In a just-released "Governor's Transition Decision Handbook"from Florida TaxWatch, one of the"prominent issues" cited is the "Significant 'contingentliabilities' faced by all Floridians including those resultingfrom, Medicaid eligibility expansion and cost increases, theescalating cost of prisons and incarceration, and theundercapitalization of Citizen's insurance."
The private, non-profit, non-partisan research institute has beenpublishing a transition handbook for new governors since1998.
The year's 84-page book contains a briefing on property insurance,in which it notes that the multi-storm seasons of 2004 and 2005caused $33 billion in insured losses for 2.8 million Floridahomeowners.
It cites specific issues with the current system of the state-runinsurance structures — Citizens Property Insurance Corp., theFlorida Hurricane Catastrophe Fund, and the Florida InsuranceGuaranty Association: Citizens premiums have been kept artificiallylow, which has led to an insurance system prone to costlyshortfalls as a result of actuarially unsound rates and asystematic reliance on assessments to fund them.
"The solvency of the CAT Fund as the policies' reinsurer is alsouncertain because it holds underfunded liability without anyprivate reinsurance and a limited capacity to issue tax exempt debtbonds to pay for deficits in damage payouts in the event of astorm.
"Currently, Citizens' total exposure is $426 billion with a1-in-100 storm estimated to cost $23 billion. The potentialshortfall from a major storm would be financed with assessments onall lines of insurance in the state, which will have a substantialimmediate and long-term negative impact upon Florida's businessclimate."
The report concludes that, "Florida needs to consider and analyzeideas for a systemic overhaul of the state property and casualtyinsurance system."