Can Something More Be Done on Property Insurance?

Folks that think we should "wait" to do more on property insurance in Florida are living in an alternate reality.....constituents I represent that are getting squeezed want action THIS SESSION!

Tomorrow morning the Board of County Commissioners will once again be discussing legislative priorities, ahead of the upcoming Legislative session beginning early next year.

 At our last meeting we discussed this as well.

 Some things that may bubble up to the surface: 

 --fixing the disastrous "live local act" that completely preempts local control and zoning for large apartment buildings--allowing owners to bypass counties and municipalities and dump huge developments in any commercial or industrial zoned property.

 --Getting the Beulah Interchange funded and in the five year work plan for construction.  This is a MUST do.

 --fixing the reimbursement problem for federal and state prisoners who spend months and sometimes years in our county jail and for which we get no reimbursement--costing local taxpayers precious local tax dollars that should be shouldered by the State and/or Federal Government.

 and there are others as well.

 But one HUGE one that we are all living and we are all hearing about is our broken, dysfunctional property insurance market here in Florida.

 Last year's legislation did not do anything to ease costs and non-renewals yet.  This is a TOP issue I am hearing about from the county residents I represent.

 As I said in an interview on Monday with Rick Outzen, I don't know how preventing homeowners from suing their insurance company benefits anyone other than insurance companies.  I'm told a legislative scheme to force the insurers to share the savings with policyholders was baked into the legislation, which is good.  But can't more be done this year, too?

My idea is pretty simple.   Exercise the power of the legislature to compel those companies that make a literal FORTUNE selling high-priced automobile insurance in Florida (Farmers, USAA, Progressive, State Farm, Allstate, Liberty Mutual, etc.) to also sell property insurance in our state at the same proportional ratio as they do in the average of the other 50 states.  And obviously at a rate that is not simply set at an astronomical number to insure none will be sold--simply to check the box.  Make them and their subsidiaries write the same atuo/property mix as they do in other places at competitive prices.  Now, I am aware there is legislation on the books that mandates the auto policy sellers in Florida also sell property insurance---but there is a loophole that the big auto insurers are utilizing.  One company, in particular, warehouses their property policies in the state and writes these policies through citizen's insurance--which puts you and I, the taxpayers, on the hook!  This company, by the way, then subsequently keeps all their auto policies in their name under their brand. And this allows these insurers to still eat their cake and make nice profits (based upon volume of sale made--due to a 5% profit cap) on auto policies while dumping volatile, less profitable property insurance--thus allowing them to DUMP the Broccoli off of their collective plates.

It has to change.. and at some point the state will have to seriously look at also subsidizing this market,-just like the Federal Government does.  

I understand that the state of florida has what is called the Florida Hurricane Catastrophe Fund - called the Cat Fund. And it has billions in its coffers that we as policyholders have paid when we pay our insurance premiums.  In the 30 years of its existance the cat fund has never spent more than $8 billion and it now has about $15 billion in the bank. Why can't the legislture set aside $2 to $3 billion and let the companies buy this reinsurance cheaper and pass those savings onto us as the policyholders?   Right now 35-40 cents of every dollar of premium is paying for this reinsurance.  A state subsidy here could result in an immediate 15% savings for the policyholders.  So why not do it in this next session!?!

I keep hearing that there is worry the cat fund will run out of money.  That makes no sense…it collects over a $1 billion a year from what I understand--and it has a replenishment mechanism built in to quickly re-fill the fund via policy-holder assessments post-storm----- in the event the fund was to ever become completely depleted----- which, again, has not happened in the last thirty years.

So there are roughly 7.5 million property insurance policies in Florida.  And 6 Million of those are written by Florida companies, which puts Florida firms and ultimately, Floridians, at the greatest risk

By contrast--there are about 12 million auto policies--the majority of which are written by out of state insurers!

So the out of state companies have lower risk and higher profits--where the Florida companies and Citizens shoulder the higher risks.  This needs to be fixed and balanced, period.  The legislature can do this---if they have the will.

We cannot keep telling our constituents that we have to wait two more years for the litigation reforms to take effect.  And I understand that a rate rollback isnt an option because every insurance company would leave.

 I also understand that there are 4 major reasons our rates are so high:  Inflation - we can do nothing about it and I know it costs more to replace and repair homes...

 the severe weather - we can do nothing about that either other than more strict building ordinances and stricter zoning on where housing can be developed--both of which are primarily local issues.

 litigation - The Governor and legislature has done a lot about this and all are saying we will see that it can slow rate increases.... but how long will that take?

 and reinsurance.   We MUST champion making the cat fund more accessible so we can reduce our premiums via providing insurers a cheaper re-insurance option.

 215.555 florida hurricane catastrophe fund, says:

There is a compelling state interest in maintaining a viable and orderly private sector market for property insurance in this state. To the extent that the private sector is unable to maintain a viable and orderly market for property insurance in this state, state actions to maintain such a viable and orderly market are valid and necessary exercises of the police power.