Senate committee debates ‘Cat 5 Hurricane Sinkhole’
The Senate Banking and Insurance Committee began its discussion of SB 805 this week. The bill is the session’s major insurance bill, addressing cancellation of policies, delays in payment and, of course, sinkhole coverage. Florida’s sinkholes dominated the debate.
The proposed legislation is similar to last year’s bill that former Governor Crist vetoed. The stated objective of most of the provisions is twofold: to help Florida’s insurance companies lower their costs and to attract insurers to the state. Very few of the provisions are pro-consumer.
Some key provisions are:
- Eliminating the requirement that insurers in Florida offer sinkhole coverage
- Narrowing the timeframe for filing hurricane-loss claims
- Allowing insurers to delay full payment on replacement-value loss claims
- Allowing insurers more latitude when canceling policies
- Requiring greater surplus reserves
Left out from last year’s bill is a proposal that homeowners’ insurers be allowed to raise rates without regulatory approval. (The 2010 provision would have limited the allowable hike to 10 percent.) Overall, the sponsor of the bill hopes to strengthen or to introduce more free-market principles into Florida’s insurance sector.
The only amendments offered related to sinkhole coverage. None was passed. The sponsor reiterated his belief that sinkholes are a primary cause of the current insurance crisis (he called it a “Cat 5 hurricane” named Hurricane Sinkhole). The elimination of the sinkhole requirement will bring insurers back to Florida, he said. Another senator remarked that the strategy had been tried in Pasco and Hernando County, and no insurance company returned.
The legislative session begins in five weeks.
Source: Tallahassee Democrat, “Senate committee debates sinkholes, insurance coverage,” 01/26/11
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