The Palm Beach Post
by Dennis Burke
September 2, 2011
Your Sunday editorial, “Will Irene whip up support?”, deemed other states’ insurance funds to be equivalent to reinsurance and stated that offshore reinsurers are the main opponents of a federal catastrophic disaster plan. Those statements are incorrect.
While other states insure some property owners, only Florida has a government fund that insures insurance companies (reinsurance). Florida’s reinsurance fund is seriously underfunded and relies upon taxes. Your automobile, business and homeowners’ policies are assessed to pay for the fund’s 2004 and 2005 hurricanes losses. Those assessments will continue for the next several years, forcing individuals, charities, school boards and churches to subsidize homeowners on the coast, including millionaires with their second and third beach houses.
Every other state that has considered a reinsurance catastrophe fund, a prerequisite for the national plan you support, has rejected that option. Those states self-fund their risk through insurance and market-of-last-resort insurance mechanisms. Most insurers oppose a national disaster insurance program, as do the three major insurance trade associations. Taxpayers and environmentalists oppose the plan due to debt and reckless coastal development concerns, respectively.
While shifting the cost of Florida’s unique exposure to severe and frequent hurricanes to other states through a federal bailout of its one-of-a-kind reinsurance program may be attractive to some Floridians, it is understandable why people in the other 49 states don’t want to pay for Florida’s risk and its self-inflicted underfunding of the Florida Hurricane Catastrophe Fund.
