Governor signs sweeping insurance bill

TALLAHASSEE, Fla. – May 28, 2009 – Gov. Charlie Crist signed legislation Wednesday that will start Florida back on the path to higher property insurance premiums, after what some argued was a failed experiment with artificially low rates in the wake of monster hurricane seasons.

At issue was legislation enacted in 2007 to freeze rates for nearly a million property owners insured through the state-backed Citizens Property Insurance Corp. Opponents blame that freeze for keeping rates at an unsustainably low rate. If a major hurricane had hit, Citizens wouldn’t have had enough to pay claims, leaving all other insurance customers around the state potentially on the hook to bail out the state’s “insurer of last resort.”

HB 1495 by Rep. Bryan Nelson gradually ramps up premiums for policyholders in the state-run insurance pool to put it back on more solid footing. The bill allows Citizens to gradually raise rates by 10 percent per year until they are considered actuarially sound.

The legislation also reduces the state’s $20 billion exposure on the Florida Hurricane Catastrophe Fund by phasing out the upper levels of a state backup pool by $2 billion a year over a six-year period.

Finally, lawmakers repealed a requirement that sellers of property located in a wind-borne debris region, with an insured value on the structure of $500,000 or more, must provide prospective buyers the structure’s windstorm mitigation rating. The change is effective Jan. 1, 2010.

News Service of Florida contributed to this report.

© FLORIDA ASSOCIATION OF REALTORS

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