Editorial: Property Insurance Crisis — Funding vs. Exposure

Dec 15, 2011

The following article was published in the Lakeland Ledger on December 15, 2011:

Property Insurance Crisis:  Funding vs. Exposure

Florida’s property-insurance crisis can be summed up in two words: Underfunded. Overexposed.

“The current insurance system puts taxpayers on the hook for potentially billions in assessments, while providing little assurance that their claims will be paid in the event of a catastrophic hurricane or series of hurricanes,” Dominic M. Calabro, CEO of the independent think tank Florida TaxWatch said this month.

He did so when releasing a new analysis of the weaknesses of the state’s Citizens Property Insurance Corp. and its Hurricane Catastrophe Fund.

Originally intended as the “insurer of last resort” Citizens now holds nearly 1.5 million policies with a risk liability of nearly $513 billion.

In order to keep rates artificially low — lest voters be offended — the risk is spread out to all insurance holders.


Thus, residents of inland Polk County — insulated from the coastal brunt of hurricanes — are on the hook for any damages done to beachside condos in Miami.

There are several proposals floating around this upcoming session to “fix” Florida’s underfunded, overexposed storm risk. Three issues in particular must be addressed.

“Any proposals to fix this situation should aim to have CPIC [Citizens] set market-oriented rates, restore CPIC to truly being the ‘insurer of last resort’ as it was intended, and include a quantitative analysis to ensure the proper protection of Florida taxpayers,” said Calabro.

Otherwise, Florida will remain one hurricane away from a fiscal tempest.

Find this article here:  http://www.theledger.com/article/20111215/EDIT01/111219577/1073/YOURTOWN17?Title=Property-Insurance-Crisis-Funding-Vs-Exposure-