Climate change adds risk. This brief highlights how the state's reliance on financing multiple layers of insurance is inadequate considering the increasing frequency and intensity of storms. This, coupled with the potential for federal support limitations, could lead to a situation where the current system struggles to financially handle future hurricane seasons.
The Problem: Rising insurance costs, insolvent insurers, and frequent hurricanes threaten the stability of the system.
The Solution (Sort Of): Florida uses a public reinsurer, among other quasi-state run entities, to backstop private insurers. One just raised $1 billion to bolster the public reinsurance.
The Catch: This "defensive" approach doesn't address the root cause - climate change leading to more intense storms.
The Worries:
The system is expensive, relying on assessments, straining taxpayers indirectly.
It relies heavily on historical data, which might not reflect the future with stronger storms.
Investors seem hesitant about future bond offerings related to the FHCF.
The Alternatives:
Resilient infrastructure to better withstand storms.
Adaptation finance to prepare for future climate impacts.
Exploring alternative insurance models like community-based options.