Florida Chief Financial Officer Tom Gallagher commended state lawmakers for approving legislation, Senate Bill 2488, that will increase the availability of homeowners insurance through changes to the Florida’s Hurricane Catastrophe (Cat) Fund.
The Cat Fund was created after Hurricane Andrew to ensure that Florida’s insurance companies could quickly pay homeowners claims after a major hurricane and continue to provide coverage.
“This legislation will promote needed competition in the marketplace and help thousands of homeowners who are frustrated with the lack of insurance available,” said Gallagher, who oversees the state Department of Financial Services. “In fact, several companies have committed that they will write more coverage this hurricane season.”
The legislation, sponsored by Senator J.D. Alexander and Representative Kim Berfield, will strengthen the Cat Fund by resetting the retention to $4.5 billion and increasing its capacity to $15 billion for the 2004 hurricane season. The Cat Fund currently provides $11 billion of capacity, or reinsurance, to the insurance industry. Access to private reinsurance, which is insurance for insurance companies, has been limited in recent years. As a result, many insurance companies have reportedly stopped writing coverage or reduced their exposure by non-renewing policies.
The lack of reinsurance available through the private market, coupled with the inability of the Cat Fund to grow with the market, has reportedly resulted in a number of consumers being forced into the Citizens Property Insurance Corporation, the state’s insurer of last resort for homeowners who can’t get coverage from the private market.
“This legislation will encourage the private market to write more coverage and reduce the state’s role in providing insurance,” said Sen. Alexander.
“Those who live here and move here deserve access to a viable and competitive insurance market,” said Rep. Berfield. “This legislation gives homeowners a fighting chance to get coverage.”
The bill now heads to the Governor for signature.
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