Alex Sink On Cat Fund

The Florida catastrophe fund is an issue CFO Alex Sink has been concerned about for quite some time. Sink and former House Speaker Marco Rubio attempted to kill the cat fund. Sink's concern is Florida would be liable for $71 billion after insurers' claims reach $22 billion. That was before insurance companies trying to stop providing hurricane insurance. The cat fund was created because Gov. Charlie Crist believed it would compel insurance companies to lower their rates. We know now that didn't happen.

Sink outlined how she wants to change the cat fund.

Reduce the risk of Property Damage with My Safe Florida Home – With the overwhelming success of the My Safe Florida Home Program, CFO Sink recommended that the hardening of homes be continued by rolling over the estimated $20 million remaining in the program.

Reduce Uncertainty of Bonding by Lowering Cat Fund Exposure – As she suggested in 2008, CFO Sink urged the Legislature to reduce the risk exposure of the Cat Fund by gradually phasing out the TICL layer over a series of years.

Establish Florida’s Reinsurance Program in the Fall, Not the Spring – CFO Sink proposed that the Legislature empower another entity with the ability to set coverage levels in the Cat Fund in the fall, taking advantage of the broader range of possible markets.

Gradually Return Citizens Back to Its Role as “Insurer of Last Resort” – With Florida’s homeowners subsidizing Citizens and their actuarially unsound rates, the CFO encourage the Legislature to seriously consider the recommendations of the Citizens Task Force.

My read is Sink wants to kill Crist's cat fund. Florida's financial woes may do just that.

Like A Bad Neighbor State Farm Is Not There

Earlier this month, Insurance Commissioner Kevin McCarty rejected State Farm Florida's request to raise homeowners insurance 47.1 percent. State Farm Fl decided to drop all Florida property insurance policies. It will take State Farm two years to end all policies. The Office of Insurance Regulation has 90 days to approve the plan.

Florida leaders have reacted angrily to State Farm's announcement. McCarthy subpoenaed State Farm. The subpoena is a fishing expedition into any manner of State Fam documents. State Farm is certain to fight the subpoena.

Gov. Charlie Crist maintains his my-way-or-the-highway stance.

"They probably charge the highest rates in the state anyway," Crist said. "Floridians will be much better off without them." The problem with Crist's statement is he doesn't have a back up plan. Citizens Property Insurance has $3.6 billion on-hand. The Cat fund: $2.8 billion. Sen. Mike Fasano, R-New Port Richey, wants to stop State Farm from leaving. Florida House Speaker Ray Sansom is convening a meeting State Farm representatives. My fear is Crist does nothing.

State Farm Fl is the largest property insurance insurer in the state. Citizens Property Insurance can not absorb those policies. Either Crist courts private insurers into Florida or he gives in.

Update: Fasano is sponsoring legislation prohibiting State Farm from selling auto insurance, if State Farm no longer seels property insurance. Crist has voiced his approval of the pending bill. I am no fan of State Farm, but what happened to Republicans' Laissez-faire economic principles?