BRADENTON, Fla. — To address an insurance crisis facing businesses in Florida, the state cabinet yesterday unanimously approved creating a commercial joint underwriting association, or JUA, that would have access to the municipal bond market to pay claims if necessary.
“I have heard from too many Florida business owners who are facing losing their insurance in the middle of hurricane season,” Florida insurance commissioner Kevin McCarty said in a statement following the cabinet’s action. “If left unchecked, this problem will have a negative affect on our state’s economy as we have already heard from businesses that may have to move out of Florida.”
McCarty told the cabinet — which consists of Gov. Jeb Bush, Attorney General Charlie Crist, chief financial officer Tom Gallagher, and Agriculture Commissioner Charles Bronson — that he has received e-mails and testimony at public hearings about “astronomical increases” in insurance rates.
So far, 21 businesses have reported that they that cannot get coverage altogether and 74 businesses have submitted applications to his office for insurance coverage, McCarty said.
Commercial insurance problems have developed largely because of reinsurers, which cut back on underwriting capacity in Florida due to losses from eight hurricanes that hit the state in 2004 and 2005.
Because the situation escalated over the last few months into what is now considered the traditional height of hurricane season, when storms tend to be more severe, McCarty said the new commercial JUA would be in place by Sept. 1.
Under a structure prescribed in Florida law, the JUA can request that a city or a county issue debt to pay claims, regardless of where the losses occur. The debt would be repaid with assessments on insurance companies that would be passed through to policyholders.
Rising residential and commercial insurance rates are major topics in this year’s gubernatorial campaign, in which Gallagher and Crist want to succeed Bush, who is term-limited out of office.
Bush recently appointed a statewide Property and Casualty Insurance Reform Committee to study solutions to Florida’s insurance crisis. A committee report, due before the end of the year, could prompt Bush to call a special session of the Legislature to implement recommendations.
