JACKSONVILLE, Fla. — Hurricane Ian may have left Florida, but it has not yet damaged the Sunshine State.

Early projections put Ian Florida’s insurance market at between $30 billion and $50 billion at a time when the state’s insurance market is already life-support. The result will be higher costs for all Floridians.

While Northeast Florida as a whole dodged a bullet with Hurricane Ian, John Ford’s home wasn’t so lucky.

“It was just a big boom,” Ford said.

A large oak tree now lies on his roof, having punched a hole in the ceiling and allowed water to seep into the frame of his house.

Still, Ford says he’s lucky.

“If it literally landed 10 feet like that, it’s over my in-laws’ part of the house,” Ford said.

Ford is insured, which is good news.

But the damage to Ford’s home is the least concern of Florida insurers right now.

“The market would lose $1 billion before this storm. So you have to understand, if there was a year when we didn’t need a storm, it was this year,” said State Senator Jeff Brandes (R-St. Petersburg).

Brandes has been raising red flags in the Florida Legislature for years about the health of the Florida property insurance market.

Six insurance companies have collapsed in Florida this year alone.

Now with Hurricane Ian, Brandes expects that number to increase.

He reckons that companies that stay in the Florida market will have to raise interest rates drastically to stay afloat.

Insurance rates in Florida have already doubled in the past four years.

“If I’m advising the governor now, you know, give him a week or two and then you’ve got to call a task force to really put together the solutions for Florida’s property insurance going forward, or we’re going to essentially have a middle class, priced out of property insurance in Florida,” Brandes said.

Ford told us the downstream costs of the storm could be an issue, but for now his focus is on getting his home back to normal.

“What just happened in the South is devastation. So I expect things to go up, I expect things to have an impact, but you know, we’re going to adjust,” Ford said.

Sen. Brandes said there is a silver lining for the insurance market.

If the storm had hit Tampa Bay as originally expected, it would have hit Citizens, the state-backed insurer of last resort, much harder.

Citizens insures more than one in four homes in Pinellas County, which would have increased the potential for a hurricane tax to be levied on all policyholders statewide.

In Lee and Highlands, which took the brunt of Ian’s wrath, Citizens insures fewer than one in ten houses.

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As the caterpillar transforms into a butterfly, so too does the recharacterization of assets within a private placement life insurance policy become transformative. Once assets are brought into the PPLI wealth structure, those assets will adopt the six principles of advanced global planning: Privacy, Asset Protection, Succession Planning, Tax Protection, Compliance Simplification, and Trust Replacement.

According to a recent Bloomberg article, “Athletes, celebrities and family offices are embracing private placement life insurance (PPLI) as a way to preserve wealth for their heirs. It’s a strategy that’s perfectly legal and has been around for decades.”

So why isn’t it used more often? Advisors typically use the tools they are familiar with. PPLI is not taught in law schools, so attorneys and other accountants need to find it in the midst of their practice. PPLI is also unknown to most insurance agents. To truly appreciate what PPLI can do for affluent clients, you must first forget everything you currently know about life insurance. Yes, PPLI is life insurance, but it’s fundamentally different in costs and benefits.

Within a PPLI structure

All cash value increases are tax-deductible and are paid out as a tax-free death benefit. There are no income or capital gains taxes. Clients have the opportunity to access cash value through tax-free loans while their assets are protected and private. PPLI also offers limited reporting, the ability to avoid estate taxes, and no return fees.

One outstanding unique feature that propels PPLI above any other life insurance policy is that all asset classes can be placed in one policy including:

• real estate/tangible assets.
• Hedge funds/alternative asset classes.
• private equity.
• Intellectual property.
• Art.
• yachts and private jets.
• Alternative currency denominations.

For many multinational clients, advanced global planning with PPLI is a streamlined wealth structure for wealthy clients around the world. It’s a good-
designed wealth structure that is successfully implemented to achieve the goals of privacy, wealth protection and tax reduction.\

It is a type of financial architecture that uses laws, concepts and ideas and connects them to each client’s family dynamics and country-specific challenges.

cost advantages

Depending on the assets within the policy, the total charges for a PPLI are 1% to 2% of the assets within the policy. The cost of insurance fees is institutionally set at the rates of wholesale reinsurance companies.

The death benefit is insured with the same reinsurance companies – companies like Swiss Re and Munich Re with trillions of dollars in assets. Generally, to be eligible for a PPLI policy, one must be a Qualified Buyer, which the Securities and Exchange Commission calls a Qualified Buyer, and have at least $5 million in investments. Minimum bonuses from most companies are also $5 million.

privacy

Advanced global planning (EWP) provides privacy and tax compliance. It also improves protection against data breaches and strengthens family security. EWP enables a tax compliant system that still respects the fundamental rights of privacy. EWP addresses the concerns of law firms and international planners regarding some aspects of the common reporting standard related to the privacy of their clients. EWP supports family privacy and well-being by protecting their financial records and keeping them compliant with tax regulations.

asset protection

EWP protects assets with segregated accounts legislation by taking advantage of life insurance benefits. This structure uses asset protection laws in the jurisdiction of residence to protect those assets from creditor claims. A trust with its own property protection provisions may receive additional protection with the policy.

succession planning

EWP involves the transfer of assets without enforced rules of inheritance directly to beneficiaries using a controlled and orderly plan. This element of the EWP provides an asset owner with a method of enacting an estate plan of their choosing without complying with compulsory inheritance rules in their home country. This plan must be coordinated with all aspects of a properly structured PPLI policy along with other elements of an asset owner’s financial and legal planning.

tax shield

EWP adds tax deferral, income, estate tax benefits, and dynasty tax planning capabilities. Assets held in a life insurance contract are considered tax-advantaged in most jurisdictions around the world. Likewise, properly constructed PPLI policies protect assets from all taxes. In most cases, benefits are paid out on the death of the insured as a tax-free death benefit.

Compliance facilitator

EWP facilitates reporting to tax authorities and asset management, as well as incorporating commercial substance into structures. In addition, the insurance company is deemed to be the beneficial owner of the assets. This approach greatly simplifies reporting requirements to tax authorities as assets in the policy are held in segregated accounts and can be spread across multiple jurisdictions worldwide.

Trust Substitute

EWP creates a viable structure under specific insurance regulations for civil jurisdictions. It also creates a new role for commercial trust companies. In most civil jurisdictions, trusts are poorly recognized and trust law is not well developed. As a result, companies with foreign trusts face obstacles in these civil law regimes.

A PPLI wealth structure is arguably the most efficient structure available today for wealthy families who want a conservative and efficient structure to integrate tax-free investment growth, wealth transfer and wealth protection.