Fla. Property Insurance Reforms Described by CFO Gallagher

Solutions to strengthen Florida’s property insurance market were described by CFO Tom Gallagher during an address to the Windermere Rotary Club in Orlando, Fla.

Last year, in the wake of two unprecedented hurricane seasons, Gallagher proposed a comprehensive insurance reform plan to better protect homeowners. This session, he is also asking the Legislature to consider reforms to Citizens Property Insurance Corp., the state’s insurer of last resort, which he believes are critical to improving coverage options for homeowners.

“Eight catastrophic storms in 15 months have caused more than $32 billion in insured damages, and Florida homeowners are bearing the brunt of this burden,” Gallagher said. “The comprehensive approach I am offering provides the solutions our state needs to protect consumers and to prevent an insurance market meltdown.”

Since first announcing his plan last November, Gallagher’s comprehensive insurance proposal has received support from elected officials, industry experts, and consumer advocates.

As part of his proposal, Gallagher is asking the Legislature to earmark the increase in sales tax revenue collected during hurricane recovery to help offset assessments against homeowners.

“Providing rate-relief to Floridians through use of surplus sales tax revenue should be our state’s first legislative priority. Florida’s families should not be taxed twice,” Gallagher said.

Other solutions being advocated by Gallagher include:

• Creation of a national Catastrophe Fund,

• allowing tax-deferred catastrophe reserves for insurance companies,

• standardizing Florida’s building codes statewide, and,

• creating federal tax-free Catastrophic Savings Accounts.

As part of his comprehensive approach, Gallagher advocated reforms of Citizens Property Insurance Corp. They include:

• Capping coverage of homes at $1 million or less;

• reallocating a portion of mitigation dollars provided through the Florida Hurricane Catastrophe Fund to retrofit older homes now trapped in Florida’s insurer of last resort; and

• requiring the Office of Insurance Regulation to evaluate the success of Citizens’ Market Assistance Program and take-out programs, followed with an annual report to the Florida Legislature.

Gallagher, whose office is investigating fraud involving Citizens, also said that stricter oversight and greater accountability were needed at Citizens and other quasi-governmental insurers. Gallagher, made recommendations at a Cabinet meeting last year, and is calling again for reforms to improve transparency and accountability at Citizens, including:

• Requiring Citizens employees to adhere to the same code of ethics as public officers/employees;

• establishing an inspector general within Citizens to conduct internal investigations;

• requiring staff of quasi-governmental insurers to provide notification to their respective boards for any financial transactions in excess of $10,000 (consultant fees, advisors, vendors);

• requiring a background check for all executive officers and executive staff of quasi-governmental insurers; and

• requiring the Division of Insurance Fraud within the Department of Financial Services to be notified within 48 hours of any suspected fraud and/or compromise of public trust by a quasi-governmental employee.

“Citizens Property Insurance Corporation should be transparent and accountable for its financial performance, and its ethical performance,” Gallagher said. “Too many Floridians are counting on Citizens for their homeowners insurance, and they deserve nothing less.”

Topics Florida Catastrophe Homeowners Property A.J. Gallagher