The Tampa Tribune
Published: June 1, 2007
Florida's leaders are gambling big-time that Florida will enjoy another quiet hurricane season.
As the new season begins today, never before have the stakes been higher for taxpayers and the state's economic future.
The upside is that if storm damage is slight, the Legislature's decision to keep rates as low as possible by shifting risks from private insurers to the public will pay off. Many local governments and businesses also are either self-insured or uninsured, and some are exposing themselves to risks they simply cannot cover.
It's too late to argue that lawmakers did too much or too little. All the state can do now is pray for a storm-free summer and fall. Yet it is our responsibility as informed citizens to understand why so many people are so nervous this year.
In an attempt to make insurance premiums more affordable, lawmakers in a January special session decided to have the state's catastrophe fund cover insured losses between $6 billion and $40 billion. That means taxpayers, not insurance companies, will get the bill if a monster storm rips into a city. The irony is that since assuming so much risk, Floridians have barely seen their premiums budge.
Meanwhile, the state's insurer of last resort, Citizens Property Insurance, has about $8.8 billion available to pay claims. In a normal year, that would be more than enough, but if a big storm slams a populated coast, the costs facing this fund could be three times that much. If that happens, homeowners will also be forced to bail out Citizens - a double whammy should big winds blow.
Insurance researchers find more risk in Florida and the Gulf of Mexico than anywhere else. The worst place, financially, for a hurricane to hit would be the densely populated Miami-Fort Lauderdale coast, according to insure.com. Insured losses could be over $60 billion. Damages would be second highest in New York City and third highest in Tampa-St. Petersburg, where insured losses could be $25 billion, with total economic losses twice that high.
Part of Tampa's loss would include city buildings that are largely uninsured. The City of Tampa has only $230 million in coverage for $1.8 billion in assets, about 13 percent. Coverage from wind damage is much less.
Many governments and businesses, and some homeowners, have made similar decisions to go bare or partially bare. For many, severe wind damage will mean bankruptcy.
Most buildings were built to minimize costs, not to withstand a hurricane wind. Some retrofitting has occurred, but not enough to make much of a blip in the damage claims.
The Hurricane Preparedness Sales Tax Holiday that begins today and continues for 12 days is a sales-tax-free opportunity to stock up on supplies for personal survival and comfort, such as flashlights, ice chests, fuel containers, emergency radios and generators. Also on the list are shutters and tarps that can help minimize structural damage.
The Legislature meets later this month to decide how much to cut property taxes. Plans range from $3 billion to nearly $6 billion.
No matter what number is chosen, one hurricane could blow it all away.
Its hard to believe that the city of Tampa is so underinsured, but I suppose they expect the feds to come to the rescue.
agree 100%
