Florida Senate committee hears property insurance reform proposals
The Florida Legislature ended two weeks of interim committee hearings this today with various hot-button issues addressed. One that we at R Street follow very closely is the political football of property insurance reform.
Before the holiday recess, the chairman of the Senate Banking & Insurance Committee Senator David Simmons tasked the state’s property insurance market stakeholders, including regulators, pertinent state agencies, insurance industry officials, and the public to offer specific reform proposals for the committee to consider. Simmons dedicated two entire committee meetings last week and this week to hear and discuss various proposals. R Street was among the various groups that submitted a list of potential market-freeing reform ideas, including a study on protecting taxpayers and the environment through property insurance reform.
Several ideas were proposed by various groups. These included: gradually reducing the capacity of the Florida Hurricane Catastrophe Fund (Cat Fund) to a level which it can be reasonably expected to make good on its claims obligations; establishing a “clearinghouse” to verify that consumers seeking coverage through Citizens Property Insurance Corporation (Citizens) are genuinely eligible; exempting new policies in Citizens from the current 10 percent glidepath rate cap; accelerating the 10 percent glidepath over a few years; making non-primary residences ineligible for Citizens coverage; allowing private insurers to purchase and include the cost of “duplicate” coverage that the Cat Fund may not be able to cover; and allowing Citizens to enter into “quota share” agreements with other private insurers thereby allowing them to share risk, among various other proposals.
After some questions and discussion, the chairman indicated that committee staff would coordinate with its sister committee in the House to begin drafting a bill incorporating most of the ideas to be examined and dissected by committee members at a future meeting.
On the political front, Republican Governor Rick Scott, whose approval numbers have been anemic since his arrival in 2011 announced this week that he would propose an across-the-board $2,500 salary increase for teachers. This announcement came on the heels of a major legal victory for Scott when the state’s Supreme Court decided to uphold a controversial piece of pension reform legislation that requires state and local employees participating in the Florida Retirement System (FRS) to contribute 3 percent of their salaries to their retirement. Allowing the law to stand essentially frees up roughly $1 billion that would have otherwise had to have been repaid to state employees. Prior to the change, the FRS was entirely employer contribution-based. Needless to say, the change in legislation upset public employees, including teachers, who viewed the requirement to contribute 3 percent of their salaries to the FRS as a 3 percent pay cut.
However, the change in law aligns the FRS with most other states’ retirement systems that require employees to contribute a certain amount to their pensions.
