Bills would raise property insurance rates, make claims harder

It is a series of bills desperately needed to treat Florida's chronically ill property insurance market, the industry says. Or it is "some of the most anti-consumer legislation ever filed," a local state senator insists.

If it's a legislative session in Florida, lawmakers must be tinkering with homeowners' insurance, and this year is no different. Several major bills are now working their way through the process.

Homeowners can expect bitter medicine in another attempt at a cure: Higher rates, more difficulty filing claims, shorter claim windows, and restrictions on getting into - and staying in - the state-run Citizens insurance program.

The outcome? Hopefully, the calming of a market that even after five hurricane-free seasons, can't stop roiling.

On Tuesday, a committee advanced Senate Bill 408, one of the major components of the overhaul on this session's calendar. The industry labels it the "cost drivers bill," saying it attacks the main problems that are driving up insurance costs.

A pair of local lawmakers had other descriptions in a Capitol press conference held shortly before the bill was heard.

"People are being affected throughout this state because of the neglect, because of the irresponsible acts by the property and casualty insurance companies," said Sen. Mike Fasano, a Republican from New Port Richey who has bucked his party and sided with homeowners against the industry.

"It is a sad day when I have to tell you that what we see before us ... is some of the most anti-consumer legislation ever filed in my 17 years in the Legislature."

Democratic Rep. Rick Kriseman of St. Petersburg was equally indignant.

"In my five years of service in the Legislature, I can't recall a bill that was so obviously written by the industry," he said. "For insurance companies, this bill is the Holy Grail. Practically every consumer protection that currently exists in law relating to property insurance claims is under attack in this bill."

Previously, Fasano, Kriseman and like-minded lawmakers had a strong ally: former Gov. Charlie Crist, who vetoed a similar bill last year. This year, a strong GOP majority and a pro-business governor vow to act.

"If we pass a bill that goes after the cost drivers, those are the things that will restore the market and maybe will reduce rates," said Sam Miller, executive vice president of the industry-backed Florida Insurance Council.

What are these cost drivers?

First, the bill addresses sinkholes, particularly in the counties just north of Tampa Bay. Statewide, sinkhole claims shot up from 2,360 in 2006 to 7,245 in 2009. More than 66 percent of those claims occurred in just three counties - Hernando, Pasco and Hillsborough.

Senate Bill 408, which has companion House bill 803, would lift a requirement that insurers offer sinkhole coverage. They may still do so, with an appropriate additional premium, but they do not have to. And they may restrict coverage to the principal building, rather covering driveways, patios and other areas of the property.

The bill redefines sinkhole damage, saying it includes foundation movement outside acceptable building code variances and includes damage to a covered building that prevents load support. The insurance industry says processing expensive sinkhole claims over minor cracking and settling is a key cost driver.

The bill spells out how claims are to be investigated, and gives insurers' data more weight when there are conflicting engineers' reports on a sinkhole situation.

Lawmakers are also attempting to recast Citizens Property Insurance Corp. in its initially envisioned role - that of the insurer of last resort for those unable to obtain reasonably priced homeowners or wind insurance in the private markets.

Currently, homeowners who were rejected by private insurers or received a quote that exceeded the comparable Citizens rate by 15 percent are eligible for Citizens coverage. The bill ups that threshold to 25 percent.

"Citizens beats us on price," said Miller of the private insurers' council. "There will always be homes that Citizens will have to write, but right now it is covering an awful lot of homes that we would like to write."

On Tuesday, Fasano was able to amend the main insurance bill to eliminate language allowing insurers to pay only a portion of a settlement up front and holding back funds until reconstruction work was under way or complete. Insurers complain that homeowners have accepted up-front settlements without subsequently having repairs done.

But Fasano convinced several Republican colleagues that the provision would have required homeowners to spend huge sums out of pocket while they waited for their insurer to come through.

Another bill heading through committees would allow insurers to increase rates by up to 15 percent statewide over the most recently approved rate filing without review, and up to 30 percent on an individual policyholder.

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