Homeowners insurance changes proposed by Florida commissioner

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Homeowners InsuranceAlterations have been put forward to the property coverage in the state, particularly for Citizens.

Kevin McCarty, the commissioner in Florida, has proposed some considerable changes to the homeowners insurance system in the state, particularly when it comes to the coverage offered by Citizens.

This was announced by the commissioner to the state Senate Banking and Insurance Committee this week.

The goal for McCarty’s proposals is the decrease the risk faced by the Citizens, the state backed homeowners insurance company of last resort. At the moment, that insurer is responsible for 21 percent of that sector’s coverage, and typically has policies on the properties that are the most vulnerable. The rates offered by that insurer are lower than those from private carriers in the state.

A catastrophic storm hitting Florida could annihilate Citizens’ homeowners insurance cash reserves.

This is the primary concern faced by both that insurer and the office of the commissioner. This would cause all homeowners insurance policyholders in the state to have to undergo new assessments for their coverage.

McCarty’s presentation suggested a number of important steps to change the homeowners insurance system in the state. These included the following:

• To concentrate the Citizens Coastal Account (the properties near the coast at a high risk) on wind alone, and separate it from the rest of the insurer’s business.
• Base the Citizens homeowners insurance rate plan on the top 20 private insurers, with a transitionally adjusted annual rate cap.
• Use a clearinghouse to assist consumers in finding coverage that they can afford, so that Citizens is chosen only if a private policy within 15 percent of the Citizens rate cannot be found.
• Cease the writing of Citizens policies on new Coastal Building Zone constructions, unless Code+ standards are met by the project.
• Share the risks between Citizens and the rest of the private industry.
• Mitigation credits can be used for homes based on insurer rate filings and storm models.
• A voluntary reinsurance pool should be formed for exposure to wind, in which private Florida homeowners insurance companies could participate.

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