Home insurance companies writing policies in Florida got their premium hike requests after the state Senate and House passed their versions of the home insurance rate increase bill in the middle of March.
The bill would allow home insurers to increase their premiums throughout the state by a total average of 33 percent over the next 3 years. The increase rate limit is 5 percent for the first year, 10 percent for the following year and 15 percent for the third year. The premiums can increase in certain areas by more than the average rate statewide.
According to supporters of the bill, the increase in rates would attract more insurance firms to write house insurance policies throughout the state and strengthen the Florida real estate insurance market. It would also increase the ability of insurers to pay claims in case a major hurricane hits the state again.
Opponents of the bill, however, argued that home insurance rates already shot up in Florida after the hurricanes in 2004 and in 2005 and that homeowners cannot afford further rate increases.
Bill Newton, head of the Florida Consumer Action Network, asked legislators not to pass the bill because they already passed previously a 10-percent yearly increase requested by the home insurance companies.
Florida Governor Charlie Crist and Florida Insurance Consumer Advocate Sean Shaw also opposed the bill. State senators who did not vote for the bill were Ronda Storms, Alex Villalobos, Joe Negron and Senate President Pro Tempore Mike Fasano.
FCAN head Newton expressed his concerns about the fact that all Democrats on the insurance committee passed the legislation and other insurance bills.
Previously, the state Senate passed a property insurance legislation that allow insurers to pass certain coverage costs to homeowners, such as backup coverage costs and inflation-related costs.
According to Senator Garrett Richter, the bill was designed to address the cost drivers that are making insurers insolvent. Over the past year, the state of Florida has taken over three home insurers because of their financial difficulties, including one insurer providing workers compensation coverage.
The past few years also saw some major insurers like State Farm threatening to stop writing home insurance policies in Florida if their requests for substantial rate increases were rejected. The approval of the rate increases over the past weeks is expected to appease major home insurance companies, according to some supporters of the bill.