Florida to sell bonds to pay storm claims
Jun 10, 2008
Miami Herald--June 10, 2008
By DAVID ROYSE
Gov. Charlie Crist and a top state financial official on Tuesday approved the sale of up to $625 million in bonds to pay claims from Hurricane Wilma back in 2005.
The decision means Floridians will pay surcharges on their car, boat, home and business insurance for two additional years to pay off the bond holders.
Crist and state Chief Financial Officer Alex Sink approved the sale of the bonds to keep the Florida Hurricane Catastrophe Fund from running out of money. The account has about $160 million, enough for the next two or three months, said Bob Milligan, director of the State Board of Administration that oversees the fund.
The catastrophe fund sells backup coverage to private insurers who can tap it when they don’t have enough money on hand to pay all their claims. When the catastrophe fund comes up short, assessments are tacked on to other premiums.
Florida policy holders are already paying a 1 percent surcharge because the catastrophe fund was short on what was needed for claims in the 2005 hurricane season that caused billions of dollars in damages. Wilma alone caused $11 billion in insured losses that year.
Those assessments were scheduled to end in 2012, but now will extend to 2014 with Tuesday’s decision. Crist and Sink serve as trustees for the board. The third trustee, Attorney General Bill McCollum, wasn’t at the board’s meeting Tuesday because he is recovering from surgery to put in an arterial stent.
Crist and Sink both expressed concern that insurance companies are still paying claims for Wilma, including more than 6,000 that have been reopened after initially being denied.
Crist, who has often criticized the property insurance industry, accused them Tuesday of "monkey business" by passing costs on to the state.
"We’re concerned that some of it may be illegitimate," Crist said. "I don’t have a whole lot of confidence in the property insurance industry."
Catastrophe Fund Director Jack Nicholson said his office wasn’t aware of any specific fraudulent claims. But he assured Crist and Sink that the agency will conduct audits to make sure that it isn’t reimbursing insurance companies for claims they shouldn’t have paid.
Nicholson also said if there was a problem it was likely independent adjusters convincing homeowners that they may have claims they can file, even though Wilma was three years ago.
Insurance industry spokesman Sam Miller also blamed adjusters who "are aggressively advertising, saying ‘We will get you more money.’"
Miller noted that most of the reopened claims haven’t come from private insurance companies but from state-backed Citizens Property Insurance Corp., and said Crist appoints much of Citizens’ board.
In addition to more than 6,000 claims for Wilma damage that have been reopened after initially being rejected, Sink said there have been about 1,600 new claims in the last year from the storm, which mostly affected the South Florida counties of Broward, Miami-Dade and Monroe.
Sink said she questioned why so many people would be filing their first claim three years later.
She said that the bonds had to be issued, though, to keep the state from defaulting and was satisfied that audits would ensure that the state wasn’t paying fraudulent claims.