The Florida Senate Committee on Banking and Insurance today passed bills which could see Florida's state-run insurer Citizens allowed to increase its rates and private insurers exempted from paying assessments should the state be unable to pay claims after a storm.
Both bills – SB 2036 and SB 1950 – have still to go before the full House and Senate before they would come into effect.
Present regulation allows the state to levy additional taxes on private auto and property insurers should it not be in a position to fulfill its obligations in the wake of a large storm. It is presently facing a projected $18bn shortfall. However, SB 2036 is designed to change that.
Furthermore, the Florida Hurricane Catastrophe Fund would be decreased while Citizens' artificially suppressed rates would be gradually increased over a number of years to avoid a sharp rise for policyholders.
The proposals have been hailed by Christian Cámara, director of the Florida insurance project of the Competitive Enterprise Institute, a think tank.
"A free-market approach is the only long-term solution to the state's insurance crisis, and these bills take that approach," said Cámara. "These proposals would transfer a substantial portion of hurricane risk away from taxpayers, and would expand Floridians' ability to make their own decisions when it comes to the rates they pay and the companies they buy from."