Florida Governor Jeb Bush today signed into law legislationaimed at helping the state's insurance market as well as homeownersbetter cope with a severe hurricane season.

The legislation, Senate Bill 1980, offers $250 million in loansto insurance companies to help them continue to write coverage andto take policies from Citizens Insurance, the state's insurer oflast resort. Starting next July, the bill also increases insurers'flexibility to increase rates, allowing for adjustments of up to 5percent statewide and 10 percent in a particular region.

Citizens will receive $715 million to offset its current deficitunder the legislation, but will have its obligations increased aswell. As of March 2007, Citizens will be required to collect enoughpremiums to prevent a deficit in the "worst case scenario" of aonce-in-70-years storm. Should the company overspend, it will berequired to look first to its policyholders.

Homeowners will also receive funding from the bill, whichincludes $250 million in grants to make older homes more resistantto hurricane damage. The state will offer free inspections todetermine their vulnerability to wind damage, and homeowners ofprimary residences valued at less than $500,000 that can benefitmost from a retrofit will be eligible for a grant of half the costof the project, up to $5,000.

"Two unprecedented, back-to-back hurricane seasons with eighthurricanes and four tropical storms pushed Florida to the brink ofan insurance crisis," said Gov. Bush. "These reforms will help toensure the state's long-term economic vitality as we continue todeal with this increased hurricane activity."

According to the governor's office, private insurance companiescollected an estimated $18 billion in premiums from 11.9 millionresidential policyholders--including more than 1 million mobilehome owners during 2004 and 2005--and paid out $38.5 billion inclaims for damages.

During the same time period, Citizens collected $1.2 billion inpremiums from about 815,000 policyholders and paid out more than$3.9 billion in claims for damages, amassing a $2.2 billiondeficit.

"I am proud that this legislature and Governor Bush did notavoid the challenges brought about by 8 devastating storms in 15months and over $30 billion of losses in Florida," said SenatePresident Tom Lee, R-Hillsborough. "Today's bill signing marks thefirst step in a multiyear approach to attract more private capital,to spread out the risk, to encourage hurricane preparedness, and todepopulate the government-run insurance company."

Florida House Speaker Allan Bense, R-Panama City, said thereforms were important for maintaining the state's insurance marketand ensuring companies would continue to operate there.

"The key to insurance reform in Florida is ensuring bothaffordability and availability," he said.

He noted that the reforms being put into place will address theproblem by encouraging private companies to write policies inFlorida, reducing the amount of risk assumed by Citizens Insuranceand aggressively promoting the hardening of existing homes againstfuture storms.

Florida Insurance Commissioner Kevin McCarty said, "I am pleasedthat the legislature was able to complete this landmarklegislation, and I am proud to stand with Governor Bush as he signsit into law."

He also noted the importance of keeping insurers in Florida,adding that "attracting fresh capital and additional capacity areamongst the toughest challenges we face, and this legislationcontains innovative and significant measures to address theseproblems."

Tom Gallagher, the state's chief financial officer, cautionedthat work on the issue is far from over, and is not solely theresponsibility of state lawmakers.

"Our priority must now be preparing Floridians for the upcomingstorm season," he said. "All the changes made to our insurancemarket will mean little if Floridians don't take the time toprepare."