Florida Insurance Commissioner Tom Gallagher spoke to the Federal Bar Association Tuesday at the Omni, discussing how the Sept. 11 terrorist attacks have affected the insurance industry.
“All the reinsurers have basically notified the primary insurers that they are no longer covering terrorism,” said Gallagher, who also serves as state treasurer and fire marshal.
Considering the state of alert the nation is currently under, terrorist exclusion clauses spell bad news for some companies.
“I have a personal major concern about quite a few syndicates in Lloyd’s,” said Gallagher, adding the insurance company has made a habit out of shuffling the burden of payment internally. The National Association of Insurance Commissioners is now conducting an audit of the organization.
Gallagher addressed current legislation regarding property and casualty insurance as well.
Since Hurricane Andrew washed over South Florida, some homeowners in the state now must purchase three separate policies — flood, windstorm and a regular policy — just to fully cover their property, which can create loopholes for insurers.
“We learned from Hurricane Andrew that when people had two policies, the adjusters would disagree as to who pays what,” explained Gallagher. “Now with three separate adjusters you can imagine what a free-for-all that’s going to be.”
The commission has proposed merging the Windstorm Association and the Florida Residential Property Joint Underwriting Association into a tax-free organization.