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Florida’s high risk of sustaining major hurricane damage presents a problematic challenge to lawmakers. Unlike most lines of insurance that require a comprehensive reform on an almost predictable cyclical bases, the pressure on lawmakers to react to the needs of homeowners can vary from year to year. In the years following Hurricane Andrew in 1992, relatively few storms made landfall in the state, which led to a stable regulatory environment that allowed carriers to incrementally increase rates, brought in new companies to depopulate the residual market, and built up cash in the Florida Hurricane Catastrophe Fund. Then came the hurricane seasons of 2004 and 2005, when eight storms caused widespread damage throughout the state and strained the fiscal resources of carriers and reinsurers. Faced with the ongoing fallout from the last two storm seasons, and with the 2006 season just months away, lawmakers are again faced with the prospect of revamping the homeowners’ insurance market.

Senate Banking and Insurance Committee Chair Rudy Garcia (R-Hialeah) made his view of the issue clear at the first meeting of the committee this legislative session. Noting the strain on the Cat Fund and the tenuous condition of the Citizens Property Insurance Corporation, he bluntly stated, “We could be confronting the greatest financial crisis ever seen in this state.”

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