A coalition of Florida charitable and business groups is pressing the state to eliminate assessments charged all policyholders to subsidize the state-backed insurance provider and hurricane claims fund.
In a letter to Gov. Rick Scott, the groups called on him to work with state lawmakers to eliminate all “hurricane taxes on insurance premiums” that go to support Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund (Cat Fund).
Business groups, led by Associated Industries of Florida, and nonprofits including the United Way, Florida Wildlife Federation and Florida TaxWatch, signed the letter.
Citizens and the state Cat Fund have to issue new debt to pay claims after hurricanes. To service this debt, the state levies hurricane taxes on the insurance premiums of businesses, charities, schools, churches, renters and drivers across the state. Yet, the opponents of these taxes say, many of these policyholders being taxed do not gain any of the benefits of the taxes that go to subsidize coastal property owners.
“It is inexcusable for Florida to continue to require our businesses and charities as well as other Floridians – even those who are not Citizens policyholders – to subsidize many of the state’s most fortunate living in expensive homes on the coast. Remarkably, this system results in charities subsidizing the owners of $3 million vacation homes,” the groups wrote.
The organizations say they are still paying for the storms from 2004 and 2005 and will be for at least another five years. They also say they are concerned about the amount of future hurricane taxes.
A report by Florida TaxWatch found that, despite no recent land falling storms, both state-run entities have faced shortfalls because of limiting bonding capabilities. The report indicated a 100-year probable maximum loss would have left Citizens with a deficit of $10.6 billion and Cat Fund with a shortfall of $24.9 billion. Additionally, Florida TaxWatch reported assessments to repay the combined $35.5 billion shortfall, spread over 30 years, at an assumed interest rate of 4 percent, are $117.9 billion
“We all know there is a glide-path to stability our elected leaders can take to better protect the business and charitable organizations throughout our state,” said Barney T. Bishop, III, president of Associated Industries of Florida. “We hope that Gov. Scott realizes how dire this situation is, and will make eliminating the hurricanes on insurance premiums and reforming Citizens and the Cat Fund a top priority during his tenure as Florida’s governor.”
The Florida Wildlife Federation believes the taxes are not only bad for citizens and businesses but also bad for the environment.
“Building in high hazard areas that will grow more and more prone to flooding and storm damage is foolhardy and risky, not only to the inhabitants, but for all of us who share the costs associated with higher insurance surcharges,” said Jay Liles, policy advocate for the Wildlife Federation
“In their natural state, barrier islands serve as a great example of the value that undeveloped coastal islands can provide in reducing storm damage inland and in providing recreational lands, wildlife habitat and beautiful landscapes. We need to protect those resources and discourage their conversion for the benefit of the few, at the expense of the many.”
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