Would a National Hurricane Catastrophe Fund help Floridians? By Mitch E. Perry05/31/06
The 2006 Atlantic Hurricane Season begins tomorrow, and Dr. Gray from the University of Colorado says there will be 5 major hurricanes this season, which begins tomorrow.
Because of the 7 major hurricanes that have swept thru Florida in the past couple of years, property insurance rates have risen dramatically. Major insurers have dropped hundreds of thousands of policies, and there doesnÃ¢â‚¬â„¢t seem to be any relief in sight.
The Florida Legislature passed a bill on property insurance reform, which stood out for the subsidy it was providing for Citizens Insurance, the state run insurer of last resort.
The new law provides $715 million dollars in surplus cash to offset CitizensÃ¢â‚¬â„¢ current deficit to ease the burden on homeowners. All Floridians who have private property insurance pay a surcharge on their premium to cover CitizensÃ¢â‚¬â„¢ deficit.
But Democrats have been critical of the legislation. This was State Senator and Gubernatorial candidate Rod Smith earlier this week.(roll tape#1 o.q.Ã¢â‚¬?to uh, CitizensÃ¢â‚¬?)
Smith said the Democrats HAD a plan that was dismissed by the Governor and the Republican led legislature (roll tape#2 o.q.Ã¢â‚¬?applauseÃ¢â‚¬?)
Lakeland Republican Dennis Ross was one of the main authors of the just passed legislation, and strongly defends it. He said there were 3 principals that had to be achieved in any type of insurance reform legislation. One of them, he says, is to make sure that Citizens was truly the market of last resort The 2nd was to make sure that all of the other policy holders that arenÃ¢â‚¬â„¢t Citizens, are NOT the primary source for bailing out Citizens deficit. (roll tape#3 o.q.Ã¢â‚¬?significant move in the right directionÃ¢â‚¬?)
Last week in news conferences throughout the state, Democrats unveiled alternative plan for insurance relief. At its core would be a proposal for a new state pool for all homeowners to cover hurricane losses up to $100,000 per policy.
Some consider that along the lines of the Federal Flood Program Ã¢â‚¬â€œ which currently has a $20 billion dollar deficit.
But Governor Bush and Senator Smith DO agree on advocating for a National Hurricane Catastrophe Fund. Now, thereÃ¢â‚¬â„¢s a new group fighting for such a fund Ã¢â‚¬â€œ a coalition called ProtectingAmerica.Org. Pete McDunna is their spokesman (roll tape#4 o.q.Ã¢â‚¬?hurricane season like last yearÃ¢â‚¬?)
In an op-ed in WednesdayÃ¢â‚¬â„¢s Wall Street Journal, Edmund Kelly, the Chairman President and CEO of Liberty Mutual criticized Protecting America.Org, saying that a government insurance plan is almost certain to be underfunded Ã¢â‚¬â€œ as political pressures would keep rates below their true cost. Kelly wrote that the difference would then be subsidized by taxpayers, the vast majority of them inland residents who would receive no benefit.
But Pete McDunna from Protecting America.org says Kelly is wrong Ã¢â‚¬â€œ because the National Catastrophe Fund would NOT be funded with taxpayers money (roll tape#5 o.q.Ã¢â‚¬?money to go into those fundsÃ¢â‚¬?)
McDunna also took exception to another part of KellyÃ¢â‚¬â„¢s editorial Ã¢â‚¬â€œ that taxpayers not affected by catastrophes would have to help fund this program (roll tape#6 o.q.Ã¢â‚¬? Ohio probably wouldnÃ¢â‚¬â„¢t Ã¢â‚¬Å“)