Living in Florida has its benefits, sun, warm weather and great beaches, but it also has a major downfall – hurricanes. Last week the Senate Banking and Insurance Committee announced that it is making changes to homeowners insurance in an effort to protect Floridians.
The catalyst for the change is to decrease the risk faced by residents and the state backed homeowner’s insurance company. Currently, the state backed insurance company is responsible for approximately 21 percent of the region’s coverage and the policies cover properties that are the most vulnerable. Rates offered by the state insurer are lower than private carriers in the state.
Anyone that experiences a catastrophic storm understands that everything could be lost and could take all of your cash reserves. This is a primary concern of the state’s insurance company and the commissioner said that if this concern is not addressed, all homeowners who hold the state policy would have to undergo new assessments for their coverage.
There are a few recommendations that the commissioner is suggesting to change the homeowners insurance system in the state. They include:
- Separate the properties that are at a high risk based on wind alone and separate it from the rest of the insurers.
- Base the rate plan based on the top 20 private insurers with an adjusted annual rate cap.
- Create a clearinghouse to assist residents in finding homeowners insurance that they can afford. This would eliminate the number of residents that would use the state’s insurance.
- Grant insurance to a resident if they can’t obtain a private policy that is within 15 percent of the state’s coverage.
- Do not grant construction approvals unless code standards are met for the project.
- Share the risks between residents and the rest of the insurance industry.
- Issue mitigation credits for homes based on insurer rate filings and storm models.
- Create a voluntary reinsurance pool for exposure to wind that private insurance companies could contribute to.
It will be interesting to see how this all plays out, but Florida residents should be aware of potential changes so that they can ensure that they are appropriately covered.
Source: Insurance News Report, “Homeowners insurance changes proposed by Florida commissioner,” Helen Cutner, Jan. 18, 2013Share