Scott, Panel Call For Florida Property Insurance Reform

December 1, 2012

Several Florida lawmakers and Gov. Rick Scott said Friday they will push to “educate” Floridians on the hidden costs associated with property insurance and a “house of cards” that will blow down if a major storm hits.

Speaking at the Florida Chamber of Commerce insurance summit at Disney, Scott said a concerted effort needs to be made to inform insurance policyholders that state efforts to shore up the market in some of the most hurricane prone regions of the state, will likely trigger across-the-board assessments when the state-backed insurer can’t pay claims.

Scott’s comments came shortly after a Chamber political consultant released survey results showing 80 percent of policyholders are not aware that they will be charged assessments if Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund are unable to pay claims in the event of a serious storm.

Scott said Citizens, the state-backed insurer, needs to continue efforts to get the word out about the potential for what he called a “hurricane tax.” Citizens has gone from the insurer of last resort to the state’s largest property insurer, with nearly 1.5 million policyholders.

“To make the dream of home ownership available we must reduce the size of Citizens,” Scott said. “It cannot be the insurer of first resort.”

Any fundamental change to Citizens role will be difficult, a subsequent panel of lawmakers said. Political considerations have – and will continue to – butt heads with the economic realities of insuring property in a state where about 80 percent of the population lives near the coastline, they said.

Balancing the actuarial soundness of insurers, including Citizens, with the clamor of the coastal population for affordable insurance has been something Florida policymakers have wrestled with for years.

Following the destructive 2004 and 2005 hurricane seasons, the Legislature placed caps on Citizens premium increases as Floridians complained loudly about spiraling rates. With private companies unable or unwilling to write policies in many areas that a number of homeowners consider affordable, Citizens has stepped in to insure more and more property.

To shore up the market, the CAT fund and Citizens play an increasingly critical role, but are themselves funded in part by potential assessments on policyholders of all companies if they can’t pay losses.

“Most families have no idea they are subject to this tax,” Scott said.

Any proposal to raise those rates beyond the 10-percent cap approved by lawmakers faces intense political pressure from coastal voters, who disproportionately make up Citizens policy base. But Sen. Darren Soto, D-Orlando, said coastal lawmakers may have to make unpopular choices to strengthen the overall insurance market across the state.

“It’s a pretty big balancing act,” said Soto, who was just elected to the Senate after serving in the House. “A big issue going into session is whether we can convince those folks who represent people along the coast to sign on to it.”

By The News Service of Florida

Comments

4 Responses to “Scott, Panel Call For Florida Property Insurance Reform”

  1. David Huie Green on December 5th, 2012 5:49 pm

    CONSIDERING:
    “There are a lot of uninsured homes in Florida ”

    Of course there are.

    Some people choose to not pay for insurance because it is so expensive.

    Some homes are so endangered that insurance companies could expect to have to pay to replace them every seven years, so insurance would have to be more than a seventh of replacement cost in hopes of breaking even — which they prefer to not just do, they actually want to make a profit.

    Some homes are insured only because the rest of the payers in Florida are footing the real bill for that insurance.

    David for free exchange

  2. whizdbiz2 on December 3rd, 2012 9:29 am

    Jane, not sure what the connection is between your claim that companies have lots of cash and uninsured homes. Are you advocating a “share the wealth” scheme? Better yet, start your own company and “get rich” yourself!

    If you know anything about insurance you know companies have cash to pay claims (see Super Storm Sandy, etc.), especially when the state Governor says to pay claims right away. Got to have the cash on hand to do that. Carolyn is correct, insurance markets work best when government stays out of the picture, Florida has not learned this lesson and until they do, things will not get better there.

  3. Jane on December 2nd, 2012 6:35 am

    Maybe it is time to look at how high insurance rates have gone and why some people can’t get insurance or can’t afford it. There are a lot of uninsured homes in Florida and the insurance companies seem to have a lot of cash these days…check their balance sheets.

  4. Carolyn Bramblett on December 1st, 2012 5:39 am

    The State needs to get out of the insurance business. That should be between policy writer and policy holder.

Written by William Reynolds · Filed Under News