Fla. Lawmakers Focus on Paring Cat
Fund
3/18/2013
Maria Mallory White
Sun Sentinel
South Florida lawmakers will continue to push this
week for changes to the state's Hurricane Catastrophe
Fund, which backs up insurers and gives them the means
to offer lower-cost coverage to Floridians.
Driven by reinsurers, some policymakers have hoped to
slowly reduce the overall size of the so-called Cat
fund, on a path that could drive up individual property
insurance premiums.
The smaller Catastrophe Fund approach may prove
financially palatable to consumers in less
hurricane-prone areas of Florida. But for Broward and
Palm Beach counties, which are generally at considered
high-risk for storm damage, the cost for homeowners
coverage would likely rise, say opponents to such a
plan.
"The more money that goes to reinsurance means higher
rates," Jay Neal, director of the advocacy group Florida
Association for Insurance Reform, said in a recent
interview.
Consumers covered by Citizens Property Insurance Corp.
already face a state-approved 10 percent annual
increase, the so-called glide path. . Citizens has
191,092 properties covered in Broward and about 133,589
policies in effect in Palm Beach.
Senate Bill 1262 seeks to trim the fund in a number of
ways including, for example reducing the maximum amount
of reimbursement that property insurers can collect from
the backup fund. The measure also would drop the amount
of mandatory coverage for the Catastrophe Fund over
time, meaning insurance companies would have to get the
difference from the private market.
The companion bill (HB 1107) filed by Rep. Bill Hager
from Boca Raton received a warm reception from the House
Insurance and Banking Subcommittee.
But a second idea has emerged that proponents say could
reduce premiums by expanding the bonding requirements
from one to three years, a move that could generate $6
billion a year without giving much more of the market to
private reinsurers.
"We have to manage rates and risks, this ... does both,"
said Sen. Jeremy Ring, D-Margate. He tried to get the
idea included in the Catastrophe Fund bill in the
committee. It didn't get a particularly favorable
reception. But the debate is expected to heat up again
on March 20 when the legislation returns for a vote by
the same panel. Ring's proposal could also result in a
floor showdown over the direction of the backup fund,
which has grown as the state has avoided a major storm
for seven years.
The Senate bill, sponsored by Sen. Alan Hasy, R-Umatilla, reduces the maximum
reimbursement amounts that insurance companies would buy from the fund, and
otherwise seeks to reduce the overall financial obligations of the fund. The
idea is to reduce the likelihood and amount of bonding and emergency assessments
charged to Florida residents in the event of a shortfall by insurers in the wake
of a major hurricane.
Hays' bill could add 1.2 percent a year to premiums, said Florida Insurance
Consumer Advocate Robin Westcott. However, the increase is expected to be offset
by an anticipated drop in reinsurance rates, Westcott said. "What I see is a
tremendous opportunity right now where you do you see that ability to reduce the
Cat Fund's liabilities and really have no impact to consumers," Westcott said.
Material from the News Service of Florida was used in this report.
