TALLAHASSEE – About a dozen Florida companies have submitted plans to use a $2 billion tax credit designed to support the home insurance industry that only saves homeowners about 1% to 3% on their annual premiums.
This will not affect the amount of money that millions of public housing owners have endured over the years – if the companies pass the money on to their customers.
The law creating the fund does not guarantee that the companies will pass the money to the consumers. Many are signing up at the same time to increase rates to cover the higher cost of private insurance, which they buy to protect themselves in the event of major disasters.
Sen. Pinellas Park Republican Jeff Brandes said the move shows how little the Legislature has done for businesses and homeowners.
He said the $2 billion is “like giving Stage 1 treatment to a Stage 4 cancer patient.”
The Reinsurance to Assist Policyholders, or RAP program, was approved at a special meeting held by Gov. Ron DeSantis at the end of May the Legislature failed to address the problem of property insurance in the permanent sector. DeSantis immediately signed it into law.
Insurance companies that wanted to participate this year were scrambling to meet the June 30 deadline to register with the Office of Insurance Regulation, which is still reviewing documents.
“OIR is urgently reviewing these documents and ensuring that the submitted documents comply with the recently issued regulations,” said Samantha Bequer, director of communications for the Office of Insurance Regulation.
Critics called it a wasteful business that would not bring money to consumers. It seems they were right according to the investment companies they offer.
“This is not what we feared, but what many legislators said would happen,” said Bill Newton, deputy director of the Florida Consumer Action Network, a nonprofit advocacy group. “When you invest so much money and say, ‘Look! Have a nice day,’ is what happens. But I’m sure he appreciates the idea.”
On a positive note, Newton said, this restoration plan is supported by Citizens Property Insurance, a state-sponsored insurance policy of last resort that has insured about 940,000 Florida homeowners and is expected to eventually reach 1.2 million. of the year.
“As long as they can provide affordable insurance, the market will be stable, balanced, and private companies will also have to lower their prices,” Newton said. “Citizens are what unites everything. Oh, and Citizens has been making money for years despite having high-risk customers. I think it is not difficult to make money in the insurance biz. “
Citizens recently asked for an 11% increase.
On average, Florida homeowners pay more than $2,000 more than their home insurance premiums.
Insurance costs have risen since DeSantis was sworn in from $1,989 in 2019, according to the Insurance Information Institute, to a recent average of $3,585, according to Insurify, which offers online comparisons.
Reinsurance is insurance for insurance companies to cover claims they don’t have to defend against. Reinsurance companies are not regulated by the state and have been fined because Florida’s insurers rely heavily on them to provide insurance coverage.
The RAP program provides airtime to home insureds, allowing them to tap into the Florida Hurricane Catastrophe Fund earlier than they are allowed before reaching their maximum premium.
The disaster liability starts when the hurricane causes $8.5 billion in damages and goes up to $17 billion, but the insurance must pay. The RAP allows participating insurance companies to get the money for free when losses reach $6.5 billion, instead of $8.5 billion.
The money does not go to the insurer unless there is a real disaster, such as a hurricane, and they are required to pay for the damage.
68 different articles from 59 companies show how much they can save based on free money. Deposits range from as low as 0.7% to 3.9%, with most being in the 1% to 2% range. Most of these changes won’t happen for several months.
For the average homeowner, that means saving anywhere from $36 to $143 a year on the $3,585 average homeowner’s bill, which has risen nearly $1,600 over the past three years.
These companies provided policyholders with pages of brochures and leaflets showing how to save money.
But the writing is all over the map. Some cited the dollar amount that would be returned to policyholders, while many simply pointed to the reduction in earnings that could be given to policyholders. Many protected their plans as trade secrets, a strategy that confused Rep. Anna Eskamani, D-Orlando.
“People are in the dark and they want answers,” Eskamani said.
Some companies had problems accounting for their payments, damages and refunds, and government regulators had to explain them and make them correct their mistakes. At one point, officials told Berkley they were using incorrect growth numbers to determine insurance premiums and offered a way to get a more accurate cost estimate.
One company, First, ran the numbers and decided it wasn’t worth participating until OIR officials confirmed it.
Some companies applying for RAP have had financial difficulties.
United Property and Casualty of St.
United stopped issuing new policies in February and is considering a sale or merger to stop it, the insurance company said. It recently asked the government for a 15% increase.
Federated National and Monarch, which recently lost thousands of jobs in Florida in an effort to avoid a meltdown, calculated savings of 0.8%. Insurance giant Demotech downgraded Federated’s rating in April from “outperform” to “outperform.”
“Our fears have been confirmed that this special provision was more to support the insurance industry than to give consumers a break,” said Eskamani.
Republicans have rejected at least half of the reforms in the House and Senate to deal with rate hikes, including a 5% rate hike, which would require insurance companies to pass any money saved from settling lawsuits to consumers in the form of lower rates or refunds if required. data report in the bill to include the effects of climate change on prices.
“Citizens are becoming the insurance of the only place,” said Eskamani. None of this is permanent.