A sweeping and controversial measure aimed at reducing costs to property insurers and liability for taxpayers was signed into law Tuesday by Gov. Rick Scott, who said it was a significant first step in restoring the private insurance market in Florida.
Equally important, Scott said the measure (SB 408) will help lower the number of Florida coastal residents now insured by the state-backed Citizens Property Insurance Corp., the state’s largest property insurer with 1.3 million policies, by making it easier for private companies to compete.
“We’ve got to recruit other companies, other insurance companies,” Gov. Rick Scott said Tuesday in an interview with the News Service. “We’ve got to make sure Citizens goes back to being the insurance company of last resort.”
Among its changes, the bill allows insurance companies to charge more for policies that pay replacement costs up front while offering discounts to policyholders who opt to get reimbursed for lost items as they are replaced.
“This bill focuses on addressing cost drivers in the system and will yield long-term benefits for Florida by stabilizing the property insurance market and attracting new capital investment to our state.” Said Kevin McCarty, Florida’s insurance commissioner, who supported similar changes that were vetoed last year by then Gov. Charlie Crist.
Less enthused, however, were critics of insurers, led by Sen. Mike Fasano, R-New Port Richey, who said the changes left many policyholders at risk of losing private insurance altogether and being forced to go into Citizens – the opposite of one of the bill’s intended effects.
“Unfortunately, what happens next is that every home owner, every condominium condo owner, every mobile home owner, and every small business owner will be paying higher premiums to private insurers and will see their rates go up in the next 18 months,” Fasano said in an interview.
Scott’s decision drew immediate praise from the Senate sponsor, business groups, and the industry as a whole.
“(The bill) closes loopholes that invite fraudulent claims by restricting misleading advertising and misleading solicitations,” said Richter, R-Naples, sponsor of the bill. “It also attacks cost drivers in an effort to responsibly lower insurance premiums. With hurricane season quickly approaching, this legislation is critical to ensure a solvent industry that policyholders can rely on.”
The insurance industry lobbied the issue hard. State Farm, Florida’s second largest property insurer behind state-backed Citizens Property Insurance Corp, spent at least $150,000 for the quarter to press its case to lawmakers. FCCI, a regional commercial insurer, spent more than $250,000 in lobbying fees.
Business groups including the Florida Chamber of Commerce and Associated Industries of Florida lauded the signing Tuesday, calling the measure a good first step.
“We should not be requiring all Floridians including businesses, charities, homeowners, churches and automobile policyholders to pay hurricane taxes,” said Jose Gonzales, of AIF. “We should not be subsidizing million dollar beach homes on Florida’s coast and we should not be going into every hurricane season hoping for a miracle.”
“This bill will require homeowners regardless of income level or home value to have a state certified hurricane protection system in place prior to an insurance carrier insuring their property. While on a personal level it is good for our industry and business as a whole. The timing of this legislation is unfortunate given the economic times and reduction in home values across the state.” says Scott Berman President of Florida Window and Door.
“Gov. Scott ran on a platform of no new taxes or fees,” Fasano said. “The law pretty much ensures that we will see a rise in fees, a tax if you will, on all rate payers,”