Florida Senate Banking and Insurance Committee Amends, Passes Comprehensive Residential Property Insurance Bill; Approves Memorial Opposing U.S. Taxation of Foreign Reinsurers
Feb 22, 2011
After twice postponing debate on numerous amendments to SB 408 during previous meetings, the Florida Senate Committee on Banking and Insurance (“Committee”) resumed consideration of the bill today, February 22, 2011, after which the comprehensive residential property insurance package was amended and passed as a committee substitute by a vote of 7 to 3.
The Committee took up the amendment process exactly where it had left off at its most recent meeting on February 7. Senator Mike Fasano had offered six amendments to SB 408, but ultimately withdrew four. His remaining two amendments were defeated, one of which would have required counties to adopt an ordinance requiring a permit for sinkhole repairs to be recorded by the corresponding county.
Senator Fasano’s second amendment would have required commercial residential insurers to offer sinkhole coverage. During debate, Senator Joe Negron asked whether it makes sense to reform the law pertaining to sinkholes by not requiring insurers to offer coverage. Members of the Committee offered no response.
Senator Chris Smith asked whether Citizens Property Insurance Corporation (“Citizens”) would continue to offer sinkhole coverage if the amendment were to pass. On hand to testify at the Committee meeting today, Citizens representatives responded that SB 408 would allow the state-run insurer to stop offering sinkhole coverage, but no decision has been made as to whether Citizens would continue to offer it.
Senator Mike Bennett asked the Citizens representatives whether they believed insurers would offer sinkhole coverage if rates could be appropriately adjusted. The Citizens representatives indicated they were unsure, given the increasing damage being caused by the tail of Citizens’ sinkhole claims.
Chairman Garrett Richter stated that he could understand Senator Fasano’s position in regard to the amendment in question, but believed it is imperative for the Florida Legislature to stop mandating actions of the business community. Chairman Richter added that insurers are in financial peril and, should it become law, SB 408 would allow them to offer coverages being demanded by Floridians.
Senator Fasano’s amendment failed after a roll-call vote.
Chairman Richter and Senator Eleanor Sobel also offered amendments to SB 408.
Chairman Richter’s amendment would eliminate the requirement for Citizens to decrease its High-Risk Account (“HRA”) boundary. In his opinion, shrinking the size of Citizens’ HRA–also known as its windstorm account–would actually force more policyholders into Citizens for all of their coverage needs.
Senator J.D. Alexander added that the reason for maintaining Citizens’ HRA is to allow State Farm Florida Insurance Company to place its wind coverage with Citizens, while collecting premium on less risky coverages.
Chairman Richter’s amendment passed.
Senator Sobel’s amendment would require a declarations page disclosure of a 10 percent premium increase provision to policyholders. The disclosure would directly attribute the increase to the Florida Legislature and Florida Office of Insurance Regulation and state that the increase was being allowed to cover insurers’ cost of “expenses or profits related to the cost of reinsurance.”
Chairman Richter stated that this amendment would cause confusion.
Representatives of the Reinsurance Association of America said they opposed Senator Sobel’s amendment, inasmuch as an increase in the cost of reinsurance doesn’t always precipitate a rate increase.
Senator Sobel’s amendment failed.
Senator Bennett then made a motion for a time certain vote, which also cut off Committee debate in order to allow for more public testimony.
The Committee also considered and passed SB 484, a memorial bill that urges Congress to oppose any effort to impose new discriminatory taxes that would significantly limit the use of reinsurance provided by companies located outside the United States. Senator Sobel cast the lone vote against this bill.
To access the meeting packet, podcast and additional information, click here.
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