‘Hurricane Tax’ On Insurance Policies To End 18 Months Early
TALLAHASSEE (CBSMiami/NSF) – An extra charge on property-insurance and auto-insurance policies to cover claims paid for the 2004 and 2005 hurricane seasons will end Jan. 1.
The Office of Insurance Regulation formally issued orders Tuesday for insurance companies to move up by 18 months the end of a 1.3 percent “emergency assessment” for the state-run Florida Hurricane Catastrophe Fund, which provides backup coverage to insurers.
The assessment has hit policyholders for $2.9 billion, which has gone to reimburse insurance companies for claims from the eight hurricanes that hit Florida in 2004 and 2005, the last time a hurricane made landfall in Florida.
“It’s been nine years since (Hurricane) Wilma,” said Sam Miller, executive vice president of the Florida Insurance Council. “If anything, the assessment helps us remember how devastating these storms may be.”
Miller said the industry had been waiting for the orders so it could begin preparing for the new end date for the assessment, which previously had been set for July 1, 2016.
The orders make official a decision Gov. Rick Scott and the Cabinet made last month to end the assessment, Amy Bogner, a spokeswoman for the Office of Insurance Regulation, said in an email.
The assessment, which first appeared at 1 percent in 2007 and was raised to the current rate in 2011, collectively hits policyholders for between $350 million and $500 million a year.
In addition to the state’s near-decade luck at avoiding hurricanes, the early termination is due to claims for Hurricane Wilma coming in $498 million less than what had initially been thought. Wilma hit South Florida in October 2005.
Also, the fund has received more money than expected due to an increase in policies statewide.
The charge is imposed on most property and casualty policies other than medical malpractice and workers compensation.
The catastrophe fund, better known as the Cat Fund, currently has about $13 billion on hand and is expected to be able to raise an additional $4 billion, which is considered solid ground for covering most post-storm claims.
In addition to the Cat Fund assessment, the state-backed Citizens Property Insurance Corp. adds an extra 1 percent charge on most policies to cover losses from the 2005 storms. First imposed in 2007, the charge is expected to be paid off in June 2017.
This report is by Jim Turner with The News Service of Florida.