to shrink hurricane fund would make homeowners pay more
Article Courtesy of The Palm Beach Post
February 28, 2013
Home insurance premiums would rise
statewide under bills filed Wednesday that aim to shrink the Florida
Hurricane Catastrophe Fund.
The state’s Cat Fund, a major source
of money to pay claims after severe disasters, would contract from $17
billion to $14 billion over three years under HB 11o7, filed by state
Rep. Bill Hager, R-Boca Raton. A similar Senate bill, 1262, was filed
by Sen. Alan Hays, R-Umatilla.
That move is likely to create business
for private reinsurers, typically offshore and foreign companies whose
unregulated rates often run more than double what the Cat Fund costs.
Industry groups say it’s a good way
to reduce the state’s role in the property insurance market, but
acknowledge it would likely raise homeowners’ bills. How much? One
estimate puts it at 3.6 percent, said former legislator Don Brown, a
consultant to the Florida Insurance Council and Associated Industries
One Senate insurance reform package has
dropped a Cat Fund cutback — at least for now — out of concern it
would raise the cost of living for residents.
Still, Brown gave the measure an even
shot to pass this spring’s legislative session.
“I would say 50-50,” said Brown,
speaking to The Palm Beach Post’s editorial board Wednesday. A
smaller Cat Fund means less difficulty finding financing after
catastrophes, he said: “It would reduce the likelihood of claims not
Skeptics said they have trouble seeing
why the move is necessary or good for consumers, since it drives up
the costs of ratepayers statewide.
“I wouldn’t have a tolerance for
legislation that puts a larger burden on policyholders,” said Rep.
Mark Pafford of West Palm Beach, policy chair for the Democratic
Among other legislative initiatives,
the Florida Insurance Council backs a range of efforts to shrink
state-run insurer Citizens, such as reducing coverage for vacation
homes or structures owned by people living outside Florida, said Sam
Miller, the council’s executive vice president.
car insurance rerforms, more time will be needed to assess how
Personal Injury Protection changes will affect rates, said Lynne
McChristian, Florida representative for the Insurance Information
Institute. Out of 136 approved filings, only about one in four — 36
— reached a targeted 10 percent decrease or more under a law whose
major provisions took effect Jan. 1, according to a summary provided
by industry officials. Another 32 saw smaller decreases in PIP, 25 had
no change, and 38 raised PIP rates.