Florida Insurance Council EVP Predicts Hurricane Insurance Will Be of ‘Utmost Concern’ in 2006

Hurricane insurance will be the most significant property and casualty issue on a state level in 2006, just as it was in 2005, Sam Miller, executive vice president of the Florida Insurance Council told Insurance Journal.

“Congress, at a higher level, is considering a national hurricane fund seriously for the first time in five years,” Miller said. “The eight hurricanes which struck Florida in 15 months, Hurricane Katrina, the largest natural disaster insurance event in world history and one of the largest events period, and the likelihood we face another decade of high hurricane activity, have policymakers and the insurance community struggling to ensure we can continue to finance our hurricane losses.”

Miller said everything is on the table. “This includes additional rate increases from private property insurers and a major rate increase package being proposed by Citizens Property Insurance Corp. up to 80 percent for residents in some coastal areas, according to media reports. Citizens’ rate should be adequate to reduce subsidization of southeast Florida property by other regions of Florida through the statewide assessments.

“At the same time,” Miller said, “policymakers are considering charging more for vacation homes and less for primary residences and providing relief to low income Floridians having trouble paying their insurance premiums, as we provide relief today to help some people pay electricity and telephone bills.

Miller said the “everything is on the table” list includes a plan by the Florida House Democratic Caucus to create a state fund providing hurricane insurance and remove this peril from private insurance companies, although passage is probably not likely.

Other proposals include dedicating a portion of sales tax revenues to the insurance system to supplement insurance premiums. The funds could go to Citizens to prevent a $1 billion 11 percent statewide assessment next year and/or to the Florida Hurricane Catastrophe Fund to rebuild the Fund’s $7 billion cash reserves depleted by the 2004 and 2005 hurricane seasons.

Federal issues include a national catastrophe fund, a tax exemption to allow private insurance companies to accumulate hurricane reserves tax-free in years when there is no hurricane, assuming we will ever have a year without hurricanes again; allowing homeowners to set up tax-exempt savings accounts to cover their hurricane deductibles; and reassessing the National Flood Insurance Program.

The Task Force for Long-Term Solutions to Florida’s Hurricane Insurance Market, will provide a roadmap on many issues for the Florida Legislature in reports in February and again in April. Other groups are preparing recommendations, including a commission appointed by Governor Jeb Bush to investigate over-development and high hurricane losses in coastal areas; the House Democratic Caucus as noted above; and various insurance community groups, including the Florida Association of Insurance Agents and the Florida Insurance Council.

Topics Florida Catastrophe Natural Disasters Hurricane