Davis Makes Proposals to Fix Florida’s Property Insurance Problems

Windstorm insurance companies would have to cover water damage caused by hurricanes under a proposal Democratic gubernatorial candidate Jim Davis released June 9, part of a multi-pronged proposal to solve the problems facing hurricane insurance customers in Florida.

Among the other proposals the Tampa congressman made are giving the governor’s office a role in the decision over property insurance rates and making it harder for companies to arbitrarily dump longtime policyholders.

Davis also is in favor of broadening loan programs for housing upgrades to make them more hurricane-sturdy and more scrutiny of Citizens Property Insurance, the state-run insurer for people who can’t get private policies.

Davis, who is vying with state Sen. Rod Smith of Alachua for the Democratic nomination for governor, said he would push for a law that would require insurance companies to give customers a year’s notice before arbitrarily dropping them if they’ve paid their premiums for three consecutive years and not filed any claims.

Perhaps Davis’ most controversial proposal though would repeal a 2005 law that clarified that wind policies don’t cover flood damage. The law passed after the 2004 season when many Floridians had hurricane claims denied by their wind insurer because the damage was deemed to be caused by flood.

The insurance industry would oppose reversing that law, said Sam Miller, a spokesman for the Florida Insurance Council. He said without the 2005 law, rates would go up even more.

“If you put wind insurers on the hook for flood damage … we are going to have to collect a flood insurance premium and rates are going to be a lot higher,” Miller said.

Davis said his main worry is that flood insurers may blame certain damages on wind while wind insurers claim water is responsible for the same damages.

“That puts the homeowner in a worse problem,” Davis said.

Davis is also proposing to put an advocate for policyholders in rate cases under the governor’s office. Currently, there is a consumer advocate in the rate making process, but he operates independently, although he is appointed by the state’s elected Chief Financial Officer.

“By making that somebody who answers directly to the governor you give them substantial clout,” Davis said. “It will make those rate cases more fair.”

Albert Martinez, a spokesman for Republican gubernatorial candidate Tom Gallagher pointed out that the state’s insurance regulator also already answers to the governor and the other elected members of the Cabinet, who can be voted out if people don’t think insurance rates are being fairly set.

Charlie Crist, the other Republican candidate, said he would be issuing his own hurricane plan later. As for creating another consumer advocate in the governor’s office Crist said: “The one we should put in the governor’s office to be the consumer advocate is the governor.”

Smith generally favors proposals put forward this year by Democrats in the state House and Senate, which would have had the state cover part of the risk of all homeowners, similar to the way the federal government underwrites flood risk.

“Davis has tried to reduce the insurance crisis to a sound bite,” said Smith spokesman David Kochman. Davis’ proposal “does nothing to address the problems in Citizens Property Insurance and won’t lower rates for consumers,” Kochman said.

As a former elected state insurance commissioner, Gallagher can claim the most direct experience on insurance issues of the four candidates, although as former Florida state lawmakers all four have extensive experience dealing with Floridians’ insurance woes.

Floridians have seen insurance become harder to get and rates skyrocket in the wake of eight hurricanes in two years and predictions of a more active storm period.

Davis unveiled the proposals at a round-table discussion with home and business owners in Tampa on Saturday.