MIAMI.- In the midst of the current crisis in the insurance market, the Banking subcommittee of the Florida House of Representatives discussed legislative proposal HB-1213, which proposes creating independent wind insurance that the state insurer Citizens would offer to everyone Florida homeowners with the goal of reducing high insurance premiums by freeing private companies from the most costly risk.
Representatives Spencer Rocha, Republican, and Hillary Cassel, Democrat, sponsors of the bill, expressed during this type of workshop that their plan would mean more affordable wind insurance, since the premiums accumulated by Citizens over the years without suffering the scourge from hurricanes in Florida would go toward paying for significant damage when storms hit the state.
Instead of Floridians paying hurricane premiums to for-profit private insurers, they could be covered by Citizens at a more affordable price. Lawmakers claimed Citizens would charge for policies similar to the National Flood Insurance Program.
Furthermore, they argued that as private insurers needed less reinsurance, which would only be responsible for covering other risks such as theft, fire, vandalism and water leaks, except for wind damage, insurance premiums would greatly decrease.
However, Citizens CEO Tim Cerio warned that if the state takes on wind risk, it could make it more difficult for Citizens to purchase reinsurance.
The idea is not new; in 2010, Tallahassee legislators unsuccessfully attempted to pass a similar law. In 1994, the Earthquake Authority was created in California, which sells insurance against this risk.
Currently, in Florida, many private companies offer high insurance premiums that include wind coverage, work for three or four years in Florida, while there are no hurricanes, and go out of business before one of these devastating phenomena occurs. Then they leave the state with their pockets full.
According to the Insurance Information Institute, the price of homeowner’s insurance in Florida has increased 102% in the last three years, three times the national average. In the Sunshine State, homeowners pay an average of $6,000 for home insurance.
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