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CFO Sink wants to lower Florida's exposure.
By JENNIFER LIBERTO, Times Staff Writer
Published February 8, 2008
Florida Chief Financial Officer Alex Sink's quest to shed some of the state's hurricane risk has a new twist that will be heard today by a key legislative committee.
Sink, who talked one-on-one with House Speaker Marco Rubio earlier this week, wants to undo part of the insurance law passed last year, which increased the state catastrophe fund's exposure by $12-billion in an effort to cut homeowner's insurance rates.
Her plan, being presented in a House insurance committee today, would force insurers to purchase more reinsurance from the private market, cutting the state's exposure to hurricanes by roughly $3-billion. Her office points out that reinsurance prices in the private market have dropped.
Insurance companies say they're all for it, but they warn that it could come at a cost. Mark Delegal, a lobbyist for State Farm Florida, said state reinsurance, at least the kind that covers the biggest, most catastrophic hurricanes, is still cheaper than anything available on the private market - meaning such a move would increase premiums.
Yet, Sink's office estimates that the increase in homeowner's rates would be small, between 1.5 and 3.2 percent, and that the cost is a small price to shed $3-billion of risk that nearly all insurance policyholders would have to pay after a catastrophic hurricane.
"If private reinsurance companies are willing to come back and take the risk off the backs of Floridians, why wouldn't we encourage that?" said Tara Klimek of the CFO's office.
[Last modified February 7, 2008, 23:20:49]