¾ÅÉ«

A Florida law enacted during a 2007 January special session provides immediate savings for homeowners by shifting potential payments for hurricane losses from the homeowners receiving the current policy benefits to future policyholders, motorists and business owners, according to the Property Casualty Insurers Association of America.

PCI unveiled the results of a study on the potential impact of property insurance reforms enacted in January.

The report, prepared by Milliman Inc. and commissioned by PCI, further noted that Florida’s new law provides the greatest benefit to households in the highest risk coastal areas, while potentially increasing household premiums in less-risky areas.

“The Florida Legislature, under enormous pressure from voters, acted aggressively during both the January special session and the recently completed regular legislative session to provide insurance rate relief to consumers hardest hit by price increases as a result of record-breaking hurricane losses in 2004 and 2005 and predictions for even more frequent and severe storms in the future,” said William Stander, PCI regional manager.

Nancy Watkins, consulting actuary for Milliman and co-author of Milliman’s Analysis of Florida’s January 2007 Special Session Legislative Reforms on Property Insurance, said the legislation could “drive away” some private insurance companies that would otherwise want to conduct business in Florida.

“Along with the reduction in Citizens’ rates, the result may be more policies shifted into Citizens. Further, lowering insurance costs in the areas most vulnerable to hurricanes might encourage additional development in those areas. In combination, these consequences may increase the risk of larger losses — and policyholder assessments to cover them — in the future.”

Milliman ran several scenarios for the 2007 hurricane season; from light to severe, and estimated the impact of projected losses on Citizens Property Insurance Company, Florida’s state-run insurer; the Florida Hurricane Catastrophe Fund, the state-sponsored reinsurance fund; and the associated cost or benefit to policyholders.

Topics Florida Legislation Hurricane Property