Legislators OK increases in home insurance rates
Article Courtesy of The Sun Sentinel
Published May 3, 2009
TALLAHASSEE - Florida lawmakers on Friday passed sweeping property insurance legislation that would allow home and condominium insurers to boost statewide rates by up to 10 percent.
Gov. Charlie Crist has voiced concern about rate increases but is not expected to veto the legislation.
"I like lower rates. We'll see what makes it back to my desk," Crist told reporters Friday morning.
The legislation is in sharp contrast to laws passed the past two years that aimed to hold insurers accountable and reduce property insurance premiums because they doubled or tripled in some cases after the 2004 and 2005 hurricane seasons.
The measure passed Friday aims to reduce the financial risks for Floridians if a major hurricane hits.
"Ten percent doesn't cut it, but it at least turns the Titanic from hitting the iceberg," said Rep. Bryan Nelson, R- Apopka, who co-sponsored the measure.
All automobile and home insurance policyholders pay fees to offset deficits in state insurance entities such as Citizens Property Insurance. Under the bill, rates for Citizens, the state's largest property insurer, would increase after being frozen since 2006.
"How could we freeze rates two years ago and in a time that we're in a greater crisis we're looking to increase rates on Floridians?" State Rep. Hazelle Rogers, D-Lauderdale Lakes, asked legislators.
The legislation was passed 80-35 in the House and 32-6 in the Senate.
The bill was stripped of several provisions that would have allowed insurers to dramatically increase property insurance rates, after opposition from Crist and Senate President Pro Tempore Mike Fasano, R-New Port Richey.
The bill's main sponsors, Nelson and Sen. Garrett Richter, R-Naples, said they hammered out a compromise after wrangling a few days with regulators, insurance industry officials and the governor's office.
Among other things, the legislation would:
Allow Citizens to increase policyholder premiums by up to 10 percent a year starting in January until its rates are considered financially sound;
Increase rates for and phase out a $12 billion part of the $29 billion Florida Hurricane Catastrophe Fund;
Allow a quicker process for private insurers to pass certain backup coverage costs to customers, adding up to no more than a 10 percent average annual increase in a premium;
Extend by one year a provision requiring state approval before insurers implement rate increases, a move supported by consumer advocates.
Insurance industry representatives praised legislators for the bill.
"Any time you vote to raise rates, it takes political courage" because it's unpopular with voters, said Sam Miller, assistant vice president of the Florida Insurance Council.
He said the bill ensures "we can survive the next hurricane."
Still, half a dozen South Florida legislators voiced opposition to the bill Friday.
"You're talking about raising rates, and there are still people who haven't been paid" their claims from storm damage a few years ago, Rep. Gwyndolen Clarke-Reed, D-Deerfield Beach, told legislators.
In other action Friday, the Legislature passed a measure that aims to lure large insurers to the state by allowing them to sell essentially unregulated home and condo insurance policies at whatever price they want. Crist is expected to veto the measure.
Crist lauded Insurance Commissioner Kevin McCarty for his regulatory work. "My preference would be to continue that," Crist said Friday.