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Hurricane Tax?

April 26th, 2016 by flanews

A decade of no hurricanes is a streak the state hopes will continue – but what if it doesn’t? As Matt Galka tells us, state leaders are considering re-insuring the pot of cash Florida has on hand just in case we get hit by the big one – and it could cost you a little more.

With hurricane season a little more than a month away – Florida has big insurance decisions to make.  Florida’s Governor and cabinet are in the middle of a search for a new insurance commissioner – something causing concern heading into storm season.

“We should all have a comfort level that, as we move into hurricane season, that we have a commissioner that’s fully focused, fully engaged, and full time,” said Chief Financial Officer Jeff Atwater.

But a hurricane drought has put the state in a good position to handle a potential big storm.  The state’s Catastrophe fund – which provides relief after big storms – is in one of the healthiest positions it’s ever been in.

“We’ve been fortunate, the wind has not blown and we haven’t had a major land falling storm in a decade, second, we’ve had a number of very prudent policies in place that have helped build the assets of the CAT Fund,” said Ash Williams, the director of the State Board of Administration, at March’s cabinet meeting.

But there’s a possibility Florida opts for even more insurance in case of a catastrophic storm. The idea is being tossed around to spend nearly $70 million dollars on reinsurance – which would get an additional 1 billion dollars of coverage for the state.

The complicated issue could add up to costing homeowners more money on their insurance premiums in Florida by levying a so called “hurricane tax.” Outgoing insurance commissioner Kevin McCarty says there’s no easy answer.

“Reinsurance doesn’t seem to make sense when you don’t have a storm, but of course it’s a brilliant idea when you do have a storm and you avoid an assessment. I think each year has to be calculated on its own. I can say this much; reinsurance is as cheap as its ever been. I mean I’ve never seen reinsurance as cheap as it is right now,” said McCarty.

A decision is expected to be made at next month’s cabinet meeting.

Florida Homeowners would be looking at a $7 dollar increase on a typical premium if the state opts to buy the extra insurance.

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