Thursday, February 07, 2008

Alex Sink Cat Fund Plan

Florida House Speaker Marco Rubio (R) and CFO Alex Sink (D) are behind a plan to require homeowners to install hurricane-proof windows and strengthen roofs.

“Basically if people can afford to, you make them do it,” Rubio said in a recent interview. “If they can’t afford it, you give them a low-interest or a no-interest loan. And if they can’t pay back the loan because they’re so poor, then in some cases we’re better off paying for this mitigation than funding or subsidizing Citizens in the long run.”

Charlie Crist believed in trickle down economics. If Florida increased the catastrophe fund to $28 billion than insurance companies would magically lower rates. I was shocked to find an old post, that I was warm towards Crist's proposal. There are several things wrong with Crist's plan. The state doesn't have the money for the CAT fund. Crist does not have the leverage to make insurance companies lower rates. They would rather not sell policies in Florida than insure high-risk homes.

Sink backed the House on the CAT fund since Jan. 2007. There is nothing shocking about Rubio and Sink being on the same side on the CAT fund.

Here is where Sink's plan is going to hit a snag. She wants insurance companies to increase by 30 percent what they must after a disaster. They companies will balk. Sink's proposal would save taxpayers $3 billion on the CAT fund. Florida would still be on the hook for a $25 billion CAT fund. That money does not exist. The state will be asking for a federal bailout if a major hurricane hits.

Rubio and Sink are aware that the CAT fund was a bad idea. Bill Posey is going to sponsor Posey's plan in the Florida Senate. How long until members of the state legislature attempt to end the CAT fund? Insurance companies don't want greater risks and the economy isn't going to magically get the state out of a fiscal deficit.

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