TALLAHASSEE, Fla. – David Jolly, a Democratic candidate for governor, is proposing a state catastrophic fund that will take away hurricane and pure catastrophe protection from the personal market.
Owners would nonetheless want personal insurance coverage for all the pieces else — like fireplace or theft — however the state would deal with storm losses. Jolly claims this might reduce personal premiums by about 60% as the costliest threat (hurricanes) would now not fall on personal insurers.
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The backstory:
Florida’s insurance coverage disaster has been constructing for years.
- Litigation and fraud: State leaders blamed skyrocketing premiums partly on extreme lawsuits. In 2022, they made it more durable and riskier to sue insurers. Critics stated that hasn’t lowered prices for householders.
- Reinsurance prices: Insurance coverage firms purchase “insurance coverage for insurers” known as reinsurance. With Florida on the heart of hurricane alley and local weather dangers rising, reinsurance prices soared — including on to house owner payments.
- Market shrinkage: Nationwide carriers pulled out, leaving smaller companies with much less money readily available. These companies had to purchase extra reinsurance, elevating premiums even additional.
- State subsidies: Lawmakers reluctantly created two state-backed reinsurance packages — RAP and FORA — providing $3 billion in cheaper protection. However most of that cash went unused, and $2.1 billion was returned to the final fund in 2025.
What’s Jolly proposing?
Florida already has a Disaster Fund (cat fund) that helps insurers cowl mid-range storm losses. Some consultants stated reducing the attachment level (letting firms faucet that fund for smaller losses) may reduce charges.
However, Jolly is proposing one thing very totally different.
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He’s calling for a brand new state catastrophic fund that will cowl all pure catastrophe losses, versus current funds that function backup reinsurance for the personal market. The state, not personal insurers, would assume the chance of hurricanes, floods and different disasters.
Personal insurers may promote insurance policies for different perils, doubtlessly slashing the price of their premiums. Jolly in contrast the thought to Medicare and Medicaid, the place the federal government steps in when personal markets fail.
The opposite facet:
Insurance coverage business leaders oppose Jolly’s plan.
- Debt threat: They level to the Nationwide Flood Insurance coverage Program, which is in substantial debt, as proof that government-run protection can shortly turn into unsustainable.
- California’s instance: California’s FAIR Plan for wildfire protection will be costly and restricted, requiring householders to purchase a number of insurance policies.
- Market influence: Business representatives warn that stripping catastrophe protection from personal insurers may weaken the businesses financially.
What they’re saying:
Jolly stated:
“I believe we’d like daring, dramatic property insurance coverage reform. We’d like a state catastrophic fund to take away hurricane protection out of the personal market. You may reduce personal insurance coverage by about 60%…
So, we’ve got a hurricane fund within the state of Florida that is principally a reinsurance fund. I am speaking about absolutely eradicating pure catastrophe perils from the personal market, funding a state catastrophic fund… Now we have to acknowledge, when personal markets fail, authorities has to step in. We do it in healthcare, proper? Now we have Medicare and Medicaid and different packages as a result of the healthcare market is simply too costly for many individuals, however we’ve got to consider that in property insurance coverage as properly.”
READ: 20 years after Hurricane Katrina: How the storm modified America
Mark Friedlander with the Insurance coverage Info Institute stated:
“State-backed options for insurance coverage should not an efficient mannequin… The personal market is more healthy. In reality, immediately, the Florida insurance coverage market is in its strongest monetary place in additional than a decade. So why would we wish to mess with that?… Individuals unrealistically count on charges to return. 2020 or earlier, that is not potential. It is not possible to show the clock again and say, we’re gonna reduce your invoice in half. It doesn’t matter what the answer is, it is completely not possible.”
Gavin Magor with Weiss Rankings stated:
“For the aged in Florida, you have obtained Half D insurance coverage for masking your medicine and you have Medicare and also you may also have a Medigap coverage as properly and even take Medicare Benefit. We’re used to a number of different types of insurance policies. This is not an issue in my thoughts… It isn’t going to be one thing the place everything of Florida has a declare at anybody level. So that you’re truly diversifying the chance… Their reserves would develop as time went on, and finally that might properly result in decreased premiums for policyholders in the entire state. For individuals who are right here and to draw new enterprise and to draw extra individuals to come back right here to assist serve these companies, it will truly be a very good factor to do.”
Lisa Miller, the previous deputy Florida insurance coverage commissioner, stated:
“Again within the 2008 to 2015 timeframes, you did not hear of a hundred-degree climate on a constant foundation. I hate to be a pessimist, however I don’t imagine that we’re gonna get run—10 years of no storms or 5 years of no storms. We noticed what occurred final yr… The federal government’s insurance coverage firm, one other entity, name it what you need, shoves the entire threat right into a public entity as a result of the general public are us, and we’ll find yourself paying for it on the finish of the day.”
Doug Quinn with the American Policyholder Affiliation stated:
“I’ll say it isn’t a magic bullet… I might assume the very first thing earlier than taking something out of the fingers of the personal market can be efficient regulation… The Workplace of Insurance coverage Regulation and the Florida Division of Monetary Companies, who’s the liquidation trustee for firms that go beneath, must observe the place all of this cash has gone. The place are the billions upon billions of {dollars}?”
Birny Birnbaum with the Middle for Financial Justice stated:
“It is good to see at the very least one politician taking the house owner insurance coverage disaster significantly and never gaslighting Florida shoppers about so-called enhancements out there… Mr. Jolly is at the very least making an attempt to talk fact to the individuals about what’s inflicting the issues. However should you actually wish to get on the causes of this, you have to get insurance coverage firms to place some pores and skin within the sport… So, I believe that that is a greater answer.”
MORE: 20 years after Katrina: Tales of survival, braveness and challenges
Why you need to care:
Florida householders have been paying the best property insurance coverage premiums within the U.S. — usually greater than triple the nationwide common. Jolly’s proposal is the primary main reform thought this cycle to straight goal the problem, setting the stage for insurance coverage coverage to turn into a centerpiece of Florida’s 2026 governor’s race.
What’s subsequent:
Jolly is the primary statewide candidate to suggest a dramatic overhaul of the insurance coverage system. Different candidates are anticipated to roll out their very own plans within the coming months.
Whether or not Jolly’s thought positive factors traction might depend upon how voters weigh the trade-off between potential financial savings and potential state debt.
The Supply: This report is predicated on on-camera interviews with David Jolly, insurance coverage business analysts Mark Friedlander, Lisa Miller, and Gavin Magor, and client advocates Doug Quinn and Birny Birnbaum. It additionally contains archived remarks from Gov. Ron DeSantis, CFO Jimmy Patronis, Louisiana Gov. Jeff Landry and Florida legislators on previous insurance coverage reforms in addition to data from the Florida Legislature, Florida Disaster Fund, Insurance coverage Info Institute and Weiss Rankings.
