Orlando, FL -- (SBWIRE) -- 03/14/2013 -- The Florida state legislature has introduced bills that would shrink the Florida Hurricane Catastrophe Fund (Cat Fund) and would likely increase home insurance premiums. The bills would reduce the Cat Fund over three years, from $17 billion to $14 billion, but would probably raise homeowners' bills by an estimated 3.6 percent.
“This is a factor that could lead to increases in home insurance premiums,” said a representative of FloridaInsurance.com, a Florida home insurance agency. “However, careful consumers will always be able to find affordable policies.”
House Bill 1107 to shrink the Cat Fund was introduced by state Rep. Bill Hager, Republican of Boca Raton. Sen. Alan Hays, Republican of Umatilla, introduced a similar bill, 1262, in the Senate.
If a bill passes, it would likely result in more business for private reinsurers, foreign companies with unregulated rates that can run more than twice the cost of the Cat Fund.
Supporters of the bill claim that a smaller Cat Fund would make it easier to find financing after catastrophes and make it more likely that claims will be paid.
Opponents say that the bill would create an undue burden for policyholders and that it is unnecessary.
The Cat Fund is a state trust fund that is tax exempt. It is directed by the State Board of Administration, which receives advice and information from an advisory council of nine members. It was created in a special legislative session in November 1993, after Hurricane Andrew. The Cat Fund provides insurers with reimbursements for a portion of hurricane losses.
In other legislative matters, the Florida Insurance Council supports efforts to decrease the size of Citizens, the state-run insurer, by such measures as reducing vacation home coverage.
Regarding car insurance reforms, a Florida representative of the Insurance Information Institute said that it remains unclear for now how changes in Personal Injury Protection, which took effect January 1, will affect rates. According to industry officials, out of 136 filings approved since the change, only one in four reached the 10 percent decrease that was a target. There were smaller decreases in 32 percent of the filings, 25 percent with no change, and 38 percent with higher rates.
To learn more call 1.888.525.2210 visit http://www.floridainsurance.com.
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