INDIANAPOLIS (January 23, 2007) - Legislation designed to bring rate relief to Florida homeowners may ultimately have the opposite effect, according to the National Association of Mutual Insurance Companies (NAMIC). The 167-page package passed yesterday evening and is expected to be signed by Governor Charlie Crist.
NAMIC supports a provision in the bill that eliminates the “Panhandle exemption” to the statewide building code to make it a code that is truly enforced statewide. However, there are several serious concerns about the situation going forward.
Rather than solving the state’s insurance crisis, the bill will more likely serve to increase rates in the future because there will be less competition in the market. It would also put Florida taxpayers on the hook for storms in the near future.
Among NAMIC’s chief concerns in the legislation are:
“This was the final shot at insurance companies,” said Liz Reynolds, NAMIC’s southeast state relations manager. “The mandatory rate rollback allows legislators to say they have guaranteed lower premiums for all consumers. However, they are also guaranteeing that fewer and fewer companies will be able to sustain their operations in Florida or see the state as a viable market for entry.”
Instead of the quick fixes the legislation provides, Florida needs to develop a solution that will stabilize rates for years to come. Key to that is strengthening the statewide building code and addressing land use issues. “While much of the discussion during the special session focused on rate relief for consumers and punishing insurers, efforts to address how all homes are built and retrofitted and land is or is not developed, particularly in vulnerable coastal areas, is truly the only long-term solution to helping Florida deal with its hurricane exposure,” Reynolds said.
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