Commissioner Calls for National Catastrophe Fund, Tax-Deferred Catastrophe Reserves

For Immediate Release Contact: Beth Scott (850) 413-2515

Tallahassee – Florida Insurance Commissioner Kevin McCarty said with the specter of projected hurricane losses from Hurricane Katrina topping $25 billion, he is intensifying his support for creating a national catastrophe fund and a federal mega-fund for state disaster relief.

“Last week we were discussing record surpluses for the property/casualty insurance industry in 2004,” McCarty said. “Monday, Hurricane Katrina wiped out the majority of that surplus gain.”

McCarty says the insurance industry, states and the federal government should work together to share that load. Rapidly rising insurance costs already are having a negative effect on local economies and with a near-record number of hurricanes expected again this year, insurance companies and customers face more financial hard times.

Since Hurricane Andrew hit Florida in 1992, the Commissioner and the state of Florida have been counted among a growing number of public and private organizations proposing changes in the way large disasters are handled.

McCarty says one of the groups examining possible solutions is the National Association of Insurance Commissioners (NAIC), which provides insurance regulatory oversight.

The NAIC, in cooperation with the National Conference of Insurance Legislators (NCOIL) has been working on a strategy aimed at getting approval for a national catastrophe fund.

Another supporter is U.S. Rep. Mark Foley, R-Fla., who has sponsored a bill to amend the federal tax code to allow insurance companies to voluntarily set aside, on a tax-deferred basis, reserves to pay for future catastrophic losses. The United States is one of the few countries in the world that does not provide companies a way to accumulate reserves on a pre-tax basis.

McCarty also favors creation of a national mega-catastrophe fund to help cities, counties, states and insurers deal with large natural or man-made disasters.

“Katrina demonstrates that catastrophes are a national problem and we need to look at national solutions,” McCarty said.

In November, a group of commissioners including McCarty is scheduled in California to discuss long-term

solutions to catastrophic risk, including hurricanes.

GALLAGHER UPDATES RECOVERY EFFORTS IN THE WAKE OF HURRICANE KATRINA

CONTACT: Nina Banister or Bob Lotane (850) 413-2842

TALLAHASSEE-Florida's State Fire Marshal Tom Gallagher said two dozen law enforcement officers from the State Fire Marshal's Office are heading to Pensacola today to help with recovery efforts in the wake of Hurricane Katrina. They will be joining officers from the Fish and Wildlife Commission, Florida Department of Law Enforcement, Department of Agriculture and Consumer Services and the Department of Transportation’s Motor Carrier Compliance Program.

“It is heartbreaking to see the people of Northwest Florida suffering all over again,” said Gallagher. “Helping the people of Pensacola and surrounding areas affected by Katrina is our first priority. In addition, we will offer any additional resources available to help our neighbors along the Gulf Coast. We know firsthand what the people of Louisiana, Mississippi and Alabama are going through right now, and I know all Floridians join me in sending our thoughts and prayers out to them.”

As State Fire Marshal, Gallagher is responsible for mobilizing search and rescue efforts at the state Emergency Operations Center during an emergency. In addition to personnel already heading to Pensacola, the State Fire Marshal's Office is coordinating the mobilization of search and rescue teams from around Florida to the Panhandle area. Gallagher also said the Division of Consumer Services is on standby to send insurance consumer specialists if needed to assist consumers with contacting their insurance companies and filing claims. And law enforcement officers with the Division of Insurance Fraud also are gearing up to respond, if necessary.

With reports of more than 80,000 Escambia County residents now without power, and more than 300,000 South Florida residents still without power, Gallagher is continuing to urge Floridians follow these safety tips after the storm:

If you use a generator, keep it outside and in a well-ventilated area because generators produce carbon monoxide. If you put it in the garage, keep the garage door open.
Beware of downed power lines, especially near water - to avoid risk of electrocution.
If your house is damaged, shut electricity off at the breakers.
Do not drive through floodwaters or on flooded roads. If your vehicle stalls, leave it immediately and seek higher ground. Water only two feet deep can sweep away most cars.

The department’s hurricane hotline, at 1-800-22-STORM, has been activated to help with questions and assist consumers in filing a claim.

GALLAGHER MOVES TO PREVENT PUBLIC ADJUSTERS FROM PRICE GOUGING HURRICANE KATRINA VICTIMS

CONTACT: Bob Lotane (850) 413-2842

TALLAHASSEE - Florida’s Chief Financial Officer Tom Gallagher today issued an emergency rule to prevent the victims of Hurricane Katrina from becoming the victims of price gouging by public insurance adjusters. In addition to limiting fees, the rule contains other consumer protections for victims who may consider contracting with public adjusters.

Gallagher found the need to impose the rules after Hurricane Charley hit in August 2004 and there were reports of adjusters demanding fees of up to 25 percent.

“Floridians upset after seeing their property damaged by Hurricane Katrina can be particularly vulnerable to signing contracts that are unfair and possibly unnecessary,” said Gallagher. “They need to strongly consider whether they need the assistance of a public adjuster, as any fees will inevitably come out of their claim settlement.”

The new rule caps adjuster fees at 10 percent of the claim payment; gives the consumer 14 days to cancel a contract made with a public adjuster without penalty, and prohibits public adjusters from demanding any up-front payments or compensation prior to final settlement of the claim.

Gallagher also warned Floridians to make sure they are dealing with a licensed public adjuster. The Division of Insurance Fraud arrested seven individuals last year for acting as public adjusters without a license. To check on the license status of an adjuster agent or company, consumers should visit www.fldfs.com, and click on Verify Before You Buy, or call the Department of Financial Services' Helpline at 1-800-342-2762.