‘Fed Up’ Florida Chamber Wants to Shield Businesses From Citizens

The Florida Chamber of Commerce would ideally like to see lawmakers repeal the property insurance law HB1A passed in 2007 but would settle for lowering assessments of businesses or giving businesses the option of buying policies that can’t be assessed for future losses.

David Daniel, vice president of governmental affairs, said the Chamber would fully advocate the repeal of HB1A, which mandated a reduction in property insurance rates while exposing insureds to assessments by three sources.

The Chamber of Commerce opposed HB1A from day one, according to Daniel. He said the Legislature took a huge gamble by putting all Florida residents “on the hook” at the expense of a relatively small group.

Daniel said Florida taxpayers are “on the hook” for losses incurred by state-run Citizens Property Insurance Corp. in three accounts: personal lines, commercial lines and high risks, as well as by the Florida Hurricane Catastrophe Fund (CAT Fund – the state reinsurer) and the Florida Insurance Guaranty Association, which is triggered if an insurer goes bankrupt.

“We are realists, and given that it is unlikely that the legislation would be repealed, we need to look at lowering assessments. As rates go down, assessments go up,” said Daniel.

The Chamber’s commercial property insurance bills (HB 1001 and SB 1422) provide that an insurer could offer a commercial policy that is not subject to assessments from Citizens in the event of a deficit. Neither the insurer nor the policyholder would be assessed on the premium attributable to the non-assessable policy. The bill also provides that the non-assessable policy is not subject to rate regulation by the Florida Office of Insurance Regulation for excessiveness.

Daniel said the best way to cut insurance costs for commercial property owners is to require residential property owners to “pay their fair share.” He said commercial property insureds are paying assessments – or taxes – on their policies that originated from shortfalls in the homeowners insurance sector. The costs commercial property owners are being assessed, benefit them in no way, he added.

Florida’s “over-reliance on state run insurance companies” to provide affordable hurricane insurance by charging less than actuarially sound rates only complicates the problem, Daniel said.

“If the state’s insurer does not charge adequate rates, which reflect a property’s exposure to loss, it creates a deficit that has to be paid after a hurricane,” Daniel said. “Government suppression of private insurer rates also leads to insurance company failures. Florida makes up these deficits and insurance company failures by assessing all property insurance policyholders as well as unrelated insurance lines. Simply put, if high-risk property owners pay subsidized rates relative to their property’s risk during a hurricane, then Florida taxpayers are required to pick up the tab.”

The Chamber sees the current scenario as a direct threat to the state’s business community. “Attacking insurance companies does not lower rates,” Daniel said. “This is affecting our business climate. My folks are fed up!”