A Statewide Wind Pool…the game of Whack-a-mole!

Like a game of Whack-a-mole, every time the ugly head of a statewide wind pool rears, it gets “whacked” back in its hole.

Rejection comes in several forms, usually that the state of Florida (and thus Floridians) should not be on the hook for “all” wind exposure. None the less…

…as policymakers and others attempt to address persistent problems with Citizens and the even more persistent political challenges to fixing those problems,  the concept of a statewide wind pool has proven buoyant enough to surface again and again!

I swear I had nothing to do with the recent move and offer what’s here for educational purposes only.


As a topic of discussion it’s been around for decades as far back as the original wind pool for Monroe County over 40 years ago.  It was exhumed after hurricane Andrew in late 1992 and was even a topic of legislation during the 1990’s.

Some ask, “If wind exposure was Florida’s problem, why did  we create a multi-peril homeowners insurer instead of just expanding the existing windstorm pool?”

Answer: after Andrew in August of 1992 there were 16,000 damaged or destroyed homes that couldn’t get repaired because their insurer was one of the eleven that went bankrupt.  Ultimately over one million homeowners needed, but could not find, the multi-peril homeowners policy their mortgages required them to have. To his credit, Insurance Commissioner Tom Gallagher created the homeowners JUA only temporarily once, then twice, before the legislature permanently created the Florida Residential Property and Casualty Joint Underwriting Association (FRPCJUA) which, along with the existing wind pool (FWUA), was to later become Citizens in 2002.

HISTORY (Post 2005)

There have been many iterations proposed for a statewide wind pool but, they all have the same basic premise: the elimination of Citizens as a government store front insurer and the reduction of duplication created by the HRA, the PLA and the Cat Fund, all of which were formed to address the singular problem of wind exposure.

Example #1: former legislator Don Crane created a working group that proposed transforming the Cat Fund into a state owned “Florida Reinsurance Corporation” (FRC) that would be the sole provider of “hurricane” insurance for all properties in the state.  The FRC would set premiums to be passed through by the primary insurers to underwrite hurricane coverage, leaving the carriers to underwrite and manage “the more predictable and quantifiable normal wind risks.” Savings and funding for the FRC would come partially by including premiums from self insured funds and government and institutional property owners as well.

Despite heavy lobbying by Crane, Dan Montgomery and their group of several hundred influential Florida citizens, the FRC concept was “whacked” back in its hole never receiving a public hearing by  lawmakers or regulators.

Example #2: while employed at the FAIA yours truly drafted a concept called the Windstorm Coverage Fund (WCF) which actually made its way into early house bill drafts during the 2006 legislative session.

When applied statewide the WCF required companies and agents to perform all the administration, policy issuance, underwriting and claims adjustment functions as part of their normal operations.  Thus it could eliminate Citizens or allow it to continue for problem perils like sinkholes if necessary.   Either way, the WCF would incur no expense for processing wind coverage.   Carriers were allowed to  retain as much of the “Wind” premium as they wanted along with the corresponding wind exposure.  The insurer forwards to the WCF any premium for the amount of wind that it does not retain and goes to the WCF for reimbursement of losses that exceed its retained amount of coverage.

This simple WCF plan as described in a 2005 actuarial analysis would save the HRA alone $108 million annually while making  “… the process transparent  to the policyholder improving policyholder satisfaction and the level of service.”

Due mostly to a unanimous lack of industry support, the WCF was also “whacked” from further legislative consideration.


Senator Mike Fasano (R) mentioned it during the Citizens Depopulation Summit on June 1, 2012. He later published an article dealing with Citizens which also pushed the statewide pool concept.

Sean Shaw mentioned the concept just four days later in an article by Aisling Swift saying it’s a “…better solution” if Citizens was to “…cover only wind damage.”

Then, only days ago reporter John Reiner writes about the subject in: “The Only Insurer Possible–State Government Controlled”.  He called it The Florida Mutual Hurricane Fund; “…an exclusive windstorm insurer  with no sales force, no federal taxes, no investor returns…”  that would “…work something like the federal flood program.”


For those thinking this is all going somewhere, it’s not. I have no conclusions to offer, certainly none that are politically feasible. But…

…I do think that Florida’s system for managing wind exposure is so painfully duplicative that even laypersons can tell it’s out of “whack.”

Citizens employs nearly 1300 people. It’s PLA sells a full homeowners policy that covers wind. The HRA sells a different policy that covers wind exclusively.  The Cat Fund, which employs less than ten people, sells a policy to Citizens that covers wind for the two different wind policies Citizens sells!

While I know it may not be politically expedient, and while there would be massive, perhaps insurmountable barriers to doing so, I don’t think it’s irrational for someone to suggest eliminating such an obvious waste of taxpayer money!


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