Senator Alexander tacks Catastrophe Fund bill onto Citizens Property Insurance assessments legislation
Mar 3, 2012
The following article was published in the Florida Current on March 3, 2012:
Sen. Alexander tacks Cat Fund Bill onto Citizens Assessments Legislation
By Gray Rohrer
An otherwise uncontroversial bill received a new wrinkle Saturday when a bid to reduce the size of the Florida Hurricane Catastrophe Fund, known as the Cat Fund, was added to the legislation by Sen. JD Alexander, R-Lake Wales.
HB 1346 removes most regular assessments on private insurance policies in the aftermath of a hurricane, which are paid to the state-backed Citizens Property Insurance Corp. after its initial assessments to its customers are exhausted. Instead, the payments are pushed into emergency assessments, which are paid over a longer period of time than regular assessments, giving private insurers more time to recoup the money from policyholders.
Consumer protection groups, private insurers, the Office of Insurance Regulation and most private insurance companies favor the legislation. The bill received unanimous support at two previous committee stops, but a more contentious measure backed by Alexander was added during the meeting of the Senate Budget Subcommittee he chairs.
Alexander has pushed for SB 1372, which would reduce the coverage provided by the Cat Fund, which acts a source of reinsurance for Citizens and private insurers alike, from $17 billion to $12 billion over a five-year period. It has passed through one committee in the Senate, but the House companion bill, HB 833, never came up for a committee vote.
Jack Nicholson, chief operating officer of the Cat Fund, helped write the bill. He contends the measure is needed to shore up a potential $3.2 billion shortfall if a large storm of Hurricane Katrina proportions hits Florida.
Private insurers have complained that the bill, which also increases the co-pays they pay into the Cat Fund, would force them to pass on the increased cost of private reinsurance to homeowners. Instead, Alexander tacked on a scaled-down version of his original bill, adding an amendment that would reduce the Cat Fund’s coverage from $17 billion to $15 billion over a two-year span. Insurance companies would still pay co-pays of 20 percent instead of 10 percent under the amendment, however.
“I’m concerned that if we pass the bill as it is without at least some modest adjustment to the Cat Fund, we’ll be losing the only voice to remind the citizens of the state of Florida what a big financial burden we have. I think we have to adjust the bill a little bit if we’re going to move forward,” Alexander said.
The House version of the Citizens assessment bill, HB 1127, passed through that chamber last month by an 89-25 vote. Alexander, who is engaged with House leaders in last-minute budget talks, said he thinks the House will take up the bill with the added Cat Fund provisions.
“I’ve talked to several of the leaders, they feel pretty confident the House would consider this,” Alexander said.
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