Florida Chief Financial Officer Alex Sink unveiled a proposaltoday to reform the Florida Hurricane Catastrophe Fund, which shesaid could reduce the potential for future assessments on Florida'sinsurance policyholders.

As she explained it in a statement, the governor and his cabinetwould be given the ability to set both the reinsurance levels andpricing of the cat fund's optional coverages, giving greaterflexibility and accountability to the management of Florida'sreinsurance fund.

This move, said Ms. Sink, would promote increased competition inthe private insurance market.

Ms. Sink, who oversees the Department of Financial Services,said she frequently hears from state residents who wonder “why theyhave to pay these taxes [assessments] on their insurance polices.If we want to reduce the potential for future assessments, we needto reform the Hurricane Catastrophe Fund to allow us to be morenimble and respond to the volatile financial and insurancemarkets.”

The CFO said she is preparing legislation and will urgelegislative leaders to implement the proposal during its upcomingspecial session. Ms Sink said she will present her proposal Oct. 16at a cabinet meeting.

If approved by the legislature before the end of the month, thereformed cat fund would begin evaluating financial and insurancemarket conditions and recommend to the Gov. Charlie Crist and hiscabinet the level and pricing of cat fund optional coverages forthe 2008 hurricane season.

The cabinet would make a final decision by Feb. 15, 2008, inadvance of the time when a majority of private insurers negotiatetheir private reinsurance contracts.

While the proposal would change the operation of Florida's catfund, the structure and mandatory coverages created by thelegislature would not change, her agency said.

“We talk a lot about taxes, but we don't talk much about thepotential for assessments,” said Florida Insurance ConsumerAdvocate Bob Milligan. “Floridians are facing these taxes everyday, and CFO Sink's proposal will allow us to better manage thestate's cat fund to benefit Florida's consumers and promotecertainty and stability in Florida's insurance market.”

In January, the Florida Legislature provided for the statecatastrophe fund to make available an additional $12 billion inoptional reinsurance coverage to primary insurers at a discountedrate–with savings to be passed on to home insurance customers.

Not only is the expected rate relief not being realized, butFloridians have taken on substantially more risk for futureassessments from the cat fund, according to Ms. Sink.

The legislature also expanded the coverage provided by Citizens,the state-backed insurer of last resort. Citizens, according to Ms.Sink, is now writing policies at actuarially unsound rates.