Halfway through the 2012 Atlantic Hurricane Season, Floridians have good reason to remain vigilant as we are not in the clear with regard to storm damages both from a structural and financial perspective. The outer bands of Isaac soaked portions of our state, and late last month a Citizens Property Insurance Corp. spokeswoman said the insurer expects to receive 5,000 to 6,000 Isaac-related claims.

Should additional storms affect our state in the coming months, there is a very real possibility that all Floridians could be faced with massive hurricane tax assessments to help cover Citizens policyholder storm claims. This possibility exists because the current structure of the government-run insurer requires any Florida insurance policyholder to help pay claim obligations beyond what the company and its reinsurer – the Florida Hurricane Catastrophe Fund – currently have saved.

While some may suggest Florida’s previous storm-free years have provided Citizens and the Cat Fund with a sizable cushion to rely upon, the names Beryl, Debbie and Isaac are all reasons why we should work towards reducing the risk associated with the government entities. Many experts believe that it would not take much to exhaust the reserves and capital Citizens and the Cat Fund have built up, leaving all Florida homeowners, businesses, renters, churches, charities and automobile policyholders to pay the state’s debt.

Reforming Citizens and the Cat Fund are not only beneficial to Florida from a financial perspective, but the environmental community supports depopulating the oversized insurer for other reasons as well. In addition to Florida’s natural habitats, which are vital to fish and wildlife and foster our essential tourist sector, the state’s low-lying coastal areas including barrier islands and wetlands play a critical role in providing a natural buffer against storm winds and storm surge. It’s our unique coastline that protects developed areas inland, helping to reduce the number of storm-related claims. 

However, the actuarially unsound low rates currently offered by Citizens and the Cat Fund have incentivized reckless coastal development in our naturally sensitive areas. And unfortunately, Citizens continues to grow, leading to the further destruction of critical coastal habitats.

As the Citizens Board of Directors works to implement the necessary changes that transfer risk out of Citizens and back into the private market, which is equipped to handle insurance risk without burdening Floridians, we encourage our elected officials to realize the importance of doing the same. While over the years smalls steps have been made to repair Florida’s property insurance market, it seems more than ever that bigger changes are required.

 Charles Lee is director of advocacy for Audubon of Florida.