January 4, 2007
TALLAHASSEE — As the legislature and Governor Charlie Crist prepare for a special session this month to deal with the property insurance predicament, the Florida Hurricane Crisis Coalition (FHCC), comprised of company’s, associations, and other coalitions, today released its recommendations for long-term insurance solutions. The coalition, formed last August by Associated Industries of Florida (AIF), seeks relief for Florida’s residents and businesses suffering from escalating property insurance costs and limited affordable coverage options. The coalition was led by three co-chairs, John Sebree of the Florida Association of Realtors; Cecil Pearce of American Insurance Association; and William (Bill) Phelan of the Florida Health Care Association.
“Members of the Florida Hurricane Crisis Coalition applaud the new administration and legislative leaders as they prepare to find long-term solutions to our property insurance crisis. All Floridians must recognize that this crisis did not occur overnight and there is no single silver bullet solution. But with a focused and thoughtful approach, this state can work toward providing a viable, competitive private insurance market to benefit residents and business owners in Florida,” said FHCC co-chair John Sebree.
FHCC’s recommendations were developed following the state’s Property and Casualty Insurance Reform Committee’s findings, as well as with input from a diverse group of stakeholders. Members strongly encourage the legislature to consider the Coalition’s adopted guiding principles. These eleven principles, authored by Representative Don Brown, will help limit the scope of the special session on measures that will reduce Florida’s exposure to hurricane damage and address the affordability of insurance premiums by:
“By establishing a dedicated funding source for homeowners’ grants, creating a non-profit mitigation entity and educating homeowners regarding the advantages of hardening homes, Florida will prove its commitment to reducing exposure to hurricanes. For every dollar spent on mitigation, there is four dollars of return,” said Barney Bishop, President and CEO of Associated Industries of Florida. “A state investment of at least $500 million per year for mitigation will ensure Florida’s homes are built under the latest and strongest building code, making them much less vulnerable to severe storms.”
The Coalition recommends the creation of a MY SAFE HOME program which would allow statewide associations and home improvement retailers to advertise and market this program to the public to insure that homeowners are informed about available state grant dollars for mitigation purposes.
To ensure these mitigation funds are spent appropriately, FHCC’s Building Assessment Task Force recommends a regulatory environment for mold assessors/remediators, home inspectiors. The insurance industry and homeowners will use these inspections to determine eligibility for grants and insurance premium discounts.
FHCC urges that Citizens Insurance Co. exposure to hurricane losses be reduced by limiting coverage to a basic policy and by charging actuarially sound rates.
“Citizens started as a last resort insurer for coastal residents but has grown into Florida’s primary insurance company due to the incredibly unfortunate weather events of the past few years,” said Bill Phelan. “Prompt action needs to be taken to ensure residents are protected, Citizens growth subsides, and the state is prepared for the unpredictable wrath of Mother Nature.”
FHCC recommendations also urge the legislature to weigh the risk of larger assessments on property and casualty insurance premiums and the ability to raise monies to pay losses through borrowing, should a catastrophic event occur, versus the need to pre-fund the state’s CAT fund. Providing additional direct insurance and reinsurance without initial capitalization at below-market or actuarially-sound rates will greatly increase the possibility of additional debt and taxes on premium.
Associated Industries and the Florida Hurricane Crisis Coalition delivered these conclusions after conducting thorough research, deliberations and by closely tracking the work of Lt. Governor Toni Jennings’ Property & Casualty Insurance Reform Committee.
(Please see attached guiding principles and recommendations. available in pdf format)