Commissioner McCarty Comments on Hurricane Andrew Anniversary
Florida Insurance Commissioner Kevin McCarty commented earlier today on the 20th anniversary of Hurricane Andrew, an event that shaped the next two decades of property and casualty regulation and legislation as well as other areas like building code requirements and enforcement. The statement follows:
“Today marks the anniversary of Hurricane Andrew, a tropical hurricane that reached landfall in Florida on August 24, 1992 and caused unprecedented economic damage in the Bahamas, Louisiana, and most notably, Florida. Total damage in the United States was estimated to be in excess of $20 billion, making Andrew the most expensive natural disaster in U.S. history at that time.
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.