House Committee to Consider Bill to Help Market
The House insurance and banking subcommittee today considers a bill (HB 1127) that has broad support and would be one component of restoring private sector interest in the Florida property insurance market. The bill would reduce Citizens Property Insurance Corporation’s reliance on so-called regular assessments in favor of emergency assessments. The difference, of course, is that insurers must pay the regular assessments up front and them pass them through to consumers through subsequent filings, whereas emergency assessments are added directly to policies.
Regular assessments threaten insurers’ cash flows at a time when they are likely to be experiencing their own claims. These assessments also create a lot of filing activity, consuming resources of both the industry and the OIR. The OIR has pointed out that the threat and impact of regular assessments is one factor that insurers cite in their decisions to restrict deplying capital in Florida. Citizens, for its part, says that moving to an emergency assessments will not cause a cash flow problem– it has its own resources, the flow of emergency assessments will begin soon enough, and it can plan for any cash flow needs.
Changing the assessment mechanism alone won’t revitalize the Florida property insurance market. However, doing that actually will take a series of steps, and this change is a good one that has broad support from the industry, the OIR and consumer representatives. Let’s hope the House committee advances this bill and doesn’t allow it to become bogged down with more controversial proposals that could derail it.