Fla. CFO Sink Outlines Plan To Deal With Storm Risk

Florida Chief Financial Officer Alex Sink announced she had written key state lawmakers urging them to adopt a four-step plan to help reduce the state's exposure to hurricane risk.

The letter was sent to Rep. Pat Patterson, R-Deland, chairman of the Insurance, Business and Financial Affairs Committee, and Sen. Garrett Richter, R-Naples, chairman of the Banking and Insurance Committee.

Steps she called for included:

o Reducing the risk of property damage by continuing the My Safe Florida Home program, which provides grants to property owners to get inspections to learn how to strengthen their homes against storms. Ms. Sink said this could be done by rolling over the estimated $20 million remaining in the program.

o Reducing uncertainty bonding ability by lowering the exposure of the Florida Hurricane Catastrophe Fund by gradually phasing out an optional upper layer of coverage for insurers called Temporary Increase in Coverage Limit. She warned that just one major storm event could mean Floridians will have to pay assessments for up to 30 years.

o Establishing Florida's reinsurance program in the fall, not the spring. Ms. Sink suggested the legislature empower "another [unnamed] entity" with the ability to set coverage levels in the Cat Fund in the fall, taking advantage of the broader range of possible markets.

o Gradually returning the state-backed Citizens Property Insurance Corp. to its role as "Insurer of Last Resort." Ms. Sink said with Florida's homeowners subsidizing Citizens and their actuarially unsound rates, she would encourage the Legislature to seriously consider the recommendations of the Citizens Task Force. Specifically she mentioned implementing actuarially sound rates in increments and banning development in designated areas to be insured by Citizens.

"There are responsible, gradual changes the Legislature can make that will begin reducing our hurricane risk exposure and will better protect Florida's homeowners," said CFO Sink, "It's time to start making smart decisions and enacting solutions, so that Florida will be less financially exposed when a major storm hits."

Ms. Sink said she is advocating gradual steps, "recognizing that Florida property owners cannot afford to bear large, one-time shocks to their homeowners insurance rates, similar to those experienced in 2006."

Ms. Sink, an elected Democrat, said, "We must establish a long-term, strategic vision for addressing hurricane risk. I hope to work with my colleagues on the Cabinet and members of the Legislature in a constructive and bipartisan way to make some of these changes in the coming months."

Unless the state charts a long term strategic vision for hurricane risk Florida "will be overexposed and Floridians will be forced to pay the price in the event of a major storm," she warned.