George S. Patton hit the nail about the head when he explained, “Take calculated risks. That's quite different from being rash.”
Let’s face the facts: it’s risky to provide property insurance within the Southeast and insurance providers must price that risk as premiums. Previously 35 years, six from the 10 most expensive insured losses were hurricanes. (Katrina was largest with $45 billion in insured losses). Six hurricanes hit Florida in 2004-05 with insured losses of $68.8 billion. (To place these facts in proper prospective, the whole State of Florida’s proposed finances are approximately $71 billion.)
The Florida Legislature took a calculated risk within the recent special session. Based on some industry analysts, the brand new legislation is predicted to lessen property insurance costs by typically 22 percent. For Floridians struggling to pay for premiums to insure their home, I hope this is actually the case.
On the other hand, as a result of the low premiums, Floridians will have to take on the greater share from the risk if your catastrophic event hits their state. For example, the brand new legislation allows policyholders to exclude windstorm coverage in return for a lower premium. Despite the fact that it’s allowed, I'll caution my policyholders to consider very carefully before excluding coverage for hurricanes and tornadoes, a couple of Florida’s most devastating weather events. Mortgage companies and bankers agree—most won't allow their borrowers to exercise this method. I am letting my customers realize that this is not a calculated risk—it’s a rash choice that may have devastating consequences.
The new legislation also lowered state-owned Citizens’ rates. This really is fine and good—as long as no hurricane hits their state. If a large storm strikes, most insurance providers, including the ones that sell car insurance, will be hit with assessments to create up Citizens’ deficits. To place it in perspective, due to hurricane claims in 2004, Citizens incurred $1.5 billion in claims, accumulating a deficit of $516 million. Who taken care of this deficit? Me and you.
As an insurance agent that has weathered many bad weather, this makes me feel just a little uneasy. I appreciate the Legislature’s work—some Floridians were facing financial ruin due to their rising premiums, but I additionally look at the other part of the story and find out the possibility of all Floridians standing on the hook to take on this increased risk.
With the brand new legislation, it’s much more imperative that policyholders talk with their insurance professional to discuss their new options—and determine the quantity of risk they think they can comfortably take.
So, although Florida Legislature addressed the insurance coverage crisis facing Floridians, much must still be done. Louisiana, Mississippi, Texas and also the Atlantic Seaboard states are witnessing what Floridians have: seeing private insurance providers either stop writing new policies or stop renewing policies, especially across the coast in which the risk is highest.
However, there's hope. I'm pleased to report that Bradenton’s own U.S. Representative Vern Buchanan, together with Representative Ginny Brown-Waite, introduced the Homeowners’ Insurance Protect Act of 2007 last month. This act is really a comprehensive catastrophic insurance bill that will establish a federal reinsurance catastrophic fund (cat fund) like a federal backstop for future disasters. The bill encourages states to produce catastrophic funds by giving a federal backstop for all those states that voluntarily create state funds. Quite simply, the federal fund will give you lower-cost reinsurance to our existing cat fund, thus lowering the costs of homeowners' insurance to people around the country.
“This bill provides lower-cost reinsurance to state catastrophic funds, the government fund would reduce property insurance charges and increase availability in Florida and over the nation,” said Representative Buchanan.
Any financial savings achieved with the bill is going to be passed on to the policyholders and never held as corporate profits. The balance also requires Catastrophic Capital Reserve Funds, that are essentially tax-deferred savings accounts you can use by private insurance providers to help offset catastrophic claims.
I applaud Representative Buchanan for authoring this important bill. Floridians take a calculated risk by lowering premiums. It’s now time for that national government to advance to help areas subjected to risks for example tornadoes, hurricanes, earthquakes along with other natural disasters.
George S. Patton hit the nail about the head when he explained, “Take calculated risks. That's quite different from being rash.”
Let’s face the facts: it’s risky to provide property insurance within the Southeast and insurance providers must price that risk as premiums. Previously 35 years, six from the 10 most expensive insured losses were hurricanes. (Katrina was largest with $45 billion in insured losses). Six hurricanes hit Florida in 2004-05 with insured losses of $68.8 billion. (To place these facts in proper prospective, the whole State of Florida’s proposed finances are approximately $71 billion.)
The Florida Legislature took a calculated risk within the recent special session. Based on some industry analysts, the brand new legislation is predicted to lessen property insurance costs by typically 22 percent. For Floridians struggling to pay for premiums to insure their home, I hope this is actually the case.
On the other hand, as a result of the low premiums, Floridians will have to take on the greater share from the risk if your catastrophic event hits their state. For example, the brand new legislation allows policyholders to exclude windstorm coverage in return for a lower premium. Despite the fact that it’s allowed, I'll caution my policyholders to consider very carefully before excluding coverage for hurricanes and tornadoes, a couple of Florida’s most devastating weather events. Mortgage companies and bankers agree—most won't allow their borrowers to exercise this method. I am letting my customers realize that this is not a calculated risk—it’s a rash choice that may have devastating consequences.
The new legislation also lowered state-owned Citizens’ rates. This really is fine and good—as long as no hurricane hits their state. If a large storm strikes, most insurance providers, including the ones that sell car insurance, will be hit with assessments to create up Citizens’ deficits. To place it in perspective, due to hurricane claims in 2004, Citizens incurred $1.5 billion in claims, accumulating a deficit of $516 million. Who taken care of this deficit? Me and you.
As an insurance agent that has weathered many bad weather, this makes me feel just a little uneasy. I appreciate the Legislature’s work—some Floridians were facing financial ruin due to their rising premiums, but I additionally look at the other part of the story and find out the possibility of all Floridians standing on the hook to take on this increased risk.
With the brand new legislation, it’s much more imperative that policyholders talk with their insurance professional to discuss their new options—and determine the quantity of risk they think they can comfortably take.
So, although Florida Legislature addressed the insurance coverage crisis facing Floridians, much must still be done. Louisiana, Mississippi, Texas and also the Atlantic Seaboard states are witnessing what Floridians have: seeing private insurance providers either stop writing new policies or stop renewing policies, especially across the coast in which the risk is highest.
However, there's hope. I'm pleased to report that Bradenton’s own U.S. Representative Vern Buchanan, together with Representative Ginny Brown-Waite, introduced the Homeowners’ Insurance Protect Act of 2007 last month. This act is really a comprehensive catastrophic insurance bill that will establish a federal reinsurance catastrophic fund (cat fund) like a federal backstop for future disasters. The bill encourages states to produce catastrophic funds by giving a federal backstop for all those states that voluntarily create state funds. Quite simply, the federal fund will give you lower-cost reinsurance to our existing cat fund, thus lowering the costs of homeowners' insurance to people around the country.
“This bill provides lower-cost reinsurance to state catastrophic funds, the government fund would reduce property insurance charges and increase availability in Florida and over the nation,” said Representative Buchanan.
Any financial savings achieved with the bill is going to be passed on to the policyholders and never held as corporate profits. The balance also requires Catastrophic Capital Reserve Funds, that are essentially tax-deferred savings accounts you can use by private insurance providers to help offset catastrophic claims.
I applaud Representative Buchanan for authoring this important bill. Floridians take a calculated risk by lowering premiums. It’s now time for that national government to advance to help areas subjected to risks for example tornadoes, hurricanes, earthquakes along with other natural disasters.
As a part of Professional Insurance Agents of Florida, an agents group, Moore, Fowinkle, & Schroer Agency is going to be going to Washington in March to satisfy with Reps. Buchanan and Waite-Brown to inform them that insurance agents and Floridians support this bill.
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