If legislation signed last month to prop up Florida's home insurance carriers acts as a small carrot to keep wavering private market capacity in the state, the just approved state budget offers few regulatory sticks to make certain that carriers will be around for at least the short term.
Included in the budget is funding for the state's Office of Insurance Regulation (OIR) to hire actuaries and examiners to scour the books of insurers to make certain that they "adapt to the changing market conditions." In addition, state added funds to "stress test" hurricane models used by insurers to set rates and capacity.
"Florida has one of the largest insurance markets in the world and this budget helps strengthen consumer protections and promote a more resilient market," said a statement from Florida Insurance Commissioner David Altmaier.
According to the Commissioner's office, the new budget includes:
$526,089 for new state actuaries to "thoroughly review filings" as well as hire a "Financial Administrator" for the Florida Office of Administration.
A $750,000 for Property and Casualty examinations "to look closely at the financial stability of insurers"
The financial stability of Florida home insurance carriers has been called into question going into the current hurricane season. Last month, Federated National, went into court-ordered restructuring and was forced to cancel 56,000 plans after its credit ratings were downgraded.
Separately, the insurance commissioner said that an additional $62,000 was added to the state's budget to conduct an annual "Catastrophe Stress Tests" of Florida homeowners’ insurers' hurricane models. According to the statement, the stress tests "will evaluate their ability to withstand the financial impact of a series of catastrophic events" and be run by Florida International University (FIU).
FIU is also the administrator of the Florida Public Hurricane Model.
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