TALLAHASSEE, FL – LAWFUEL – Legal Announcements – Speaking about the necessity for a federal insurance program to alleviate Florida’s insurance concerns, Attorney
General Bill McCollum today addressed the International Association of
Insurance Supervisors (IAIS) at the Association’s annual conference in Fort Lauderdale. The Attorney General presented the keynote address at the conference’s opening ceremonies and called for Congress to support a
federal insurance backstop to address the difficulty in obtaining
affordable reinsurance in order to create a more favorable insurance market for consumers.
“The Federal Government already extends billions of dollars in
taxpayer-supported assistance to national disaster areas. By creating a
federal backstop, it will assure that more property losses from windstorm, or earthquakes or other national disasters, are covered by private insurance, thereby reducing potential taxpayer costs,” said Attorney General McCollum. “I hope to encourage the debate and the passage of legislation now being discussed for a federal solution.”
Attorney General McCollum commended the supporters of current federal
proposals to address the insurance crisis, yet reiterated his belief that a broader approach including a federal financial backstop for reinsurance is necessary to adequately address the costs being passed directly to consumers.
The Attorney General stated that only the creation of such a
program could spread the risk of catastrophic events outside a single
state. He encouraged the Federal Government to become the reinsurer of last resort for very large hurricanes, i.e. 100- to 200-year events, which would ultimately drive the cost of Florida homeowners’ insurance down.
The Attorney General reminded the audience that as more markets
emerge and as capital becomes more mobile, the global insurance marketplace
is becoming increasingly important to the economic security for an
ever-growing portion of the world’s population. With over $100 billion in
combined premiums in 2006, Florida is one of the ten largest insurance
markets on the planet. With this in mind, Attorney General McCollum
emphasized the importance of addressing the issue of reinsurance, which he believes is responsible for the inflated costs of homeowners’ insurance policies in Florida. Reinsurance is purchased on a global scale by insurance companies to protect against losses from catastrophic events and
the cost of reinsurance is passed directly to the policyholders.
“Florida is at the forefront of regulatory efforts,” said Florida
Insurance Commissioner Kevin McCarty. “Other states are looking at what we are doing, and we have a responsibility to Florida consumers to carefully scrutinize the activities of all insurance companies doing business in our state to ensure that insurance remains available and affordable.”
The IAIS is the recognized international standard-setter for
insurance supervision and plays a key role in facilitating the adoption of new standards. Established in 1994, the IAIS represents insurance
regulators and supervisors of some 190 jurisdictions in nearly 140
countries. The IAIS has also more than 120 insurance professionals,
insurers, reinsurers and trade associations as Observers. The IAIS issues
global insurance principles, standards and guidance papers, provided
training and support on issues related to insurance supervision, and
organizes meetings and seminars for insurer supervisors. The IAIS works
closely with other international institutions to promote financial
stability. For more information on the IAIS, visit http://www.iaisweb.org.