Hurricane season started June 1 and will run for the next six months. Homeowners in Florida know they need to get ready for possible hurricanes, but are their insurance companies ready? In Florida, we are entering our eighth straight year without a major hurricane making landfall with our State. This time has allowed insurance companies to build up their cash reserves and Kevin McCarty, head of Florida’s Office of Insurance Regulation told reporters, “We are better positioned today than I have seen in 10 years.” Others, such as Robert Hartwig, president of the Insurance Information Institute don’t completely agree, stating, “It’s very fortunate for Florida that it has been able to build up its reserves, but the fact of the matter is that Florida is living on borrowed time.”
Florida has 1,200 miles of coastline and 79% of all its residential and commercial properties are located these coastal areas. This makes Florida extremely vulnerable to the wind and water damage that come with each hurricane. Florida’s coastal property is valued at almost $3 trillion which accounts for almost 30 percent of the entire nation’s $10 trillion coastal exposure. Only New York has as much exposure as Florida. While Florida’s “Catastrophe Fund,” has $12 billion in reserves to back up private insurers, many fear that one big storm could leave it empty and leave Florida unprepared to handle the next storm. The State is trying to lessen some of its exposure by trying to shift homeowner’s policies away from the government operated Citizens and into the hands of private insurers. Rick Scott told officials in Miami that, “Citizens has gotten way too big….There was no way in a significant hurricane that Citizens was going to be able to pay.” It appears like the verdict still may be out on whether Florida’s insurers are really ready for hurricane season, but let’s hope that Florida’s citizens are ready with their hurricane preparations.