GALLAGHER: CABINET VOTE BRINGS MUCH-NEEDED INSURANCE
RELIEF TO FLORIDIANS
Tom Gallagher, Florida’s chief financial officer, applauded the decision by
the Governor and Cabinet to approve reactivating the Commercial Joint
Underwriting Association (JUA). The JUA will provide property insurance
coverage to Florida’s business owners who have been unable to secure it from
private companies. Gallagher recommended the JUA as a short-term solution
last week in a letter to Governor Bush.
“Eight storms inflicting $38 billion in insured losses have created a crisis
in Florida’s property insurance market, and our state’s homeowners and
business owners are being held hostage as a result,” said Gallagher. “The
solution I recommended and we approved today will help provide basic
coverage to Florida employers who employ thousands of hardworking citizens
and serve as the backbone of our economy. There are some real opportunities
to provide further relief for Floridians, and fighting for homeowners
remains my number one priority.”
Since the hurricanes of 2004, Tom Gallagher has made several recommendations
to the Cabinet and Legislature which have provided relief to Florida’s
homeowners, including the elimination of the double-deductible, the creation
of a simplified insurance policy checklist, and the approval of $715 million
dollars in insurance rate-relief to Floridians which eliminated a 20%
percent surcharge on homeowners insurance bills this summer.
Gallagher, who serves on the Cabinet, also recommended last week that a
working group comprised of representatives from the Governor’s Office,
Florida Senate and House of Representatives, Department of Financial
Services, State Board of Administration and the Office of Insurance
Regulation explore lowering the threshold of the Florida Hurricane
Catastrophe (CAT) Fund from $5.2 billion to $3 billion. The Catastrophe Fund
provides reinsurance to insurance companies.
Gallagher said the Catastrophe Fund has proven to be a critical tool to
Florida’s economy and cited in today’s Cabinet meeting that the fund saves
homeowners living in a $150,000 home in Miami as much as $3,100 annually. He
said that for homeowners in Hillsborough or Escambia County, the savings are
as much as $500 a year.
Gallagher said these savings are possible because insurance companies pay 70
cents for every $1 of reinsurance in the worldwide market but pay less than
a dime for that same coverage through our Catastrophe Fund. In addition,
Gallagher said that when Florida insurers purchase reinsurance on the
worldwide market, the money is gone even when no storms come. When those
same insurers buy it through the Catastrophe Fund, that money stays in
Florida and builds to pay future storm claims.
Gallagher said if a consensus is reached by the working group making changes
to the CAT fund, then he recommends that the governor call for a special
“The sooner we put additional solutions in place, the sooner we will be able
to stabilize insurance rates and provide desperately needed coverage to
homeowners,” Gallagher said.