Homeowners insurance may soon become a political battlefield
The drama surrounding Florida’s Citizens Property Insurance continues to unfold as state lawmakers begin to play a larger role in the state-run insurers struggle to free itself from the financial burdens of its past. The state-run insurer was recently rattled by an onslaught of corporate scandals that aroused the ire of the Florida Legislature. The insurer claims that it has successfully reduces its risk exposure over the past year, but lawmakers are seemingly unconvinced by the organization’s claims. It is becoming increasingly likely that the Legislature will begin taking aggressive and direct action concerning the homeowners insurance organization.
Lawmakers aim to take action before hurricanes cause financial ruin
Lawmakers claim that Florida is teetering on the edge of financial ruin and that a single, powerful hurricane could send the state over the edge. This belief is rooted in the financial problems of Citizens Property Insurance, which accounts for the majority of homeowners insurance policies in the state. The organization has been riddled with financial problems for almost a decade, since the onslaught of 2005’s Hurricane Katrina. Florida’s own Catastrophe Fund, which is meant to provide a capital cushion for insurance companies, is unable to account for the costs associated with a severe natural disaster. Because neither the Cat Fund not Citizens Property Insurance can handle the financial risks they face, lawmakers are eager to take action.
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Homeowners insurance on track to become more expensive
According to the Florida Legislature, downsizing the homeowners insurance group is necessary. Lawmakers believe that the best way for Citizens property Insurance to shed policies is to raise rates on homeowners insurance coverage. By reducing the policies accounted for by the organization, lawmakers believe they are reducing the risk that Florida taxpayers will have to bail the insurer out in the event of a severe natural disaster. Senate Bill 1770, which was recently introduced to the Legislature, aims to solve this problem by increasing homeowners insurance rates.
Bill aims to push consumers toward the private market
The bill sets the stage for homeowners insurance rates to rise at a rapid pace, exceeding the 10% increase in rates that has become the routine for Citizens Property Insurance. Rates are expected to reach new heights for those that own more than one property, a potential problem for rental groups throughout the state. Part of the aim of the bill is to make policies so expensive that homeowners will turn to private companies for the coverage they need.