“Katrina’s coming,” a Florida state congressman told his colleagues recently. He was urging them to vote for legislation that would allow alternative hurricane insurance to what is provided by the state-backed Citizens Property Insurance Co. The bill passed 66-48 and will go to the state Senate next.
The congressman meant that hurricanes in Florida are inevitable. The bill, which was backed by Gov. Rick Scott, is apparently meant to give Floridians more options in the event of a hurricane and to protect them from rates that have been described as “artificially low.”
According to the Miami Herald, the bill would allow Citizens to hand over its customers and homeowners to the surplus lines companies. Customers would still be given the option to switch back to Citizens.
Citizens was initially created to be a sort of “last resort” insurer, but it has ballooned to the state’s largest property insurer. As it stands now, the company can assess customers of other insurance companies regarding different coverage, including automobile policies, to cover its own finances.
Supporters of the bill say the surplus lines companies could help in the event of a massive hurricane such as Katrina. Any such companies would reportedly need to have $50 million in surplus funds to be a part of the program.
Opponents are still worried that switching to a different company could leave customers paying higher rates or left abandoned altogether if an insurance company goes underwater. The Florida Insurance Guaranty Association does not include surplus lines companies.
Source: Miami Herald, “Fla. House OKs alternative hurricane insurance,” Bill Kaczor, Feb. 3, 2012Share