Fla. Gov. Bush weighs calling special session on P&C proposals

The Property and Casualty Reform Committee formed by Florida Gov. Jeb Bush in June has come up with recommendations for solving the insurance crisis in the state and Bush is weighing whether he should call a special session of the Legislature in early December to consider them.

The recommendations include 11 meant to foster loss mitigation and premium discounts. The report recommends that Citizens policyholders be required to upgrade their homes to meet the statewide building code over some period of time or risk higher hurricane deductibles applicable to their policies

Among the recommendations is one for more consumer information as to the types of specific mitigation and the resulting potential credits on policy issuance and renewals. Another calls for “state funded research concerning mitigation of commercial structures and whether strengthening the state’s building code for commercial structures should be considered.”

Regarding Citizens Property Insurance Corp., the state’s residual market insurer, the report calls for the Office of Insurance Regulation to set rates quarterly, based on the highest rate approved for the voluntary market, and to earmark a portion of future mitigation funding for Citizens policyholders.

The panel also urges that Citizens be allowed to write the full policy, doing away with the wind boundaries and the distinction of wind and ex-wind policies in the wind boundaries.

The report urges the federal government to create a national catastrophe fund to deal with high level catastrophic events.”

Public forums
The committee held seven public forums around the state between July and the end of October, meetings that produced some 150 ideas and concepts from the public. From the 150, the committee has boiled the list down. (See below.)

The primary question posed by Florida residents and addressed by the committee has been, “Why are insurance rates rising so quickly?”

The committee cites some of the following reasons for high costs: it costs more to insure a home due partially to the increase in property values — the same property value increases that have given people more equity in their homes also leads to higher insurance costs; the costs of building materials and labor have risen dramatically and the cost of rebuilding a home has doubled in the past couple years; the cost of reinsurance has increased; and insurers have depleted their reserve funds after the 2004 and 2005 hurricane seasons, and by law are required to maintain a certain level.