Washington, D.C., —The director of CEI’s Florida Insurance Project today renewed calls for meaningful property insurance reform, and criticized an amendment to the insurance reform bill pending before the Florida Senate:
“Property insurance reform is needed now in Florida. SB 1950 and its House companion, HB 1495 are meaningful, positive first steps toward a free market solution, which is the only viable long-term solution to the present crisis,” said CEI Florida Insurance Project director Christian Cámara.
The Florida legislature is currently considering a set of reform bills, SB 1950 and its House companion, HB 1495. Both measures contain provisions that phase down the hurricane catastrophe fund and allow the Florida Citizens Property Insurance Corporation (“Citizens”) to gradually increase its rates to shore-up its finances, ensure solvency, and decrease the likelihood and severity of potentially enormous post-event assessments, or “hurricane taxes,” to cover claims-paying shortfalls.
The Senate bill, however, does not allow for a “flex rating” system, which about 20 states have adopted in one form or another with successful results. The provision, which is currently included in the House bill, allows insurers to make small adjustments in rates in response to changing market conditions. The removal of this provision makes it much harder for insurers to replace near-worthless Hurricane Catastrophe Fund reinsurance with private reinsurance, and does little to invite companies to compete and provide more choices for consumers.
Additionally, an amendment has been filed onto the Senate bill that would continue to endanger Florida’s finances by greatly prolonging the artificial suppression of Citizens’ rates. This would extend the state-run insurer’s risk of insolvency and the likelihood for huge hurricane taxes on all Floridians after a storm.
“The Senate would do well in adopting the House version of the bill, including its flex rating provision, and should reject any proposals that will prolong Citizens insolvency through artificially suppressed rates,” said Cámara.