Challenged with pressure to lower rates and reinvigorate the property insurance market, Florida lawmakers hammered out compromise legislation in the final minutes of the 2006 session that in the long run may help consumers and insurers, according to the Property Casualty Insurers Association of America.
“In the end the Legislature realized that in order to help consumers, private market insurers had to be part of the solution,” William Stander, PCI assistant vice president and regional manager for PCI said. “Under the circumstances, this compromise was the best that could be hoped for by insurers. The decisions made Friday night should benefit the marketplace over time, but clearly more work is needed to solve the problems facing the state.”
The legislation that will ultimately be sent to Gov. Jeb Bush’s desk is SB 1980. This 141-page bill addresses a wide variety of issues involving the state-run Citizens Property Insurance Corp. The bill provides $715 million in tax dollars to help cover part of Citizens’ deficit of $1.7 billion, increased rates for Citizen’s policyholders, lower emergency assessments by spreading them out over 10 years, and the elimination of homes valued at over $1 million from Citizens after 2008.
Other provisions in the bill will include grants for homeowner disaster mitigation, the implementation of a flex-rating system that will allow insurers to adjust rates 5 percent statewide and 10 percent within specific region, and a provision that allows limited apportionment companies to purchase reinsurance from the Florida Hurricane Catastrophe Fund. There is also a rapid cash buildup of 25 percent for the Florida Hurricane Catastrophe Fund. Along with the positive developments some adverse provisions passed including one that will require insurers to adjust Citizens’ hurricane claims beginning July 1, 2007.
“While many of these provisions are beneficial, we would have liked the Legislature to go further in supporting the development of a more competitive insurance marketplace,” Stander said. “The flex-band is a positive sign and we will urge policymakers to continue down this road, but we all still have a long road ahead.”
Source: Property Casualty Insurance Assoc. of America
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