April 14–Proponents say the time is right for Cabinet officials to approve a first-ever plan for theFlorida Hurricane Catastrophe Fund to buy private reinsurance, but opponents say it’s a better deal forBermuda financiers thanFlorida homeowners.
Skeptics questioned terms disclosed less than 24 hours before a Cabinet meeting today they understand to show homeowners will pay$12.60 more on a$2,000 policy this year to save them from the slim risk of paying a storm tax of$14.40.
“It makes no sense whatsoever,” saidJay Neal, CEO of theFort Lauderdale-basedFlorida Association for Insurance Reform, whose members include representatives fromFlorida property insurers. “There’s an overwhelming chance it’s going toBermuda’s operating profit.”
Part of the deal involves $1 billion in private reinsurance, costing $68 million, that kicks in only after the state storm fund has already paid out $12.5 billion to cover storm losses, a memo to Cabinet members shows. The private coverage has between a 3.5 percent and 4.4 percent chance of being triggered, documents show. If it’s not needed, offshore reinsurers keep the money.