Senators grill state insurance chief
Mar 6, 2009
Sarasota Herald-Tribune–March 6, 2009
By LLOYD DUNKELBERGER H-T Capital Bureau
State Insurance Commissioner Kevin McCarty was sharply questioned by a Senate committee on Thursday over state efforts to shore up its hurricane catastrophe fund.
Senate Ways and Means Chairman J.D. Alexander, R-Lake Wales, said the fact that the so-called CAT fund cannot meet its promise to provide up to $28 billion in backup insurance in the event of a major storm may call into question the solvency of the many insurance companies that rely on the fund for reinsurance.
Alexander said state regulators cannot look at the CAT fund’s potential shortfall and “just disregard that and say the CAT fund is the CAT fund.”
McCarty said regulators, under existing law, do not discount the CAT fund’s backup insurance when weighing the solvency of the insurance companies. But he said state regulators remain concerned about the potential for companies not to be able to pay their claims if the CAT fund cannot provide timely backup insurance.
McCarty said the state is still working with the U.S. Treasury in an effort to secure some type of federal help in the coming hurricane season since the CAT fund is likely to have trouble floating any major bond issues in the troubled financial markets.
Alexander and Sen. Al Lawson, D-Tallahassee, also questioned the state’s role in rejecting State Farm’s request for a 47 percent rate increase. After the increase was denied, State Farm announced it was pulling out of the Florida property market.
“I think what you people have done is a travesty,” Lawson said, saying consumers who are looking at other property insurers in lieu of State Farm are finding rates that are higher than a 47 percent increase on their existing policies.
Lawson said the state should work on getting State Farm to stay in the Florida property insurance market.