May 4, 2009
After sometimes-tense behind-the-scenes negotiations, Florida legislators agreed to a major property package that addresses the inadequate funding levels of Citizens Property Insurance Corporation and the Catastrophe Fund.
The financial storm we've experienced recently certainly helped illustrate the precariousness of providing insurance through a mechanism – the Florida Cat Fund and Citizens – based on crossed fingers, prayer, and the hope that others will provide a bail out.
HB 1495 will allow the state-run Citizens to increase its rates by 10 percent for individual policyholders. The action ends the freeze on Citizens’ rates that had previously been enacted. Passage of this legislation shows that lawmakers understand that keeping Citizens’ rates at woefully inadequate levels only set up Floridians for even worse economic circumstances later when the next big storm strikes. The bill also will increase rates and lower coverage amounts over time for the Florida Hurricane Catastrophe Fund, which provides reinsurance.
Another controversial property bill that passed on Friday was HB 1171, which allows some companies to sell policies virtually free from rate regulation. Insurers offering unregulated policies would be prohibited from purchasing coverage in the Temporary Increase in Coverage Layer of the Cat Fund. The legislation would establish three qualified classifications:
Because this bill will not affect all members equally, NAMIC was neutral on the legislation. However, we do recognize it as a much-improved step over the current environment. While it is helpful that legislators recognize consumers are now demanding pricing freedom for companies, it would have been even more beneficial to make that kind of freedom available to all companies and consumers.
The Florida General Assembly also passed a bill to prohibit counties and municipalities from charging accident response fees or “crash taxes." Possibly in anticipation of the Legislature’s action, at least one city, Winter Haven, has already decided to end the practice and refund fees already collected.
Other bills of interest to the property/casualty insurance industry that passed last week include:
In other news, the Florida House and Senate passed a concurrent resolution Friday extending their session until May 8 for consideration of budget issues. Other business had to be concluded by the original adjournment time of midnight May 1.
Posted: Monday, May 04, 2009 12:00:00 AM. Modified: Monday, May 04, 2009 11:53:42 AM.
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