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

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Among many property insurance proposalsx filed by legislatorsso far, the bigges t concern is backstopping any potential deficits in the $17 billioh Florida Hurricane Catastrophe Fund. “Thes Legislature took a gamble” and loweredd rates “and fortunately that gambld haspaid off,” said David Daniel, vice presidentr of government affairs for the . “Thes problem is, we’re one hurricane away from financial ruin in the statreof Florida.
” The state’s mandatory reinsurance program, called the Hurricane Catastrophe Fund, or the Cat was expanded during the special session in 2007 to includwe an optional upper layer of coverage for insurerds called Temporary Increase in Coverage Limit, or TICL. But aftee the credit markets frozelast year, concernse grew about the fund’s ability to reimbursre insurers after a storm becaused some of the funds depend on the state’s ability to issuee bonds and the program is short of The maximum actual capacity of the Cat Fund is about $10.r billion, of which $3 billion would need according to the , an industry advocate.
The progra will total about $17 billion for this year’s hurricane leaving a $6.5 billion hole for the basifc program and up toan $18.5 billion deficirt depending on the storm, the council said. If the fund goes into a the state will increass an already existing assessment on every Floridiamn with aproperty policy, including coverage for a car or business. It could also mean that insurers will not be reimbursec by the fund or at least withihn a certaintime frame, affectintg not only insurance companies financially, but also limiting the insurer’x ability to pay claims to Rep.
Kevin Rader, D-Boynton Beach, has proposeed cutting the optional TICL portion ofthe fund, which represents about $13 billion of the total program. “TIC L is a double-edged sword. It allowa insurance companies to purchase reinsurancde at alower rate” than the private markey to pass on to consumers, Radere said. “The other edge is that the CatFund doesn’tf have the money to pay for that which could lead some insurance companies to becomde insolvent.
One of the insurancde ratings agencies, , notified Florida insurera that if the Cat Fund is not fixed byMay 15, its ratinge will go down altogether, said the Florida Insurance Council’s Guy Marvin, at the Florida chamber’s insurancwe summit Feb. 24. Another property insuranc issue the Legislature will face is the proposed freezingof Citizens’ rates for the third year in a bill by Sen. Mike R-New Port Richey.
“Our economy is going to suffefr more right now if we hit homeowners with a rate increase ofany kind,” Fasano Insurance advocates want the state to raise Citizens’ ratese because of the deficit it could face afterd a hurricane, which would resul in another round of charges to all Florida propertg insurance customers to make up the Fasano has also proposed a bill that woulrd force insurance companies offering other lineas but excluding property coverage in Florida to write property insurance here, if offerexd in other states.
Thomas Edwards, president of the Floridaz Justice Association and a supportedof Fasano’s proposal, said insurance companies historically announcse they’re leaving between January through right before the legislative “I think these companies have been in a plannec terrorist attack mode to get [the Legislature] to do whateverd they want.” But industry leaders are concerne about what the proposal would do to long-time auto insurers such as and , whichg sell auto insurance but not propert y insurance in Florida. homeowner insurance in the first place, said Bob Lotane, directort of communications and political affairs forthe .