This afternoon, the 160 members of the Florida Legislature will convene in a special session to debate ideas designed to bolster the insurance market and bring down rates.
Here are some of the various provisions contained within the legislation in either the House or Senate, taken from various media reports:
- A one-year freeze on rates for Citizen’s policyholders (H)(S)
- Fire the Citizens Board of Directors (H)
- Repeal prior rate increases for Citizens set to go into effect this year, previously required to provide Citizens with enough cash before the 2007 hurricane season and that Citizens rates should be higher than private sector companies. (H) (S)
- Cut Citizens rates by 25% (S)
- Allow Citizens to offer full policies (not just windstorm) in high risk areas (S)
- Allow Citizens to cover non-homesteaded properties (S)
- Change the Citizens assessment, in place to cover Citizens losses in 2004 and 2005 and currently on all homeowner insurance policies in Florida, to all forms of casualty insurance – homeowner, automobile, and medical malpractice (S)
- Allow insurance companies to buy from the state in exchange for guaranteed rate reduction (H) (S)
- Reduce the threshhold for tapping the State Hurricane Catastrophe Fund from $6 billion to $3 billion (S)
- Require insurance companies to factor in national profits when requesting rate increases (H)
- Require insurance companies who offer homeowner insurance in other states and other polices in Florida to offer homeowner insurance in Florida or pull out (H)
- Require insurance companies to return profits to policyholders after a certain level is reached – similar to regulations for electric companies (H)
- Require insurance companies to use “storm worthiness” of a home, rather than date of construction, when setting rates (H)
- Insurance companies could not drop policyholders during hurricane season (H)
- Prohibit the creation of new Florida-only subsidiaries – so called “pup” companies (H)
- Homeowners can receive credit for strengthening their homes (H)
- Give homeowners more options: windstorm coverage, no coverage for the contents of their homes, or coverage only for the unpaid portion of their mortgage (S)
- Allow homeowners with homes valued at $500,000 or more the option of coverage for only the unpaid portion of their mortgage (H)
- Homeowners can pay higher deductibles in exchange for lower premiums (S)
- Condo Associations can form self-insurance funds by joining with other homeowner associations (S)
- Provide $100 million to homeowners to harden their homes (H)
Office of Insurance Regulation
- Make the Insurance Consumer Advocate part of the Office of Public Counsel, an arm of the Legislature and thus independent from the Office (S)
- End the process where insurance companies could file for arbitration when the Office denies a rate increase (S)
- Allow the Office to reduce the deposit required from foreign reinsurance companies who want to sell in the state; the current level is 100% of the amount they wish to sell in Florida (S)
- Require the statewide building code to apply to the panhandle (H)
- Place a cap on total damages paid by insurance companies at $20 billion when a big storm hits Florida, costs above that would be paid by taxpayers (S)
Governor Crist has not been as specific in his recommendations, saying generally that he wants permanent solutions that reduce rates. The House did take up two of his campaign themes: ending the cherry picking for companies who don’t sell homeowner policies in Florida, and factoring in the national picture for Florida-only subsidiaries.
The Governor has proposed a moratorium on companies dropping policyholders for four years. There are some exceptions, but companies would be penalized significantly for dropping policies simply to limit exposure to claims after a hurricane.
Many of these provisions will be included in the final legislation, while others will be debated and deleted. It will be interesting to see what the final product will be.