Legislature strikes deal on property insurance bill

May 1, 2008

South Florida Sun-Sentinel--May 1, 2008

By Julie Patel
South Florida Sun-Sentinel

The state House late Wednesday night unanimously passed a sweeping property insurance bill that is touted as a "homeowners’ bill of rights."

The Senate is expected to approve the compromise measure before the annual legislative session ends Friday, and then send it to Gov. Charlie Crist.

The full House and Senate are expected to approve it before the annual legislative session ends Friday, and then send it to Gov. Charlie Crist.

"It gives consumers greater rights and remedies, freezes some rates and provides more transparency," said Rep. Jack Seiler, D-Fort Lauderdale. "I’m not going to say it’s a great bill, but it’s a good bill that creates better protections for consumers … than current law."

The bill builds on a property insurance law passed last year that lowered homeowner’s insurance prices. This year, the legislation focuses on holding insurers accountable and equipping the state to be a tougher watchdog over property insurers.

Clearing the way for the compromise, House leaders filed an amendment late Wednesday that Sen. Jeff Atwater, R-North Palm Beach, co-author of the original Senate bill, and House leaders approved.

The bill extends the rate freeze for Citizens Property Insurance Corp., the state’s largest home insurer, by one year, to January 2010.

It doubles maximum fines for insurers that violate state law. The Senate originally wanted to increase the fines by much more.

It prohibits insurers from using arbitration panels when there’s a disagreement with state insurance officials over rates.

It extends by one year, to January 2010, a provision from last year’s insurance bill that requires insurers to get state approval before raising property insurance rates.

It requires insurers to notify state regulators 90 days before dropping more than 10,000 homeowner policies in one year.

It requires insurers to use state-approved methods to predict the risk of hurricanes, a key factor in setting rates.

The House amendment retains most of the language of the Senate bill, drafted after state Senators held hearings earlier this year with insurance executives about their pricing practices.

Insurance industry representatives fought many of the Senate bill’s provisions and were able to get certain things removed by House leaders.

For instance, the House amendment doesn’t include a provision holding insurers accountable to state anti-trust laws. Also notably missing from the amendment is a provision prohibiting Citizens from selling any new policies that only provide windstorm coverage. Supporters of the provision, including Citizens leaders, said the so-called wind-only policies allow insurers to "cherry-pick" and "dump" the less profitable windstorm policies on the state.

The amendment also does something the Senate bill didn’t. It targets state regulators and Citizens, the state-backed property insurer. Under the House amendment, the state Office of Insurance Regulation would be required to provide more public information. The amendment would also create a task force to determine how to restore Citizens as the home insurer of last resort.

The amendment includes all Citizens policyholders in the first assessment for the insurer’s annual deficits and increases the first maximum assessment from 10 percent to 15 percent.

Like the Senate bill, the amendment includes a provision requiring $250 million of Citizens’ funds to be used to provide loans for private insurers that would take policies from Citizens.

"To be candid … it is not a bill designed to specifically reduce premiums," Rep. Don Brown said during the House debate on the amendment late Wednesday night. "But what it does focus on is significant consumer protections."