Scott Signs Property Insurance Rewrite

May 18, 2011

A sweeping and controversial measure aimed at reducing costs to property insurers and liability for taxpayers was signed into law Tuesday by Gov. Rick Scott, who said it was a significant first step in restoring the private insurance market in Florida.

Equally important, Scott said the measure (SB 408) will help lower the number of Florida coastal residents now insured by the state-backed Citizens Property Insurance Corp., the state’s largest property insurer with 1.3 million policies, by making it easier for private companies to compete.

“We’ve got to recruit other companies, other insurance companies,” Gov. Rick Scott said Tuesday in an interview with the News Service. “We’ve got to make sure Citizens goes back to being the insurance company of last resort.”

Among its changes, the bill allows insurance companies to charge more for policies that pay replacement costs up front while offering discounts to policyholders who opt to get reimbursed for lost items as they are replaced.

A major provision places more restrictions on sinkhole coverage. The law makes it easier for insurers to challenge claims and shortens to two years the window in which policyholders can file claims.

“This bill focuses on addressing cost drivers in the system and will yield long-term benefits for Florida by stabilizing the property insurance market and attracting new capital investment to our state.” Said Kevin McCarty, Florida’s insurance commissioner, who supported similar changes that were vetoed last year by then Gov. Charlie Crist.

Less enthused, however, were critics of insurers, led by Sen. Mike Fasano, R-New Port Richey, who said the changes left many policyholders at risk of losing private insurance altogether and being forced to go into Citizens – the opposite of one of the bill’s intended effects.

“Unfortunately, what happens next is that every home owner, every condominium condo owner, every mobile home owner, and every small business owner will be paying higher premiums to private insurers and will see their rates go up in the next 18 months,” Fasano said in an interview.

Scott’s decision drew immediate praise from the Senate sponsor, business groups, and the industry as a whole.

“(The bill) closes loopholes that invite fraudulent claims by restricting misleading advertising and misleading solicitations,” said Richter, R-Naples, sponsor of the bill. “It also attacks cost drivers in an effort to responsibly lower insurance premiums. With hurricane season quickly approaching, this legislation is critical to ensure a solvent industry that policyholders can rely on.”

The insurance industry lobbied the issue hard. State Farm, Florida’s second largest property insurer behind state-backed Citizens Property Insurance Corp, spent at least $150,000 for the quarter to press its case to lawmakers. FCCI, a regional commercial insurer, spent more than $250,000 in lobbying fees.

Business groups including the Florida Chamber of Commerce and Associated Industries of Florida lauded the signing Tuesday, calling the measure a good first step.

“We should not be requiring all Floridians including businesses, charities, homeowners, churches and automobile policyholders to pay hurricane taxes,” said Jose Gonzales, of AIF. “We should not be subsidizing million dollar beach homes on Florida’s coast and we should not be going into every hurricane season hoping for a miracle.”

Fasano, however, said he hopes to return to the issue when lawmakers return next year after policyholders feel the effects.

“Gov. Scott ran on a platform of no new taxes or fees,” Fasano said. “The law pretty much ensures that we will see a rise in fees, a tax if you will, on all rate payers,”

By Michael Peltier
The News Service of Florida

Comments

6 Responses to “Scott Signs Property Insurance Rewrite”

  1. eab on May 21st, 2011 2:02 pm

    So where are all our Republican brethren on this? Everyone seems to have disappeared.

    Soon, no one will admit to voting for Rick Scott.

  2. eab on May 20th, 2011 11:54 am

    “The lady doth protest too much, methinks.”

    Surely our Republican legislature and fine business minded governor would never do anything to harm the working people of our state. The insurance companies simply need more,more,more and we can get by on less,less,less.

    Rick Scott set an example for our citizens when he declared he would only accept a dollar a year as salary. Now the rest of us can surely get by on that as well.

  3. Kay on May 19th, 2011 12:21 pm

    Legislation, legislation, legislation…..and what do we get ….
    THE SHAFT every single time.

    The insurance companies still after all the disasters made record
    profits, BECAUSE they raise your rates and make you pay them back.

    If we have to pay them back for what they are supposed to insure at
    THEIR RISK, why do we really have to bother. A low interest loan could
    do the same thing.

    My rates jumped so high I definitely could have paid off a big loan, instead
    my insurance rates will never go down, I will pay, and pay, and pay…….

  4. Jane on May 19th, 2011 8:26 am

    Any time private citizens have to pay higher insurance premiums the result is NOT good! It means less money goes into disposable income, which means less money in our general economy. I don’t have to be an economist to figure this one out! Between gas, higher insurance rates, the new septic tank tax, you have just wiped out any disposable income we have here in Florida! You better hope the tourists show up this year!

  5. eab on May 18th, 2011 10:25 pm

    I wish I knew more about the insurance industry. My ignorance makes it difficult to judge issues like this one.

    I will quote a friend of mine, a local banker, who took some insurance classes a few years ago. His statement to me about the industry was ” Insurance companies are not in business to pay claims. They are in business to avoid paying claims”.

    I kinda get concerned when *any* industry pushes so hard to pass legislation that they spend this kind of money.Someone is looking for Return on Investment.

    Anyone care to buy a congressman? Rick Scott is overstocked.

  6. NOT GOOD! on May 18th, 2011 7:48 am

    A TAX IS A TAX, NO MATTER WHAT YOU WANT TO CALL IT!!! WITH NO LIMITS!!!

Written by William Reynolds · Filed Under News