Property Insurance Cost Control Bill
Florida Gov. Scott Signs Property Insurance Cost Control Bill
May 17, 2011
Florida Gov. Rick Scott has signed into law legislation that promises to lower costs for the state’s property insurers, including what they pay on sinkhole claims.
While the memory of former Governor Charles Crist’s veto of a similar but smaller bill last year still fresh, property/casualty insurers and agents had been counting on Scott for support and he did not disappoint them.
Scott said the bill (SB 408) is in keeping with his campaign promise to allow competition that gives consumers more insurance choices.
Scott called it “a comprehensive property and casualty insurance package” that “strengthens Florida’s property insurance market by addressing cost drivers associated with burdensome regulations, and confronting the sinkhole crisis. It is a significant step forward to making Florida more competitive and attracting new companies into the state.”
The bill was sponsored by Sen. Garrett Richter (R-Naples) and Rep. John Wood (R-Haines City). The bill passed the Senate 26-11 and the House 85-33. It takes effect upon signing.
The new law includes provisions limiting sinkhole losses along with provisions changing the holdback provisions on dwelling and contents coverage, placing a statute-of-limitations on sinkhole and hurricane claims, capping public adjusters’ compensation, and repealing a provision that would have reduced the boundaries of state-backed insurer Citizens’ high-risk zones.
Insurance Commissioner Kevin McCarty publicly supported the bill, as he did the one Crist vetoed, and McCarty praised Scott for signing it.
“This bill focuses on addressing cost drivers in the system and will yield long-term benefits for Florida by stabilizing the property insurance market and attracting new capital investment to our state,” McCarty said.
Much of the bill is aimed at reducing sinkhole costs, which have exploded in recent years. It restricts what constitutes a sinkhole loss to damage to the main building, excluding driveways, sidewalks, swimming pools, or separate structures. The bill also requires that sinkhole damage must be repaired in accordance with the insurer’s professional engineer’s recommended repairs.
The bill also places a two-year statute of limitation on sinkhole claims, and a three-year statute of limitation on hurricane and windstorm claims.
It also restores a holdback on structural claims. Insurers will be able to pay a policyholder a down payment for structural damage, and once a contractor is hired the insurer will pay the contractor for the remaining work. The bill also allows insurers to offer a holdback policy on dwelling contents at a lower rate than policy without a holdback.
Florida insurance agents welcomed the news.
“After enduring years of misguided policies that have wrecked our homeowners’ insurance market, this new law will go a long way in repairing the serious damage that has been done and sends a strong signal to the world that Florida is open for business,” said Kyle Ulrich, vice president of public affairs for the Florida Association of Insurance Agents.
Insurers were also pleased.
“This has been a long and oftentimes difficult journey to rectify the poor decision of former Governor Charlie Crist when he vetoed a similar bill last year,” said Liz Reynolds, Southeast manager for the National Association of Mutual Insurance Companies. “While the bill doesn’t include everything to right the property insurance market in Florida, such as returning Citizens Property Insurance Corporation to the insurer of last resort, it does help shore up the damaged market and moves us closer to a stronger business environment. We will continue to work with members of the Legislature as they pursue additional solutions to the state’s insurance challenges.”
The Property Casualty Insurers Association of America (PCI) agreed.
“This new law will address the concerns of consumers and policyholders about the cost of property insurance in Florida and help stabilize the state’s insurance marketplace,” said William Stander, assistant vice president and regional manager for PCI. “It is an excellent example of how government, industry and the people of Florida can work together to stabilize and improve the state’s insurance market. It is a common-sense, long-term solutions that utilizes market-based solutions and means stronger homes and safer families.”
Not everyone is happy, however. Senator Mike Fasano, a Republican, who has been a vocal opponent of the bill, expressed his disappointment, arguing that the bill “virtually guarantees” a 15 percent hike in premiums for many Floridians. He called it a “backdoor tax and fee increase” that will hurt homeowners and small business owners.
Fasano also dislikes that the legislation requires homeowners to pay for some repairs in advance and then be reimbursed by insurance companies. He says many families simply can’t afford this burden.
“Big business has triumphed over the needs of the consumer. Insurance companies will only get richer because of this legislation while policyholders will have to pay more of their hard earned money for what will amount to less coverage,” Fasano said in a statement.
http://www.insurancejournal.com