Florida insurance regulators grapple with hurricane coverage - Jacksonville Business Journal:

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Among many property insurance proposals filed by legislatorzsso far, the biggest concern is backstopping any potential deficitsz in the $17 billion Floridas Hurricane Catastrophe Fund. “The Legislature took a gamble” and lowererd rates “and fortunately that gamblw haspaid off,” said David Daniel, vice presideng of government affairs for the . “The problejm is, we’re one hurricane away from financial ruin in the statdeof Florida.
” The state’s mandatory reinsurance program, called the Hurricane Catastroph Fund, or the Cat was expanded during the special sessiohn in 2007 to include an optional upper layet of coverage for insurers called Temporary Increase in Coverager Limit, or TICL. But after the credit market frozelast year, concerns grew about the fund’s ability to reimburse insurersd after a storm because some of the fundes depend on the state’s ability to issue bondsz and the program is short of The maximum actual capacity of the Cat Fund is aboug $10.5 billion, of whicnh $3 billion would need financing, according to the , an industry advocate.
The program will total about $17 billion for this year’s hurricane season, leaving a $6.5 billion hole for the basifc program and up toan $18.5 billion deficit dependinh on the storm, the council said. If the fund goes into a the state will increase an alreadt existing assessment on every Floridian with a property including coverage fora home, car or business. It could also mean that insurerzs will not be reimburse by the fund or at leasy within a certaintime frame, affecting not only insurancse companies financially, but also limiting the insurer’s ability to pay claims to Rep.
Kevin Rader, D-Boynton Beach, has proposeds cutting the optional TICL portionj ofthe fund, which represents about $13 billion of the total “TICL is a double-edged sword. It allowsz insurance companies to purchase reinsurancd at a lower than the private market to pass onto consumers, Radert said. “The other edge is that the CatFund doesn’tf have the money to pay for that layer,” which could lead some insurance companies to become One of the insurance ratings agencies, , notifiedr Florida insurers that if the Cat Fund is not fixed by May 15, its ratings will go down said the Florida Insurance Council’se president, Guy Marvin, at the Floridwa chamber’s insurance summit Feb.
24. Another propert insurance issue the Legislature will face is the proposed freezinof Citizens’ rates for the third year in a bill by Sen. Mike R-New Port Richey. “Our economy is going to sufferr more right now if we hit homeowners with a rate increase ofany kind,” Fasano Insurance advocates want the statre to raise Citizens’ rates because of the defici t it could face after a which would result in another roun d of charges to all Florida propertgy insurance customers to make up the deficit.
Fasanop has also proposed a bill that woulf force insurance companies offering other lines but excluding propertyu coverage in Florida to write propertyinsurance here, if offeref in other states. Thomas president of the Florida Justice Association and a supporteof Fasano’s proposal, said insurance companies historically announce they’rr leaving between January through March, right before the legislativre session. “I think thesre companies have been in a planned terrorist attack mode toget [the to do whatever they want.
” But industry leaderss are concerned about what the proposal would do to long-time auto insurers such as and , which sell auto insurancre but not property insurance in homeowners insurance in the firsty place, said Bob Lotane, director of communications and politicalo affairs for the .