Florida Legislature Passes Flood Insurance Bill

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News Release: Associated Press News
Updated: May 1, 2014

TALLAHASSEE, Fla. (AP) -- Florida is trying to entice private insurance companies to sell flood policies in the state that's the most vulnerable to storm surge.

The Florida Senate voted Thursday 30-3 for the bill (SB 542) sponsored by Sen. Jeff Brandes, a Republican from St. Petersburg. It now heads to the desk of Gov. Rick Scott.

The legislation is designed to make it easier for private companies to sell flood insurance.

Florida is home to 37 percent of the federal policies and state officials say congressional attempts to overhaul the troubled program burdened many Floridians with skyrocketing premiums. Congress just recently rolled back some of the increases it permitted in 2012.

It's not clear, though, that many private insurers will want to assume the risks of flooding.

News Release: Florida Senate
Updated: March 26, 2014, 4pm

Tallahassee–The Florida Senate today passed several pieces of priority legislation including: Senate Bill 542, by Senator Jeff Brandes (R-St. Petersburg), which aims to increase the availability of private-market flood insurance options; Senate Bill 846, by Senator Jack Latvala (R-Clearwater), which expands Florida’s ethics laws; and Senate Bill 1648, by Senator Ring (D-Margate), which updates Florida’s existing public records laws.

“Senator Brandes’ innovative legislation paves the way for a private market for flood insurance in Florida, freeing homeowners from the dictates, irregularity and uncertainty of Washington bureaucrats,” said Florida Senate President Don Gaetz (R-Niceville). “Under this legislation, Floridians will have a wide range of flexible options to choose from so they can reach an affordable level of coverage for their property.”

“The bill emphasizes consumer choice and will let us control our own destiny in this critical market,” said Senator Brandes. “This legislation makes Florida a national leader in the flood insurance marketplace and I am grateful to my colleagues for their overwhelming support.”

Senate Bill 542, Flood Insurance
The National Flood Insurance Program (NFIP) is a federal program that enables property owners to purchase flood insurance, as it has historically been unavailable in the private market, and is frequently required by mortgage lenders. The NFIP currently writes more flood insurance policies in Florida (more than 2 million) than any other state. Although Florida policies make up about 37 percent of the total policies written, since its inception the program has paid only about $3.7 billion for flood losses in Florida compared to more than $50 billion nationwide.

Senate Bill 542 creates an alternative to the NFIP by expressly authorizing insurance companies to offer flood policies in Florida. In order to keep the cost of flood insurance low, the bill provides opportunities for policyholders and insurers to select various deductible amounts, choose between insuring their property for the outstanding balance of their mortgage, the property’s replacement cost, or the actual cash value of the property. The legislation further empowers Florida consumers by allowing them to opt to include or exclude coverage for contents, additional living expenses, or secondary structures, but also provides consumer protections by maintaining the Office of Insurance Regulation’s current role with regard to rate approval.

Senate Bill 846, Governmental Ethics
Senate Bill 846 expands Florida’s ethics laws to promote transparency, accountability, and ethical behavior among officials in local governments, special taxing districts, and quasi-governmental organizations that deliver government services or collect and spend taxpayer dollars.

“In 2013, we passed comprehensive ethics reform legislation the late Governor Askew called ‘the most sweeping ethics reform in 38 years’. In 2014, we are doubling down to pass legislation that encourages ethical and open decision making and conduct at all levels of government across the state,” said President Gaetz.

“This Senate has made it a priority to raise the standard of public conduct across the board because we believe Floridians deserve assurances that all public officials – from state legislators and clerks of the court to water management district board members and city councilmen – are working in an ethical, transparent manner,” said Senator Latvala.

Senate Bill 846 requires Direct Support Organizations and Citizen Support Organizations that are created or authorized by statute to assist state agencies or perform government services to adopt their own Code of Ethics at least as stringent as the state’s; applies anti-nepotism provisions, voting conflict standards, and post-employment lobbying restrictions to statutorily created quasi-governmental entities like the Florida Clerk of Courts, Enterprise Florida, and Citizens Property Insurance; and requires certain special districts to set up and use lobbyist registration systems.

A key component of the joint House and Senate “Work Plan Florida 2014” agenda authored by President Gaetz and House Speaker Will Weatherford (R-Wesley Chapel), Senate Bill 846 requires elected municipal officers to complete four hours of ethics training annually, and like constitutional officers who were subjected to this requirement last year, certify completion of the training on their annual financial disclosure forms. In the event a public official refused to file the required financial disclosure, the Florida Commission on Ethics is given the authority to investigate and may recommend the official be removed from office if it finds the failure was wilful.

Senate Bill 1648, Public Records and Meetings
“This legislation, which has received support from the First Amendment Foundation, strengthens Florida’s existing Sunshine Laws and ensures our state continues to lead the nation in open records and open government,” said President Gaetz.

“While Florida’s Sunshine Laws are a model for providing access to information from government, updating and clarifying the existing public records laws will ensure more uniform application,” said Senator Ring. “Senate Bill 1648 updates, clarifies, and codifies court decisions relating to existing law to guarantee that citizens can access the public records they are entitled to and that governments correctly respond to their requests.”

The legislation provides the fee charged for satisfying a voluminous or complicated public records request is limited to the cost of the lowest paid personnel capable of performing the work and excludes employer-paid benefits, requires a private contractor acting on behalf of a public agency to inform the agency before denying a public records request or if it is being sued for failing to provide a record, and requires agencies to train all their employees in Florida’s public records laws at a level commensurate with their positions.

Senate Bill 1648 also brings additional transparency to government entities that use public funds to pay membership fees in private associations or organizations. The bill prohibits the expenditure unless the financial, business, and membership information that pertains to the government entity is available for public inspection along with records the association distributes to all its members.

For more information, please visit www.FLSenate.gov.

Associated Press News Release

MIAMI (AP) -- The Florida Legislature is moving forward on a plan to entice private insurance companies to sell flood policies in the state that's the most vulnerable to storm surge.

It's not clear, though, that many private insurers will want to assume the risks of flooding and join two companies already writing certain flood policies in the state.

Florida is home to 37 percent of the polices written under the National Flood Insurance Program, and state officials say congressional attempts to overhaul the troubled program have burdened many Floridians with skyrocketing premiums or homes they can't sell without its taxpayer-subsidized rates.

A flood insurance bill sponsored by Sen. Jeff Brandes, R-St. Petersburg, is on track for approval by the Senate. Similar legislation is moving through House committees.

The legislation (SB542) provides flexibility and protections for consumers and a free market for private companies that for decades could not compete with federally subsidized flood insurance rates, said Brandes.

"It's a long-term solution to the National Flood Insurance Program. The federal fix does not solve the problem, it only kicks the can down the road," Brandes said last week. "It is time for Florida to control our own destiny and lead the nation."

Tampa-based Homeowners Choice Property & Casualty Insurance Company Inc. began offering flood coverage as part of a homeowners insurance policy in January.

The flood policies written by The Flood Insurance Agency in Florida and 17 other states are identical to the federal policies, though on Monday the Gainesville company will extend the coverage limits to $500,000 for a home and $250,000 for personal property, said CEO Evan Hecht. The current limits under the federal program are $250,000 for a home and $100,000 for personal property.

Hecht wouldn't disclose how many private policies his company has written in Florida since his program started targeting homeowners facing instant rate increases. He said the policies were popular, but he didn't expect a lot of competition in the market because if private insurers wanted to be in the flood business, there would not have been a need for the federal program.

"The exorbitant rate increase is what created the opportunity for us to compete in terms of rate adequacy. There was no reason to jump into the market before," Hecht said.

Insurance industry groups are lukewarm on Brandes' bill. It might be giving people the impression that the insurance industry will be able to pick up all the federal flood policies in Florida and offer rates competitive with the government's subsidies -- neither of which is true, said Sam Miller, executive vice president of the Florida Insurance Council.

"The best of all worlds would be to have the private market be it and have the NFIP be the insurer of last resort. I think we're a long ways away from that," Miller said.

Congress backtracked on its 2012 attempt to put the troubled flood insurance program back on sound financial footing, which resulted in huge premium increases for some homeowners. President Barack Obama recently signed a bill that rolled back the instant rate increases that had applied to recently purchased homes, but it still lays the groundwork for hefty rate increases to be phased in over time.

According to Florida legislators, roughly 268,500 policies out of the 2 million federal flood policies written in Florida got the subsidized rates. Pinellas County has more subsidized policies than any other in Florida: 50,255 out of 141,764 policies. Miami-Dade County is second with 47,442 out of 366,376 policies.

Under the new law, state legislators say about 50,000 second homes in Florida will see 25 percent rate hikes per year until they got to a rate that reflected the real risk of flooding, and 103,000 primary homes will lose their subsidies if sold.

In the small waterfront cities that make up the Florida Keys, residents worry that rate hikes for second homes could displace the workforce for the tourism-dependent economy. They bristle at the perception that their islands are just a playground for wealthy people with vacation homes.

"A lot are owned by people who hope to retire or they are rental properties. A 25 percent annual increase ... that's going to be passed on to the people who pay the rent: the servers, the teachers, the police officers who can't afford to purchase a home outright," said Heather Carruthers, president of the board at Fair Insurance Rates in Monroe, a community organization in the county that encompasses the Keys. "We don't have mansions -- we don't have space to build them. That's not the fabric of the community."

News Release: Florida House
Updated: March 5, 2014, 6pm

Tallahassee, Fla.—The Florida House of Representatives Insurance & Banking Subcommittee today passed a proposed committee substitute for House Bill 879, the Florida Flood Insurance Bill, which provides Florida homeowners more private sector choices for flood insurance.

“While the Federal government has been slow to act, Floridians are facing drastic increases to their flood insurance rates,” said State Representative Bryan Nelson (R- Apopka), Chairman of the House Insurance & Banking Subcommittee. “My hope is this bill will invite more competition and provide consumers more options when they are making decisions on purchasing flood insurance.”

“The NFIP has been the only means of flood insurance for many Floridians, and these homeowners are now facing skyrocketing premiums overnight with no recourse,” said State Representative Ed Hooper (R-Clearwater), sponsor of the House bill. “This bill will provide Floridians with new options for flood insurance from the private market, allowing them to select the best option for their family and budget.”

The bill establishes a set of laws to govern the sale of flood insurance policies by private market insurers to Florida homeowners. Through this legislation, insurers can write standard flood insurance policies, which provide the same coverage as flood insurance under the Nation Flood Insurance Program (NFIP). Insurers would also be able to write preferred flood insurance policies, which provide more coverage than the NFIP and allow Florida homeowners the option to have more comprehensive flood insurance. The bill allows flexibility in rate-setting until October 1, 2019, as long as rates are not excessive, inadequate, or unfairly discriminatory. Finally, the bill requires insurers taking policies out of the NFIP to notify the consumer that if the policy returns to the NFIP, a full-risk rate could be charged.

News Release: Governor Rick Scott's Office

TALLAHASSEE, Fla. – Florida Governor Rick Scott made the following statement today on the passage of legislation to delay unfair flood insurance hikes for Florida families:

“The House’s action on this flood insurance fix tonight is an important win in our fight to undo the unfair flood insurance rate hikes that are hurting Florida families.

“Our state is grateful for the work of US House Speaker John Boehner and the bi-partisan coalition for the passage of this legislation. Since 1978, Florida homeowners have paid $16 billion – nearly four times what we have received in claim payments.

“This legislation will help to ensure the long-term viability of the NFIP by establishing a reasonable glidepath to rate adequacy without causing undue harm to its real estate market and continuing economic recovery.”

Last week Governor Scott met with President Obama to ask him to use executive authority to delay the unfair flood insurance premium increases. Governor Scott called on President Obama in October and Senators Nelson and Rubio in September to address the increases set to take place as part of the National Flood Insurance Program.

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