Senate Rejects Florida Property Insurance Bill

The Sun-Sentinel reports that the Florida State Senate rejected the much-publicized property insurance bill this afternoon, leaving unresolved how to cover the $1.7 billion deficit Citizens Property Insurance Corp. has caused the state due to recent hurricanes. The battered Florida insurance market is now very much up in the air.

The sweeping proposal that would have dramatically changed state-backed Citizens and could have altered Florida property insurance kept state senators debating remedies late into the night on Thursday, but ulimately, the bill was killed. Several amendments to the Senate bill would have had substantial impact on South Florida real estate owners and likely led the the bill’s demise.

The provisions in question included:

• Citizens’ policyholders in the high-risk coastal areas could see their premiums double because of a provision requiring the insurer of last resort to charge high enough rates to cover its losses for a 1-in-100-year hurricane without resorting to bonds or assessments.

• Setting aside $715 million from the state’s general revenue fund to send insured homeowners checks for up to $140. The money is supposed to cover whatever increases homeowners paid on their insurance bills to bail out state-backed Citizens.

• A 50 percent surcharge added onto Citizens policies insuring vacation and second homes, to make up for future Citizens’ deficits. If more money is needed, then all Citizens’ policyholders would face a 50 percent assessment. And if money still is needed to wipe out a deficit, then all of Florida insurance policyholders would be assessed.

• Insurance companies could raise home insurance premiums by 10 percent in a given area, without getting approval from the Office of Insurance Regulation.

• Homes with an insured value of more than $1 million that are located in high-risk areas east of Interstate 95 in South Florida, would not be eligible for an insurance policy after July 1, 2008. Homeowners who can’t find another policy would be eligible for a Citizens policy, but would have to pay higher rates and would be treated as a non-homestead property and subject to the 50-percent surcharge.

• Setting aside $250 million for a program to help people upgrade their homes to better withstand hurricane-force winds, including $7.5 million for mobile home owners. On top of that, another $250 million would be set aside for a loan program to provide matching funds to help shore up private insurance companies.

We will continue to monitor this story and report on it as more details become clear. One thing is for certain: the action taken by the Senate (or lack thereof) will have great impact on both the Florida home loan and the Florida homeowners insurance markets for years to come.