Legislature Fails to Reform Florida Hurricane Catastrophe Fund |
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Written by U.S. Insurance News
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Monday, 12 May 2008 |
For now, the hurricane insurance tax issue in Florida has been tabled.
The state legislature adjourned earlier this month without addressing the tax issue. Instead, legislators passed additional regulatory measures that, in the opinion of the American Insurance Association (AIA), continue a series of legislation in recent years that discourage national companies from expanding their writings in Florida.
The legislature did not pass a measure supported by AIA and the Florida business and non-profit community, which would have reduced the size of the Florida Hurricane Catastrophe Fund—and the potential for hurricane taxes on Florida citizens if the Catastrophe Fund is forced to issue bonds after a major storm.
“We are disappointed that legislators continue to put their faith in the ability of government-sponsored insurance mechanisms,” said Cecil Pearce, AIA vice president for the southeast region. “This puts the burden of paying for Florida hurricanes on the backs of consumers, instead of allowing the private reinsurance market to do what it does best: spread the risk of natural catastrophes to companies and investors far beyond Florida.”
In other action, Florida legislators extended a rate freeze on Citizens another year, until 2010. Also, Citizens’ claims-paying capacity was diminished by the legislation transferring $250 million in Citizens’ surplus to an account to provide loans to small domestic companies willing to take policies out of Citizens.
The legislation established a blue ribbon task force to develop a plan to return Citizens to an insurer of last resort and to recommend measures to encourage private insurers to assume policies currently in Citizens.
“AIA will continue our focus on a public policy agenda aimed at reinstituting a vibrant private property insurance market in Florida,” Pearce said.
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