Insurance bills clear Senate panel

Article Courtesy of The Palm Beach Post

By Dara Kam
Published  April 10, 2007


TALLAHASSEE More Florida homeowners could be eligible for coverage by the state insurer of last resort, property insurers based outside of the state couldn't set up "pup" firms here, and low-income homeowners would get less money to harden their homes under two bills approved Monday by the Senate Banking and Insurance Committee.

What the bills would do

SB 1864

* Reduce the matching grants residents can get from the state to harden their homes against hurricanes from $5,000, or half of what they spend, to $2,500, or one-fourth of what they spend.


* Limit grants to pay only for roof replacement and shutters. Shutters include anything that covers openings.


SB 2498

* Prohibit subsidiaries of insurance companies that are not headquartered in Florida (called pups) from getting licensed to sell property insurance here. Currently licensed pups would not be able to renew their licenses.

* Expand the pool of homeowners eligible for coverage by Citizens. If the rate offered by a commercial insurer is at least 15 percent more than Citizens' rate, a client in the high-risk area could switch to Citizens. The rate offered by a commercial insurer now must be at least 25 percent higher than Citizens' rate.


Gov. Charlie Crist pushed one of the bills (SB 2498) after lawmakers failed to include some of his recommendations during a property insurance reform special session.


He wants to prohibit insurers headquartered outside of Florida from setting up subsidiaries - called pups - in the state, because the pup companies run out of resources quicker than their parent corporations.

The likely result, if the bill passes, is that 27 insurers could be affected, including up to 1 million homeowners currently covered by State Farm's Florida subsidiary.

The panel passed the bill Monday with no discussion, and testimony from two insurance industry lobbyists was limited to 60 seconds each.

Crist appeared in the back of the committee room as the panel took up the measure, and he began to fill out an appearance card before Committee Chairman Bill Posey, R-Rockledge, advised him that he was not required to do so.

Sen. Mike Bennett, R-Bradenton, cast the sole vote against the bill.

"We debated this issue during special session, and we recognized that we had some problems with it. Here we are forced to pass a very critical bill in less than three minutes. It's just a bad way to do legislation," Bennett said after the vote, noting that lawmakers had debated and refused to pass a similar component during the special session.

The bill also would expand the pool of homeowners eligible for coverage by the state-run Citizens Property Insurance Corp., but not as much as Crist wanted. He had sought to allow any resident to opt into Citizens, but he said he realized that universal availability would have threatened the state-backed insurer's federal tax-exempt status.

Crist said he was satisfied with the bill's solution of allowing people in high-risk areas to switch to Citizens if the rate they received from a commercial insurer was at least 15 percent more than Citizens' rate.

The second Senate bill (SB 1864) would water down the matching grants that homeowners could get from the state to harden their homes against storms.