Fla. Insurance Bill On Gov. Crist’s Desk Comes with Risks

The Florida Legislature on Monday overwhelmingly passed a bill members hope will lower Floridians’ skyrocketing property insurance rates and sent the measure to Gov. Charlie Crist, who has demanded meaningful relief for home owners.

The House passed the bill 116-2 and the Senate followed a few minutes later with a unanimous vote. Crist hasn’t said whether he will sign the bill.

Although the measure (HB 1A) will provide some relief to a large number of home owners, how much remained murky.

But to provide relief now, lawmakers are taking a risk. If there isn’t enough money to pay claims from a megastorm like Hurricane Katrina, or a costly season with several storms, Floridians will be on the hook for billions of dollars in damages.

In such a scenario, they’d be hit with assessments on their car and home insurance policies, or taxpayers would have to pay for the losses.

Lawmakers said the average Florida homeowner could see savings of about 22 percent, although it would vary widely depending on where they live and who their insurance company is.

However, customers of the state’s two largest insurers would get the least relief.

For the customers of state-created Citizens Property Insurance, Florida’s largest insurance company, the average savings could be about 18 percent for high risk coastal residents, said Rep. Ray Sansom, R-Destin. Other Citizens customers would see much lower cuts, around 5 percent.

But Citizens customers will get a recent 21 percent rate increase reversed, and the measure also cancels a 56 percent increase they would have been hit with this year.

“That level of savings is extremely meaningful,” said Rep. Ellyn Bogdanoff, R-Fort Lauderdale.

State Farm, the state’s second-largest insurer, said its customers would see savings of 7 percent on average when they renew their policies.

That kind of cut isn’t much, considering how much rates have increased, said some lawmakers in debate on the measure Monday.

“Five percent … would not be what anyone would realistically call meaningful rate reduction,” said Rep. Shelly Vana, D-Lantana. Vana voted for the measure, saying it was better than nothing.

The only two House members to vote against the bill were Rep. Don Brown, R-DeFuniak Springs, and Rep. Dennis Ross, R-Lakeland. Both had expressed skepticism about the way the plan relied on the state instead of the private market to address the rate increases.

Several lawmakers also expressed concern that the relief could be short-lived if there’s a big storm.

If there is a big hit, everyone with insurance will pay assessments on their policies. And those who are getting small reductions will get hit worst — because they’ll pay an assessment on a larger premium.

Rep. Keith Fitzgerald, D-Sarasota, called the measure “at best a stop gap fix.”

“We’re gambling,” acknowledged Rep. Ron Reagan, R-Bradenton. “That’s what insurance is.”

Boosters of the proposal said people were demanding rate cuts now —and that’s a bigger problem than what might happen, or might not.

“At first blush, it’s kind of frightening,” said Sen. Bill Posey, R-Rockledge. “At second blush you realize that people will pay more if we don’t do this.”

“If the big one doesn’t come for another 50 years, then there’s probably $200 billion that will be saved,” in the meantime by consumers, Posey said.

Although no hurricanes made landfall in Florida last year, forecasters say storm activity will be above average for the next 15 to 20 years and warn residents to prepare for more storms like Katrina.

Few forget the deadly, destructive seasons of 2004 and 2005, when eight storms hit Florida residents and caused $36 billion in insured damages in Florida alone. Those seasons are blamed by insurance companies for the rate increases that residents have been complaining about.

Crist had demanded that lawmakers pass a bill that will result in meaningful rate cuts, although he steadfastly declined to say exactly what that would be.

The proposal hits at rates in several ways. Insurers will be able to get cheaper backup coverage from the Florida Hurricane Catastrophe Fund, which lawmakers said could result in rate cuts of more than 35 percent for customers of some companies.

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Associated Press Writer Stephen Majors contributed to this report.