Citing the high level of catastrophic risk exposure Florida faces, Chief Financial Officer Alex Sink today suggested guidelines for the Legislature to follow in working to reduce the state’s hurricane risk.
CFO Sink advocated gradual steps, maintaining that Florida property owners cannot afford to bear large, one-time shocks to their homeowners insurance rates, similar to those experienced in 2006.
“There are responsible, gradual changes the Legislature can make that will begin reducing our hurricane risk exposure and will better protect Florida’s homeowners,” said the CFO. “It’s time to start making smart decisions and enacting solutions, so that Florida will be less financially exposed when a major storm hits.”
In a letter to Rep. Pat Patterson, chairman of the Insurance, Business and Financial Affairs Committee, and Senator Garrett Richter, chairman of the Banking and Insurance Committee, Sink set forth four recommendations:
My Safe Florida Home
Sink recommended that the hardening of homes fostered by this program be continued by rolling over the estimated $20 million remaining in the program.
Cat Fund
She urged a lowering of the Cat Fund exposure to reduce uncertainty over bonding.
Fall Reinsurance
The state should establish its reinsurance program in the fall, not the spring, she said. Sink proposed that the Legislature empower another entity with the ability to set coverage levels in the Cat Fund in the fall, taking advantage of the broader range of possible markets.
Citizens Role
Also, she urged lawmakers to take steps to gradually return Citizens Property Insurance back to its role as an insurer of last resort.
She said Florida’s homeowners are subsidizing Citizens and its “actuarially unsound rates” and urged lawmakers to consider the changes set forth in the recent Citizens Task Force report.
“We must establish a long-term, strategic vision for addressing hurricane risk,” Sink said. “I hope to work with my colleagues on the Cabinet and members of the Legislature in a constructive and bipartisan way to make some of these changes in the coming months.”
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