News & Updates


Property insurance changes in works

By JOHN FRANK – Herald/Times Tallahassee Bureau

TALLAHASSEE — State Rep. Rick Kriseman is a reluctant expert on property insurance.

A fire torched his home. His previous Florida-based insurer faltered. His rates jumped 90 percent in the last year.

And now the St. Petersburg Democrat is sounding an alarm about legislative efforts to revamp the system to benefit property insurers at the expense of customers.

“We are making major decisions that have serious impacts on our citizens without full vetting, and that’s when bad policy comes out,” Kriseman said.

The convoluted issue is often one of the last to coalesce in the Legislature, but this year appears especially murky with Gov. Charlie Crist’s possible veto looming over the negotiations.

The House version of the legislation, at nearly 100 pages, holds considerable ramifications for homeowners: rate increases, unregulated policies, fewer hurricane mitigation credits, limits on sinkhole claims and more out-of-pocket expenses.

Rep. Bill Proctor, the House sponsor, said the measures are needed because Florida faces a “perilous condition for a major storm’’ just weeks before hurricane season.

“This bill is not going to cure that overnight,” the St. Augustine Republican said. “All we are trying to do is change the direction to some extent.”

The state’s risk?

The sobering assessment of the state’s exposure comes in spite of several years without any major storms. At the same time, a number of Florida property insurers went insolvent in the last year and the bulk of the state’s top companies reported losing money.

The state-run company, Citizens Property Insurance Corp., now holds $405 billion in risk and one in four Florida homeowner policies, and is moving toward financial security after lawmakers mandated rate increases last year. But it still can’t withstand more than a 25-year storm.

“The goal should be for every property owner to pay for their exposure for loss; no more, no less,” said David Daniel, a vice president at the Florida Chamber of Commerce, a force behind the overhaul.

He called the bills a small step in the right direction, and said, “In the end, the status quo is going to save Floridians some money but its going to require that we all pay enormous assessments after the fact, and really it puts our economy at risk.”

In a sign of the issue’s importance this year, the Cabinet heard a presentation from Florida’s chief insurance regulator in March amid concerns of the market’s stability.

Commissioner Kevin McCarty tried to reassure the state’s top governing board, and identified five cost-drivers that are hurting insurers, ranging from reinsurance costs to fraud.

Market demands changes?

The bills (HB447 and SB876) advancing toward the full House and Senate addresses the bulk of those items. But it also goes much further by incorporating a number of industry-friendly provisions.

The most controversial is a plan to allow property insurers to bypass state regulators and offer largely unregulated rates to homeowners instead of the current rates which are moderated by the Office of Insurance Regulation.