On Day 1 of hurricane season, Florida Governor Scott suggests national pool for windstorm insurance
Jun 1, 2012
The following article was published in the Palm Beach Post on June 1, 2012:
By Eliot Kleinberg
MIAMI — Many Florida homeowners live in fear of losing their windstorm insurance. Gov. Rick Scott suggested today that windstorm coverage go the way of flood insurance and become nationalized.
“It would make a lot of sense,” Scott said at a start-of-the-season news conference at the National Hurricane Center in Miami-Dade County.
And while figures show Citizens insurance, the state insurance pool, could handle the expense of most storms likely to hit Florida, Scott stuck to his claim that it’s “unsustainable” in the long run.
Citizens, Scott said, needs to be what it was designed to be – “the insurer of last resort, not first resort.”
Besides Scott, today’s event included U.S. Homeland Security Secretary Janet Napolitano; Craig Fugate, the federal emergency management director; and Bill Read, the center’s outgoing director.
This season marks the 20th anniversary of Hurricane Andrew, which remains second only to the 9 / 11 attacks as the nation’s costliest catastrophe, with $15.5 billion in damage. But that’s in 1992 dollars and reflects what South Florida looked like then.
In the ensuing two decades, the total property value of the eight counties from Okeechobee to Vero Beach to Key West has nearly tripled, according to a Palm Beach Post survey of property appraisers.
The alarming potential those figures suggest isn’t lost on Gov. Scott.
“Hopefully, long term, we’ll fix Citizens, and what we’re building today is a lot safer than what was built before Andrew,” he said.
If enacted, a proposal this spring to uncap rates for new Citizens customers could raise premiums more than 50 percent in parts of Palm Beach County and more than 90 percent elsewhere.
The Post reported this week that Citizens has $5.6 billion in surplus and can call on nearly $20 million in total claims-paying resources, including the state’s Hurricane Catastrophe Fund.
Citizens has about a 23.5 percent share of the state’s policies that include wind coverage. It’s by far the state’s leading property insurer, with 1.4 million customers, including 140,000 in Palm Beach County. Most went with Citizens after they were dropped by other carriers.
Scott said the state is trying to make it easier for other insurance firms to write policies. Asked what incentives he can offer those firms, he said, “Don’t put them in the position where their entire surplus is at risk. Understand what they need to write insurance here. We cannot continue to grow Citizens.”
A national windstorm insurance pool would be similar to one that has been in place for flood insurance since 1968. Property owners in designated areas could buy insurance from the government.
Congress has considered windstorm pools, including one proposed in 2008. Critics have said the program could run up potentially huge bills for the federal government.
Forecasters have been calling for a near-normal 2012 season, but stress that people should prepare for the one storm that could hit them. This season already produced two named storms, Alberto and Beryl – which struck northeast Florida – even before Friday’s official start.
Referring to 2011’s 19 named storms, which tied it for third busiest on record, Napolitano said: “A lot of preparation has gone on in the interim months since last year’s very active season.”
It’s been six years since a hurricane struck Florida – Wilma – but FEMA’s Fugate said, “the complacent ones weren’t getting ready anyway.”
Fugate added: “How do you break through the apathy? We’re just going to keep hammering.”
View the original article here: http://www.palmbeachpost.com/storm/on-day-1-of-hurricane-season-gov-scott-2386768.html