Don Brown

PropertyCasualty360.com
By Lynn McChristian
December 2011

They Say, Hearsay

First, politicians let Citizens Property Insurance and the Hurricane Catastrophe Fund grow. Now, there is all this talk about shrinking both of them, and I hear that will make my insurance bill rise. Where’s this sense of urgency coming from? Seems like we’ve got people crying wolf for no good reason.

We Say

There is good luck, and there’s dumb luck. We’ve had both over these 6 consecutive hurricane-free years. Today, however, calls to shrink Florida’s state-run property insurance mechanisms are coming from intelligent people who think the way you make your own luck is to plan for the time it runs out—whenever that is.

Running on luck is not what the COO of the Florida Hurricane Catastrophe Fund (Cat Fund) wants to do. Jack Nicholson has been saying, in essence, that if and when a major hurricane strikes, all the good fortune in the world (aka capital) will bring in no more than $7 billion in bonds to meet the Cat Fund’s current obligation of $18.4 billion. By year-end, lucky Florida’s Cat Fund will have $8.4 billion in cash, but there’s no way today’s world financial markets would find investors willing to buy $11 billion in bonds to close the gap. Marketplace realities say the best we could hope for is $7 billion—tops.

Shrinking the fund would mean that insurers would seek reinsurance in the private market, which costs more, and those costs would be passed on to consumers.

Tempers understandably flare with rate increases, so it may make sense to address this by shouting out the dastardly, fear-inducing four-letter word that is propelling efforts to moderate the state-run insurance mechanisms—debt.

Financing future storms with debt seems popular with people who are getting lower rates today. That tune changes when the bill comes due, including the bill we are still paying from Hurricane Wilma, a storm that hit way back in 2005. Our conversations with policyholders must continually stress that claims drive premiums, and if the money is not available the year it is needed, it will be collected on the back-end as long as necessary. “Pay it forward” is what the private market is required to do via regulation and legislation; “pay it backward” is the way the state insurance programs run, by design. However, a redesign may be on the horizon.

“Pay it forward” extends to bail outs that private carriers provide to Citizens or the Cat Fund when either experiences claims in excess of cash on hand. I think it would be interesting to show policyholders the invoice a company gets from regulators—which could amount to millions of dollars depending on the number of policies in force—and point out that this bill is payable within 30 days. It would make it crystal clear what that assessment amount is all about on their insurance bill.

Florida has been taking risks that seem ever riskier. Given the current economic conditions, these actions are sending danger-danger signals, and more people are hearing them.

Underwriting cycles have an effect on investment risk-taking, of course, and there is much history to show that in hard markets insurers experience greater underwriting losses and higher risk of insolvency. While the soft market is not over, planning for the next cycle is beginning because a couple of indicators are flashing.

Four criteria are necessary for a market to turn, and all four must be met:

– Sustained period of large underwriting losses
– Market decline in surplus/capacity
– Tight reinsurance market
– Renewed underwriting and pricing discipline.

The chart illustrates where things stand as of October 2011, a year with the highest global losses ever. Insured losses as of June 2011 were more than double those for the first half of last year and more than four times above the 10-year average. Global catastrophe losses of this magnitude will set profits back, compounded by low interest rates.

There are limits to insurers’ and reinsurers’ ability to finance catastrophe risk on their own, and there are new ways of packaging risk as securities. Florida State University’s Storm Risk Management Center has created a portal to share research and industry papers related to catastrophe risk financing. Its website (www.catriskfinancing.org) organizes content for academics, practitioners, researchers, and insurance professionals who want to understand the issues.

Earlier this year, the Florida Office of Insurance Regulation issued a report on the bonding and borrowing capacity of Citizens and the Cat Fund, concluding that “strategic methods for encouraging the movement of capital and property insurance policies to the private market should be employed as quickly as possible.” That is now a work in progress.

http://www.propertycasualty360.com/2011/11/28/taming-floridas-hurricane-catastrophe-fund?t=claims-technology

The Florida Times Union
Editorial
November 30, 2011

Are you feeling lucky?

No hurricane has made landfall on the Sunshine State in recent years, despite having active hurricane seasons.
Florida continues to gamble on a foolish wager that it doesn’t need to pay for insurance sufficient to cover damages from even one big hurricane, let alone several.

If luck runs out, those paying in the form of hefty after-the-fact assessments will include Jacksonville-area homeowners, even if the damage is elsewhere.

The Legislature created the problem and now needs to fix it by restoring responsible funding of property insurance. The paucity of major storm damage in recent years makes it easier for politicians to continue ignoring the problem.

This year’s 18 named storms made last year the sixth-busiest Atlantic hurricane season since record keeping began in 1851.

But this marked the sixth consecutive year the U.S. has avoided a hurricane making landfall at a Category 3 level or higher.

When luck runs out, Florida will be faced with some big numbers. Think in terms of billions of dollars in damages charged to taxpayers and policy holders. Imagine what this will do to the state’s economy.

The Legislature has manipulated property insurance in recent years through two quasi-public entities, shifting liability from private insurers to Florida’s residents and discouraging private competition in the state’s insurance market. The result is undue risk of economic catastrophe in the event of a single hurricane the size of Andrew, which struck in 1992.

An idea gone wild

Citizens Property Insurance Corporation, originally intended as an insurer of last resort, now has 1.5 million policies and covers 25 percent of residential property in the state. Its growth has been fueled by artificially low rates mandated by the Legislature.

Half of its policies are in five high-risk coastal counties in South Florida.

The Florida Hurricane Catastrophe Fund, a reinsurance entity that backs policies written by Citizens, also provides reinsurance for private insurers, further increasing the state’s exposure.

For perspective, consider that Andrew, a Category 5 hurricane, stuck a fairly narrow path in Florida. But it’s impact shocked the state and insurers.

Katrina cost $47 billion across several states in 2005. Four hurricanes that swept through Florida in 2004 did more than $25 billion in insured damages.

Raymond James and Associates, which advises both Citizens and the Cat Fund, projected that in the event of a single 100-year hurricane, the cash and reserves of Citizens and the Cat Fund could be depleted, forcing the state to borrow $18.6 billion through bonding to pay the costs — if the markets would lend that much. That’s based on a 100-year hurricane cost of $55.7 billion, a Cat Fund estimate cited in a recent Florida TaxWatch analysis.

If the worst happens

A Category 4 hurricane making a direct hit on Miami or Tampa Bay could fit the definition of a 100-year hurricane.

The $18.6 billion in bonds would be repaid through assessments, with the average Citizen policyholder being hit for $9,400 and the non-Citizens policyholder being assessed $7,100, according to a scenario outlined by Brent Winans, a Delray Beach risk-management consultant. Both could be paid over 30 years, with first-year installments of $1,200 and $360, respectively, and payments of $270 and $230, respectively, in subsequent years.

Incidentally, less than 1.5 percent of Citizens’ policies are written in Duval, Clay, St. Johns and Nassau counties, but non-Citizens policyholders here would be hit with the same assessments as those in South Florida who have benefitted most in the short term by underfunded reserves.

Floridians who live inland and in North Florida would be subsidizing coastal development in South Florida.

TaxWatch and others have suggested sensible reforms that would put the state on better footing.

All cost money. All would increase premiums for most policy holders, and many in high-risk areas would have to pay much more.

The Legislature must acknowledge that Florida can’t be lucky forever and address this property insurance problem.

Failure to do so would represent an abdication of responsibility with potentially catastrophic cost consequences for taxpayers and policyholders.

http://jacksonville.com/opinion/editorials/2011-11-30/story/florida-relying-luck-hurricanes

SunSentinel.com
By Julie Patel
November 30, 2011

A Citizens Property Insurance panel approved 30 recommendations Wednesday to help the state-backed insurer downsize and lower its financial risk to Floridians.

The changes will be discussed at a Cabinet meeting on Tuesday. Many would reduce Citizens’ financial risk to Floridians by millions of dollars without changing any laws. Some would effectively allow Citizens to shed policies and raise premiums.

Citizens is the largest property insurer in the state with nearly 1.5 million policies. All automobile and property insurance policyholders in the state would be charged fees if a major hurricane triggers deficits for Citizens.

Gov. Rick Scott recently ordered Citizens to develop ways to shrink and implement them by June.

Carlos Lacasa, Citizens’ board chairman, asked the insurer’s employees to report the impact of each recommendation on premiums the insurer collects. He said the changes are needed but “no one can be comfortable” offering worse coverage at higher prices and the board is sensitive to that.

Critics, including Tampa Attorney Sean Shaw, called on Cabinet members to challenge the changes.

Some recommendations don’t require approval from regulators and Citizens plans to move fast on them.

In December, it wants to changes its rules to raise its sinkhole deductible to 10 percent and cap coverage for its roughly 7,500 coastal policies with more than $1 million in coverage or non-renew them. It wants to reduce coverage for personal liability, liability for mold and loss assessments – coverage that helps condominium unit owners pay assessments charged by their condo associations to cover damage and improvements. It also wants to lower the default coverage sold to consumers for contents coverage, which covers furniture and electronics.

The rule changes would take effect in May for new policies and June for policies that are up for renewal.

Citizens already plans to drop coverage for gazebos, most carports and screened-in pool enclosures – almost everything but the main building on a property.

Citizens also wants to rethink rates for contents coverage and other structures as part of its rate hike request for 2013.

By March, Citizens wants to change its rules to drop more policies for homes that are considered vacant and eliminate coverage for damage from dropped objects, which would limit coverage for cosmetic damage to tiles on the floor of a home. It also wants to reduce coverage for high-value property such as jewelry, guns and silverware and for water damage such as pipes bursting and require homes 30 years or older that want coverage to have a 4-point inspection showing the electrical, heating and plumbing systems have been updated and are in good condition.

By the third quarter of next year, Citizens wants to add a fee for policyholders based on whether they’ve had claims in the past; drop ordinance and law coverage, which pays to make repairs for damage comply with new building codes, for everything but the main building of a property; and consider phasing out hurricane-proofing discounts five years after an inspection.

The changes made by the third quarter would be effective by early 2013.

About a dozen changes would affect policies for condominium buildings or businesses.

Citizens Spokeswoman Christine Ashburn said the board will approve the technical details of the recommendations in mid-December and can tweak them then if needed.

http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2011/11/citizens_insurance_prepares_to.html

The Palm Beach Post
By Randy Schultz
November 28, 2011

Hurricane season will end Wednesday with Florida having enjoyed six comparatively uneventful seasons. Unfortunately, the storm over hurricane insurance hasn’t moved on.

This month, Florida TaxWatch released a report on the state’s property insurance system. Not surprisingly, the report highlighted the usual lingering problems: Florida’s state-run insurer of last resort, Citizens, has become the insurer of first resort; private companies continue to drop policies; the Hurricane Catastrophe Fund, Florida’s state-run reinsurance system, wouldn’t be able to pay its bills if a large storm struck.

Given the Legislature’s priority of drawing congressional and legislative districts, important issues may get stuck behind the Tallahassee rope line. At this point, there is only one property insurance bill (SB 578), which would let unregulated companies take policies out of Citizens. At some point, though, the Legislature should listen to what Jack Nicholson has to say.

No, not that Jack Nicholson. This Jack Nicholson is CEO of the Florida Hurricane Catastrophe Fund. The fund provides subsidized backup coverage to insurance companies. Without the fund, private companies almost certainly wouldn’t write any hurricane policies in Florida. The purpose of the fund, Mr. Nicholson said in an interview, is to “stabilize the insurance market.”

For that to happen, companies must believe that the fund’s coverage is reliable. Last month, however, Mr. Nicholson said the fund might come up $3 billion short by being unable to borrow enough to cover what it owes the companies. One big reason is the instability and caution in the bond market that began in 2007. If companies see the fund as unreliable, Mr. Nicholson said, the effect would be to de-stabilize the market.

We agree on the need for a reliable catastrophe fund, which means getting more money into the fund and/or reducing the fund’s exposures. The less the fund covers, of course, the more private companies would have to cover, which would mean higher rates. Mr. Nicholson argues that “higher rates are coming anyway.” His worry is that a strong storm and a weak catastrophe fund would mean “economic catastrophe.”

The TaxWatch report proposed scenarios for strengthening the fund. Earlier, though, was the point that changing one part of the insurance system affects the others. One of those other parts is the consumer. Any change to the Hurricane Catastrophe Fund should ask something of insurers, not just consumers. An unbalanced solution would not stabilize the state’s real estate market.

http://www.palmbeachpost.com/opinion/editorials/head-off-economic-disaster-1999419.html?cxtype=rss_editorials

News-Press.com
By Manley Fuller
President, Florida Wildlife Federation
November 22, 2011

Despite there being 19 named storms this year, including Hurricane Irene which estimates suggest caused $10 to $15 billion in damages, Florida was once again spared this hurricane season.

Maybe it’s a change in the weather patterns or just good luck, but either way we now have another opportunity to make the necessary changes to the state-run insurer to reduce the risk to Florida taxpayers while providing greater protection to Florida’s natural storm buffers including barrier islands and flood plains.

Following Hurricane Irene, many news sources questioned the need to create a national disaster insurance program. However, this plan is strongly opposed by the Florida Wildlife Federation as well as other groups whom we rarely agree with on political issues. Such a fund would only encourage further coastal development in the most hazardous areas of East and Gulf coastal states, exposing taxpayers to tremendous liability. By providing private parties with public subsidies, offering insurance coverage anywhere someone chooses to build, we risk destroying coastal wetlands, dunes, and other natural defenses to storm surge. These buffers help reduce inland storm damage, as well as provide important fish and wildlife habitats.

In Florida, we know far too well the financial and environmental risks associated with government-run insurance programs that incentivize high-risk development. Every day, more policies are written by Citizens Property Insurance Corp., which transfers much of that risk to Florida homeowners, business owners, churches and charities — whether they are Citizens policyholders or not. Additional risk is transferred through the Florida Hurricane Catastrophe Fund. Creating a national program will surely create the same problem we have in Florida, but this time the problem will adversely affect all Americans as well as our coastlines.

The 2012 state legislative session is just weeks away, beginning on Jan. 10. For the past four years, we have been voicing our concern over the issues associated with Citizens and the Florida Hurricane Catastrophe Fund, working in conjunction with various charitable and business organizations throughout the state who also realize the consequences we all will face if changes are not implemented.

In our opinion, people who choose to develop or redevelop in predictably high risk areas should do so on their own dime instead of relying on public subsidies by the public, state or federal government. With Citizens’ chief financial officer suggesting the insurer should reach 1.6 million policies by the end of 2011, maybe this session all of our elected officials will realize that continuing to “help” some Floridians by offering an unfunded insurance subsidy today, will ultimately place Florida’s solvency at risk and lead to the destruction of critical coastal habitats that help protect Florida from storms and rising tides.

http://www.news-press.com/article/20111123/OPINION/311230017/Guest-opinion-Subsidizing-coastal-development-risky-taxpayers-habitat

Mysuncoast.com
By John McQuiston
November 16, 2011

The head of Florida’s Hurricane Catastrophe fund tells Governor Rick Scott that the fund should get smaller, which would likely mean that your homeowners insurance bill will get larger.

The “CAT Fund,” as it’s known, serves as insurance for insurance companies that sell homeowners policies here.
But it faces a three billion dollar deficit.

And the Fund’s Chief Operating Officer, Jack Nicholson, says it has grown too large to do its original job.
When Hurricane Andrew struck South Florida in 1992, it not only proved catastrophic to many homes and businesses, but to the companies that insured them.

“They were planning to cancel about 800,000 policies in the state,” Nicholson says. “Companies were going to withdraw from the state. We had to have something to provide them with some financial backing and support.”
So the state created the Florida Hurricane Catastrophe Fund. If another large disaster struck, it would insure that insurance companies could pay claims.

But in 2007, the Florida Legislature massively expanded the CAT Fund’s mission to reduce homeowners’ policy premiums.

“That was never intended to be the purpose of the cat fund,” says Nicholson.

Now, he says, it can’t afford to serve as a price suppressor. Tuesday, he told Governor Scott and his cabinet that the fund should be scaled back.

“It’s going to put the responsibility back on the insurance companies to pay their own claims,” says Florence Conlan, a Private Risk Advisor at Baldwin Krystyn Sherman Partners.

But that means that homeowners will have to pay more for insurance, probably 10% over the next seven or eight years, Nicholson says. Conlan believes it’s worth the cost to lose the risk.

“Wouldn’t we rather pay it on the onset than worrying about when we’ve lost everything?”

Conlan does work in the insurance business and those companies would likely be allowed to raise rates if a cat fund scale-back happens, but other supporters say that it would make the state more solvent.

Governor Scott has said he favors the idea.

http://www.mysuncoast.com/news/local/story/Catastrophe-fund-change-could-raise-homeowners/DaFK0Ja1zEGAFadwzZq53g.cspx

The Palm Beach Post
By Bill Kaczor
November 16, 2011

TALLAHASSEE, FLA. — Gov. Rick Scott said Tuesday that he supports shrinking Florida’s hurricane insurance backup fund even though that would raise premiums.

Scott also said he sees no need to abolish the state’s mandatory no-fault automobile insurance system, which has been riddled with massive fraud. Scott said he’s confident lawmakers can find a way to fix the system.

The governor and Florida Cabinet took no action after listening to a proposal for downsizing the Florida Hurricane Catastrophe Fund to eliminate a potential $3.2 billion shortfall.

Later though, Scott said he supported the idea.

“It’s shrunk already,” Scott said. “We can’t borrow the money. … I want to spend more time on that proposal, but I think we do need to reduce the size of the ‘Cat Fund.'”

Cat Fund chief operating officer Jack Nicholson told Scott and the three Cabinet members that due to volatility in the world finance markets, the state would be unable to find investors willing and able to buy enough bonds to help meet its coverage goal of $18.4 billion.

Insurers including the state-backed Citizens Property Insurance Corp. can get reinsurance through the Cat Fund at lower rates than in the private market.

The fund, though, has only $7.1 billion in cash. That’s expected to increase to $8.4 billion if Florida finishes the year without getting hit by a hurricane.

To make up the difference, the fund would have to borrow the rest, but Nicholson said it no longer can expect to find buyers for the full amount, hence the estimated $3.2 billion shortfall.

Nicholson said the fund probably could sell no more than $7 billion in bonds. He recommended that the Cat Fund’s coverage goal be reduced by $5 billion, which would require legislative action.

“The state is taking a risk today that it doesn’t need to take,” Nicholson said. “You’ve got a private insurance market. It has the capacity today to take that risk.”

Private reinsurance, though, would cost more. A preliminary analysis shows the down-sizing proposal would increase premiums for homeowners, businesses and other consumers by 10 percent over seven years, Nicholson said.

Scott said higher rates would be worth the trade-off.

“Consumers actually want real insurance,” Scott said. “They don’t want to have insurance that they know that no one can write the check. And basically right now if the Cat Fund can’t bond, then people are buying insurance believing that they’re going to get paid when they’re not.”

The Cat Fund repays its bonds through special assessments on almost all insurance policies sold in the state, including auto.

Scott and Chief Financial Officer Jeff Atwater held a news conference to urge the passage of legislation that would stop auto insurance fraud they say is costing Florida insurers and motorists $900 million a year.

They did not, however, offer specific suggestions. One option lawmakers are considering is to abolish what’s known as Personal Injury Protection, or PIP coverage, but Scott said he doesn’t think that’s necessary.

“We’ll see what comes through the Legislature,” Scott said. “Right now I believe it can be fixed.”

Motorists now must buy PIP insurance that provides $10,000 in coverage for injuries suffered in traffic accidents regardless of who is at fault.

Officials say the system is being abused through staged accidents as well as claims for unneeded health care services. They also blame lawyers who often seek fees more than the $10,000 limit even though no-fault was supposed to eliminate or reduce the need for litigation.

http://www.palmbeachpost.com/storm/scott-supports-shrinking-fla-hurricane-fund-1970648.html

Saintpetersblog.com
By Peter Schorsch
November 15, 2011

Michael Peltier of the News Service of Florida reports: Pressured by the governor and Cabinet to come up with specific fixes, governing board members of the state-backed insurance pool on Monday said they’ll resurrect a legislative proposal that died earlier this year with the hope it will be considered more favorably during a redistricting and election year session.

Meeting in Orlando, the board members of Citizens Property Insurance Corp. admitted that substantive change may not be in the cards as lawmakers return in less than two months for the 2012 session, but chairman Carlos Lacasa said it was important that the board be aggressive in its efforts to revamp the insurer that now handles nearly 1.5 million policies in some of the most hurricane-prone regions of the state.

Board members on Monday said they will work from a template offered last year by Sen. Alan Hays, R-Umatillla, that fell by the wayside as interested parties sparred over numerous portions of the controversial bill.

Tasked by Gov. Rick Scott and the Cabinet earlier this month to come up with a slate of recommendations for them to consider at their next Cabinet meeting Dec. 6, Citizens officials said they have little time to make up a whole new legislative package from scratch.

Hays’ initial proposal – a starting point again for Citizens in the coming session – allowed the company to raise premiums by up to 20 percent a year, after years of having rates frozen, most recently allowing for a 10 percent increase at most.

Beyond the rate hikes, the bill would have ratcheted down the value of homes that Citizens could insure. By 2016, the home would have to be valued at $500,000 or less to be eligible for Citizens coverage under the proposal.

Among the other provisions from the 2011 legislation that board members say they’ll support in the coming year is a prohibition on the use of public claims adjusters by Citizens customers. Public adjusters work with consumers to try to get claims paid by the company – and have been criticized by the insurance industry for unfairly reopening claims that shouldn’t have been reconsidered.

Citizens will also likely again back a prohibition on the company from offering commercial, non-residential policies, part of an effort to shrink the company’s book of business that would force it to shed about 8,300 policies.

Last session’s bill also would have prevented insurers from levying assessments on non-Citizens policies until policyholders within the pool are charged a 15 percent surcharge to be paid upon renewal, termination and cancellation.

With lawmakers expected to fight over redrawing political boundaries and a tight presidential race ahead in the key swing state, Citizens officials say they are not overly optimistic about what lawmakers will be able to achieve this session on the controversial insurance issue, especially since it targets residents in the voter rich coastal regions.

“The legislative process is extremely unpredictable,” said Citizens Vice Chairman Rob Wallace, a former lawmaker.

Though a valid concern, Lacasa, also a former lawmaker, said it is imperative for the board to at least begin the process of making significant changes to Citizens sooner rather than later.

“I would hate to squander a session,” Lacasa said.

http://saintpetersblog.com/2011/11/citizens-board-backs-redux-of-2011-bill/

SunSentinel.com
Editorial
November 15, 2011

The newest recommendations to “shrink” the size and risk of Florida’s Catastrophe Fund comes to an old conclusion: We’re all going to pay more; the only question is whether to pay now or later.

We opt for the former, but it’s no small consideration. Right now, Florida is still mired in the aftershock of the worst economic downfall in almost a century.

Many homeowners owe more on the homes they are insuring than those very homes are worth. Struggling businesses can barely afford another bout of insurance shock.

But it must also be understood that if the state were to get socked by a powerful hurricane, or a series of less powerful ones, Florida homes and businesses would get crushed by additional insurance assessments. That’s because insurance policies in the state, by law, can be assessed extra charges to make up for depletion of the CAT fund or to cover shortfalls at Citizens Property Insurance Corp.

Floridians today, in fact, are still paying 1.3 percent of their premiums to make up for deficits from the 2005 hurricane season. And the future remains unsettled. There is no guarantee the CAT fund would be able to raise the $17 billion it would need to offer committed coverage in the wake of storm losses of that magnitude.

So, pick your poison. Pay now to limit post-storm assessments, or continue to gamble on the storm-free hurricane seasons like the past six ones.

Our view? We back studying proposals, like ones offered by Florida TaxWatch, to at least blunt potential post-storm assessments.

Certainly, there are ideas on the table worth considering. For example:

One proposal would raise premium costs by $19.25 more a year, or $95 million for all policyholders, by adjusting the industry’s deductibles.

Another would increase premium costs by $92 more a year, or $453 million total, by decreasing coverage amounts by close to one-third to $12 billion.

Reducing policy coverage by $3 billion and increasing minimum co-pays for insurers to 25 percent would add $115 more a year, or $566 million for all policyholders.

If all three proposals above are implemented, costs would rise by $173 more a year, or $850 million for all policyholders, but it would drop coverage $5 billion.

We doubt Floridians can sustain the last option, not in this economy and not amid the current housing collapse. But some variation of the first two ideas could begin the process of weaning Florida from the risk it has taken on.

We believe it’s preferable to pay something now, rather than perpetually betting on the climate and risking financially crippling insurance policy assessments on top of post-storm damage in what will remain a troubled economic landscape into the foreseeable future.

http://articles.sun-sentinel.com/2011-11-15/news/fl-florida-insurance-editorial-1115-20111115_1_post-storm-cat-fund-florida-s-catastrophe-fund

Bradenton.com
Letter to the Editor
By Manley Fuller, President, Florida Wildlife Federation, Tallahassee FL
November 13, 2011

Based on a request from Gov. Scott, management from Citizens Property Insurance Corp. is expected to submit a proposal to the Florida Cabinet with a plan to reduce Citizens’ size and risk.

We look forward to hearing the suggestions presented by Citizens because for years we have supported reform of both Citizens and the Florida Hurricane Catastrophe Fund and are pleased to finally have a governor in office who also supports changes that better protect all Floridians.

Recently released information demonstrates how critical it is that these state-run entities be reformed.

From Citizens Chief Financial Officer Sharon Binnun sharing with a Senate committee that Citizens grows by 1,000 policies per day — a rate that is unsustainable and puts all Floridians who buy insurance at financial risk — to Cat Fund Chief Operating Officer Jack Nicholson announcing Florida faces a potential $3.2 billion bonding shortfall, all Floridians continue to be faced with imminent financial disaster.

We applaud Gov. Scott for asking tough questions and working to alter the current situation. We urge the Florida Legislature to do the same this legislative session.

Returning Citizens to its original role as insurer of last resort, scaling back the size of the Cat Fund, and establishing a rate structure that more honestly reflects the price of development decisions that put homeowners in jeopardy and render useless natural storm buffers — including barrier islands and coastal wetlands which diminish storm energy and floods — should be a priority of all our elected leaders this session.

http://www.bradenton.com/2011/11/13/3645833/reform-citizens-cat-fund-to-prevent.html