A devastating hurricane could trigger a disaster on insurance

When a disaster like Katrina hurricane sweeps the State in Florida, it may allow more homes destroyed, shops damaged and destroyed roads: There is a real chance that the governor Charlie Crist recent reforms l insurance, the state bankrupt.

“Our situation is the assurance of such liquidation of the kitchen timer,” said Robert J. McClure, President of Florida’s James Madison Institute. “In a moment it sounds, and Florida is in a big mess. The state has actually proposed rates low damage for the people of the adoption of enormous financial risks. If a big storm really the case, legislature has authorized the sale of nearly $ 30 billion in bonds to cover their exposure. No matter how it is almost three times larger than the $ 11 billion in California problem is that the history of the greatest of debts Communal sell. This is where the risk of bankruptcy if it is not enough money to increase sales by borrowing to pay for damage caused by the hurricane, the state is not extent, demand in the brackets. “If the state can sell securities?” S’interroge Florida State University economist Randall Holcombe. “I would not say no, but I would not say ‘Yes’, either. I do not know. ”

In addition, the Board of Public Administration, the Florida Hurricane Catastrophe Fund (the Cat-Fund), the problem of most loans, would not promise there are buyers. In answers to written questions - the spokesman, Mike McCauley attribute is not on a person - the Governing Council dismisses the issue as “speculative” and proposes a Dodge: “There is no opportunity for all contingencies and twisted the economy could be the high impact loan. What is important for insurers to consider [the Cat funds], and develop their confidence is based on the information we offer them. “The mother answered, furthermore, that more than $ 5 billion in cash, Grand large portion of them are already borrowings.

Even supporters of the regime agree that this is a frightening situation. Representative Ron Reagan, an insurance agent, reluctantly terms of care, he admits unstable. “All we have is great, as long as the wind does not blow,” he said. “There is no doubt that the State has taken a huge financial risk,” said Julio ROBAINA representative of the state, also voted in favour of reform and himself as one of its most ardent defenders. But he adds: “We had to be done. There is no end of the insurance companies’ greed.”

In fact, enormous pressure for change succeeded, because insurance rates more than doubled for many homeowners Coast in the wake of Hurricane Katrina and a good investment climate, with higher premiums insurers have been record profits. Populistes insurgency erupted. During his campaign, Crist sought reforms and insurance convened a special meeting of the legislative process to pass the same after he took office in January.

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