Catastrophic Property Insurance In Florida

Backing Resort Casinos, AIF Unveils 2012 Agenda

“Before the Legislature this year are numerous issues that could have a significant effect on the business community – both positively and negatively,” said Jose Gonzalez, vice president of governmental affairs at AIF. “It’s our responsibility as an organization to protect our members, as well as the entire Florida business community, and use our influence in Tallahassee to ensure Florida is creating a climate that spurs job and business development. “Destination resorts offer Florida an opportunity to grow its economic base and create as many as 100,000 new jobs," the AIF maintained in its legislative goal announcement. “These luxury resorts will attract new visitors to Florida who are interested in experiencing a variety of amenities including high-end retail, restaurants, entertainment venues and gaming facilities, hotel and residential towers, convention space, pools and outdoor recreation facilities. AIF supports and will aggressively advocate for legislation that will bring premier development companies to Florida to build world-class destination resorts resulting in direct and indirect economic benefits to Florida and Florida businesses.” Besides pushing for resort casinos, AIF offered support for a bill introduced by Sen. Alan Hays, R-Umatilla, and Rep. Matt Hudson, R-Naples, to close loopholes they claim "unscrupulous" physicians use when dispensing medications in workers' compensation cases. Despite evidence presented on the other side of the issue, AIF insists that closing these loopholes will result in businesses saving $62 million in the Sunshine State. “Online travel companies should not have an unfair advantage over companies located and doing business in Florida,” insisted AIF. “The way in which taxes are currently remitted is hurting Florida’s tourism economy and hoteliers who have been collecting and remitting occupancy taxes to the state, counties and municipalities for years. Any legislation that permanently codifies the online travel companies’ business model would be bad for Florida employers and would open the door to demands from other wholesale-to-retail businesses seeking a similar tax windfall if this market-distorting tax advantage were enacted by the Legislature.” AIF pledged to support “efforts to enforce the fair collection of state sales tax, arguing that “brick-and-mortar retailers are at a disadvantage to out-of-state, online-only retailers when it comes to the collection of state sales tax.

TaxWatch report says Florida's property insurance system is ...

, Released by Florida TaxWatch in November, the two state-backed components of the system, Citizens Property Insurance Corporation (CPIC) and the Florida Hurricane Catastrophe Fund (FHCF), are underfunded and overexposed.

“The current insurance system puts taxpayers on the hook for potentially billions in assessments, while providing little assurance that their claims will be paid in the event of a catastrophic hurricane or series of hurricanes,” said Dominic M. Calabro, Florida TaxWatch President and CEO. “This independent analysis highlights some of the problems with CPIC as the largest component of the system, recommends needed reforms, and analyzes proposed solutions.

One of the tenets of insurance is to diversify risk so that losses are not correlated with each other; however, the financial risk of damage from a hurricane hitting Florida is largely concentrated within CPIC rather than being spread around the country and the globe. As of November 2011, CPIC had 1.47 million policies extending approximately $512.8 billion of property coverage to Floridians. This is a substantial number of policies, a large percentage of Florida’s total residential exposure, and 99.9 percent of the $512.8 billion in exposure is held within the state, compounding the instability within CPIC.

In addition to the concern created by CPIC concentrating financial exposure within Florida’s borders, this Florida TaxWatch analysis identifies several other problems originating from CPIC that adversely affect the rest of Florida’s property insurance system and taxpayers: the eligibility requirements to obtain a CPIC policy have been lowered enabling significant growth in policy numbers, making CPIC no longer the “insurer of last resort”; the concentration of exposure in high-risk areas of the state places financial liability on the remainder of the state’s policyholders to pay for hurricane damages; CPIC’s artificially low rates and ratio of the amount of exposure held within CPIC to cash-on-hand to pay claims being nearly 100 to 1; and the Glide Path implemented in January 2010, intended to gradually make CPIC rates actuarially sound, is insufficient to do so in a reasonable period oftime.

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