Florida Chamber-backed Bill To Fix Florida’s Property Insurance System Passes Senate Committee Stop

February 17, 2012 | Important Updates Print

Florida is financially unprepared for a major hurricane and our current financing model could be the single biggest threat to our recovering economy.  If Florida were hit by a major storm this year, the CAT Fund could experience anywhere from $1.6 billion to $4.6 billion in unfunded obligations – dollar figures so high that the CAT Fund has said it cannot borrow sufficient funds to meet these obligations.

A Florida Chamber-backed bill that will help to fix Florida’s broken property insurance system passed the Senate Banking and Insurance Committee today 8-1.  Florida Chamber Executive Vice President David Hart testified in support of the bill in committee.  SB 1372 by Sen. JD Alexander will:

• Increase the CAT Fund industry retention to $8 billion for the 2013-2014 contract year;
• Decrease the CAT Fund mandatory coverage limit beginning 2012-2013; and
• Reduce the CAT Fund emergency assessment authority.

“The Florida Chamber of Commerce has a rich history of engaging in insurance reform efforts that create a more competitive and stable insurance market,” said Hart.  “We have long-held that Florida needs more free market insurance opportunities than the existing government-run Citizens Insurance.”

Seismic reforms to the Florida Hurricane Catastrophe Fund (CAT fund) and the government-run Citizens Property Insurance Corporation are top priorities of the Florida Chamber of Commerce for the 2012 Legislative Session.

Reform to these entities are critical because Citizens Insurance has grown from the insurer of last resort to the insurer of first resort and reforming both Citizens and the Cat Fund will help to eliminate the “hurricane tax” assessment levied on Florida businesses, homeowners, renters, charities, churches and drivers to cover costs associated with major hurricane losses.

Without reform, Florida remains a ticking time bomb until the next hurricane makes landfall, where future “hurricane taxes” could amount to over 50 percent of insurance premiums each year for up to 30 years and will be financially devastating to the business community.  Also, because Citizens Insurance and the Cat Fund will not have the capacity to pay claims for future storms, they will rely entirely on taxpayer-backed debt – further threatening Florida’s economy and job creation.

If Florida were hit by a major storm this year, the CAT Fund could experience anywhere from $1.6 billion to $4.6 billion in unfunded obligations – dollar figures so high that the Cat Fund has said it cannot borrow sufficient funds to meet these obligations.

For more information on the Florida Chamber’s Insurance Coalition, contact Teye Reeves at teye@flchamber.com.  To sign-up for more grassroots alerts and updates on issues most important to your business, please visit www.FloridaChamber.com/grassroots.