Florida House Insurance, Business and Financial Affairs Policy Committee Reviews State Windpool Proposal–March 24

Mar 24, 2009

On Tuesday, March 24, 2009, the Florida House Insurance, Business and Financial Affairs Policy Committee (“Committee”) conducted a workshop on the following two insurance bills sponsored by State Representative Ellyn Bogdanoff (R-Fort Lauderdale) as part of its regular agenda:

  • HB 1157 relating to Property Insurance
  • HB 1159 relating to Public Records/Florida Hurricane Protection Program

These linked bills would create a statewide windpool known as the “Florida Hurricane Protection Program,” and contain additional provisions that include a public records exemption for certain Florida Hurricane Protection Program records.

Representative Bogdanoff explained her proposal, noting that she has been working on crafting the bill for four years, and that a statewide windpool is not a new concept.

She reminded the Committee the that large insurance companies are no longer writing homeowners’ insurance policies in Florida and asserted that, because hurricane exposure is too big of a risk to underwrite, the State should shoulder the burden.  Remaining risk would be absorbed by the private market.

Representative Bogdanoff’s proposal is three-tiered:

  • The lower layer of a windpool would be funded with existing Florida Hurricane Catastrophe Fund surplus
  • The middle layer would be funded through a financing mechanism such as bonds
  • The upper layer would be funded through private reinsurance

State Representative Jim Waldman (D-Coconut Creek) questioned the logic of the State of Florida underwriting all of the State’s hurricane risk.  Representative Bogdanoff reiterated that large insurers are leaving the State.

Among those testifying was an actuary involved in the Pinnacle Study, which was recently commissioned by the “Shield Our State Coalition,” a 501(C)4 entity describing itself as a “new public-private partnership that will increase financial security for Floridians in the wake of a catastrophic hurricane, stabilize residential insurance rates, and restore the private residential insurance market in the state.”

The actuary provided a brief overview of the Study, adding that an overall statewide rate increase of seven percent is projected with the implementation of the Study’s recommendations.

Representative Waldman noted that any projected rate decrease would not occur as a result of the windpool proposal, but, in part, because the proposed windpool would be a non-profit entity.

State Representative Alan Hays (R-Umatilla) expressed skepticism about the proposal and noted that premiums must increase in order to solve the “hurricane problem.”

Expressing his support for Representative Bogdanoff’s proposal, the Pinnacle actuary added that Citizens Property Insurance Corporation, not the State, would assume the risk for Florida’s hurricane exposure.

Florida Tax Watch reviewed this issue at the request of Florida Chief Financial Officer Alex Sink and provided a report to the Committee; however, the meeting was forced to conclude during this presentation because the allotted time had expired.

No action was taken on HB 1157 and HB 1159.  To view the Committee packet, which includes the workshop section, click here.


For additional information on Florida’s legislative process and terminology, click here.


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