Fla. Gov. Signs Homeowners Storm Rule

Additionally, the measure establishes a system where policyholders will pay one deductible per hurricane season rather than after each individual storm.

"Now that Gov. Bush has signed the hurricane deductibles legislation, the Office of Insurance Regulation is expected to quickly move to set up a procedure for policyholders to begin applying for the reimbursement of any multiple deductibles paid during this hurricane season," said Julie Pulliam, a spokesperson with the American Insurance Association's Southeast regional office. "Insurers will also begin the extensive process of implementing the single season deductible for 2005 and beyond."

Passage of the legislation into law represents a victory, if not a complete one, for the industry, which had lobbied to have the program funded from the state's general revenue. The industry was successful, however, in moving the burden of administering the program onto the shoulders of the state Department of Financial Services.

Under the bill, the state Catastrophe Fund will reimburse the affected policyholders and then make up the expense by collecting a rabid cash buildup surcharge along with the premiums that insurance companies are charged for participating in the fund over the next five years, which will be passed on to consumers.

While insurers are not administering the program, Property and Casualty Association of America regional manager William Stander said that they will be required to cooperate with the state by providing claims information and to issue notices to policyholders. Providing that information shouldn't be a problem, he said, adding that the PCI supported the overall bill and was pleased with it's passage.

Another aspect of the bill Mr. Stander said was "of concern, although not to the point of troubling," prohibits insurance companies from retroactively changing their deductible policies. Some companies, he noted, had stated early in the hurricane season that policyholders would not be required to pay multiple deductibles and instead absorbed those costs themselves. Under the law, those companies are barred from charging the extra deductibles retroactively, for which the policyholders would have been reimbursed by the state.

"It's interesting," Mr. Stander said, "that the legislature chose to incentivise everything that's wrong and disincentivise everything that's right."

Cecil Pearce, vice president of the Southeast region for the American Insurance Association, also praised the passage of HB 9, noting the unique circumstances of 2004.

"The unprecedented nature of the 2004 hurricane season, with over 1.5 million claims and up to $20 million in insured losses, inevitably meant that policymakers would want to review the statutes governing the state's property insurance market," he said. "AIA stressed to the state's political leadership that, overall, the post-Andrew insurance reforms?including the hurricane deductible program and the CAT Fund?had worked, that the industry has responded positively to the storms, and that due to the complicated nature of these programs, debate over major changes should be put off until the March 2005 regular session. We are pleased that lawmakers agreed with our position."

As the bill was passed by the legislature, lawmakers also announced that a joint committee would be formed to examine property-casualty insurance issues before the start of the next regular legislative session in March.

Mr. Stander said several issues the industry is hoping to have examined involve sinkholes, building codes and a possible lowering of insurance company thresholds before collecting from the hurricane cat fund. For many companies, he said, no single hurricane of 2004 caused enough damage losses to trigger cat fund payments.

Ms. Pulliam also noted that several hurricane-related issues should remain on the legislature's agenda.

"Looking ahead to the regular legislative session, we expect legislators to look at an even broader range of public policy issues, including more consumer options in terms of deductibles, changes to the Hurricane Catastrophe Fund, and an examination of the state-run Citizens Property Insurance Corp.," she said.

Also last week, the governor and his cabinet again approved an emergency rule barring insurers from canceling or nonrenewing insurance policies of storm victims whose home have yet to be repaired.

"Thousands of Floridians still waiting for help to rebuild or repairs to be done can breathe easier thanks to action we took today," said state Chief Financial Officer Tom Gallagher, a member of the cabinet who pushed for the rule's adoption. Mr. Gallagher also lobbied the legislature to make the rule a part of state law during the recent special session.

The emergency rule, developed by the Office of Insurance Regulation, applies to all homes and condominiums damaged during the 2004 hurricane season in which a storm claim has been filed. Insurance companies will be prohibited from canceling or nonrenewing these policyholders until 60 days after repairs are made.

The emergency rule takes effect Jan. 1, and is set to expire March 31, 2005.