Florida Senate Budget Subcommittee on General Government Appropriations Report: December 8, 2011

During the Senate Budget Subcommittee on General Government Appropriations (“Subcommittee”) meeting today, December 8, 2011, Kara Collins-Gomez, Government Operations Staff Director for the Florida Legislature’s Office of Public Policy Analysis and Government Accountability (“OPPAGA”), updated legislators on OPPAGA’s pending report on the Florida Public Hurricane Loss Model (“Public Model”).  OPPAGA’s final report has not yet been published.

Ms. Collins-Gomez outlined the project scope, which included the benefits of having a public model, funding, costs, how to increase private funding and related options for the Legislature.  She also provided a historical background of the Public Model.

She further outlined the efforts that could be made to increase private funding of the Public Model, but noted that this also would cost money.  Florida International University (“FIU”) has estimated that the annual cost for marketing the Public Model to insurers would be $100,000.  Additionally, enhancing the Public Model by including a storm surge component would cost $250,000. 

Ms. Collins-Gomez stated that insurers are using the Public Model less than before.  In compiling related data, OPPAGA received varied responses when it asked insurers why they do not use the Public Model.  Some insurers explained they were no longer writing property insurance in Florida, while one insurer said its reinsurer offered the use of a model at no cost.  Another insurer had used the Public Model just once to see what the results would be. 

Senator Alan Hays noted that the Public Model is not as “user friendly” as private models.  Ms. Collins-Gomez explained to the Subcommittee that it may be more cost-effective for insurers to use a private model, since the Public Model can only be used at FIU. 

The funding options that were outlined for the Legislature included discontinuing State funding of the Public Model, reducing State funding as it is offset by the fees insurers pay to use the public model, or continuing funding at current levels. 

The Subcommittee discussed what would happen if the Public Model ceased to exist.  It was noted that the Florida Office of Insurance Regulation could simply request corresponding pertinent information during the rate filing process.  Ms. Collins-Gomez noted that Florida is the only state with a public model.  Senator Oscar Braynon II asked whether the State of Florida could partner with other states to maintain the Public Model.  However, Ms. Collins-Gomez noted that the Public Model only provides Florida data.

Although FIU representatives were in attendance at today’s meeting, the Subcommittee adjourned before they were able to speak.  Senator Hays stated that they would be invited back to address the Subcommittee. 

A copy of Ms. Collins-Gomez’ presentation is attached.  

To access the complete Subcommittee packet, click here.

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