A proposal to decrease the size of the fund could make it more expensive for Florida property owners.
A new bill in the state of Florida could have homeowners insurance customers in the state paying more for their coverage as it aims to make the hurricane fund smaller than it currently is.
The bill is geared toward shrinking the size of the Florida Hurricane Catastrophe Fund.
Florida’s catastrophe fund has been an important source of cash for making claims payments in the state following severe disasters. Should this bill pass, it would bring it down from its current $17 billion to $14 billion in a period of three years. This could mean that homeowners insurance companies will find themselves charging more in order to compensate for the smaller size of that fund.
This is the potential homeowners insurance impact of House Bill 1107.
The bill was filed by Rep Bill Hager (R-Boca Raton), and is quite similar to one that was filed in the senate (SB 1262), by Senator Alan Hays (R-Umatilla). This will likely generate business for private reinsurance companies, which often consist of foreign and offshore organizations that typically charge rates that are about twice as high as the state’s Catastrophe Fund.
Though industry groups have stated that this could be a positive step in shrinking the role that the state plays in the overall property coverage marketplace, they did recognize that the likely outcome will be an increase in homeowners insurance rates. There has yet to be a consensus on the estimate as to how much the premiums are likely to rise. However, Don Brown, a former legislator and Florida Insurance Council and Associated Industries of Florida consultant, has predicted that there will be a 3.6 percent rise, on average.
One of the reform packages in the Senate has eliminated a cutback to the Catastrophe Fund, at least for the moment, in order to help to reduce the risk of increasing the cost of living for the people living in Florida through more expensive homeowners insurance bills. However, Brown still believes that during the spring legislative session, there is a chance that the measure will move forward. “I would say 50-50,” he said.