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House OKs lifting rate caps from some hurricane insurance

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The Associated Press

Published: April 22, 2009

Updated: 04/22/2009 04:03 pm

TALLAHASSEE - Some property insurance policies covering hurricanes and other hazards would be freed from state rate regulation under a bill passed by the House in a move to attract better financed insurers to Florida.

The bill (HB 1171) would give homeowners the choice of paying more for coverage from companies that also have stronger capitalization, which makes them less likely to default on claims.

"No one is compelled to buy a policy," said the sponsor, Rep. Bill Proctor, R-St. Augustine. "It simply affords the opportunity I hope — I sincerely hope — that will begin to remove some of the debt that this state may confront."

Proctor and other lawmakers are worried because the state's Florida Hurricane Catastrophe Fund, which provides backup coverage for insurers, doesn't have enough cash or borrowing power to cover all potential claims if a major hurricane or a series of damaging storms should strike the state.

Attracting more robust insurers to the state could reduce reliance on the "cat" fund.

The legislation was introduced after Florida's largest privately owned property insurer, State Farm Florida, announced it would withdraw from the state after being denied a 47 percent rate increase.

The House passed the bill 105-13. It next goes to the Senate where a similar measure (SB 2036) is awaiting final committee action.

Critics said deregulating premiums is too big a price for any benefits the state may reap.

"One choice that we have to always keep in mind is that we must have some type of oversight over insurance companies being able to raise rates at whatever standard or whatever levels they want," said Rep. Julio Robaina, R-Miami.

Although he voted for the bill, Rep. Franklin Sands, D-Weston, also had reservations.

"My only concern is that this could possibly lead to price gouging," Sands said.

Rep. John Wood, R-Winter Haven, voted for the bill and said consumers would have the power to keep prices in line.

"The price of the policy will be regulated by the consumer's ability to determine if the price being charged was worth the coverage being offered by the company," Wood said.

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