Advertisement
  1. Archive

Insurance plan gets gale-force veto from pair

Two key state lawmakers said Thursday they strongly oppose any plan to shift hurricane risk from private companies to a tax-exempt state program as proposed by the state's two largest home insurers.

"That will never happen on my watch," Rep. John Cosgrove, D-Miami, chairman of the House Insurance Committee, told an academic task force studying how to make sure all Floridians have affordable hurricane coverage.

Sen. John Grant, R-Tampa, chairman of a similar committee in the Senate, agreed.

"You're in the business to insure risk, and don't come to us, Mr. Insurance, and tell us you want to transfer the hurricane risk," Grant said at the meeting attended by state officials and insurers.

State Farm and Allstate insurance companies propose setting up a quasi-governmental program funded in part by homeowners' premiums. It is similar to a Hawaii program set up after Hurricane Iniki in 1992 that kept insurers from fleeing the state but tripled the average homeowner policy premium.

State Farm and Allstate write 49 percent of Florida homeowners' policies.

Leslie Chapman-Henderson, an Allstate spokeswoman, said her company will continue to work with the task force. "We very sincerely want to find a way to address our exposure problem and find a solution that can be acceptable," she said.

At the hearing, Cosgrove discounted what he described as "hurricane hysteria" about a $50-billion megastorm hitting Florida. He conceded such a storm could happen but pointed out it is considered a 1-in-300-years occurrence.

"We have to be driven by what's more realistic, and that's smaller hurricanes but more frequent," he said.

But he said the state should be prepared. "Florida should recognize that there has to be a private-public partnership to ensure the people of Florida are protected in the event of a huge, catastrophic loss."

The task force's technical advisers say private insurers, not the public, should remain the first major source of payment from hurricane damage. They initially suggested to the panel that the state should not jump in to help insurers from the state's catastrophe fund until a $20-billion loss.

But the panel said it wants to get figures from insurance companies, state regulators and private economists about what the amount should be.

Those numbers will be discussed at its July 25 meeting in West Palm Beach. The group, which consists of state university system Chancellor Charles Reed and four university presidents, will come up with recommendations for a report due Aug. 15 to state officials.

Currently, the state's hurricane catastrophe fund would begin helping insurance companies, based on the assessments they have paid into the pot, when losses reach $3-billion.

The fund, the only one in the nation, is expected to have $1-billion by the end of this year. Its bonding power could add several more billions of dollars.

Both Grant and Cosgrove said the state has come a long way since Hurricane Andrew in 1992, when Cosgrove and others in Dade County huddled in their closets and bathrooms as their homes blew away around them. It caused $16-billion in insured damages and the failure of eight insurance companies.

Cosgrove said he believes that the insurance industry and the state, with the programs it has set up since Andrew, could economically weather a $15-billion storm.

Insurance industry representatives said it is important that state officials and lawmakers acknowledge that insurers cannot do it alone if a huge hurricane hits.

YOU MIGHT ALSO LIKE

Advertisement
Advertisement