I’m sure that Florida insurance buyers are “happy” to see this news from the Orlando Sentinel:
Floridians will pay an extra $1 on top of every $100 of insurance premium for an additional two years under a plan approved Tuesday by Gov. Charlie Crist and the Cabinet to pay off claims still lingering from the 2005 hurricane season.
Crist and the Cabinet agreed to authorize the sale of as much as $625 million in bonds this summer, mostly to cover costs stemming from Hurricane Wilma, which had been initially expected to do little damage to Florida but ultimately rang up $11 billion in rebuilding costs. Wilma has become one of the state’s costliest storms on record.
Jack Nicholson, manager of the state’s Catastrophic Fund, said there are still 7,819 claims outstanding from Wilma and the state currently has only $187 million to cover these costs.
Let’s see….it’s the Florida model for state underwriting of cat risk that we’re supposed to be emulating through a federal cat reinsurance program, right?
There’s a reason that insurers accumulate such large warchests of capital — so that when disaster strikes, the claims can be paid and the insurer can continue to operate.
If sufficient capital isn’t on hand after disaster…well, it’s going to come from somewhere.
However, this mention of Wilma reminds me that it was an odd storm. It did far more damage in south Florida than it “should” have. In particular, I remember the claims files on several of the new, mostly-glass towers on/near the beach, where it almost seemed like either the materials didn’t perform as well as advertised, or someone failed to consider the wind-tunnel effect created by the construction of so many towers.
Also, I remember the claimants being significantly more aggressive than claimants in the 2004 storms, or Katrina and Rita….
