Plan Shifts Wind Risk to State
St. Petersburg Times
April 11, 2006

The problems are no secret. State-run Citizens Property Insurance Corp. has a $1.73-billion deficit, dozens of private insurance companies have stopped writing or renewing policies in high-risk areas, and because of that, every Florida homeowner is paying more - sometimes a lot more - for property insurance.

The state has proposed solutions ranging from prohibiting Citizens from providing windstorm coverage for homes worth more than $1-million to using sales tax revenue to reduce the deficit.

Here's another: Take private insurance companies completely out of the business of writing the hurricane wind portion of a policy and replace them with a privately run state insurer that would cover all the wind business.

Under a plan proposed Friday by Americans for Insurance Reform, a national consumer advocacy group, private insurers would continue to sell homeowners policies, excluding wind coverage, that would wrap around the coverage sold by the privately run state insurer.

Policyholders would get insurance in two parts: private coverage that would not cover hurricane wind, and wind coverage from the state.

Citizens and the Florida Hurricane Catastrophe Fund, which is used to cover heavy catastrophe losses, would cease to exist.

The net effect, the plan's authors argue, would be a lower cost for nonhurricane insurance, fair rates for hurricane coverage and an end to rampant instability in the property insurance market.

For a copy of the complete article, contact AIR.