Florida Panel Okays Hurricane Insurance Reforms

David Reddick, state affairs manager for the National Association of Mutual Insurance Companies, said that he hopes that Legislature strikes the right balance between protecting the right of homeowners to be made aware of their options while at the same time not constricting the marketplace for insurers.

According to a report prepared by the Joint Select Committee on Hurricane Insurance, consisting of members of both Florida legislative chambers, recommendations include overhaul of the Citizens Property Insurance Corp., the state's insurer of last resort.

The report suggested that the Legislature look at the question of whether Citizens rates should be based on actuarial soundness rather than compared to rates of other insurers, especially in areas where there is a lack of competition.

In addition, the report questioned the practice of Citizens paying bonuses to carriers for taking policies out of its pool as a cost-effective means of reducing its potential liability.

Other suggestions include creation of a checklist used by all companies that policyholders would have to sign, showing they know what is covered in their policies.

The Legislature was also asked to consider requiring carriers to offer hurricane deductibles of 1, 3, 5, 7, and 10 percent of policy limits, in addition to the 2 percent deductible that must be currently offered.

The legislators also suggested that the state retain the mandatory hurricane deductible for homeowners' policies and other personal lines residential policies, rather than making the annual deductible an option for such policies.

The report also recommended that the retention for the Florida Hurricane Catastrophe Fund be lowered to address multiple hurricanes within the same year. In addition, the panel suggested further study of the premium structure for the FHCF to determine whether additional premiums should be charged to reduce the likelihood of bonding.

The legislators also urged that the Florida Office of Insurance Regulation and the Insurance Consumer Advocate have access to all the assumptions and components used in developing a hurricane loss model.

They also urged that the law provide an exemption from the public records law and public meetings law for any trade secret information related to a proprietary hurricane loss model.