ROBIN WESTCOTT: Storm is brewing in property insurance market

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ROBIN WESTCOTT: Storm is brewing in property insurance market

Opinion Editorial by Robin Westcott, former director of insurer solvency and acting deputy insurance commissioner, property and casualty, with the Florida Office of Insurance Regulation — Floridians cannot afford to lose the stability we have gained. Thursday marks the start of hurricane season — a date Floridians know well. But as meteorologists keep a watchful eye on the Atlantic and Gulf Coasts this summer, my attention will be focused on Washington, where a powerful storm of legislation is brewing that would make it more difficult to obtain and afford the insurance we need to stay protected against natural disasters.

Almost 25 years ago, Hurricane Andrew changed the face of the insurance marketplace in a dramatic way. Up until that point, neither consumers nor insurance companies understood the catastrophic risk exposure to our state. Insurance companies failed and many large insurance companies retreated or significantly reduced their exposure in Florida. A new Florida domestic homeowners market and our own Florida Hurricane Catastrophe Fund were born in the wake of Hurricane Andrew. While time does have a way of erasing our memories, Florida endured the four storms of the 2004 season and these new companies and the CAT Fund came through battered but withstanding the unrecognized risk of having a year with multiple catastrophic events. Part of the reason that this market survived and continues to prosper has been because of private international reinsurance. In fact, 91 percent of private insurance for Florida homeowner insurers is from international reinsurers. Now, two proposals that may be included in upcoming corporate tax reform plans seek to shrink Florida’s insurance and reinsurance market, leaving our state’s consumers with higher costs for the same insurance coverage.

One proposal, crafted by U.S. Rep. Richard Neal, D-Mass., and introduced in previous Congresses and in past administration budget messages, would deny tax deductions unfairly to domestic insurers for certain reinsurance premiums paid to foreign-based affiliates. The other proposal is the border-adjusted tax featured in the House Ways and Means Committee Chairman Kevin Brady’s (R-Texas) Blueprint for Tax Reform. If applied to international reinsurance, this proposed law would dramatically reduce the supply and increase the price of reinsurance upon which Florida’s economy depends.

For the entire opinion editorial via the May 30, 2017 Daytona Beach News-Journal, please click here.

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