A big hurricane will hit us sometime
Published in the Tampa Bay Times on May 30, 2016
A storm is coming. We just don't know when. After an unprecedented streak of 10 years without a hurricane, maybe you're comfortable with Florida's preparation for the next big hurricane, the flooding and powerful winds. But it's not wise to become complacent about storms; Florida remains the most hurricane-prone state in the nation, and a big one is coming — sometime.
June — the official start of hurricane season — is almost here. Will this year be different? The lack of hurricanes with an increasing number of tropical storms is a mystery that leaves scientists speculating. And some parts of Florida are very vulnerable, but we've been very lucky.
We prepare individually by creating a plan for our homes and businesses, knowing evacuation routes, safeguarding valuables and checking insurance coverage. State leaders must also be ready with a financial plan to handle another year like 2004 or worse. A worst-case storm could cause damage of $75 billion to $100 billion. For context, the entire annual state budget is about $82 billion, so the state can't handle a loss like that on its own. The nonpartisan group Stronger Safer Florida has advocated purchasing reinsurance to shift some of the risk outside the state. The Florida Hurricane Catastrophe Fund has done just that, purchasing $1 billion worth of reinsurance, which protects consumers.
Reinsurance will almost certainly mean no assessments after the storm. Between 2005 and 2015, residents and businesses paid more than $6 billion in hurricane assessments, the vast majority going for claims against the Cat Fund and Citizens Property Insurance Corp. The Cat Fund is a state-backed entity that provides reinsurance for companies offering homeowners insurance in Florida. Citizens was developed by the state to be the insurer of last resort. Together, these entities make sure homeowners can find insurance, but both can impose assessments after a hurricane to pay claims. The assessments are paid by all Floridians or businesses with insurance, not just those who had losses. That means everyone's insurance bill goes up until we build up the money again.
Reinsurance means that instead of assessments, we'll get money from outside the state to pay off our losses and the state will be better insured. No one likes higher insurance bills or tax increases. We also don't want to pay back loans for years after a hurricane. Reinsurance is the way to avoid these problems.
In 2015, after 10 years of hurricane assessments came to an end, state leaders took the important step of purchasing reinsurance for the Florida Hurricane Catastrophe Fund. Yes, it costs money, but coverage is reasonably priced. This is a smarter policy than the state relying solely on accumulated cash or borrowing with bonds that must be repaid with interest.
Reinsurance benefits the Floridians who don't get hit by the big storm, such as inland residents. But everyone in the state benefits and our insurance system works as it should. Reinsurance helps keep prices stable and insurance available throughout the state, even along the vulnerable coasts that generate major economic benefits.
And coastal properties are becoming more vulnerable. A recent study found that more than 6 million Floridians — nearly half the number of Americans at risk — would be at risk by the year 2100 if sea levels rise roughly 6 feet. Some South Florida communities are flooded after a simple shower. When it rains for days, winds exceed 100 mph and waves are crashing in during a hurricane, the effects will worsen.
It's good to be prepared. Check your roof, have those trees trimmed and find out where to get sandbags if needed. We'll soon be glued to weather programming and websites, watching to see if storms are projected to hit us. At some point they will, but at least we will know our state is ready.
Bill Newton, a resident of St. Petersburg, is deputy director of the Florida Consumer Action Network.