Dear Mr. Governor:
I believe to have thought of a viable alternative to the homeowners’ insurance dilemma that the State of Florida faces today. My plan includes windstorm, windstorm-generated floods and, if necessary and separately, fire. In this very brief letter, I am presenting you with a synopsis of a system based on personal choices about playing the odds, which would make it not only self-sustaining but also palatable to citizens. It would be administered with minimal bureaucracy, relying heavily on available technology.
The plan.
Anyone who owns a home in Florida can opt to bet annually up to 1% of the market value of the structure that he or she owns against windstorm events. Those monies will go into a State interest-yielding fund. To participate, a proprietor would need to provide proof of ownership and a State-registered independent agency’s GPS location of the center of mass of the structure to be integrated into the system.
The official path of a tornado or hurricane, as published by the National Hurricane Center, will be the defining set of points of a reference line used to make calculations about payments to subscribers of the service. Compensation will be calculated according to the GPS location of the center of mass of a participating structure to the closest GPS point alongside the path of the storm. A pre-defined multiplier defined by the shortest distance between the registered GPS point of the structure and the GPS point of the storm path will be used.
For instance, in a category 5 or higher hurricane, a similar chart to the one below will apply:
In a directly-impacted zone (0 to 6 miles from the storm path):
From 0 to 1 miles, the multiplier is 100
From 1 to 2 miles, the multiplier is 90
From 2 to 3 miles, the multiplier is 80
From 3 to 4 miles, the multiplier is 70
From 4 to 5 miles, the multiplier is 60
From 5 to 6 miles, the multiplier is 50
In an indirectly-impacted zone (7 to 12 miles):
From 6 to 7 miles, the multiplier is 32
From 7 to 8 miles, the multiplier is 16
From 8 to 9 miles, the multiplier is 8
From 9 to 10 miles, the multiplier is 4
From 10 to 11 miles, the multiplier is 2
From 11 to 12 miles, the multiplier is 1
For a category 4 hurricane, all the category 5 multipliers will be reduced by 10%.
For a category 3 hurricane, all the category 5 multipliers will be reduced by 25%.
For a category 2 hurricane, all the category 5 multipliers will be reduced by 45%.
For a category 1 hurricane, all the category 5 multipliers will be reduced by 70%.
State computers will calculate payments as soon as the path of a storm is known. Checks will be routed automatically to winners' bank accounts.
Tornadoes, not part of a hurricane system, will be covered as a category 5 hurricane with the highest multiplier (100) if property is damaged or destroyed within 500 feet from the tornado’s center path. No other criteria, such as distance multipliers shall apply.
Plan implementation
This system can be implemented, for the most part, with existing State employees and computers. No disputes, except personal or heir identification and clarifications of distances from a home to a storm path will be entertained.
Although fire and collision insurance are handled better by private companies, the fund could offer additional coverage if necessary.
Advantages
1. Solvency. No insurance company will have to take a profit out of the fund every year. The money accumulated over time will make the fund strong.
2. Citizens’ control of their destiny. Since property owners will not have to submit to inspections or to adjustors, they’ll be free to invest on additional property protection—as they deem appropriate. As such, they have the possibility of making money by taking precautions.
3. Since this game will make a lot of money long run, the payers or their heirs will be reimbursed proportionally to money paid by them that becomes surplus.
Cordially, Jack Delgado
