Floridas New Insurance Bill

by : Calum MacKenzie

In January of 2007 Florida passed a new insurance bill hoping to lower property insurance costs. Although this bill lowers insurance costs for Florida residents, if a catastrophic hurricane hit, it could cost the state billions of dollars just to recover.

The bill was passed to cut the enormous increase in cost of home insurance for people in Florida since 2004 and 2005 after suffering from the damaging hurricanes they have had, especially those who live on the shorelines. Many have experienced, not just double the cost, but some have even seen triple the cost of home insurance.

Although this bill will provide a large number of home owners some relief, how much relief still remains unanswered. It is estimated that anywhere from 5 percent for many inland customers to 20 percent for others will benefit from the bill, particularly those on the shore. However, it has not yet been determined when residents will start seeing a savings from this bill.

With this bill now in place, private insurance companies have more state backup insurance, which in turn will lower the rates for consumers. The state will now be taking the majority of the responsibility to pay out the Hurricane Catastrophe Fund in the event of a damaging storm; in effect the insurer's risk is greatly reduced. This ultimately means there is no need for insurance companies to raise rates on consumers.

Since the backup coverage for insurance companies will now be cheaper than the private reinsurance that the majority of companies purchase, it instantly cuts one of their largest costs, which is ultimately passed on to consumers.

Consumers are also able to change their coverage under this bill. However if homeowners still owe a mortgage on their home there's a very strong possibility that many of the changes won't be available to them since mortgage lenders usually have requirements for home coverage.

Yet, how many people are comfortable with this bill? According to a recent poll done by Quinnipiac University from January 29th, 2007 through February 4th, 2007, it seemingly appears that a majority approves of this bill. Sixty-two percent of the Florida population approves of this new bill, while 14% disapprove and 24% have no opinion either way.

All in all, this bill was designed to keep money in the pockets of Florida residents instead of in the pockets of insurance agencies. Over the next year, we'll be able to see if this bill is really a Florida resident's dream come true or a political blunder that will cost taxpayers money.