Cat Fund Bill Survives Two Special
Interest Cat Fights, Headed to House Floor
Contributors: Sergio Bustos, Marc Caputo, Mary Ellen
Klas, Toluse Olorunnipa, Erika Bolstad, Patricia Mazzei,
& Amy Sherman
A bill to shrink Florida’s Hurricane Catastrophe Fund
survived substantial debate and parallel cat fights
between special interests Tuesday, clearing its final
House committee. It now heads to the House floor.
HB 1107 by Rep. Bill Hager, R-Boca Raton, would reduce
the state’s $17 billion reinsurance fund, while also
exempting medical malpractice insurers from potential
“assessments” levied by the fund.
Both issues—shrinking the low-cost reinsurance fund and
exempting medical malpractice—sparked opposing arguments
among lawmakers and groups that have a financial
interest in the outcome.
Hager said he sponsored the bill because the Cat Fund
may not be able to meet its obligations to pay claims
for Citizens Property Insurance and other private
insurance companies that buy its reinsurance.
“This is the time for us to belly up to the bar,” he
said. “We’ve made promises. Promises we know that we
could not keep.”
Opponents of the bill argued that the Cat Fund is
sufficiently capitalized and could comfortably make all
of its payments if the bonding is spread out over two
Those opponents include some property insurance
companies and consumer advocates, who argue that
shrinking the Cat Fund will lead to higher insurance
rates. Legislative staff say this bill could increase
rates for policyholders from between 3.1 percent and 4.7
percent over the next three years. That would be on top
of any rate increases caused by SB 1770, a major
property insurance bill. That bill was temporarily
postponed Tuesday after several questions about its rate
Florida’s Insurance Consumer Advocate disagrees that the
Cat Fund bill would raise rates. Robin Westcott said
that the private reinsurance market—which would pick up
the slack after the Cat Fund shrinks—has seen softening
rates this year.
“This will not create a rate increase,” she said.
The bill also picked up some opponents due to its
requirement that medical malpractice insurance continue
to be carved out of the tax assessment base.
Almost all lines of insurance can potentially be
assessed to pay for a shortfall in the Cat Fund, and an
exemption for the medical malpractice industry was
scheduled to sunset this year. The bill extends the
exemption, potentially saving medical malpractice
insurers millions of dollars.
Rep. Greg Steube, R-Sarasota, challenged the special
“I don’t see how you can carve [out] a specific class”
of insurers, he said.
A separate bill is scheduled to be heard in the Senate
on Tuesday, but its provisions are quite different from
the House bill.
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