Senate Banking and Insurance Committee Considers Property Insurance Package–SB 1950
Apr 2, 2009
The Senate Committee on Banking and Insurance (“Committee”) considered Senate Bill 1950 relating to Insurance by Committee Chairman Garrett Richter today, April 1, 2009.
To view the April 1 meeting packet, click here. To view the Senate Committee Staff summary of SB 1950, click here.
Following Chairman Richter’s explanation of the bill, the Committee members questioned him, during which discussion took place regarding the Citizens Property Insurance Corporation (“Citizens”) actuarially-sound rate provision contained in the bill.
Senator Al Lawson noted that Florida Office of Insurance Regulation (“OIR”) would not review those rates once they are actuarially sound. During the exchange, Senator Mike Fasano noted that Florida property insurance premiums could increase 40-50 percent over five years.
The bonding capability of the Florida Hurricane Catastrophe Fund (“FHCF”) also was discussed. SB 1950 would authorize the FHCF to bond money from the Florida Retirement System by an unspecified amount.
FHCF Senior Officer Jack Nicholson testified that the FHCF could implement the provisions of SB 1950 and suggested that the effective date be changed to June 1, 2009.
Christine Turner of Citizens raised concerns with the provision requiring Citizens rate increases to be tied to the My Safe Florida Home Program (“MSFH”). Senators J.D. Alexander and Fasano noted that Citizens rates may not reach actuarial soundness for a significant period of time, which prompted discussion regarding the ambiguity created by quantified actuarial soundness.
Senator Jeremy Ring asked about Citizens’ maximum assessments. Ms. Turner noted that, initially, Citizens policyholders would be assessed 15 percent of their premium per account (45 percent maximum). Then, up to six percent of premium per account (18 percent maximum) would be assessed to all Florida insurance policies except for medical malpractice and workers’ compensation.
Deputy Florida Insurance Commissioner Belinda Miller addressed the windpool boundary issue as provided for by SB 1950 and recommended that the Committee consider eliminating the ability of Citizens to write new wind-only policies. She noted that this action would help address the State Farm withdrawal issues and expressed the Florida Office of Insurance Regulation’s ability to work with the Committee on the bill.
Senator Mike Bennett asked Ms. Miller about the actuarial soundness of State Farm. Senator Fasano noted that State Farm rates are lower than those of Citizens because State Farm has not written risks that were near the coastline, or in sinkhole-prone areas.
Senator Bennett offered an amendment that would allow insurers the option to charge rates that had not been approved by the OIR. He explained that this amendment would encourage large insurance companies to remain in Florida. The amendment was withdrawn; however, it was noted that similar language to that of Senator Bennett’s amendment would be considered at the next Committee meeting.
Chairman Richter offered several amendments that were adopted to the bill without objection or discussion, one of which would allow agents to discuss the applicability of the Florida Insurance Guarantee Association. Another amendment would stagger the appointments of Citizens Board members.
Chairman Richter also offered an amendment that would remove the multi-line discount provision for policies placed in Citizens. An insurance agents’ representative testified that this provision is intended to return Citizens to its former capacity as the “market of last resort” on a statewide basis. Senators Fasano and Bennett spoke against this amendment, after which Chairman Richter withdrew it.
In an apparent effort to keep SB 1950 relatively unamended, it was temporarily passed. However, the bill likely will be reconsidered in the next scheduled Senate Banking and Insurance Committee meeting on April 6.
For additional information on Florida’s Legislative process and terminology, click here.
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