Senate bill pressures home insurers
Wednesday, March 26, 2008
Aaron Deslatte | Tallahassee Bureau
Orlando Sentinel - March 26, 2008
TALLAHASSEE - The Senate Banking and Insurance Committee on Tuesday advanced a package of changes to keep pressure on insurers and extend the reforms enacted last year to lower homeowner premiums.
The plan, spearheaded by incoming President Jeff Atwater, R-North Palm Beach, would permanently ban the industry practice of charging higher rates before the state approves them. It does away with an arbitration panel used by insurers to plead for higher rates.
It also restricts the types of computer models insurers can use to justify higher rates and requires them to get state approval before dropping customers.
And it would raise fines on insurers for intentionally thwarting state rules from $20,000 to $100,000 and freeze premiums for the 1.3 million policyholders in Citizens Property Insurance Corp. for another year.
Keeping the Citizens rate-freeze intact, though, drew a prickly response from lawmakers still upset with last year’s reforms that increased the number of policyholders in what has become Florida’s largest insurance company.
Many are coastal homeowners unable to get coverage from the private market. But should Florida face a Katrina-sized hurricane, both Citizens and the state-run Hurricane Catastrophe Fund could have to sell as much as $27 billion in bonds to pay claims.
Since neither entity has the revenue to pay off the bonds, thousands of dollars in assessments would be tacked onto premiums for a variety of insurance policies statewide, from auto and renters’ to homeowners who aren’t in Citizens.
“Our state is faced with a lot of uncertainty right now. People are losing jobs. They’re losing their homes,” said Sen. Al Lawson, D-Tallahassee, who joined Sen. J.D. Alexander, R-Winter Haven, in voting against the measure (SB 2860). “They really can’t afford to subsidize the wealthy in this state.”
Atwater said there were signs that more private carriers were willing to take on Citizens policies, and the freeze was intended to smooth the transition as the state gradually tries to shrink its storm risk.
