It is the most expensive natural disaster ever to hit the United States. When all is said and done, experts estimate that Hurricane Katrina will cost insurers between $40 billion and $60 billion.
The state of Florida is well aware of the monetary effects of hurricanes, and how crucial insurance is to ease the burden on its consumers and businesses. Because of this, a task force seeking long-term solutions for Florida’s hurricane insurance market has begun an eight-month assessment of the state’s current insurance status. And Florida State University Associate Professor of Risk Management and Insurance Randy E. Dumm is among the experts appointed to the group, which was created by the Florida Legislature during its 2005 session and formed recently by the Florida Office of Insurance Regulation.
The Task Force on Long-Term Solutions for Florida’s Hurricane Insurance Market will meet six times throughout the next year to gather information and eventually propose solutions to the current dilemmas the insurance market faces.
"Without viable, consistent, affordable prices for property insurance here in Florida, we have some obvious problems," Dumm said.
One of the primary objectives of the task force is to examine the question of whether sufficient hurricane insurance is available to meet the state’s needs.
"Our objective as a task force is to examine the information on the hurricane insurance marketplace and the potential solutions available to address the issue of long-term capacity and then provide the Legislature with our recommendations on how we as a state can move forward.
"Given the number of hurricanes over the past two years, we unfortunately have a much greater awareness of the scope of this problem," he said.
In addition to the need for coverage that is both available and affordable, "We also need to be concerned with the issues of premiums that are equitable for all property owners and that allow insurers to make a reasonable profit," Dumm added.
As well as preparing recommendations for the Legislature, Dumm expects the task force to be a learning experience not only for its members but also for his students in FSU’s College of Business.
"Most of our students live in Florida," he said. "They tend to be very interested in this subject. The nice thing about this whole task force process is that the students end up being beneficiaries of the information that we gather."
In addition to his teaching and task-force responsibilities, Dumm is a member of the Florida Commission on Hurricane Loss Projection Methodology.