Florida Hurricane Catastrophe Fund
Content you can use however make sure find another 4 academic article, book, research book to add it. (and modify grammar errors)
1.
a huge contribution factor to the disparity is insurance structure. We have taken a deep look at various insurance structures around southeast USA and we found that Miami has one of the most favorable structures for those in low income communities, so we wish to expand this to other cities and provide the low income communities with more assistance that they would not be able to afford otherwise. Yan has taken the lead on conducting research on this form of insurance and will dive into later.
The Florida Hurricane Catastrophe Fund (FHCF) was created in November 1993 during a special legislative session after Hurricane Andrew. The purpose of the FHCF is to protect and advance the state's interest in maintaining insurance capacity in Florida by providing reimbursements to insurers for a portion of their catastrophic hurricane losses.
Miami is located between Biscayne Bay, Florida's Everglades and the Atlantic Ocean in the southeast corner of Florida, and the main portion of the city lies on the shores of Biscayne Bay which contains several hundred natural and artificially created barrier islands, the largest of which contains Miami Beach and South Beach. It is a gathering place for the hurricane, and there is a high chance that the hurricane will occur.
Hurricane poses a huge risk of property damage and serious casualties. At this time, we need insurance to reduce and spread the risk. And the best insurance at Miami to protest the hurricane is catastrophe insurance. Catastrophe insurance refers to the risk of causing huge property losses and serious casualties due to natural disasters such as earthquakes, hurricanes, tsunamis… Through insurance to diversify risk. It’s Government-led reinsurance program - Florida Hurricane Catastrophe Fund. The state government assumes the risk of catastrophe as a reinsurer. The catastrophe insurance program implements financially subsidized rates and enjoys federal tax exemption. Its operation is supervised by the state government's management committee. It is mandatory for insurance companies that operate property and liability insurance in Florida to cover hurricane risks and participate in this hurricane reinsurance fund. It is not mandatory for policyholders to ensure hurricane insurance. (This catastrophe insurance is free for every local dweller) And the catastrophe insurance has the following effects:
1. The function of insurance to spread risks, reduce losses, and protect people's livelihood. It is conducive to protecting the legitimate rights of victims, alleviating social conflicts, coordinating social relations, and promoting social harmony and stability.
2. Through establishing a catastrophe insurance system, transforming financial compensation for catastrophe losses into pre-insurance arrangements, reduce the impact on government finances through the effective transfer of losses caused by natural disasters
3. Establishing a catastrophe insurance system can effectively improve the level of catastrophe risk management. Thereby alleviating the pressure of social management at all levels of government and promoting the construction of a service-oriented government.
The fund sources are mainly:
1. FHCF stipulates that property insurance companies in Florida must purchase reinsurance in proportion from them. (This includes personal residences, mobile homes, commercial, residential structures)
2. the investment income of the fund;
3. If the fund is not enough to make up for the large indemnity expenses, the FHCF can also issue bonds to the society and enjoy the same treatment as government bonds.
So Individuals generally don’t need to buy hurricane insurance. However, there is a combination of insurance policies you still need to purchase to protect your home from hurricane damage best and support FHCF.
1. A home insurance policy is the first way to protect your home against a hurricane.
2.Flood insurance: the damage to your home and your possessions caused by an external flood. If a hurricane causes rising flood waters and the water enters your home, you would be covered if you have a policy.
3.Windstorm insurance: the damage to your home and your possessions caused by an external windstorm.
However, the aid of Insurance is just to solve post-disaster reconstruction and fund; it does not reduce the actual impact of the hurricane on the local area.
The Catastrophe insurance is the best way to do this situation what I know in the insurance part; there is no other city did better way than this one. In sustainability, we find a useful way to increase the reserve fund. It is Insurance-linked securities(ILS). This is a financial product that transfers insurance risk to the capital market. Catastrophic bonds are typical ILS. The insurance company issues catastrophe bonds to investors. If there is no catastrophe within the agreed time limit, the bond investors will get back the interest and principal. If the agreed catastrophe occurs, the trigger condition is reached. The investor will lose interest, even the principal. It’s a feasible way to use high-interest rate to attract an investor, and put these funds into the national treasury or purchase national debt. If hurricane occurs, it will be fund to use: if hurricane not occurs, just use the above fund to pay for the real interest rate. (the original interest rate – the national debt interest rate - inflation)
2. Coastal cities all over the world including asia, india, africa, North America, and Australia
South america rarely gets hurricanes
Focus more on us coastal cities
-Multiple cities on the east coast of The united states
- Sub US islands( caribbean, haiti, puerto rico etc.)
-specifics; people closer to water( rivers, lakes, oceans) and people who live on lower elevation
Poor communities
-shown to be concentrated around more industrial settings, resulting in risk of toxic leaks
-flood prone areas
- poor infrastructure
-no money to leave
-no money to repair
-can't adjust to economic shock as well
Rich communities
-flood insurance
-the ability to migrate out of the area
-ability to adapt better to the economy
- flood barriers