A1.3 percent surcharge on most property/casualty policies in Florida to help pay for past hurricane claims is coming to an end earlier than originally planned.
The Florida Cabinet voted this week to end the assessment on policyholders that was begun in 2008 and was expected to continue until 2016.
State law requires an assessment whenever the Florida Hurricane Catastrophe Fund (FHCF) does not have enough cash to pay insurers for the losses they incur. The surcharge, called the “hurricane tax” by some, is used to fund revenue bonds to pay the losses.
FHCF ran out of money following Wilma, which was the fourth storm of 2005 and the eighth storm that hit the state during a two-year period. The FHCF had to borrow about $2.6 billion to pay its obligations to private insurers.
Officials had expected to need the assessment on policies until July 2016 but the state agency and private insurers were able to settle the remaining outstanding claims for less than anticipated. Also, officials said the policyholder base against which the assessment was levied has been growing in recent years after declining in the first years of the assessment.
Now the surcharge will be discontinued on policies renewed or issued on or after Jan. 1, 2015.
Jack Nicholson, chief operating officer for the FHCF, called the move “good news” for consumers.
The Florida Cabinet has reviewed the surcharge over the years. In 2010, the Cabinet considered delaying the assessment, with some officials questioning why some claims take so long to be filed or closed.
In 2011, the state enacted a law placing a statute-of-limitations on hurricane and sinkhole claims and capping public adjusters’ compensation.