Property insurance reforms proposed by Senator Jeff Brandes (Pinellas County) could save Floridians up to $1 billion annually through lowered insurance coverage rates, though opponents claim that the reforms would deplete state disaster relief resources.
Initially filed in Oct. of 2021, Senate Bill 578 (SB 578) seeks to bring two reforms to the Florida Hurricane Catastrophe Fund (FHCF). The FHCF primarily sells reinsurance to major insurance firms. Reinsurance is the policy insurers must buy and actively hold in order to pay claims following a major catastrophic storm or likewise natural disaster.
In the first reform, Brandes is attempting to enforce that the state disperses some of the $11.3 billion in FHCF cash reserves to help policyholders in the present day rather than stockpiling the money indefinitely while waiting for a once-in-a-century storm that may materialize. In the situation a catastrophically powerful hurricane does hit Florida, the FHCF can be usurped through the borrowing of money and levying surcharges on all Florida policyholders in order to repay loans, Brandes argued.
The bill would also lower the aggregate attachment point for the FHCF from $8.2 billion to $4.5 billion. Brandes estimated that Florida’s homeowners could save around $150 per year each on their property insurance in the state if the attachment of the FHCF was to be lowered significantly.
Dropping the aggregate attachment point for the FHCF would allow Florida’s property insurers to be able to claim on public reinsurance earlier and for smaller industry loss events.
The reforms would additionally require insurers to pass along to policyholders any savings they would accrue, effectively lowering the cost of coverage.
The Florida Chamber of Commerce has come out as an opponent of the bill, stating that the currently implemented structure of the FHCF enables it to have long-term viability, also expressing concern over the state’s ability to pay claims should a storm large enough to cause irreparable damage to infrastructure hit the state.
While insurers pay 33 percent fewer costs for reinsurance they buy from the CAT Fund compared to private market reinsurers, the FHCF would be forced to increase its rates if the reforms are enacted, according to the FHCF.
The Chamber of Commerce additionally voiced concerns over the viability of charging all Florida policyholders, both home and auto, to recoup losses.
Bill pushback is further fueled by a lack of research and insight towards possible outcomes should the reforms be enacted.
Debate surrounding the proposals is ongoing as it traverses its way through the Senate. However, the bill does not currently have a House sponsor, proving to be a major hurdle SB 578 would need to clear.