Could Reform of Hurricane Catastrophe Fund Help Solve Florida Insurance Crisis?

Florida lawmakers will return to the state capitol next month to address the state's property insurance crisis, and insurance experts say one proposal could save homeowners $150 per year right away.

Source: NBC 8-WFLA | Published on April 20, 2022

Florida insurance market

The short-term solution entails making insurance more affordable for insurance companies.

The man behind the majority of Florida insurance company ratings paints a bleak picture if the crisis is not addressed.

Insurance premiums in Florida have skyrocketed, leaving homeowners stunned. According to industry experts, the crisis is being caused by out-of-control litigation, but lawmakers have yet to put a stop to the abusive lawsuits.

State Sen. Jeff Brandes, R-St. Petersburg, proposed a different way to lower rates at a Senate committee meeting three months ago.

"The amendment enables companies to participate at a lower level," Brandes explained.

Sen. Brandes wants to make changes to the Florida Hurricane Catastrophe Fund, also known as the CAT fund. The CAT fund sells insurance to all of the state's property insurers. Insurance companies, too, must be insured.

Anonymous good Samaritans write checks to cover rising property insurance costs for Tampa Bay seniors.

Senator Brandes wants to temporarily reduce the contributions made by businesses and consumers.

"It will save the companies money, and it will ultimately save consumers $150 per year," Sen. Brandes said.

The CAT fund, established in 1993 in the aftermath of Hurricane Andrew, pays claims following major disasters.

"From 1993 to today... has paid out roughly $15 billion, but it still has $15 billion of capacity in the account today," Sen. Brandes explained.

Tampa Bay has escaped Florida's devastating hurricanes, but for how long?

The Florida Hurricane Catastrophe Fund's chief operating officer, Gina Wilson, warned in January that freezing contributions is risky.

"Those who do not remember the past will be doomed to repeat it. In 2006, the CAT fund ran out of funds "Wilson stated. "We're very fortunate because we haven't had a storm in ten years, and that's the only reason we have money in the bank."

Senator Brandes is not alone in his support for this idea. From insurance companies to consumer advocates, everyone tells 8 On Your Side Investigative Reporter Mahsa Saeidi that this is a short-term solution that must be implemented right away.