Florida Chief Financial Officer Alex Sink's proposal that shesaid could reduce the potential for future Hurricane CatastropheFund assessments on Florida policyholders was endorsed today by theReinsurance Association of America.

RAA President Franklin W. Nutter issued a statement saying theproposal would better safeguard Florida's financial risk.

Under Ms. Sink's proposal, announced yesterday, the governor andhis cabinet would be given the ability to set both the reinsurancelevels and pricing of the cat fund's optional coverages, givinggreater flexibility and accountability to the management ofFlorida's reinsurance fund.

She said if the plan is approved by the legislature before theend of the month, the reformed cat fund would begin evaluatingfinancial and insurance market conditions and recommend to Gov.Charlie Crist and his cabinet the level and pricing of cat fundoptional coverages for the 2008 hurricane season.

The cabinet would make a final decision by Feb. 15, 2008, inadvance of the time when a majority of private insurers negotiatetheir private reinsurance contracts.

"We believe CFO Sink's proposal makes a great deal of sense,"said Mr. Nutter. "The private reinsurance market has both thecapacity and the appetite to accept Florida's catastrophe risk andis able to spread that risk around the world, rather thanconcentrating the risk in Florida, as is currently the case."

Ms Sink's proposal followed insurance industry criticism of thelegislature's creation of an additional $12 billion in optionalreinsurance coverage available to primary insurers throughFlorida's cat fund at a discounted rate.

The savings to insurers were to be passed on to consumers in theform of rate relief, but the impact on rates has been belowexpectations.

According to RAA, the change also resulted in Floridians takingon more risk of future assessments from the cat fund.

Ms. Sink's proposal, RAA said, would give the governor and hiscabinet the ability to set both the amount and pricing of the catfund's optional reinsurance coverages, providing for greaterflexibility and accountability to the management of Florida'sreinsurance fund.

RAA said it would also promote increased competition in, andassumption of risk by, the private insurance market.

In reacting favorably to the proposal, Mr. Nutter said that "theprivate reinsurance market can do that without the hugepost-hurricane assessment/taxes inherent in the current law. Wewill cooperate fully with CFO Sink as she moves forward with herexcellent proposal."

Ms. Sink has said she would present her proposal at Tuesday'sFlorida cabinet meeting, and will urge legislative leaders toimplement the proposal during the upcoming special legislativesession.