Senate OKs House Property Insurance Package As Amended; Bill Headed To Governor Next; House Debate Highlights

By a vote of 32-6, the Florida Senate took up and passed HB 1495, the property insurance legislative package as amended by the House of Representatives this morning, May 1, 2009.

HB 1495 now will be certified by legislative leadership and presented to Florida Governor Charlie Crist for action.

 

HB 1495’s Nelson Strike-All Points; House Floor Debate Highlights

As a product of House and Senate negotiations during the past 24 hours on the details of the 2009 property insurance legislative package (HB 1495 by State Representative Bryan Nelson, the bill’s original sponsor), a strike-all amendment by Representative Nelson was passed onto HB 1495 by the Florida House of Representatives today, May 1, 2009.

Post-Nelson Strike-All Differences

Following are the main differences effectuated by Representative Nelson’s strike-all amendment, as compared to the bill that initially passed out of the House on April 24 (prior to further amendment by the Senate):

• The Florida Hurricane Catastrophe Fund’s (“FHCF’s”) Temporary Increase in Coverage Limits (“TICL”) layer has been expanded in some ways and reduced in others;
• Citizens Property Insurance Corporation (“Citizens”) can buy TICL coverage;
• A 10 percent maximum flat increase per Citizens policyholder is provided;
• “Flex rating” has been removed and certain types of expedited rate filings are contemplated instead;
• There are no provisions for the renewal of the My Safe Florida Home program;
• The public records exemptions currently extended to confidential documents related to rate filings are removed.

 

House Floor Discussion Highlights

During this morning’s final House debate on HB 1495, issues raised included whether the requirement of actuarially-sound rates for Citizens would cause dramatic rate increases for its policyholders, and whether a Citizens rate freeze should be continued, in light of the mortgage crisis and the overall state of the economy.

A question also was raised as to how much of the FHCH was funded, to which Representative Nelson replied that nearly the entire mandatory level of FHCH coverage was funded, but that no funding existed for the optional TICL layer.

Representative Nelson also indicated that FHCF Senior Officer Jack Nicholson had approached Berkshire Hathaway on behalf of the State Board of Administration (“SBA”) regarding financing the unfunded TICL layer. Berkshire Hathaway indicated that it was not willing to enter another “put” option with the SBA as it had done during 2008.

 

Representative Hays’ Amendments

During today’s House debate on HB 1495, several amendments to the bill were proposed by State Representative Alan Hays (D-Umatilla), all of which were either withdrawn or failed. The most significant of these are summarized below:

• Failed: An amendment to restore the My Safe Florida Home program
• Failed: An amendment that would have required an insurance company to  divulge to customers when a policy is subject to an assessment (similar to the truth-in-lending disclosures required for the banking industry)
• Withdrawn: An amendment that would have required rating agencies to disclose the fact that they are evaluating an insurer’s use of FHCF reinsurance when rating an insurer

 

Objections Answered

The main objections presented to Representative Nelson’s strike-all amendment to HB 1495 were its lack of provisions for mitigation, and the concern that it will cause an ill-timed Citizens rate increase.

On the other hand, it also was suggested that Citizens-only policyholders comprise approximately 17 percent of all Florida insureds, and thus, to keep the Citizens rate freeze in place would have placed a burden on the other 83 percent of the policyholder market.

 

Colodny Fass will continue to monitor information regarding HB 1495 and provide reports as it becomes available.

 

 

For additional information on Florida’s legislative process and terminology, click here.

 

Should you have any questions or comments, please contact Colodny Fass.

 

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