Insurance Information Institute President Robert P. Hartwig: Florida can’t reinsure itself

Oct 27, 2010

This article was published in the Gainesville Sun on October 27, 2010:

Florida Insurance Information Institute President Robert P. Hartwig:  Florida can’t reinsure itself

Paige St. John’s stale and xenophobic account of a faraway meeting held more than two years ago (“How Bermuda controls insurance rates”, Oct. 26) reveals a fundamental misunderstanding and mischaracterization of what reinsurance is and how it works.

Stated simply, reinsurance is insurance for insurance companies and it is an indispensable mechanism for spreading Florida’s multi-trillion dollar hurricane risk around the globe. St. John suggests that if reinsurance dollars were instead funneled to Tallahassee bureaucrats, the state could finance its own hurricane losses through its existing catastrophe fund.

Well, Florida’s been there and tried that, with disastrous consequences. Florida’s state run insurer and reinsurer both went bankrupt during the 2004/2005 hurricane seasons and policyholders will be paying for their bailouts until 2016, at least. Does St. John really believe that in a state where the insured value of coastal property exceeds $2.4 trillion, a sum that is more than three times the size of Florida’s entire $744 billion economy, that the state should even try?

Had a major storm struck in recent years, the ensuing bailout of the state’s insurers could have forced Florida to float the largest municipal bond issuance in United States history, potentially bankrupting the state. Florida is no more capable of insuring and reinsuring itself than it is of filling its theme parks and beaches with its own residents.

Robert P. Hartwig,


Insurance Information Institute

New York

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