|Published:||May 18, 2011 2:30 AM EDT|
|Updated:||May 18, 2011 2:30 AM EDT|
TALLAHASSEE, Fla. (AP) - A law Gov. Rick Scott signed Tuesday is expected strengthen property insurance companies that cover damages to homes and businesses from hurricanes, fires and other hazards, but critics say it'll mean higher rates for their customers.
The measure (SB 408) also is aimed at reducing fraudulent sinkhole claims.
"With hurricane season quickly approaching, this legislation is critical to ensure a solvent industry that policyholders can rely on," said Sen. Garrett Richter, a Naples Republican who sponsored the new law.
The legislation's most persistent critic has been Sen. Mike Fasano. The New Port Richey Republican said it will increase insurance company profits while raising premiums. Former Gov. Charlie Crist vetoed a similar measure last year.
"No one is shocked that Gov. Rick Scott would sign an anti-consumer bill that raises rates and hurts our economy," said former Florida Insurance Consumer Advocate Sean Shaw, who now has launched an advocacy group called Policyholders of Florida.
The Republican governor, a business executive who was elected in November, said in a statement that the new law is in keeping with his campaign promise to increase competition and give consumers more choice.
"A healthy, stable and competitive private insurance market is critical to the success of Florida, given the hazards we face," Scott said.
A key feature of the new law will reduce the time windstorm victims have to file their claims from five to three years. Sinkhole claims will have to be filed within two years and they'll face some new limitations.
Other provisions are aimed at regulating public adjusters who work for claimants rather than insurance companies. Their fees would be capped and deceptive solicitations would be prohibited.
Insurers will be able to offer better coverage but for a higher price.
Another provision will require insurance companies to have at least a $15 million surplus to pay claims.
The signing drew praise from business and insurance interests.
"After enduring years of misguided policies that have wrecked our homeowners' insurance market, this new law will go a long way in repairing the serious damage that has been done," said Kyle Ulrich, senior vice president of public affairs for the Florida Association of Insurance Agents.
Those policies included laws designed to hold down skyrocketing insurance rates in the aftermath of a series of hurricanes that struck Florida in 2004 and 2005.
As a result of the rate limitations, some companies left the Florida market or reduced their exposure by canceling policies particularly in coastal areas. That has made the state-created Citizens Property Insurance Corp. Florida's largest property insurer with more than 1 million customers.
The new law's supporters are hoping it will attract more insurers to Florida by making it more profitable to do business in the state.
In a related action, the State Board of Administration, chaired by Scott, filed an emergency rule giving the Florida Hurricane Catastrophe Fund more time to respond to an influx of claims from 2005 storms.
The board will begin evaluating the claims from 67 property insurance companies on June 1 and normally has 60 days to resolve them. The rule would let the board waive that deadline.
The so-called "cat fund" provides backup coverage if claims exceed a company's ability to pay them. The board has about $580 million set aside for 2005 claims. Officials aren't sure if that will be enough or if the state will have to borrow money to fully cover all legitimate claims.
The board's executive director, Ash Williams, said the rule will give the board time it needs to evaluate the claims "come to the right number."
Thousands of claims were filed for 2005 storms shortly before the five-year deadline in October, mostly related to Hurricane Wilma and from condominiums, Williams said.
He said the new law should help prevent that from happening again by shortening the claims deadline to three years and reducing the influence of public adjusters.
Normally most claims are filed in a relatively short time after a hurricane strikes and only a few come in just before the cut-off date.
"What we are now seeing is the reverse of that ..., which is very odd," Williams said.
He said contributing factors are growing number of public adjusters and lawyers specializing in insurance claims, hard economic times that make people more aggressive in seeking claims and accommodating laws.
Other board members are Chief Financial Officer Jeff Atwater and Attorney General Pam Bondi.
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