Via Insurance Coverage Blog, I came across this presentation by Tillinghast Towers-Perrin describing some of the hidden costs of this year’s reform measure.
A few interesting points:
- In the event of a storm worse than a 1:20 year event, a majority of the funding for claims payments are expected to come from post-event assessments.
- Florida homeowners are expected to see, on average, a $265 savings in their insurance rates (admittedly with significant variation, depending on location). However, if a 1:20 year storm hits in 2007, insureds in Florida are forecast to be on the hook for more than $1700 to make up for funding shortfalls. If the season were to bring a 1:250 year event, that amount would rise to just shy of $14,000, accordng to TTP.
- The eighth page of the presentation includes a nice map describing how folks in northern Florida will be subsidizing folks in the southern part of the state. For example, in the event of a 1:30 year storm, folks in Tallahassee would see a cost 100 times greater than their expected savings, while the equivalent figure in Miami is 3×.
Strangely, legislators in Tallahassee, who were bending to the admittedly loud demands of the people, failed to mention much of this when describing their reform plans.