Pro-consumer groups and a Florida lawmaker protested a major insurance bill Monday, saying it would lead to major rate hikes and devastate the housing market.
“Unfortunately, we think the final product is very damaging and unnecessary,” said Jay Neal, president of Florida Association for Insurance Reform.
Neal, along with Sean Shaw of Policyholders of Florida, Rep. Mike Fasano (R-New Port Richey) and others, said SB 1770 had cruised through the legislative process without adequate scrutiny to its provisions.
The 96-page bill includes many proposals, but its most controversial one would force Citizens Property Insurance to increase rates for all new policyholders to rates that are at least "actuarially sound."
“In some areas, people buying a home now would have up to 90 percent higher property insurance rate than the person that’s in the house now,” said Neal, whose group represents a wide swath of stakeholders. “We know that that would be extremely devastating to the real estate markets."
The supporters of the bill said it’s a way to bring fiscal “sanity,” to Florida’s state-run property insurance system, which relies on “assessments” on all consumers after a major hurricane. SB 1770 will be up for a vote on the Senate floor on Tuesday. A less ambitious House bill is also up for a committee vote this week.
Members of the business community stress that the bill would not harm current policyholders, who will remain covered by a 10 percent cap on annual rate increases. They argue that Citizens’ “assessment” system forces inland homeowners to subsidize those who live on the coast, and needs to be addressed before the next disaster.
“Go back to what’s the underlying crux of this structure,” said David Hart, executive vice president for the Florida Chamber of Commerce. “That 77 percent of us, through an assessment scheme, subsidize the other 23 percent. How is that fair?”
But the bill’s opponents are not convinced by the “subsidizing” argument, and say Citizens is well on its way to addressing the fiscal problems covered by the SB 1770.
Fasano, whose district includes parts of Pasco and Hernando counties where property insurance is a top pocket book issue, said the bill would have an “economically disastrous” impact on his constituents.
“Those people are not being subsidized by everybody (else),” he said after listing off several neighborhoods in his district with homes valued under $50,000, “They’re not millionaires.”
Shaw said the bill is not only anti-consumer, but also bad for the economy.
“If you sink the housing market, you sink the economy, and that’s exactly what these bills are poised to do,” he said.