CEI Analyst Hails Passage of Insurance Reform Bills


Christian R. Camara

Tallahassee, FL, —The Florida Senate Committee on Banking and Insurance today overwhelmingly approved both SB 2036 and SB 1950 with bipartisan support.

SB 2036, sponsored by Senator Mike Bennett (R-Bradenton), would allow private insurers to bypass the state’s current rate regulation process and would immunize their policyholders from potentially enormous assessments by Citizens Property Insurance Corporation after a major hurricane. Citizens, a state agency, serves as the largest provider of property insurance in Florida, and current law allows it to levy assessments – “hurricane taxes” – on all property and auto insurance policies in the state should it find itself unable to pay its claims after a storm. These taxes do not require any additional legislative approval.

SB 1950, sponsored by Banking and Insurance Committee Chairman Garrett Richter (R-Cape Coral) would implement several changes to Florida insurance law that would reduce the enormous hurricane risk the state and its taxpayers are currently exposed to. These changes include a decrease of the Florida Hurricane Catastrophe Fund. On its own, the CAT Fund has the ability to literally bankrupt the state should it be faced with a projected $18 billion shortfall in the aftermath of a major storm.

The bill would also provide a “glide path” to gradually increase Citizens’ artificially suppressed rates to an actuarially sound level. This would place Citizens in a more stable financial position and would reduce the need or severity of “hurricane taxes” after a storm. Part of the rate increase would be directed to the My Safe Florida Home program, a highly successful mitigation grant program that has effectively fortified thousands of Florida homes, thereby reducing the state’s overall hurricane risk.

Both bills, which must still pass the full House and Senate, would significantly expand the availability of property insurance throughout Florida and would give residents more options to insure their homes. Last week, the House version of both bills (HB 1171 and HB 1495, respectively) passed their first committees of reference in the Florida House of Representatives with bipartisan support.

“A free-market approach is the only long-term solution to the state’s insurance crisis and these bills take that approach,” said Christian Cámara, Director of the Competitive Enterprise Institute’s Florida Insurance Project. “These proposals would transfer a substantial portion of hurricane risk away from taxpayers, and would expand Floridians’ ability to make their own decisions when it comes to the rates they pay and the companies they buy from.”