Fla. Legislature Mulls Over Insurance Proposals, Sessions End in Three Weeks

April 20, 2005

With three weeks remaining before the end of the 2005 sessions of the Florida Legislature, it appears that only a few insurance-related proposals have made it through the process of elimination. Remaining proposals would:

• Prohibit insurance companies from canceling insurance policies until 60 days after hurricane repairs are completed;

• Require policies to be rewritten in understandable language so policyholders can understand their provisions; and

• Require insurance companies wanting to raise rates by more than 15 percent to justify their increases in public hearings.

Other proposals being considered could make it harder for homeowners to prove a sinkhole caused damage to their dwelling, depending on how sinkholes are defined; and force policyholders to wait for a settlement if a home is destroyed and insurers can’t agree on how much of the destruction was caused by wind, as opposed to flood.

Additionally, insurers would have to inform policyholders that discounts are available if they take steps to shore up their homes with stronger roofs or hurricane shutters. The Senate has proposed creating a low-cost loan program for such home improvements.

Concerns over an increasing number of sinkhole claims took a back seat to hurricane issues in the legislature, despite industry contentions that sinkholes are a bigger threat than hurricanes in Florida’s insurance market. A panel of experts was appointed last month by the Legislature, suggesting the creation of a sinkhole reinsurance pool to help insurers keep premiums low.

According to legislative testimony, fewer than one-half of 1 percent of homeowners take advantage of hurricane-mitigation discounts.

“If we learned anything from this hurricane season, it’s that mitigation works, that the building code works,” said House sponsor Rep. Dennis Ross, R-Lakeland told the Lakeland Ledger. “This could be a panacea. Homeowners get a discount and if they are hit by a hurricane, they hopefully have less damage.”

Homeowners who get their insurance from the state-sponsored insurer of last resort, Citizens Property Insurance, are reportedly unlikely to have protection against rising premiums.

Ross and other key lawmakers oppose a Senate proposal to cap Citizens’ premium increases at 5 percent a year, arguing that doing so could hurt Floridians who aren’t Citizens’ customers.

If Citizens runs a deficit, the state must bail it out using tax dollars or by assessing all property and casualty policyholders statewide (except those holding medical malpractice and workers’ compensation policies).

Senate sponsor Rudy Garcia, R-Hialeah, acknowledged he might have a hard time winning the 5 percent cap, and may focus instead on language that would limit any increase to what actuaries say the fund must charge to be fiscally sound. That would be a departure from state law, which simply requires Citizens to have higher rates than private insurers.

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