main menu page title feature menus content footer
My Florida C F O

CFO's Initiatives

Stay Connected

Follow the
Department of
Financial Services

Sign up for the CFO's

Press Release

News   RSS RSS   Press Office   Archive

Legislators Approve Reforms to State’s Property Insurance Market, Millions in Tax Savings Expected


TALLAHASSEE - Florida Treasurer and Insurance Commissioner Tom Gallagher today praised the Florida House of Representatives and Senate for passing legislation that will reform the state's property insurance market and generate millions of dollars in tax savings for Florida homeowners. Centerpiece to the legislation is a 10 percent rate cap on the 40 percent rate increase that was scheduled to take effect July 1, impacting nearly 410,000 coastal residents.

The legislation (SB 1418), sponsored by Reps. Jeff Atwater (R-Palm Beach), Carlos Lacasa (R-Miami) and Sen. Rudy Garcia, merges the Florida Windstorm Underwriting Association (FWUA) and the Florida Residential Property and Casualty Joint Underwriting Association (RPCJUA) into one entity - Citizens Property Insurance Corporation (CPIC). Under the legislation, CPIC is structured to be a tax-exempt entity and will have the ability to issue tax-free bonds.

"The passage of this legislation is a victory for Florida homeowners," Gallagher said. "It will provide relief to homeowners who were facing an exorbitant 40 percent rate hike this July and it will help build reserves to protect against future hurricane losses." The sponsors of the legislation were instrumental in getting this fiscally responsible bill moving this session, Gallagher added.

"The mystery and abuse of skyrocketing windstorm insurance rates are over," Atwater said. "The winners today are Florida homeowners who will now have access to affordable windstorm insurance."

"We are working to make sure that the huge increases in premiums scheduled for this year can be reduced by factoring in the dollars we save with the tax exemption," Lacasa said.

"Homeowners will not only save millions in federal income taxes, they will save billions of dollars in interest if we ever see another hurricane like Andrew, which caused more than $16 billion in insured damages," Garcia said. Garcia pointed out that if Florida had another catastrophic storm and had to issue $5 billion in bonds to help pay claims, homeowners would save up to $2 billion in interest.

Under the legislation, CPIC would offer homeowners one policy with full coverage comparable to the private market or wind-only policies for homeowners currently eligible for coverage by the FWUA.

The bill also includes "consumer choice" language that gives policyholders the option to maintain a relationship with his or her agent in the event of a take-out.

According to Gallagher, the RPCJUA and the FWUA currently offer varying levels of insurance coverage, leaving consumers to contend with gaps in coverage. The FWUA provides hurricane coverage to about 410,000 coastal residents, more than 65 percent of which are in south Florida. The RPCJUA, created after Hurricane Andrew to serve as a safety net for homeowners who could not obtain insurance in the private market, covers approximately 110,000 policyholders.

"With CPIC, homeowners would have access to one policy with full coverage, one agent to deal with, and one adjuster to handle claims," Gallagher said. "This eliminates the risk of gaps in coverage and enables homeowners to better understand what is covered in their policy."

In addition to tax savings, CPIC would decrease policyholder assessments by adding surplus lines carriers and their policyholders in the assessment base, which now only includes regulated carriers. Surplus lines companies, which wrote nearly $1 billion in premium last year in homeowners' insurance, are currently exempt from assessments.

CPIC's rates for a full policy would be based on the same formula now used by the RPCJUA, which uses the highest average rate among the top 20 insurers writing in that area.

Approved by the Florida Senate last week, the legislation is now headed to the Governor for his signature.