NU Online News Service, May 28, 2:23 p.m. EDT
Florida Governor Charlie Crist yesterday signed into law a measure that could raise homeowners insurance rates up to 10 percent for policyholders with the state-created Citizens Insurance Corp.
The Senate Sponsor of HB 1495, Senator Garrett Richter, R-Naples, said during Senate discussion of the bill that Citizens premiums are not adequate to cover potential losses in the event of a major hurricane.
He noted that 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 House had initially passed a 20 percent ceiling in its version of the bill, and the Senate passed a 5 percent ceiling. The two sides then negotiated to 10 percent.
Julie Pulliam, spokesperson for the American Insurance Association (AIA), hailed the bill signing, stating, "The bill will start Florida on the path to actuarially sound property insurance rates by gradually increasing Citizens' rates, reducing its reliance on post event assessments on all property-casualty premiums to pay claims."
The bill also calls for a "cash buildup" factor for the Florida Hurricane Catastrophe Fund, 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.
Ms. Pulliam said phasing out TICL will further reduce the state's hurricane exposure.
The bill was sponsored in the House by Rep. Bryan Nelson, R-Apopka.
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