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Property Insurance Proposals Begin to Take Shape

Property Insurance Proposals Begin to Take Shape

The Florida legislature is expected to take steps this session to improve the Florida property insurance market.  After a series of committee meetings, some of the ideas are beginning to take shape.  According to Senate Banking & Insurance Chairman David Simmons, the committee will have a bill dealing with issues relating to Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund.  At the same time, Simmons recognizes that moving forward with some of the changes can be challenging, joking that ‘there is unanimity among some of us.”

Several of the proposals expected to be in the Senate package will be based on recommendations of the Florida Office of Insurance Regulation.  Insurance Commissioner Kevin McCarty made a presentation to the committee outlining a combination of market-based reforms he thinks will encourage the deployment of private capital.

The Senate package is likely to address areas such as:

  • Creating a clearinghouse to encourage policies to be written in the private market before entering Citizens.  This would be a greatly enhanced version of the Florida Market Assistance Plan.
  • Eliminating rate competition by Citizens.  Citizens would move to a methodology based on the rates in effect for carriers writing business in various areas of the state and/or an altered version of the glide path.
  • Expanding risk transfer programs in Citizens.  The legislature would give Citizens broader authority to enter into risk transfer arrangement with insurers.
  • Reviewing the mitigation system

The Senate also has expressed interest in a proposal of the Florida Hurricane Catastrophe Fund to begin gradually reducing its capacity in an effort to better ensure it can meet its post-event obligations.

The House Insurance Subcommittee also has been working on property insurance issues.  Chairman Bryan Nelson proposed increasing the 10 percent Citizens glide path in current law to 13 percent, with the caveat that Citizens must spend the additional funds on risk transfer.