Is Homeowner Insurance An Entitlement?
According to Mike Thomas (columnist for The Orlando Sentinel), homeowner insurance is about to become an entitlement under the homeowner insurance plan proposed by Governor Crist.
Instead of increasing rates, Citizens probably will be ordered to cut them. Whereas once the plan was to shrink Citizens Property, now the plan is to greatly expand it and let it compete with private insurers.
The state also may move to reduce rates charged by private insurers. It would do this by having taxpayers assume billions more in risk when a major hurricane hits.
All Florida property owners are already paying surcharges on their homeowner insurance bills due to the 2005 hurricanes that resulted in a $1.55 billion deficit in the Florida Hurricane Catastrophe Fund. Think that if you don’t live in Florida this won’t affect you? Better think again, because one of the proposed plans is to spread the risk even further:
Another might make them subsidize their Florida homeowner policies with policies they sell in less disaster-prone states.
That means folks living in say South Dakota will pay higher priced homeowner insurance premiums to cover the risks associated with their insurance company doing business in Florida.
In reading up what others are writing on the topic, I found a particularly useful article “What Wrecked Property Insurance” which details the reasons for the increases including the cost of reinsurance which has skyrocketed. But every Florida property owner is seeing (and will see in the future) huge increases.
We’re all paying extra charges to bail out three state insurance safety nets: Citizens Property Insurance Corp., the state’s insurer of last resort; the Florida Hurricane Catastrophe Fund, which offers cheaper reinsurance to Florida insurers; and the Florida Insurance Guaranty Association, which pays claims for bankrupt insurers.
From the proposals I have seen so far, they all point to the Florida property owners and taxpayers as assuming the financial risk for future hurricane claims so that the rates will go down now for everyone.
