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Cat Fund bill survives two special interest cat fights, headed to House floor

A bill to shrink Florida’s Hurricane Catastrophe Fund survived substantial debate and parallel cat fights between special interests Tuesday, clearing its final House committee. It now heads to the House floor. 

HB 1107 by Rep. Bill Hager, R-Boca Raton, would reduce the state’s $17 billion reinsurance fund, while also exempting medical malpractice insurers from potential “assessments” levied by the fund. 

Both issues—shrinking the low-cost reinsurance fund and exempting medical malpractice—sparked opposing arguments among lawmakers and groups that have a financial interest in the outcome. 

Hager said he sponsored the bill because the Cat Fund may not be able to meet its obligations to pay claims for Citizens Property Insurance and other private insurance companies that buy its reinsurance. 

“This is the time for us to belly up to the bar,” he said. “We’ve made promises. Promises we know that we could not keep.”

Opponents of the bill argued that the Cat Fund is sufficiently capitalized and could comfortably make all of its payments if the bonding is spread out over two years.

Those opponents include some property insurance companies and consumer advocates, who argue that shrinking the Cat Fund will lead to higher insurance rates. Legislative staff say this bill could increase rates for policyholders from between 3.1 percent and 4.7 percent over the next three years. That would be on top of any rate increases caused by SB 1770, a major property insurance bill. That bill was temporarily postponed Tuesday after several questions about its rate impact.

Florida’s Insurance Consumer Advocate disagrees that the Cat Fund bill would raise rates. Robin Westcott said that the private reinsurance market—which would pick up the slack after the Cat Fund shrinks—has seen softening rates this year.

“This will not create a rate increase,” she said.

The bill also picked up some opponents due to its requirement that medical malpractice insurance continue to be carved out of the tax assessment base. 

Almost all lines of insurance can potentially be assessed to pay for a shortfall in the Cat Fund, and an exemption for the medical malpractice industry was scheduled to sunset this year. The bill extends the exemption, potentially saving medical malpractice insurers millions of dollars. 

Rep. Greg Steube, R-Sarasota, challenged the special exemption. 

“I don’t see how you can carve [out] a specific class” of insurers, he said. 

A separate bill is scheduled to be heard in the Senate on Tuesday, but its provisions are quite different from the House bill.