Citizens' Rates Would Increase Under Fla. Senate Bill

A day before voting, legislators in the Senate agreed to an amendment to cap the maximum increase per policyholder at 5 percent instead of 10 percent, which the bill originally called for. Legislators agreed to 5 percent for the purposes of negotiating with the House.

Senator Evelyn Lynn, R-Daytona Beach, said if the House had a cap at 20 percent and the Senate had a cap at 10 percent, the final number after negotiations would he higher than 10 percent. Starting at 5 percent, she said, allows the Senate to negotiate up to 10 percent.

Senator Mike Fasano, R-New Port Richey, who proposed the amendment, initially proposed an amendment to extend a freeze that exists on Citizen's rates for another year.

He said the rate freeze would help Floridians until the economy improves. "It's amazing that we have a bill before us right now that does more for the insurance industry than it does for our homeowners back home," Sen. Fasano said.

Senator Garrett Richter, R-Naples, who sponsored the bill, said freezing rates would dig Florida in a deeper hole as Citizens premiums are not adequate to cover potential losses in the event of a major hurricane. "If we don't stop the digging, how deep do we dig?" Sen. Richter asked.

He noted a task force formed to review Citizens determined a 20 percent increase per-policy ceiling would be necessary to get rates to an actuarially sound position. The 10 percent sought by the Senate, Sen. Richter said, is friendlier to Floridians.

After that amendment failed, Sen. Fasano proposed the 5 percent cap.

The bill also calls for a "cash build-up" factor for the Florida Hurricane Catastrophe Fund (FHCF), under which FHCF reimbursement premiums charged to Citizens and private insurers would increase incrementally over a five-year period.

Additionally, the Temporary Increase in Coverage Limit (TICL) layer, which is a $12 billion optional FHCF reinsurance layer that sits above the fund's mandatory layer, would be phased out over a six-year period under the bill.

"As the TICL option is phased out, its pricing will increase by an additional multiple each year until TICL is eliminated," the bill summary states.

In a previous interview with NU Online, Florida Insurance Council Executive Vice President Sam Miller said the TICL layer is currently unfunded and is essentially "phantom insurance."

The bill would also authorize the Department of Financial Services to establish grant allowances under Florida's My Safe Florida Homes Program for homeowners who make storm mitigation improvements to their homes.

Gary Landry, vice president of the Florida Insurance Council, expressed support for the bill. "They had to come in and do something with the cat fund," he said. He expects a House and Senate compromise on the rate increase to be reached soon, but said there is no set time frame.