Several Florida lawmakers and Gov. Rick Scott said Friday they will push to “educate” Floridians on the hidden costs associated with property insurance and a “house of cards” that will blow down if a major storm hits.
Speaking at the Florida Chamber of Commerce insurance summit at Disney, Scott said a concerted effort needs to be made to inform insurance policyholders that state efforts to shore up the market in some of the most hurricane prone regions of the state, will likely trigger across-the-board assessments when the state-backed insurer can’t pay claims.
Scott’s comments came shortly after a Chamber political consultant released survey results showing 80 percent of policyholders are not aware that they will be charged assessments if Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund are unable to pay claims in the event of a serious storm.
Scott said Citizens, the state-backed insurer, needs to continue efforts to get the word out about the potential for what he called a “hurricane tax.” Citizens has gone from the insurer of last resort to the state’s largest property insurer, with nearly 1.5 million policyholders.
“To make the dream of home ownership available we must reduce the size of Citizens,” Scott said. “It cannot be the insurer of first resort.”
Any fundamental change to Citizens role will be difficult, a subsequent panel of lawmakers said. Political considerations have – and will continue to – butt heads with the economic realities of insuring property in a state where about 80 percent of the population lives near the coastline, they said.
Balancing the actuarial soundness of insurers, including Citizens, with the clamor of the coastal population for affordable insurance has been something Florida policymakers have wrestled with for years.
Following the destructive 2004 and 2005 hurricane seasons, the Legislature placed caps on Citizens premium increases as Floridians complained loudly about spiraling rates. With private companies unable or unwilling to write policies in many areas that a number of homeowners consider affordable, Citizens has stepped in to insure more and more property.
To shore up the market, the CAT fund and Citizens play an increasingly critical role, but are themselves funded in part by potential assessments on policyholders of all companies if they can’t pay losses.
“Most families have no idea they are subject to this tax,” Scott said.
Any proposal to raise those rates beyond the 10-percent cap approved by lawmakers faces intense political pressure from coastal voters, who disproportionately make up Citizens policy base. But Sen. Darren Soto, D-Orlando, said coastal lawmakers may have to make unpopular choices to strengthen the overall insurance market across the state.
“It’s a pretty big balancing act,” said Soto, who was just elected to the Senate after serving in the House. “A big issue going into session is whether we can convince those folks who represent people along the coast to sign on to it.”
Via Michael Peltier of the News Service of Florida.