Senate Property Insurance Package to Floor

By: Michael Peltier, The News Service of Florida
By: Michael Peltier, The News Service of Florida


Yet another rewrite of the state’s property insurance law is headed to the Senate floor, over continued opposition from consumer advocates.

The Senate Rules Committee on Tuesday approved the bill (SB 408) that makes changes to how policyholders get paid and what types of coverage insurers are required to offer. But showed no signs of becoming less controversial ahead of what is expected to be a fierce debate on the chamber floor.

Backers of the change say the entire state faces a possible financial calamity should a major disaster outpace the ability of insurers to pay claims – which is likely because of a push over the last half decade or so to keep premiums low for consumers.

“This is the biggest single financial crisis facing this state. It’s bigger than another other thing we’ve got going,” said Sen. J.D. Alexander, R-Lake Wales, “If we ever have a major storm, we are in deep trouble.”

If insurers are short of what’s needed to pay claims, assessments would be levied on nearly every type of insurance policy held by Floridians.

“One day, every person we represent is going to be hugely impacted on every policy they have whether they can afford to own a home or not,” Alexander said.

But consumer advocates continue to say that big, profitable insurance companies simply don’t need help keeping costs down, especially at consumers’ expense.

"The Florida Legislature is willfully and blatantly ignoring consumers, focusing instead on creating huge profits for big insurance companies, as if even more corporate giveaways will lead to lower rates,” said former state Insurance Consumer Advocate Sean Shaw, founder of the Policyholders of Florida coalition. “It won't and they know it.”

The measure passed on a 9-3 vote, readying it for a floor vote.

Taking up much of the same issues that were vetoed by Gov. Charlie Crist last summer, the property insurance bill targets Citizens Property Insurance Corp, the state-run insurer of last resort, which now has 1.3 million policyholders.

Some coastal committee members said provisions drafted to reduce the number of Citizens policyholders – such as limits that would prevent Citizens from covering high-valued homes - put their constituents in particular risk through no fault of their own - because private insurers simply don’t want to offer coverage in their area.

“We can't say there's one set of rules for the private market and another" for Citizens, said Sen. Anitere Flores, R-Miami. "I just can't put my constituents on an unlevel playing field."

Among the major changes made Tuesday was a compromise that allows insurance companies to make payments for structural repairs on a periodic basis as repairs are completed and receipts are produced. Current law requires insurers to pay replacement costs up front regardless of whether repairs are made.

Policyholders would have the option to insure the contents of their home for replacement value in a lump sum payment but would have to pay higher premiums. Property owners could lower their premium costs by opting to insure their belongings on a pay as you go basis, receiving claims payments as items were replaced.

“If you want that convenience, you have to pay the premium,” said Sen. Garrett Richter, R-Naples.

The bill makes a number of changes to sinkhole coverage, a primary target of insurance companies, which say claims payments are out of control, while they doubt that actual sinkhole incidences have increased.

The bill would require Citizens to offer sinkhole coverage but that would be limited to the primary structure and all claims payments must be used to repair the home. Private insurers would be allowed to drop sinkhole coverage and place it with policies that insure a home only if it is destroyed in a sinkhole.

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