Home insurance premiums would likely rise statewide under bills that aim to shrink the Florida Hurricane Catastrophe Fund.
The state’s Cat Fund, a major source of money to pay claims after severe disasters, would contract from $17 billion to $14 billion over three years under HB 1107, filed Wednesday by state Rep. Bill Hager, R-Boca Raton. A similar Senate bill, 1262, was filed by Sen. Alan Hays, R-Umatilla.
That opens the door to private reinsurers, typically offshore and foreign companies whose unregulated rates often run more than double what the Cat Fund costs.
Industry groups say it’s a good way to reduce the state’s role in the property insurance market, but acknowledge it would likely raise homeowners’ bills. How much? One estimate puts it at 3.6 percent, said former legislator Don Brown, a consultant to the Florida Insurance Council and Associated Industries of Florida.
One Senate insurance reform package dropped a Cat Fund cutback — at least for now — out of concern it would raise rates across the state. One of Gov. Rick Scott’s avowed top goals is not to raise the cost of living for residents.
Still, Brown gave the measure an even shot to pass this spring’s legislative session.
“I would say 50-50,” said Brown, speaking to The Palm Beach Post’s editorial board Wednesday. A smaller Cat Fund means less difficulty finding financing after catastrophes, he said: “It would reduce the likelihood of claims not getting paid.”
Skeptics said they have trouble seeing why the move is necessary or good for consumers.
“I wouldn’t have a tolerance for legislation that puts a larger burden on policyholders,” said state Rep. Mark Pafford, D-West Palm Beach, and policy chair for the Democratic caucus.
Industry groups and allies said they formed a Stronger Safer Florida Coalition to shrink the Cat Fund and reform state-run insurer Citizens. Members include Associated Industries of Florida, Florida Chamber of Commerce, Florida Consumer Action Network, Florida TaxWatch, the R Street Institute, 1,000 Friends of Florida, Audubon of Florida, CERES, Florida Coastal and Oceans Coalition, Florida Wildlife Federation, Sea Turtle Conservancy, Surfrider Foundation, The Nature Conservancy and James Madison Institute.
Citizens and the Cat Fund “place an unreasonable financial burden on the backs of the majority of Floridians,” said AIF president Tom Feeney.
Meanwhile, Citizens, under fire for its handling of internal discipline cases, released a report of 474 cases investigated against employees since 2008 and announced “all were addressed and corrective action taken in accordance with Citizens’ policies in place at the time.”
The summaries did not name the parties, but in one case, an employee was alleged to have used a Citizens’ email account to conduct bank fraud. The employee was fired in 2010.
In 2011, an employee bought alcohol on at least six occasions at an adult entertainment establishment with a company credit card. The employee resigned.
Homeowner Patricia Asseff on Wednesday filed a suit in Broward County Circuit Court seeking class action status against Citizens, the latest suit to allege it improperly denied discounts on home features that protect against storms. Details: citizensreimbursement.com.