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Lawmakers Vote to Cap Rate Increases

April 24th, 2009 by flanews

The states high risk insurance pool is going to be more expensive next year. Lawmakers are trying to cap the Citizens Property Insurance rate increase at 10 percent a year, but as Whitney Ray tells us, if the cap legislation fails, rates could increase as much as 50 percent.

If a major hurricane hit Florida, state run Citizens property insurance couldnt handle the claims. All Floridians would then be on the hook through increased assessments. Lawmakers are turning to a Citizens rate increase to solve the problem.

This bill will cap the increase and it puts the premiums on a glide path to toward becoming actuarially sound, said Rep. Alan Hays.

Statewide Citizens rate increases would go up 10 percent a year for six years. Some individual policies would go up 20 percent. Insurance lobbyists say it could be worse.

To do it in a way that would be actuarially sound, you would have to raise the rates as much as 50 to 70 percent, said Insurance Lobbyist Bob Lotane.

Governor Charlie Crist is happy with the lower rate increase.

The lower the better, Crist said.

The bill also lowers the amount of money in the states catastrophe fund. The state offers back up insurance to companies through the cat fund. Decreasing the fund will force insurance companies to look for private back up insurance.

Insurers could then pass the extra cost on to their policyholders without seeking state approval. Public interest groups say people cant afford more.

This is not the time to be raising rates, said Brad Ashwell with Florida PIRG.

If no changes are made and a major storm hits, the state could go bankrupt.

The legislation also pumps more money into the My Safe Florida Home program to help people strengthen their houses against hurricanes.

Posted in Charlie Crist, Hurricane Season, Insurance, Legislature, State Budget, State News | No Comments »

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