New Property Insurance Bill approved

May 29th, 2008

Florida Property Insurance Costs didn't "drop like a rock" but at least for some time, they are not going up.

Florida Legislature has done a decent job, and the same can be said of our Governor. I would say they did the best they could, unlike the shoddy treatment given to Florida property tax issue.
Governor Crist signed yesterday the new law, called "homeowners' bills of rights".

He signaled that the important consumer protections contained in the bill would help to keep insurance costs affordable. Since his election in 2006, Gov. Charlie Crist has made insurance relief one of his main goals, as seen in his constant objections to insurance companies rate hikes, and his intents of lowering insurance prevailing costs to the consumer.

New insurance regulations were all approved by the governor, with the exception of one provision that would allow up to 250 million to be lent by Citizens Property Insurance to small insurers. Also approved was the extension of rate freeze for Citizens policies.Increased penalties will be set for insurance companies in violation of Florida regulations.

His veto on the $250 million proposed loans to small insurance companies is not essentially against the program itself, but against the state-backed Citizens Property Insurance having to finance it, while its own finances could be challenged in the case of a major hurricane in the near future.
The Florida Insurance Council, which backs the small insurers program, hopes that it will be expanded next year, because of its good success track.

Essentially the new bill contains:
- Extension of the regulators' authority to block insurance companies' rake hikes. - Freeze on Citizen's rate till January 2010.
- Prohibition of using arbitration panels in case of conflicts between insurers and state insurance officials, related to rates. Most states disallow these panels. In Florida's case the panels were used to approve rates, after state regulators had rejected them. The insurance companies would provoke regulators' rejections, by unreasonable demands, only to have the panels be the decision-makers.
- Maximum fines for violation of insurance state laws are doubled.
- The state must approve the methods used for hurricane prediction, which are essential in establishing insurance rates.
- Insurance companies cannot drop a policy holder without giving them a 180 days notice.
- They also must pay undisputed claims within 90 days of agreeing on the amount of the payment. Consumers were complaining that they were pressured into accepting low loss estimates on their claims by the threat of being held for many months and even years if the refused. Consumers can now accept the payment of the undisputed part of the claim, while resolving the remaining parts and start doing repairs on their damaged home, and get some prompt relief.

In general, the bill was well received by state regulators and consumer advocates, giving back to the state its control over rate increases and consumer protection. Insurance companies executives had mixed feelings.

Citizens' customers should be especially cheery about the new law. However, Florida Association of Insurance and Financial Advisors claims that Citizen customers' rate freeze benefits would be paid by all Florida's residential property owners if we are hit by a major hurricane. In effect, major Citizen's deficits would have to be covered by the totality of Florida insured homeowners by rate increases in their policies, regardless of which is their insurer.

Like every summer, I'll cross my fingers.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com/
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