Florida Senate panel votes for Citizens insurance rate hike
INSURANCE
A Florida Senate panel passed an insurance bill minus a provision that would have allowed home insurers to pass through automatic rate increases. However, the bill would let the state-run insurer raise its rates.
By BEATRICE E. GARCIA
bgarcia@MiamiHerald.com
The Florida Senate version of legislation that will reduce the size of the state’s hurricane catastrophe fund and allow for gradual increases in premium rates for homeowners advanced in committee Monday.
The bill proposes to gradually reduce the size of the Florida Hurricane Catastrophe Fund and allows for a gradual increase in rates charged by Citizens Property Insurance, the state-run insurer. Citizens hasn’t been allowed to raise rates since 2006.
Like the session Friday in the House insurance committee, the bill was amended several times.
However, a provision in the bill that would have allowed insurers to pass through inflation-based increases of up to 8 percent a year was shot down. Sen. Sen. Mike Fasano, R-New Port Richey, argued strongly against that provision. The House bill does contain a similar provision.
’VIOLATED’ PRINCIPLES
Fasano also had strong words for Barney Bishop, president of Associated Industries of Florida, a powerful lobbying group for small and medium-sized businesses, who urged the panel to pass the bill because of a current shortfall of about $18 billion in the fund.
That number represents the amount of cash and possible bonds the fund could sell if a storm hit a section of the state and it had to make good on its back-up insurance coverage. The CAT fund is allowed to sell up to $29 billion in reinsurance this year.
Bishop said lawmakers ”violated every known insurance principle” when they expanded the CAT fund in early 2007. He also argued for less regulation for insurers so they would be willing to write policies in Florida, which would make it easier for homeowners and businesses to find coverage.
“OUT OF TOUCH’
That didn’t sit well with Fasano. ”You don’t have a clue,” he said, adding that Bishop was “totally out of touch living in a Tallahassee cloud.”
To Fasano and many of the senators on the committee, it is crucial that insurance rates don’t rise sharply because they know most homeowners aren’t able to take on large increases given the deep recession.
Concerned about the need to raise insurance rates, Sen. Ronda Storms, R-Brandon, said the move “just smacks me of being unmerciful. I don’t want to be without mercy.”
The bill has at least three more committee stops to make before it would be ready for a vote by the full Senate.