Fla. Task Force Suggests Citizens, CAT Fund ‘Solutions’
The Task Force on Long-Term Solutions for Florida’s Insurance Market has submitted a report to Governor Jeb Bush and the Legislature detailing the devastating effects two hurricane seasons have had on consumers, the strained financial resources of the private market, issues facing Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund, and offers numerous recommendations to stabilize Florida’s insurance market.
The suggested solutions recommended by the Task Force can be grouped into five main categories:
• Creating a Federal Backstop by pushing for a long-term national solution to catastrophe insurance and encouraging a discourse to create a National Catastrophe Fund. This fund would not only provide additional capital, but would also be a stabilizing force to the Florida insurance industry.
• Promoting mitigation by improving the resiliency of Florida homes through improved building codes for new homes, retrofitting of older homes, and the adoption of the Building Code Effectiveness Grading System. This recommendation includes grants and subsidized loans.
• Limiting Citizens’ exposure by limiting eligibility to home structures valued under $1 million, the continuation of the seasonal occupancy surcharge, refinement of Citizens’ rate making process, and a review of the Citizens’ take-out program.
• Improving competitive conditions by expanding the Office of Insurance Regulation’s monitoring of market conditions and encouraging capital investment into the market, reducing the frictional cost by streamlining regulatory requirements and removing barriers to competition.
• Strengthening the financial position of FHCF, which includes the creation of a better method for FHCF to address multiple event catastrophes, alteration of the rate structure to more quickly replenish the FHCF’s cash reserves, and consideration of other methods, including the use of sales tax revenue from post-storm recovery to augment FHCF’s financial position.
During last year’s session, the Legislature passed Senate Bill 1486 which created the Task Force and vested it with the responsibility to develop recommendations to improve the availability of homeowners insurance for all Floridians.
The Task Force brought together members with varied expertise including the insurance commissioner, experts on hurricane damage mitigation, and representatives from the insurance, lending, and construction industries and academia. The Task Force analyzed state and national insurance trends, as well as solicited expert testimony.