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Coastal Management: Insurance Reform Efforts

Surfrider Foundation was invited to a conference held in Orlando 4/12-4/13, dealing with insurance reform. As some of you may know, all of us in Florida are still paying assessments on our insurance (and not just homeowners, it's on your auto , etc policies also) related to the 2004-5 hurricanes. Due to the strange way insurance operates in Florida, if there was true catastrophe we would all be socked with HUGE assessments for long periods of time.

The goal of reform is to make property owners right on the coast and in floodplain areas pay premiums (much higher) that would reflect their true risk. The upside for the environment is that this reform would discourage development in these environmentally sensitive areas, by making insurance costs sky-high. As it is, we're all subsidizing insurance for those beachfront homes.

Here's a synopsis of the conference:

Primary sponsor: RenaissanceRe (large re-insurance company), Co-sponsors NWF and FWF

31 invitations-only participants (thanks for allowing me to represent Surfrider Foundation), discussion of how artificially low insurance rates – derived either from improper spread of risk or overhangs – encourage development in coastal and floodplain areas.

Nationally, the focus is on the NFIP (National Flood Insurance Program), and how it has evolved from its original goal of discouraging risk to actually facilitating growth in wrong places. Coastal Barriers Resource Act (1982, expanded 1990) protections are being corrupted.

In Florida, the focus is Citizens and its re-insurer Cat Fund. Private insurance (and their re-insurers) want back into the market at profitable rates. Free market conservatives and conservationists are finding common ground; the linkage between high risk and environmental sensitivity borders on a direct correlation.

Paths to reform are the objective. Avoiding paying the piper through huge post ‘’big storm ’’ assessments and inhibiting development in sensitive areas are the payoffs. Businesses also want to avoid the uncertainty of future assessments as they would be on the hook for some massive bills.

Current Actions:
Bills such as the Flood Insurance Reform Act of 2011 need our support in US Senate. In Florida, numerous bills have been advanced to reform Citizens and the Cat Fund, none successfully.

Future Actions:
Working on strategies for further legislative efforts to reform situation in Florida is the primary task moving forward. Also blocking current proposals to free up CBRA lands for development in panhandle is key, if we lose there it weakens the whole program and could set precedent for further erosion (pun intentional) of CBRA.