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Dream Big!
National study focuses on Florida’s insurance crisis

TALLAHASSEE, Fla. – Feb. 6, 2008 – The James Madison Institute study on the state of insurance markets across the United States, completed with help from the Competitive Enterprise Institute and the Heartland Institute, revealed Florida and four other states have dismal markets warranting an “F” for performance.

The national study, unveiled in Florida on Feb. 4 by state Reps. Dennis Ross (R-Lakeland) and Don Brown (R-DeFuniak Springs), examined insurance markets across the 50 states and the District of Columbia. Insurance reforms in Florida did nothing to achieve lower premiums for policyholders and increased liabilities for taxpayers, and the study concluded the state could see a reduction or elimination of private insurers from the market as a result of those reforms.

Reps. Ross and Brown agreed with the study’s findings, citing more than $30 billion in bonds backing the Florida Hurricane Catastrophe Fund that has not yielded lower premium rates for consumers. The fund also could collapse, leaving insurers and the state on the hook for liabilities uncovered by bonds already sold.

The lawmakers highlighted the extensive market share of Citizens Property Insurance Corp., and the dangers associated with allowing Citizens and the state’s Cat Fund to levy new assessments without legislative or voter approval.

Ross estimates current losses to families per year would reach $1,600 each for property and auto insurance policies. Brown stated, “We must treat the root of the problem. We must admit what the real problem is: wind; exposure, and human behavior that continues to produce the exposure. The course we’re on is not the correct course.”

Among the recommended solutions to the current insurance crisis: the establishment of a limited purpose wind-only insurer and to phase-out Citizens as it currently exists, a reduction in Cat Fund liabilities, the establishment of a private reinsurance purchasing mandate for carriers, the creation of a national coastal wind insurance zone that would be federally regulated but not receive special subsidies, and the use of property tax credits to beef up storm-proofing among homeowners to receive insurance premium discounts on wind coverage.

Source: Insurance Journal (02/05/08)

© Copyright 2008 INFORMATION, INC. Bethesda, MD (301) 215-4688

  Related Topics: Property insurance
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