Insurance official: National cat fund a “beach house bailout”
/ Wednesday, November 28, 2012
ORLANDO
The head of a national insurance association slammed the idea of a federal catastrophe fund — once considered the ultimate solution to Florida’s property insurance woes by many state leaders — during opening remarks Wednesday at a meeting of state business leaders in Orlando.
Charles Chamness, president of the National Association of Mutual Insurance Companies, called the national catastrophe insurance program a “beach house bailout” and said his group would work to stop it from moving forward.
Hurricane Sandy’s aftermath may lead to a renewed push for more federal involvement in natural disaster insurance coverage, Chamness said at the Florida Chamber of Commerce’s annual “insurance summit,” adding that “we think it is unlikely that it will move ahead.”
Top Florida leaders ranging from former Gov. Jeb Bush to U.S. Sen. Bill Nelson and members of Congress have pushed for the creation of a national fund to help spread the risk of natural disasters beyond state borders. Legislation passed the U.S. House five years ago but failed to make it through the Senate.
Supporters of the Florida Hurricane Catastrophe Fund say it has helped hold down rates and is generally well capitalized with significant reserves, although questions have been raised about whether it can borrow enough to cover all claims after an extremely large storm.
But Chamness called it an “economically unsound gimmick.”
Instead, Florida can improve the state’s insurance market by focusing on stronger building codes, hurricane deductibles that limit what insurers have to pay after a disaster, shrinking state-run Citizens Property Insurance and spreading hurricane risk through the global reinsurance market, Chamness said.
Insurance industry insiders from across Florida are meeting here this week to discuss the future of Florida’s turbulent insurance market. Gov. Rick Scott and top state lawmakers are scheduled to address the group Friday.
The head of a national insurance association slammed the idea of a federal catastrophe fund — once considered the ultimate solution to Florida’s property insurance woes by many state leaders — during opening remarks Wednesday at a meeting of state business leaders in Orlando.
Charles Chamness, president of the National Association of Mutual Insurance Companies, called the national catastrophe insurance program a “beach house bailout” and said his group would work to stop it from moving forward.
Hurricane Sandy’s aftermath may lead to a renewed push for more federal involvement in natural disaster insurance coverage, Chamness said at the Florida Chamber of Commerce’s annual “insurance summit,” adding that “we think it is unlikely that it will move ahead.”
Top Florida leaders ranging from former Gov. Jeb Bush to U.S. Sen. Bill Nelson and members of Congress have pushed for the creation of a national fund to help spread the risk of natural disasters beyond state borders. Legislation passed the U.S. House five years ago but failed to make it through the Senate.
Supporters of the Florida Hurricane Catastrophe Fund say it has helped hold down rates and is generally well capitalized with significant reserves, although questions have been raised about whether it can borrow enough to cover all claims after an extremely large storm.
But Chamness called it an “economically unsound gimmick.”
Instead, Florida can improve the state’s insurance market by focusing on stronger building codes, hurricane deductibles that limit what insurers have to pay after a disaster, shrinking state-run Citizens Property Insurance and spreading hurricane risk through the global reinsurance market, Chamness said.
Insurance industry insiders from across Florida are meeting here this week to discuss the future of Florida’s turbulent insurance market. Gov. Rick Scott and top state lawmakers are scheduled to address the group Friday.
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