Florida Hurricane Insurance Task Force 1/31/2006

Task Force on Long Term Solutions for Florida’s Hurricane Insurance Market met Monday and Tuesday to review its draft report containing several recommendations that the Task Force will make to the Florida Legislature regarding homeowners insurance. The recommendations contained in the draft report were debated and revised, and several draft recommendations are subject to further debate. The Task Force is charged with the responsibility of analyzing issues affecting the affordability and availability of insurance in Florida. A copy of the draft report is attached.

The draft report contains information and recommendations relating to Citizens Property Insurance Corporation (Citizens), mitigation incentives, and proposals for the Florida Hurricane Catastrophe Fund (FHCF). The recommendations are aimed at growing and maintaining a healthy property insurance market in Florida. Specifically, the final report is expected to contain recommendations that the Legislature enact laws relating to the following:

1) require building codes be strengthened, specifically requiring opening protections (shutters or the like) for homes located in the wind borne debris area;

2) prohibit Citizens from writing any new business in the 30-yr erosion zone;

3) requesting the Legislature re-examine several aspects of the FHCF, including revisiting the “trigger” for insurance companies in years with multiple events, methods to implement a rapid cash build-up – which will likely result in higher insurance rates for Floridians but may also off-set the need for assessments after a catastrophic event;

4) requesting the Legislature find ways to enhance the FHCF, including increasing the capacity of the FHCF, using increased sales tax revenues to off-set assessments, and supporting a constitutional amendment protecting the corpus of the FHCF;

5) requesting the Legislature revisit the issues relating to sinkhole claims;

7) delay or eliminate the statutory mandate that moves Citizens’ high risk account boundaries toward the coast;

8) study capping the limit of homes insured by Citizens to $500,000 and $1 million in Citizens’ high risk account.

Although the Task Force did not come to definitive recommendations at this past meeting on certain topics, the Task Force will continue its discussion on its recommendations regarding the consumer choice law and plans to specifically delineate advantages and disadvantages to maintaining the law. Specific possibilities discussed by the Task Force included recommending a statutory provision stating that the agents would not be liable for placing a policy with “undercapitalized” companies, while at the same time stating that consumer choice is an impediment to depopulation.

Also, the Task Force considered recommending a process by which Citizens will be required publicize new applications for seven days to other writers, as well as making new Citizens policies on manufactured homes ineligible for Citizens coverage if the home has an attachment that is not constructed to code.

The Task Force may also recommend a statutory provision requiring Citizens to perform background checks on its executives.

The importance of a National Catastrophe Plan will be emphasized throughout the report.

The Task Force is scheduled to meet again February 27, 2006, to finalize the recommendations it wishes to contain in its report. We will continue to monitor the Task Force’s activities, and will provide updates accordingly. Should you have any questions or concerns, please feel free to contact this office.

Regards,

Katherine A. Scott