Editorial: Legislature should hold the line on property insurance

Most windstorm insurance consumers in South Florida would surely say they already pay too much for premiums, but lawmakers in Tallahassee don’t seem to care. They’re considering at least three major insurance bills that would either raise rates, reduce homeowner protections, reduce regulation or all three.

If the legislation follows the pattern of previous years, a deal will almost certainly be struck in the final days of the session, and as things now stand, homeowners would be the losers.

Last year, Gov. Charlie Crist vetoed the major insurance reform bill, which opened the door to a rollback of premium discounts based on home improvements made by homeowners — a bad idea. This year, the impact on businesses and homeowners could be even worse, particularly for those covered by Citizens Property Insurance — most of South Florida. There seems little reason to believe that Gov. Rick Scott will be similarly inclined to protect consumers.

Policyholder premiums could shoot up by 15 percent or 25 percent a year, according to the different versions in the House and Senate (HB 1243 and SB 1714). Current law caps annual increases at 10 percent, which is bad enough. A further boost would be an unbearable burden for most South Florida residents, who rely on the state’s insurer of last resort because private industry has redlined large sections of this part of the state. Many consumers already have trouble making ends meet and staying in their homes. This could drive them over the edge.

We are all in favor of increased competition and offering incentives to lure more insurance companies to do business in Florida, but forcing consumers to shoulder unacceptably high costs is not the solution. In addition to permitting exorbitant rate increases, the bills, as currently crafted, would oblige Citizens policyholders to accept a private insurer with rates up to 25 percent higher than the state-backed public company.

These are just some of the features of the bills under consideration. Fortunately, some legislators have been outspoken opponents of the worst aspects of the proposals. Sen. Anitere Flores has labeled SB 1714 and another insurance proposal, SB 408, which limits protections for policyholders in the private insurance market, “anti-consumer bills” and vows to fight them. Good. Homeowners must also make their voices heard by contacting their legislators.

When he was in the Senate, Chief Financial Officer Jeff Atwater played a key role in passing bills that helped consumers by keeping a lid on premiums and holding insurers accountable. As CFO, he should give his support to consumer groups fighting excessive rate increases and proposals to limit the rights of policyholders filing claims.

Recent tornadoes that ripped through the Midwest and Mid-Atlantic states, meanwhile, are a reminder that a national catastrophic insurance program is badly needed. Insured damages will run into the billions of dollars, while the federal “disaster area” designation will bring emergency assistance subsidized by all taxpayers.

It makes sense to create a national program that covers tornadoes, hurricane damages and other catastrophic disaster losses paid for by a national program that spreads the risks evenly. Sadly, it’s unlikely that Congress can summon the will at this time to enact such a program. Until they do, Florida residents will have to remain vigilant to ensure that their representatives in Tallahassee provide responsible leadership.