executive Vice President of the Florida Chamber. “We have long-held that Florida needs more free market insurance opportunities than the existing government-run Citizens Insurance.”
Reform to these entities are critical because Citizens Insurance has grown from the insurer of last resort to the insurer of first resort and reforming both Citizens and the CAT Fund will help to eliminate the “hurricane tax” assessment levied on Florida businesses, homeowners, renters, charities, churches and drivers to cover costs associated with major hurricane losses.
Without reform, Florida remains a ticking time bomb until the next hurricane makes landfall, where future “hurricane taxes” could amount to over 50 percent of insurance premiums each year for up to 30 years and will be financially devastating to the business community. Also, because Citizens Insurance and the CAT Fund will not have the capacity to pay claims for future storms, they will rely entirely on taxpayer-backed debt – further threatening Florida’s economy and job creation.
