And who pays the difference when claims payments exceed revenues in a state? The subscribers who don’t live in that state do. Not in the rates charged in your domicile states (as I have explained on several occasions, no state insurance department will permit losses in another state to be a factor in its approved rates), but in the depletion of policyholder’s surplus that is owned by the membership. The marked decline in surplus over the past three years is directly attributable, in large part, to the necessity to draw on surplus to pay catastrophe claims in Florida and the other Gulf Coast and Southeastern states.

A tragic situation? Of course it is. And as Commander Kennedy noted in a letter to subscribers in Florida, there is no small amount of irony in the fact that “…an organization, chartered in 1887 to provide insurance to serving officers who were ‘uninsurable’ in the civilian market of that time because of risk conditions at their duty stations, finds itself having to make such decisions.” The only thing more tragic would be to continue on the present course until such time as the Exchange no longer had surplus adequate to continue insuring its subscribers and became nothing more than a memory among a small segment of the military population.

You will undoubtedly hear disgruntled commentary which will malign this decision and its implementation as unnecessary, unfair and gratuitous. I personally find the action repugnant and distasteful and fervently sought other alternatives, but found none that effectively address these circumstances and the issues at hand. That an outcome may be unpopular or undesirable does not make it unnecessary. My principal duty to the subscribers as a whole is to protect their financial interests to the best of my ability and for such time as I serve in this position I intend to carry out that duty to its full extent. It is, after all, ultimately an issue of fairness.