By BARNEY T. BISHOP III
Special correspondent
Tampa Tribune
Published: December 4, 2010
Gov.-elect Rick Scott has been saying for months, “Let’s get to work,” to rally Floridians around proposals to grow our economy, reduce government intervention in the market and create new jobs in the Sunshine State. One area Scott and our newly elected legislative leadership can start to work on immediately is to eliminate the unfair “hurricane tax” currently levied on Florida’s businesses.
These taxes take the form of assessments levied on the insurance premiums of businesses statewide, as well as on charitable organizations, schools, churches and renters, and in effect subsidize many of our state’s most fortunate – homeowners living on the coast. Eliminating the hurricane tax will free funds for business to reinvest in new initiatives and jobs, encourage capital formation in our state and foster a more transparent, competitive and fair environment for businesses and consumers alike.
As the president of Associated Industries of Florida (AIF), I was present during Scott’s recent speech to the Florida Council of 100 where he discussed his plans for Florida. The governor-elect boldly called for a freer market, more cost-effective regulation, honesty and transparency in our metrics and governing our state along a clear business plan. When Scott assumes his post in Tallahassee, all of these values can be applied to achieve much-needed reforms of the state-sponsored Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund (Cat Fund). The instability of these entities and the taxes they generate affect all Floridians – not just Citizens policyholders.
Today our businesses are still paying for the storms from 2004 and 2005 because of the debt burden designed into the structure of Citizens and the Cat Fund. Although 2010 was the most active storm season in 150 years, Florida was spared from any storms making landfall. Had our vulnerable shores been hit, Florida businesses, churches and families would have experienced an unwelcome surge of new hurricane taxes to fund Citizens and the Cat Fund. Potentially, these taxes could exceed 50 percent of the insurance premium on our businesses – each year for up to 30 years – in order to service the bonds that would be issued by Citizens and the Cat Fund, assuming a financing of that scale can even be achieved.
Prior to the election, Scott addressed Floridians during a town hall meeting in Miami stating, “I will return Citizens to the insurer of last resort, level the playing field so that solvent private insurers are allowed to compete with each other for business, not with the subsidized and financially unsound government run insurance company.” AIF both applauds and is prepared to support those initiatives. As we return Citizens to its original role as an insurer of last resort, we must also return the Cat Fund, currently a taxpayer agency of first call, to its own originally conceived role as an emergency buffer for the largest possible catastrophes.
Under the last administration, the exposures in Citizens have increased astronomically, and the Cat Fund has nearly doubled in size, posing a painful and enormous contingent tax burden on Floridians. But it didn’t have to be this way. The legislation rushed through in 2007 by our now-outgoing governor undercut reforms championed by former Gov. Jeb Bush with bipartisan support that would have fostered the evolution of Citizens and the Cat Fund back to their original roles.
Reforming Citizens and the Cat Fund are not the only challenges confronting Florida’s property insurance market. We continue to suffer from abuses from certain public adjusters, mitigation inspectors and the continuing sinkhole crises. We need tort reform and changes in our so-called “bad-faith” law. But there is no better place to start than by reducing the risk associated with these state-run insurance entities and eliminating the risk of future hurricane taxes.
With our new legislative leadership in Tallahassee, Gov.-elect Scott has the partners he needs to restore a freer insurance market in Florida and improve our standing as a place where employers want to come and hire new workers.
We look forward to working with Scott throughout his tenure in an effort to eliminate the hurricane tax, which will ultimately benefit both the business community and our state’s most vulnerable citizens.
Barney Bishop is the president and CEO of Associated Industries of Florida, a statewide organization of businesses.
http://www2.tbo.com/content/2010/dec/04/MEOPINO1-gov-scotts-first-order-of-business/
