Legislators on a House budget committee debated an idea Wednesday to eliminate the state’s public model to predict hurricanes that regulators use to check how insurers calculate premiums.
Some asked why the state should pay for it when there are private companies that do the samething. Others defended it, saying it’s a check on the private companies insurers hire to predict risk – information used to calculate premiums.
A recent report by the woman who developed the first hurricane model showed that the models inflated projected damages from hurricanes by $35 to $53 billion in recent years.
Separately, a Senate budget committee is meeting this morning to discuss possible cuts for the Department of Financial Services, the Office of Insurance Regulation, the Office of Financial Regulation, the Division of Administrative Hearings and the Department of Business & Professional Regulation – each of which play some role in protecting Florida’s insurance consumers.
Rep. Bryan Nelson, R-Apopka, an insurance agent who chairs the insurance committee, said at the House’s Government Operations Appropriations Subcommittee meeting Wednesday that he doesn’t like that the state’s hurricane model competes with private models: “I think we need to quit funding it.”
Shahid Hamid, a Florida International University business professor who runs the program, said most insurers typically use multiple models to predict risk so “other models don’t feel threatened by us.” He added that the public model is transparent about how it predicts risk. “Other models are black boxes,” he said. “We are, in some cases, a check on the other models.”
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Read: “Lawmakers debate cutting a key tool for insurance regulators,“ an article by SunSentinel.com.