The Association of Bermuda Insurers and Reinsurers (ABIR) have begun criticizing Florida lawmakers over their inaction on the state’s Hurricane Catastrophe Fund. Legislators are also coming under fire from ABIR over their failure to take action on the troubled Citizens Property Insurance Corp., the state run insurance organization that accounts for the majority of coverage in the state. Both the Catastrophe Fund and Citizens Insurance are being crippled by financial problems, which could put the state in a very dangerous position once this year’s hurricane season kicks off.
Insurers had hoped that 2012 would not be as devastating as the previous two years in terms of natural disasters. Unfortunately, these hopes have thus far been shattered by recent storms and forecasts that predict an active hurricane season. ABIR claims that legislators are more concerned with election year politics than protecting the state’s citizens and working with the insurance industry.
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According to ABIR, one major hurricane in Florida that results in a 25% drop in the Catastrophe Fund’s claim capabilities would cause 24 of the state’s largest insurance companies to fall into capital deficiency. These companies rely on the Fund to help in times of natural disaster, but would be unable to draw upon its support in the case of a major event due to the financial turmoil that has crippled the program.
There may still be time to bolster Citizens Insurance and the Catastrophe Fund, but doing so will likely require a special session of the Senate. This is not something legislators are keen to abide given that 2012 is an election year and there are other topics occupying their time.