FPCA Homeowners Division: House Insurance Releases New Cat Fund, Flood Insurance Plans

Mar 4, 2014

Florida Property and Casualty Association Homeowners Division Members:

The House Insurance & Banking Subcommittee released its agenda for their meeting on Wednesday, March 5th, at 3:30 PM.

The agenda includes HB 391 by Hager (FHCF), HB 879 by Rep. Hooper (flood), and HB 143 by Rep. Raburn (FIGA).

Chairman Nelson has filed proposed committee substitutes for both the FHCF and flood insurance bills, available here:

PCS for HB 0391 – Florida Hurricane Catastrophe Fund http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?PublicationType=Committees&CommitteeId=2725&Session=2014&DocumentType=Proposed%20Committee%20Bills%20(PCBs)&FileName=PCS%20for%20HB%20391.pdf

PCS for HB 0879 – Flood Insurance http://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?PublicationType=Committees&CommitteeId=2725&Session=2014&DocumentType=Proposed%20Committee%20Bills%20(PCBs)&FileName=PCS%20for%20HB%20879.pdf

 Of particular interest to FPCA is our top priority, the FHCF legislation. As filed, the original bill would have reduced the mandatory FHCF capacity by $1 billion per year for three years, to a reduced total of $14 billion. FPCA opposes this legislation due to the potential impact on rates.

The proposed committee substitute is similar to a concept discussed last year between the Governor’s office and insurers and reinsurers. Under this concept, the FHCF capacity is set at $14 billion, and the FHCF must offer a new optional layer “Coverage Limit Increase Option (CLIO)” totaling an additional $3 billion in capacity. The bill language mimics the old Temporary Increase in Coverage Limits (TICL) provisions to describe how CLIO will operate.

FPCA lobbyists have spent considerable time over the past several weeks educating Chairman Bryan Nelson (R-Apopka) and committee members as to the problems with the original legislation. This approach by Chairman Nelson does offer the potential for placing the “burden of proof” on reinsurers. If substantial capacity is available at competitive rates, as the reinsurers insist is the case, then insurers will not want to purchase the optional FHCF coverage. If private reinsurance rates are in fact higher, than insurers will be able to continue purchasing FHCF coverage up to the full capacity, keeping rates in line for policyholders.

Meanwhile, the Senate Banking & Insurance Committee has not yet decided when it might take up any of three competing FHCF bills, and we believe that they are reluctant to do so without a broad agreement among all interested parties, insurer and reinsurer alike.

In addition, the CFO’s Bill of Rights / Assignment of Benefits legislation, SB 708, is on the agenda of the Senate Appropriations Committee for Thursday, March 6, at 1:00 PM. Given the continued fluidity surrounding various provisions in the bill, especially relating to the assignment of benefits, what will happen on this bill in that hearing is unclear. The committee may choose to make just enough changes to obtain a majority of committee votes. The possibility also exists that the committee may remove the assignment of benefits section in its entirety, in order to avoid becoming bogged down by numerous amendments and intense debate.

Please let us have your thoughts at this time.