could remove upscale coastal homeowners from
TALLAHASSEE, Fla. -- Feb. 11, 2002 -- A committee in
the Florida House has proposed a bill to limit the reach of the Florida
Windstorm Underwriting Association (FWUA), removing
the highest-priced homes from coverage, which will increase rates for many
owners in hurricane-prone areas. The bill would force owners of expensive homes
to either switch coverage to the Florida Joint Underwriting Association (JUA) or seek private insurance.
The reason for the switch is monetary. The fund currently does not make enough money to pay claims in the event of a major storm, and should that happen,
House Speaker Tom Feeney, R-Oviedo, also supports the move. "I'm a free marketeer and I believe that when it comes to insurance, that an individual who owns a home probably ought to pay the legitimate actuarial sound risk that they take when they buy the home," Feeney says. "There is something unfair about a proposal that would take a widow living in Clermont 300 feet above sea level in a block home on her retirement fund and ask her to pay a couple hundred extra in insurance so that an out-of-state homeowner with a stick home in Key West sitting out over the ocean worth $3 million can have cheaper insurance rates.
As currently proposed, homes worth more than $500,000 would be ineligible for the state-subsidized windstorm insurance starting in 2005, with the number of those allowed to participate growing smaller in each succeeding year. In 2006, only homes worth less than $400,000 could participate; in 2007, only those worth less than $300,000 would be covered.
Homeowners that switch from the FWUA to the JUA would not lower the risk to the state’s taxpayers in the even of a major storm, but the JUA premiums would be higher, thereby allowing the state to generate more money to offset potential losses. The bill, if approved, would also make the FWUA and JUA tax exempt by placing their management under the state Board of Administration.
A change to the JUA would also make the higher-priced policies attractive to private insurers, says Alexander, who believes the move would lower the state's risk by privatizing more policies. The JUA has already farmed a number of policies out to private insurers, going from a high of about 400,000 policies to about 90,000 today.