Senate Banking and Insurance Committee Report–March 25

Today, March 25, 2008, the Senate Banking and Insurance Committee approved Senate Bill 2860, with two “no” votes coming from Senator J.D. Alexander and Senator Al Lawson.

The Committee adopted a lengthy amendment to SB 2860 that contains many of the recommendations published by the Senate Select Committee on Property Insurance Accountability that were issued on March 13, 2008.

The ultimate resulting Committee Substitute also combined SB 2860 with SB 1196 relating to Insurance Rate Standards.

A summary of the amendment passed today may be viewed by clicking here. A copy of the amendment is attached for your review.

Several late-filed minor amendments, which appear to merely clarify certain provisions in the main amendment to the amendment, also were adopted.

Two amendments posed by Senator Lawson were defeated in the Committee. The first amendment offered by Senator Lawson would have eliminated the freeze on Citizens Property Insurance Corporation’s (“Citizens”) rates this year. The second amendment would have prevented Citizens from insuring homes valued over $1 million.

Although the vote was taken as a voice vote, it appeared that only Senator J.D. Alexander and Senator Lawson voted in favor of Senator Lawson’s amendments.

Senator Alexander offered an amendment he termed the “truth in financing amendment” that would place any unsold bonds from the Florida Hurricane Catastrophe Fund (“FHCF”) into the State Pension Fund. Senator Alexander withdrew the amendment after describing it to the Committee.

Additionally, SB 2156 relating to the FHCF was approved unanimously by the Committee. This bill, sponsored by Senator Bill Posey (R-Rockledge), which has been promoted primarily by Florida Chief Financial Officer Alex Sink, would reduce the amount of reinsurance offered by the FHCF.

Although SB 2156 was approved today by the Committtee, Florida Governor Charlie Crist was quoted today in a St. Petersburg Times article (reprinted below) as saying that “raising rates is not an option.”

Florida Chief Financial Officer Alex Sink later issued a statement applauding the Florida Senate Banking and Insurance Committee for unanimously passing Senate Bill 2156.

“I thank Senator Posey and his Senate colleagues for their leadership and support of this bipartisan proposal to reduce the risk of hurricane assessments on Floridians and businesses,” said CFO Alex Sink. “With their support, we are eliminating the risk of $5.5 billion in hurricane assessments if we have a bad storm this year.”

The companion bill is HB 7021, sponsored by State Representative Ron Reagan (R-Sarasota/Bradenton).

 

Should you have any questions or comments, please do not hesitate to contact this office.

 

From The St. Petersburg Times

Insurers’ side gets support
By Tom Zucco, Times Staff Writer

Published Monday, March 24, 2008 9:54 PM

The same day that a global credit rating agency predicted the Florida homeowners insurance market could collapse if a major hurricane strikes, state Rep. Don Brown continued his crusade to sound alarms over how last year’s insurance reforms — which created that market — put the entire state’s economy in peril.

Rating agency Fitch Inc.’s position, which mirrors that of the insurance industry and is something lawmakers and other rating agencies have long acknowledged, is that a massive hit would force the state to borrow billions and tack on assessments to all Florida policyholders to help pay claims.

Fitch also took a shot Monday at the smaller, newer insurance companies moving into the state, accusing some of having low financial ratings. And it criticized the “growing adversarial relationship” between insurers and regulators.

Gov. Charlie Crist would later sharply criticize that assessment.

But it was Brown, a DeFuniak Springs Republican, an insurance agent and chairman of the House Committee on Insurance, who again put a face on the issue. After holding a similar hearing last week questioning state-backed Citizens Property Insurance’s ability to pay claims, Brown and his committee spent much of Monday afternoon trying to coax Florida Office of Insurance Regulation chief actuary Bob Lee and Deputy Insurance Commissioner Belinda Miller to admit the state should allow insurers to increase premiums now rather than risk higher assessments in the event of a major storm.

Last year, Florida lawmakers voted to expand the state’s catastrophe fund by $12-billion to give insurance companies access to cheaper backup coverage, with the savings passed to policyholders. Brown and Rep. Dennis Ross, R-Lakeland, were the only two lawmakers who voted against the measure.

At one point, both sides went back and forth for nearly 10 minutes over the definition of the term “actuarially sound.”

Rep. Alan Hays, R-Umatilla, questioned whether the state is doing enough to tell homeowners that if they don’t pay enough for insurance now, they could later be forced to pay assessments that are much higher. “Shouldn’t we tell them,” Hays asked, “about the corner we’ve backed them into?”

Insurance regulator Miller said notices of past assessments are listed on premium statements. “And how else can we do it?” she added. “That’s the way it (the law) was created.”

Of the 14 members of the insurance committee, three are insurance agents (Brown and Reps. Priscilla Taylor and Bryan Nelson), and Ross is a lawyer whose firm represents insurance companies.

Crist, a leading proponent of expanding the state’s exposure to risk to lower homeowners rates, had harsh words for the Fitch report.

“I don’t know what Fitch is,” Crist said. “What I can tell you is that from a consumer point of view, it’s better than it was for Florida even a year ago.

“Florida property insurance is about 16 percent cheaper than it was just a year ago,” Crist said. “Ironically, 16 new companies are operating in Florida since the reform that happened last January, giving more choice to consumers, more opportunity for lower rates and more coverage for more Floridians.

“So, no disrespect to Fitch,” he added, “but what I care about more is Johnny and Susie Floridian than Fitch.”

Asked what he thinks of efforts by Brown and others to pass legislation reducing Florida’s exposure, Crist said he’s had discussions with catastrophe fund officials to do just that.

“But raising rates,” Crist said, “is not an option.”

Times staff writer Steve Bousquet contributed to this report. Tom Zucco can be reached at zucco@sptimes.com or (727) 893-8247.

© 2008 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111

 

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