CFO Tom Gallagher’s Property Insurance Reform Proposals
GALLAGHER RENEWS CALL FOR INSURANCE REFORMS AS STATE LAWMAKERS ENTER FINAL DAYS OF SESSION
As state lawmakers enter the home stretch of the 2006 legislative session, Gallagher renewed his call for immediate rate-relief, improved access to property coverage and reforms to help strengthen the long-term stability of Florida’s property insurance market. Both the House and Senate have developed legislation that will help address the state’s property insurance crisis.
“Eight catastrophic storms in 15 months caused more than $30 billion in insured damages, and Florida homeowners are bearing the brunt of this burden,” Gallagher said. “We have a property insurance crisis and Floridians deserve solutions that will provide immediate rate-relief and ensure the long-term stability and availability of homeowners insurance in our state.”
But, Gallagher added, Florida’s crisis cannot be solved without federal solutions.
“With 115 major disaster declarations in more than 30 different states over the past two years, we - as a nation - need to plan for the cost of catastrophes,” Gallagher said.
Since 2004, Gallagher has proposed a comprehensive insurance reform plan to better protect homeowners and to reform Citizens Property Insurance Corp., the state’s insurer of last resort. Attached is a side-by-side overview of the proposals he has advocated and their inclusion in the current House and Senate property insurance bills.
As part of his plan, Gallagher urged the Legislature to earmark surplus sales tax revenue collected during hurricane recovery to help offset the added costs of insurance assessments, hurricane repairs or hurricane preparation for this year’s season. “This is not a bailout of Citizens Property Insurance Corporation, it is common-sense relief for Florida’s hard-hit homeowners,” he added.
Other solutions being advocated by Gallagher include:
• creation of a national Catastrophe Fund,
• allowing tax-deferred catastrophe reserves for insurance companies,
• expedited payments to speed up the rebuilding process,
• standardizing Florida’s building codes statewide, and,
• creating federal tax-free Catastrophe Savings Accounts.
Gallagher has also advocated reforms of Citizens Property Insurance Corporation, including capping coverage of homes at $1 million or less, appropriating dollars to retrofit older homes now trapped in Citizens, and requiring the Office of Insurance Regulation to evaluate the success of Citizens’ Market Assistance Program and take-out programs, followed with an annual report to the Florida Legislature.
He said that stricter oversight and greater accountability at Citizens Property Insurance Corporation is also critical, which is why he has advocated the following reforms:
• requiring Citizens employees to adhere to the same code of ethics as public officers/employees,
• establishing an inspector general within Citizens to conduct internal investigations,
• requiring staff of quasi-governmental insurers to provide notification to their respective boards for any financial transactions in excess of $10,000 (consultant fees, advisors, vendors),
• requiring a background check for all executive officers and executive staff of quasi-governmental insurers,
• requiring the Division of Insurance Fraud within the Department of Financial Services to be notified within 48 hours of any suspected fraud.
“Citizens Property Insurance Corporation should be transparent to its policyholders and accountable for its performance,” Gallagher said. “Too many Floridians are counting on Citizens for their homeowners insurance, and they deserve nothing less.”
The Florida Legislature is expected to adjourn this Friday, May 5.
Gallagher said Congress still has time to act on federal solutions, including legislation sponsored by Florida Reps. Ginny Brown-Waite and Clay Shaw to create a federal catastrophe fund and a bill sponsored by Rep. Tom Feeney that would designate catastrophe savings accounts as tax-exempt. Congress is scheduled to recess after Memorial Day and re-convene June 6.