Financial Securities Council

Insurance & Financial Industries Working Together to Secure a Stable Fiscal Climate for Florida
Council Lobbyist: Gerald Wester                                           

The state’s insistence on paying for hurricane losses after the fact requires that storm losses be paid back in the form of assessments (taxes) on virtually all lines of insurance. This includes auto, personal and professional liability, etc. Florida’s property owners (residential and commercial) have become responsible for paying off the state’s enormous exposure in the event a bad storm or a series of storms hit Florida.

Ignoring the economic reality of Florida’s hurricane risk, the state has dramatically placed greater responsibility for hurricane losses previously covered by private insurance companies on the backs of taxpayers. In response to this risky proposition, Associated Industries of Florida formed the Financial Securities Council (FSC) to address property insurance concerns, as well as other financial issues, and develop long-term, market-based solutions and public-policy recommendations on behalf of the business community.

The Council’s top priority will be developing public policy recommendations on property insurance and providing an opportunity for business leaders across the state to focus on key financial service issues facing Florida consumers and businesses. FSC members include representatives from the property casualty, life and health insurance industries, as well as representatives from the financial sector and other major business associations.

Florida recently increased the probability and magnitude of a potential tax by: expanding the Cat Fund; expanding Citizens’ tax base to include most business insurance premiums; rolling back Citizens’ rates; moving Citizens from a market of last resort to a market competitor; and investing Citizens’ cash in securities backed by sub-prime mortgages. Commercial insurance premiums account for approximately 41% of the total premiums subject to the Hurricane Tax.

Floridians now face $28 billion in risk exposure through the Cat Fund. Exposure to loss in Citizens more than doubled in 2007 ($434.3 billion) relative to year end 2005. In the long run, the expansion of these programs is not sustainable and has placed the state of Florida in great financial peril.

In the near term, the Council will mainly focus on advocating for reforms in the property insurance arena so as to bring back a healthy private property insurance market in Florida -- returning Citizens to an insurer of last resort and returning Citizens’ assessment base to only residential insurance.

The Council is also looking at playing a major role in policy discussions revolving around the use of personal identification information, since both the House and Senate are currently in the process of reviewing Florida’s laws regarding the use of this data. 

FSC Issues

• Support expansion of hurricane damage mitigation efforts
• Support avenues to depopulate Citizens Insurance Company
• Support phasing out optional Cat Fund coverage
• Support reducing the hurricane tax on homeowners and businesses
• Support identity theft and privacy protection legislation as long as it will not hinder businesses which rely on the sharing of information as part of everyday commerce
• Oppose legislation that would make Florida an “opt-in” state instead of an “opt-out” state, which would require the express written consent of an individual before any of their personal information could be shared with affiliated companies or with any other person or entity