Legislative panels approve bill to merge FWUA, JUA, state insurance pools
TALLAHASSEE, Fla., -- Feb. 26, 2002 -- House and
Senate committees yesterday approved similar versions of a windstorm insurance
bill (HB 1361 and SB 1418) that would merge the
Florida Windstorm Underwriting Association with the Florida Residential
Property and Casualty Joint Underwriting Association to form a single state
"insurer of last resort" -- the Citizens Property Insurance Corp.
Similar legislation failed during last year's session, but lawmakers added a provision this year that would give this new combined state insurance pool tax-exempt status, which would save about $80 million annually.
During discussion of HB 1361 in the House Insurance Committee, Rep. J.D. Alexander, R-Winter Haven, added an amendment that would cap rate increases at 15 percent annually beginning in July 2003. However, many lawmakers say they're hoping they also can reduce the rate increase set to take place July 1 for many coastal homeowners that could raise their windstorm insurance premiums by as much as 40 percent.
"I'm not going home with $80 million in tax savings and sticking it to the people of
If the bill becomes law, the Internal Revenue Service (IRS) would also enable the new Citizens Property Insurance to issue tax-free bonds to help pay large claims after a major storm. In return, lawmakers think those tax savings will help increase surplus funds for the windstorm/hurricane insurance pool and also encourage private insurers who dropped their windstorm coverage after Hurricane Andrew in 1992 to re-enter the market.
Additional amendments tacked onto HB 1361 by Rep. Alexander would target decreasing the number of homeowners covered under the state insurance pool and transfer those homes to private insurers. It would mandate that the Citizens Property Insurance Corp. reduce the geographic boundaries of its windstorm insurance pool if the number of policies it carries doesn't drop 25 percent in five years or 50 percent in 10 years