The Tampa Tribune
by Representative John Wood
April 28, 2011
There are several observations of Florida’s homeowners’ insurance market on which everyone can agree.
Despite six hurricane-free years, there aren’t enough insurance companies competing for our business, and most consumers have limited choices for insuring their homes. State government is too involved in the homeowners’ insurance business, and when the state runs out of money to pay hurricane claims, every Floridian with a home, auto, boat or business policy will be taxed to cover the shortfall.
And, if this state is ever going to restore choice and competition to homeowners’ insurance, and eliminate the financial risk we all face if a major hurricane hits, we must address the factors that are unnecessarily driving up insurance costs in this state.
That’s the rationale behind legislation that state Sen. Garrett Richter, R-Naples, and I are sponsoring this legislative session. SB 408 and HB 803 are meant to benefit consumers and to help bring healthy competition back to our insurance marketplace, by addressing the unnecessary costs that chase insurers away and increase premiums.
Special interest groups benefiting from the current system have orchestrated criticism that these bills are anti-consumer. The truth is these bills are pro-consumer, pro-rate payer and pro-taxpayer. In fact, state Insurance Commissioner Kevin McCarty has testified that reining in some of these unnecessary cost drivers is essential to restoring our homeowners’ insurance market.
What do these bills actually say?
One provision requires insurance companies to increase their minimum surplus from $5 million to $15 million. In recent years, Florida has seen several small start-up insurers fail because they were undercapitalized.
The House bill would reduce from five to four years the deadline for filing claims after a hurricane. This is common sense. If a hurricane hits your home, do you really need more than four years to determine if you have damage?
Another provision in the House bill requires homeowners who file a sinkhole claim to use the claim payments they receive to actually fix their homes.
Finally, there’s a provision allowing insurers to pay contractors in installments as damaged homes are fixed – rather than making a lump sum payment up front. The intent is to encourage homeowners to actually repair their homes, rather than use claims money for something else.
Critics falsely contend that policyholders would be forced to pay out-of-pocket payments for repairs – that is absolutely untrue.
State government missed an opportunity in these hurricane-free years to remove barriers that would improve the insurance market and scale back government-run Citizens Property Insurance Corp. Our current public policy path hasn’t created more choices or competition for consumers. Call your legislator and tell them to support SB 408 and HB 803, which will start us on that path.
State Rep. John Wood (R-Winter Haven) is vice chairman of the House Insurance and Banking Subcommittee.
