Wednesday, October 1st, 2014
Half-True
National Republican Congressional Committee
Says Alex Sink "even supported a tax on homeowners insurance policies."

National Republican Congressional Committee on Friday, January 10th, 2014 in a campaign website

Alex Sink 'supported a tax on homeowners insurance policies,' NRCC says

Alex Sink was critical of the state-run Citizens insurance company while she was chief financial officer.

In the special election for a U.S. House seat, Republicans are taking aim at Democratic nominee Alex Sink’s career in both the public and private sector.

On a website called The Real Alex Sink Truth Team -- intentionally aping Sink’s own Truth Team page -- the National Republican Campaign Committee calls her out for allegedly supporting higher taxes while serving as Florida’s elected chief financial officer, or CFO.

"Alex Sink has consistently supported higher taxes, including property taxes, sales taxes, and taxes on water, sewer and cable television," the site reads. "She even supported a tax on homeowners insurance policies."

We’ve seen all these claims often repeated during the campaign (so far, we’ve rated the one on water and TV Mostly True). But the one about whether she supported a tax on homeowners insurance deserves some attention.

Avoiding a catastrophe

To back up this claim, the the NRCC pointed us to a story in the Palm Beach Post from June 2008, after Sink had become CFO. The article detailed a Cabinet meeting between then-Gov. Charlie Crist and Sink, both of whom voted to extend a 1 percent assessment on private home, car, boat and motorcycle policies to cover a $625 million shortfall in the Florida Hurricane Catastrophe Fund, often referred to as the CAT fund.

The assessment was put in place in 2007 to cover outstanding claims from the very heavy 2005 hurricane season. The purpose of the fund -- established in 1993 after Hurricane Andrew destabilized the state’s insurance market -- is to pay policyholders when insurers are unable to cover all their obligations. Because of the vast number of claims following Hurricane Wilma, the fund was falling short, so an emergency assessment was enacted to cover the lack of funds.

By law, the fund only has to pay out claims to the extent of its cash balance, and it issues bonds to cover the difference should claims exceed that balance. To cover the repayment of those bonds, an emergency assessment is made on all policyholders to share the burden. The 2007 assessment was set to expire in 2012, but Crist and Sink changed that so the assessment would last until Dec. 31, 2014.

The NRCC pointed to a partial quote from Sink, who said extending the assessment was "really a tax on insurance policies." But nuances keep this from being slam-dunk support for the NRCC’s claim.

First, in a literal sense, the emergency assessment is not a tax. The state statute for the CAT fund says so.

In addition, there’s evidence that Sink was not a fan of the process at work here. The fund was facing scads of new claims after Wilma, and Sink had been supporting changes in state law to shore up its finances. But state legislators hadn’t taken action on her recommendations before the extension. She and Attorney General Bill McCollum continued to press the Legislature for changes to Citizens after the extension, as well.

"It's certainly not a good time to be telling homeowners they've got a $600 million tax increase in addition to what they were already paying," Sink was quoted as saying about a month before the vote, referring to the onset of the Great Recession and again characterizing the assessment as a tax. She confirmed to us through her campaign that she "believed it was not a good time to keep the assessment and was not an enthusiastic supporter of it."

Crist and Sink both voiced concerns that state policyholders were on the hook for potentially fraudulent claims, but agreed to extend the assessment because CAT fund director Jack Nicholson said there were only about 10 or 20 weeks worth of money still available for payouts. One alternative would have been to increase the emergency assessment, which happened when it was bumped up to 1.3 percent in January 2011, covering an additional $676 million in bond payments, and is slated to last until July 1, 2016.

A big reason for the shortfall was the poor estimates from insurers about how much they would need to cover claims, a process that happened in 2006, before Crist and Sink took office. Nicholson told PolitiFact the fund now "is in the best situation that it has ever been in financially," and that it would take storm claims in excess of $25 billion to force the state to issue more bonds.

Our ruling

The NRCC said Alex Sink "supported a tax on homeowners insurance policies," and it used Sink’s own words as evidence. In casting her Cabinet vote to extend an emergency assessment on policyholders to pay for hurricane claims, she did use the term "tax."

However, it wasn’t officially a tax. And Sink supported the policy grudgingly, saying it was unfair that consumers would have to continue paying for old storm damages. Sink had a history before and after the Cabinet vote of trying to scale down the state’s exposure to hurricane coverage and reinsurance to private companies

The ad is wrong to call it a tax, but Sink’s vote -- grudging though it was -- did serve to maintain an increase in insured consumers’ out-of-pocket costs, which had the effect of seeming a lot like a tax to policyholders. The claim is partially accurate but leaves out important details or takes things out of context, so we rate it Half True.