Florida Senate, House Seek to Close Property Insurance Legislation Gaps

The Florida House and Senate are trying informally to work out differences in bills to address the state’s property insurance crisis,
including how much rates for more than one million customers of the state-backed Citizens Property Insurance Corp. might go up.

The Senate now wants to limit Citizens’ increases to 5 percent, while the House would allow hikes up to 20 percent.

If the informal negotiations do not close the gap, a formal conference committee would have to go to work. The pressure is on as the regular legislative session ends Friday.

But insiders think a deal will be struck.

“I believe we will have something,” said Gary Landry, vice president, Florida Insurance Council, which represents insurers.

The Senate passed a bill Tuesday by a vote of 34-2, with Sens. Eleanor Sobel, D-Hollywood, and Rudy Garcia, R-Hialeah, casting the only opposing votes.

Instead of insisting upon its own measure (SB 1950), which capped Citizens’ rate hikes at 10 percent, the Senate agreed to back the version (HB 1495) that the House passed last week by a 75-33 vote. However, the Senate then amended the House version, including the rate increase limit to 5 percent.

Landry said the move could be a negotiating strategy by the Senate sponsors and that many believe the final number will end up close to 10 or 12 percent.

He said the industry believes at least 10 percent is needed to begin bringing the funding for the state-backed Citizens and its hurricane fund in line with projections of potential losses.

The bill would effectively lift a statutory freeze on Citizens’ rates at December, 2006 levels imposed by the Legislature in 2007 and provide a so-called “glide path” for rate increases on Citizens’ policies.

The rate increases would stop once actuarially sound rates are achieved.

Without the legislation, officials have warned that Citizens’ premiums would increase even more — as much as 40 percent– next January after the rate freeze expires.

In addition to funding Citizens, the legislation would begin a process of shoring up financing for the state’s property reinsurer, the Florida Hurricane Catastrophe Fund, and reduce the state fund’s exposure as a reinsurer. Both the House and Senate bills would reduce the FHCF’s current optional, temporary reinsurance layer of $12 billion to $10 billion for the 2009 contract year, $8 billion for 2010, $6 billion for 2011, $4 billion for 2012, and $2 billion for 2013.

Gov. Charlie Crist, who has generally opposed rate hikes, has indicated that he would support a rate increase but only if if it is reasonable.

Topics Florida Legislation Property Politics