Fla. Democrats Support National Catastrophe Fund

October 20, 2005

In an effort to stabilize Florida's insurance market and entice more companies to write windstorm coverage, Democratic legislators have announced they support efforts suggested by Gov. Jeb Bush's to urge Congress to create a national catastrophe fund.

The Democrats say another aim is to reduce the burden on Citizens Property Insurance Co., the state's insurer of last resort, that now covers 795,000 policies, more than half of them in South Florida.

According to the Fort Lauderdale Sun-Sentinel, Republican legislative leaders applauded Democrats for researching the windstorm idea but it is unclear whether they and the insurance industry will back it.

The Democrats want the state to cover windstorm risk by offering a policy modeled after the National Flood Insurance program. The new state-backed insurance fund would augment private property and casualty insurance and cap risks at $500,000.

Several Florida House Democrats, including state Reps. Dan Gelber of Miami Beach, Franklin Sands of Weston and Priscilla Taylor of West Palm Beach touted the plan Tuesday as legislators began hearings about insurance industry reform.

The plan calls for tapping money already in reserve in Florida's Hurricane Catastrophe Fund, collecting premiums and holding reserves tax-free. It also would allow the state to supplement losses by issuing bonds.

"There's a lot of ways to build up the reserve other than just increasing premiums," Gelber told the Sun-Sentinel.

Democrats said they hope that by shifting wind risk to the state, more insurers would want to cover homes in Florida. After last year's hurricane season, several companies, including Allstate Floridian Insurance Co. and Nationwide Insurance Co. of Florida, announced they would stop issuing new homeowner policies or would not renew thousands of existing customers' coverage.