on August 25, 2012 by admin in Insurance Industry, Comments (0)

8 Insurance Industry Impacts of Hurricane Andrew

1. Out Of Tragedy, A Stronger Market

"Hurricane Andrew was quickly elevated into more than a human tragedy -- it also altered our state’s history, and became a watershed event that transformed Florida’s property insurance market as well as global catastrophe markets. The magnitude of this event surprised the insurance industry leading to several bankruptcies and a reconstituted property market. The immediate result was that several regional insurers failed, while large insurers made business decisions to limit their risk in our state.

After our initial focus on recovery, Florida’s policymakers instituted far-reaching reforms that included modernizing our emergency management systems, and improving state, county, and city government coordination. We also leveraged government resources to augment the private marketplace and create a better property insurance safety net. This involved the creation of the Florida Hurricane Catastrophe fund (Cat Fund), and the creation of the forerunner of Citizens Property Insurance Corporation. These entities provided state-sponsored insurance for those Floridians who could not find coverage in the private market, and state-sponsored catastrophe reinsurance for insurers that protected homes in our state.

This new framework allowed us to weather the unprecedented storm seasons of 2004 and 2005 when eight named storms reached our shores. Despite these catastrophic series of storms in 2004 and 2005, our state minimized insurer insolvencies, and the global reinsurance market was able to recapitalize following these events. Today the global reinsurance market is stronger than ever. While the vision of our leaders turned the tragedy of Hurricane Andrew into an opportunity to strengthen our state, we should use the 20th anniversary of this event as a warning for us to stay prepared, and remain ever vigilant in our preparation for a future catastrophic event."

— Florida Insurance Commissioner Kevin McCarty

Source: Florida Office of Insurance Regulation

Article source: http://www.insurancetech.com/business-intelligence/240006166

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