Florida State is to consider taking over home insurance

28th March, 2009

Under a proposal from Fort Lauderdale representative Ellyn Bogdanoff the state of Florida would take over all insurance for hurricane damage to properties.

Bogdanoff has said that the state would take over hurricane insurance whilst at the same time dismantling the Citizens Property Insurance; a taxpayer backed insurance company, and the Florida Hurricane Catastrophe Fund, which provides reinsurance to companies who sell property policies.

Should this proposal go through it is thought that savings would then be made by home owners and at the same time calm the roiled property insurance market in Florida.

Under the proposed plan, the state would assume all hurricane risk and allow private insurers to sell policies for other property risks, like fire and vandalism. The private insurance companies would still administer the hurricane insurance, but the state would receive the premiums and be responsible for paying claims if a major hurricane struck.

It has been said that if a major hurricane hits this year the Hurricane Catastrophe Fund could be billions of dollars short. The current system would require the state to riase $35 billion heras if it were to take all the premiums it would need to raise just $22 billion and less in future as it built its reserves from future premiums.

 

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