Monday, September 8, 2008

Hurricanes Could Sink Florida Financially

Why the hell should a working family in Bozeman Montana subsidize a fifty-five year old early retiree living in Pompano Beach?
From StormWire:

– Florida has one of nation's highest insurance premiums because of hurricane season.
– If major storm hits, the Florida market could "effectively collapse" said Fitch Ratings.
– Governor pushing for national insurance fund to help Florida manage damage costs.

...Despite Florida's efforts to enforce stricter building codes and tighter evacuation plans, a recent evaluation in March by the independent ratings agency, Fitch Ratings, reported that if a big storm were to hit the state, the market could effectively collapse. Researchers from the National Hurricane Center claim that Hurricane Ike, should it make landfall in Florida as a Category Four storm, could cause Miami $70 billion in damage, according to

At this point, Hurricane Ike is not likely to exceed a Category Three storm if it hits Southern Florida, but eventually, disaster will strike the peninsula. When it does hit, no one is quite sure who will foot the bill.

"It's going to be a financial nightmare," said Cecil Pearce of the American Insurance Association. When it comes to managing the cost of rising insurance premiums and property damage, Pearce claims "Florida is the nation's basket case."

Due to the annual barrage of tropical storms and hurricanes, Florida homeowners pay some of the nation's highest insurance premiums. So high in fact that in a recent poll, Floridians named insurance premiums their number-two concern about the state's future, behind property taxes but ahead of jobs, education, health care and the dying Everglades.

Since Hurricane Andrew put most Florida insurers out of business and scared several national insurers out of the state, the state government has helped to hedge the risk of hurricanes. It provides subsidized insurance to 1.3 million high-risk homeowners who can't get private policies, a 50% increase in just three years. Additionally, it manages a Hurricane Catastrophe Fund that provides subsidized reinsurance to the state's private firms....MORE