FL CFO Proposes Setting Reinsurance Levels, Pricing on CAT Fund Optional Coverages
A new proposal by Florida’s chief financial offer would give the state’s governor and cabinet the authority to set the reinsurance levels and pricing of the Florida Hurricane Catastrophe Fund’s optional coverages.
In January, Florida’s Legislature added a $12 billion optional layer to the catastrophe fund, which allows private insurers to buy state-backed reinsurance at below-market prices.
According to Florida CFO Alex Sink, giving the governor and cabinet the authority to set reinsurance levels and pricing on the optional coverages would provide greater flexibility and accountability to the management of Florida’s reinsurance fund and promote increased competition in the private insurance market.
“I hear all the time from Floridians who are wondering why they have to pay these taxes on their insurance policies,” said Ms. Sink in a statement. “If we want to reduce the potential for future assessments, we need to reform the Hurricane Catastrophe Fund to allow us to be more nimble and respond to the volatile financial and insurance markets,” she said.
Ms. Sink said she is preparing legislation to enact her proposal. The cat fund’s structure and mandatory coverages would not change under Ms. Sink’s proposal.
Reinsurance Assn. of America President Franklin W. Nutter said in a statement Wednesday: “We believe CFO Sink’s proposal makes a great deal of sense. The private reinsurance market has both the capacity and the appetite to accept Florida’s catastrophe risk and is able to spread that risk around the world, rather than concentrating the risk in Florida as is currently the case.”
Published on October 11, 2007
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