NU Online News Service, April 27, 2:24 p.m.EDT

The Florida House on Friday night approved and sent to theSenate a measure designed to beef up the finances of thestate-created home insurer of last resort and the Florida HurricaneCatastrophe Fund.

A Senate vote on the measure–which was passed 75-to-33 by theHouse–was expected Tuesday, along with another House bill that wassent to the Senate on Wednesday that would let major insurers raiserates without state approval.

Among the provisions in the House measure approved Friday is oneto allow rates for Citizens Property Insurance Corp. to increase upto 10 percent on average statewide, or 20 percent per individualpolicy, until Citizens rates are actuarially sound. A Senatemeasure would make the individual cap 10 percent.

According to a House staff analysis, Citizens currently has only$2.63 billion in surplus, compared with a potential exposure from1.1 million policies of $415 billion. If a hurricane were to causea loss of more than $6.1 billion, Citizens would have to levy a 30percent assessment on policyholders, the report said.

Citizens' rates have been frozen at a 2005 level since 2007. Thetwo measures under consideration would let the freeze expire. Butaccording to Sam Miller, Florida Insurance Council executive vicepresident, some Senate amendments have been proposed to extend thefreeze.

Changes proposed for the Hurricane Catastrophe Fund are designedto bolster an operation that faces a potential $19 billionshortfall. The fund provides below-cost reinsurance for insurers,which are required to pass their savings on to consumers.

Under the proposed change, there would be an extension of thefund's Temporary Increase In Coverage Limit (TICL) Options untilMay 31, 2016, with an annual corresponding decrease in thepercentage of reimbursement available from the fund under thisoption.

According to the House staff analysis insurers, purchasing theTICL option will annually incur more of the claim losses reinsuredwith this coverage, and so will become less reliant on the cat fundfor reimbursement of these losses.

The bill allowing higher-priced property insurance policieswould allow sale of a new "non-assessable residential propertyinsurance policy."

Rates for such policies could only be disapproved by Florida'sOffice of Insurance Regulation if they were inadequate or containedrating factors contrary to the unfair trade practices statute.

The policies would not be subject to assessments by Citizens. Anotice to consumers would be required in the application for thepolicy and in the notice of policy renewal stating that the policyis subject to rate regulation for adequacy only, and is not subjectto Citizens' assessments.

The staff analysis noted that "some homeowners may be willing topay the higher premium in exchange for not being subject toassessment by Citizens."

Florida Insurance Commissioner Kevin McCarty today issued astatement strongly opposing the measure, saying that "by allowinglarge national insurers to write homeowners policies that areunregulated for excessiveness," it "will very likely yieldsubstantial and unpredictable rate increases."

"I can assure you that the companies who seek to take advantageof the proposal are not going to reduce their rates if this billpasses. They will almost assuredly increase the rates they chargein Florida," he added.

"There is no guarantee that these companies will continue towrite in Florida, even if this bill passes," the commissioner said."Not a single company has indicated to me a willingness to eitherstay in Florida or write new business if this proposal isadopted."