Three ways the Florida Legislature could raise your property insurance premiums

Apr 13, 2011

The following article was published in the South Florida Sun Sentinel on April 13, 2011:

Three ways the Florida Legislature could raise your property insurance premiums

By Julie Patel

Lawmakers in Tallahassee are seriously considering three bills that could raise your property insurance premiums.

The bills are intended to reduce fraudulent or inflated claims, draw new insurers to the state and strengthen the insurance market. State records released this week showed hefty contributions from insurers to state political campaigns, but legislators said they’re not influenced by the money.

Some legislators have questioned provisions as the bills moved through legislative committees.

“At what point do we recognize that there are people out there who are struggling that can no longer afford these increased premiums, fees, taxes, whatever you want to call them?” ask 

Consumers pay for advertising

Two measures would effectively allow insurers to raise home insurance rates to cover higher advertising and agent commission costs without oversight from regulators. In 2008, the Office of Insurance denied State Farm’s rate hike request in part because it found the company didn’t need to spend more for marketing when it hadn’t sold new Florida policies in years.

The Senate bill, SB 408, also allows insurers to charge as much as they want for sinkhole coverage and to drop full sinkhole coverage.

The House version, HB 803, allows insurers to withhold part of homeowners’ claims payments until repairs are made.

Both bills would give homeowners only two years to file sinkhole claims and three years for hurricane claims. One version awaits a full Senate vote. The House version cleared one committee and is to be voted on by another Thursday.

Raises Citizens premiums

Customers of Citizens Property Insurance would see premiums rise up to 15 percent or 25 percent a year, depending on whether a House or Senate bill prevails. That means a $1,000 premium could increase by 75 percent or 144 percent in four years because of compound interest.

Current law caps annual increases for policyholders at 10 percent.

The bills, HB 1243 and SB 1714, also would bar the insurer from accepting policyholders who can find a private insurer that charges up to 25 percent more and allow Citizens to drop policies for homes that cost $500,000 or more to replace. The Senate version, which allows fewer policyholders to be dropped, will be taken up by a final legislative panel on Friday. The House version faces a vote by the whole chamber.

Less regulation for insurers

Insurers could raise premiums by up to 30 percent a year without full oversight from regulators under SB 1330. It has cleared one committee and is scheduled to be considered by another on Friday. The House version of this bill, HB 885, would allow insurers to increase policyholders’ premiums without full oversight by up to 15 percent a year — as opposed to the 10 percent allowed by state law — to pay for catastrophe insurance for the insurer. This version now awaits a full House vote.

Bills approved by each chamber of the Legislature would have to be approved by the other before going to the governor’s desk for signature to become law.

Individuals and groups listing “insurance” in their occupations donated more than $1 million during the first three months of the year to political candidates, committees and parties, according to state campaign finance records.

More than $93,000 went directly to legislators on the House and Senate’s insurance committees, which first vetted all of the bills.

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