It's the law: Windstorm insurance rate hikes capped at 10 percent

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TALLAHASSEE, Fla. -- May 13, 2002 -- It's the law: Gov. Jeb

Bush signed legislation that caps windstorm insurance rate increases at 10 percent this year, sparing some coastal homeowners from a proposed 40 percent rate hike.

Through the same bill, Florida's two insurers of last resort, the Florida Windstorm Underwriting Association (FWUA) and Joint Underwriting Association (JUA), become one through a new company to be called the Citizens Property Insurance Corp. Bush signed the bill at the National Hurricane Center on Friday.

"This bill provides important reforms that will save Florida's homeowners millions of dollars in catastrophic insurance fees," Bush says. "No one wants to imagine that another devastating hurricane will hit our state, but if it does, this legislation will help contain insurance-related costs.

The new Citizens Property Insurance Corp. will serve about 520,000 customers, many of them in South Florida. The Citizen's Corp. expects to save about $80 million per year in tax savings alone thanks to its newly-acquired tax-exempt status. That money will be added to the windstorm insurance fund's reserves and used to pay for damages in the event a hurricane strikes Florida.

"The federal tax exemption is important," says Sam Miller, a spokesperson for the Florida Insurance Council. "We've been trying to get it for a long time."

Miller says that the new bill aims to keep rates down for those who need the insurance, while, at the same time, limit the risk for all Floridians. Should Citizens’ Corp. not have enough funds in reserve to pay for the damages resulting from a major storm, Florida taxpayers would be forced to make up the difference.