GAO Says Nothing To Clarify In Natural Cat. Report

NU Online News Service, July 22, 11:00 a.m. EDT

A Government Accountability Office official contradicted a Florida Office of Insurance Regulation (OIR) official over a report that reviewed nine of the nation's residual catastrophe insurance programs.

Orice Brown, director of Financial Markets and Community Investments with the GAO said that conversations between the federal office and the OIR did not indicate there would be any clarifications to the report. Instead, the GAO said it would advise Florida of any studies it does in the future on state catastrophe insurers. There are currently no plans for any additional insurance studies of catastrophe funds at this time, she said.

A spokeswoman for the OIR stood by earlier comments that officials at the GAO said in e-mails that clarification would be provided "when needed and when opportunities arise to do so." However, she did agree that the GAO is not issuing any changes to the report.

The 72 page report was prepared by the GAO at the behest of Congress as it considers legislation that would increase the federal role in natural catastrophe insurance coverage.

The report says that total exposure to hurricane risk between the Florida Citizens Property Insurance Corp., the state's residual insurer, and the Florida Hurricane Catastrophe Fund, the state's reinsurance fund for private insurers, stand in excess of $2 trillion.

The GAO puts most of that exposure in the state's Hurricane Catastrophe Fund.

State officials contended that the report did not explain that despite the exposure, a loss of that magnitude would only occur if the entire state was wiped out by a hurricane.

The GAO said the report was meant to give Congress information about the exposures states face and the financial mechanisms they use to cover losses, limit access to the programs and mitigate losses by encouraging homeowners to retrofit their homes against a hurricane.