A coalition of insurance organizations, bankers, realtors and home builders are petitioning state lawmakers to support SB 98/HB 279 an effort by Sen. J. D. Alexander and Rep. Kim Berfield to protect Florida’s Hurricane Catastrophe fund with a constitutional amendment.
Their petition says, few would dispute Florida’s need for a viable CAT Fund. The Florida Hurricane Catastrophe Fund has been a model for the rest of the country and is largely recognized as the number one reason carriers are willing to underwrite catastrophes in the Sunshine State. It is also responsible for lower property insurance rates.
Unfortunately using CAT Fund surplus for other purposes is dissuading otherwise willing insurers from coming to Florida and is inducing others to consider leaving. Those who “might” invest in Florida’s wind market have witnessed such misuse in fiscal year 2000-2001 of $12.2 million, in 2001-2002 of $30 million, and in 2002-2003 of $20 million.
During Special Session 2004A, another $150 million was appropriated as reimbursement for multiple deductibles—this, despite availability of a $720 million budget surplus created by the four storms. That’s four years in a row for a total of almost $215 million (excluding investment income). Now the CAT Fund is broke and the message to insurers is that they cannot depend on money promised by the Florida Legislature.
If not curtailed, such activity could not only affect CAT Fund stability, but even lead to assessments on the very policyholders it was designed to help. In fact, financial rating organizations are already rumored to be considering downgrades of carriers’ ratings based on the CAT Fund’s lack of money and the inability of lawmakers to protect its surplus. That’s a sad testament to the hard work and wise decisions of past Legislatures.
The members of the ALLIANCE think it’s time to send a better message. We need to tell Floridians, insurers, investors, and rating organizations that CAT Fund dollars will remain in the CAT Fund and be allowed to grow for their intended purpose. The ALLIANCE supports a constitutional amendment limiting the amount of CAT Fund dollars that can be used for mitigation or items not directly related to its mission.
State Sen. J.D. Alexander and Rep. Kim Berfield have introduced SB 98 and HB 279, respectively, placing a constitutional amendment on a statewide ballot that would limit access to the CAT Fund reserves. For the sake of all Floridians, we must protect the Florida Hurricane Catastrophe Fund so that we can attract more companies and competition and keep premiums as low as possible.
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