New Florida Governor Charlie Crist has signed his first bill into law, House Bill 1A from a special session of the Florida Legislature dealing with insurance rates for homeowners. One of the principal goals of the special session was to increase the availability and lower the cost of homeowners insurance, particularly in coastal areas. A House of Representatives staff analysis of the bill contains background information about the insurance market in Florida and the impact of the eight major hurricanes that hit Florida during the 2004 and 2005 hurricane seasons. The staff analysis reports that claims payments were made relating to the eight hurricanes totaling $33,346,477,364, and describes the resulting impact on the number of insurers writing homeowners coverage in the state, the cost of coverage and the cost of reinsurance.
This 176 page bill makes extensive changes to the Florida property insurance and reinsurance markets. The changes are summarized in the staff analysis. Among the changes is expanding the Florida Hurricane Catastrophe Fund to provide a “temporary emergency program” for the 2007, 2008 and 2009 hurricane seasons providing less expensive reinsurance for insurers. Savings from the reduced cost of reinsurance must be passed on to consumers. It is unclear what the impact of this new law will be on the reinsurance market, but a large amount of reinsurance premium may now be diverted from the private reinsurance market to the public avenues set up or modified in this bill.