Gov. Charlie Crist signed into law Thursday a bill reforming insurance law and cutting property insurance rates in an effort to counteract swelling policy costs for Florida homeowners.
The result will be several changes to Florida insurance law designed to lower rates. Companies will now be required to seek state approval before raising rates, dropping policyholders during hurricane season or delaying payment of claims. They will also be required to allow coverage options — wind coverage, for example, will now be optional — and installation payments on premiums.
Citizens Private Insurance Corp., the state-run insurer of last resort, had scheduled a two-part, 80 percent rate increase for January and March. Those increases have been repealed to make the company more competitive with private insurers. The bill freezes rates at their current level and provides refunds to those that have already paid since the Jan. 1 increase.
Insurers will now be required to return excess profits to policyholders and will face new restrictions when “cherry-picking” — selling only automobile insurance and neglecting to offer more risky property insurance in Florida.
The bill is expected to save the average Florida homeowner 21.8 percent on property insurance payments.
“Today, we have a message for the people of Florida: ‘Help is on the way!’ We have heard the calls for help from Floridians suffering from high insurance rates,” Crist said in a release. “With this legislation, the powerless have become the powerful.”
The move has already been criticized by Chicago-based Fitch Ratings, which said rates are already too low to cover the cost to insurance companies and competition in the Florida market should determine insurance rates.
“Fitch views Florida’s proposed legislation as a mechanism to further suppress homeowner’s insurance rates in a market where rates continue to be inadequate despite several large recent rate increases,” the company said in a release. “The best long-term solution to the Florida homeowners market is for the state to allow competitive market forces to set rate levels.”
In addition to directly addressing insurance rates, the bill expands the Florida Hurricane Catastrophe Fund — a move that’s designed to make purchasing reinsurance less expensive for insurers in the hope that they will pass those savings on to consumers. Regional exemptions to the Uniform Building Code will also be eliminated, with the goal of minimizing storm damage to buildings.
Soure: Jacksonville Business Journal