Lawmakers look anew at storm insurance rates

Feb 20, 2008

With this year’s legislative session just two weeks away, lawmakers are once again weighing proposals aimed at making insurance coverage more affordable and available.

Miami Herald–Feb. 20, 2008

A bill introduced Tuesday by Rep. Dennis Ross, R-Lakeland, would give homeowners two choices when buying a hurricane policy. They could buy it from a state windstorm program, which would be created by this legislation, for a cost that could be lower upfront. But the policy could be subject to future assessments if the program runs out of funds to pay claims after a major storm.

The other option would be for residents to buy a policy including windstorm coverage from a private insurer at a possibly higher cost. This policy wouldn’t be subject to any assessments.

This proposal ”engages the private market and allows the private market to come in if the consumer chooses,” said Ross in an interview late last week.

Such a windstorm program could write hurricane coverage throughout the state, not just along the coast. That’s the predicament of Citizens Property Insurance, the state-run insurance company, which has about 1.3 million policies on its books, including the riskiest properties near the water.

The idea of creating a program to provide all the windstorm coverage in the state has been suggested several times over the years. A plan was floated after Hurricane Andrew hit in 1992 and blew away the state’s insurance industry. In 2006, the Florida Association of Insurance Agents shopped around their own concept of a statewide insurance pool.


Sam Miller with the Florida Insurance Council said that while Ross’ bill can probably muster support in the House, it remains to be seen if a similar proposal is introduced in the Senate or if the Senate would consider the House measure.

Sen. Bill Posey, who heads the Senate Banking and Insurance Committee, believes consumers already have that choice — they can choose a policy from Citizens or a private insurer. But many private companies don’t want to write hurricane coverage in Florida, thus limiting coverage options for consumers.

In a related development Tuesday afternoon, the Senate Banking and Insurance Committee voted to introduce a bill that would lower the exposure of the Florida Hurricane Catastrophe Fund. This bill would match a similar one that’s already been introduced in the House of Representatives.


Also Tuesday, the Office of Insurance Regulation filed a formal complaint against Allstate Floridian Insurance and nine sister companies, asking to suspend the insurer’s license to write new business in Florida. The complaint is required by law.

OIR is also facing Allstate in the state court of appeals. OIR had filed an emergency order Jan. 16. Allstate appealed and the appeals court granted the insurer a temporary stay.

Florida Insurance Commissioner Kevin McCarty took action because Allstate had not fully complied with a subpoena for documents that was issued in mid-October.

This complaint will go before the Division of Administrative Hearings and will be decided by an administrative judge. A spokesman for the OIR said these proceedings could move along faster. Allstate’s appeal in the Court of Appeals could take up to 18 months to resolve.